EXECUTIVE COMPENSATION AGREEMENT


         THIS  AGREEMENT is entered  into as of August __, 1996,  by and between
MICHAEL  GULETT (the  "Employee")  and  PARADIGM  TECHNOLOGY,  INC.,  a Delaware
corporation (the "Company").


         1.       Term of Employment.

         (a)  Basic  Rule.   The  Company  agrees  to  continue  the  Employee's
employment,  and the Employee  agrees to remain in employment  with the Company,
from the date hereof until the date when the  Employee's  employment  terminates
pursuant to Subsection (b), (c) or (d) below.

         (b) Early  Termination.  Subject to  Sections 6 and 7, the  Company may
terminate  the  Employee's  employment  by giving the Employee 90 days'  advance
notice in writing.  The  Employee may  terminate  his  employment  by giving the
Company 30 days' advance  notice in writing.  The  Employee's  employment  shall
terminate automatically in the event of his death. Any waiver of notice shall be
valid  only if it is made in  writing  and  expressly  refers to the  applicable
notice requirement of this Section 1.

         (c)  Cause.  The  Company  may at any  time  terminate  the  Employee's
employment for Cause by giving the Employee notice in writing.  For all purposes
under this Agreement, "Cause" shall mean:

                  (i) A willful act by the Employee which constitutes misconduct
         or fraud and which is injurious to the Company; or

                  (ii)  Conviction of, or a plea of "guilty" or "no contest" to,
         a felony.

No act, or failure to act, by the Employee shall be considered  "willful" unless
committed  without  good faith and without a  reasonable  belief that the act or
omission was in the Company's best interest.

         (d)  Disability.  The  Company  may  terminate  the  Employee's  active
employment  due to Disability by giving the Employee 30 days' advance  notice in
writing. For all purposes under this Agreement, "Disability" shall mean that the
Employee,  at the time notice is given, has become eligible to receive immediate
long-term disability benefits under the Company's long-term disability insurance
plan or, if there is no such plan, under the federal Social Security program. In
the event that the Employee resumes the performance of substantially  all of his
duties  hereunder  before the  termination of his active  employment  under this
Subsection (d) becomes effective,  the notice of termination shall automatically
be deemed to have been revoked.

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         (e) Rights Upon Termination. Except as expressly provided in Sections 6
and 7,  upon the  termination  of the  Employee's  employment  pursuant  to this
Section 1, the Employee shall only be entitled to the compensation, benefits and
reimbursements  described  in Sections 3, 4 and 5 for the period  preceding  the
effective date of the termination. The payments under this Agreement shall fully
discharge  all  responsibilities  of  the  Company  to  the  Employee  upon  the
termination of his employment.

         (f)  Termination of Agreement.  This Agreement shall terminate when all
obligations of the parties hereunder have been satisfied.

         2.       Duties and Scope of Employment.

         (a)  Position.  The Company  agrees to employ the Employee as its Chief
Executive  Officer  for the term of his  employment  under this  Agreement.  The
Employee shall report to the Company's Board of Directors.

         (b)  Obligations.   During  the  term  of  his  employment  under  this
Agreement,  the Employee shall devote his full business  efforts and time to the
Company and its  subsidiaries.  The  Employee  shall not render  services to any
other for-profit  corporation or entity without the prior written consent of the
Company's  Board of  Directors  (the  "Board").  This  Subsection  (b) shall not
preclude the Employee from engaging in  appropriate  professional,  educational,
civic,  charitable or religious  activities or from devoting a reasonable amount
of time to  private  investments  that do not  interfere  or  conflict  with his
responsibilities to the Company.

         3.       Base Compensation.

         During the term of his  employment  under this  Agreement,  the Company
agrees to pay the Employee as compensation for his services a base salary at the
annual rate of $255,000 or at such higher rate as the Company may determine from
time to time.  Such salary  shall be payable in  accordance  with the  Company's
standard  payroll  procedures.  Once the Company has increased  such salary,  it
thereafter  shall not be reduced.  (The annual  compensation  specified  in this
Section 3, together with any increases in such compensation that the Company may
grant  from  time  to  time,   is  referred  to  in  this   Agreement  as  "Base
Compensation.")

         4.       Employee Benefits.

         During the term of his employment  under this  Agreement,  the Employee
shall be eligible  for the employee  benefit  plans and  executive  compensation
programs maintained by the Company for other senior executives,  subject in each
case to the generally applicable terms and conditions of the plan or program in

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question and to the determinations  of  any  person  or  committee administering
such plan or program.

         5.       Business Expenses.

         During the term of his employment  under this  Agreement,  the Employee
shall be authorized to incur necessary and reasonable travel,  entertainment and
other business  expenses in connection  with his duties  hereunder.  The Company
shall reimburse the Employee for such expenses upon  presentation of an itemized
account and  appropriate  supporting  documentation,  all in accordance with the
Company's generally applicable policies.

         6.       Change in Control.

         (a)  Definition.  For all  purposes  under this  Agreement,  "Change in
Control" shall mean the occurrence of any of the following events after the date
of this Agreement:

                  (i) the  consummation of the acquisition of fifty-one  percent
         (51%) or more of the outstanding  stock of the Company by one person or
         by two or more persons  acting as a partnership,  limited  partnership,
         syndicate or other group  pursuant to a tender offer validly made under
         any federal or state law (other than a tender offer by the Company);

                  (ii) the  consummation  of a  merger,  consolidation  or other
         reorganization  of the  Company  (other than a  reincorporation  of the
         Company), if after giving effect to such merger, consolidation or other
         reorganization  of  the  Company,   the  stockholders  of  the  Company
         immediately prior to such merger, consolidation or other reorganization
         do not  represent  a  majority  in  interest  of the  holders of voting
         securities (on a fully diluted basis) with the ordinary voting power to
         elect directors of the surviving or resulting entity after such merger,
         consolidation or other reorganization;

                  (iii) the sale of all or  substantially  all of the  assets of
         the  Company  to a third  party who is not an  affiliate  (including  a
         Parent or Subsidiary) of the Company;

                  (iv) the dissolution of the Company pursuant to action validly
         taken by the  stockholders of the Company in accordance with applicable
         state law.

         (b) Good Reason.  For all purposes under this Agreement,  "Good Reason"
shall mean that the Employee:

                  (i) Has  incurred a material  reduction  in his  authority  or
         responsibility;

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                  (ii)  Has  incurred  one  or  more   reductions  in  his  Base
         Compensation in the cumulative amount of five percent or more; or

                  (iii) Has been notified that his principal  place of work will
         be relocated by a distance of 35 miles or more.

         (c)  Severance  Payment.  The  Employee  shall be entitled to receive a
severance payment from the Company (the "Severance Payment") if, during the term
of this  Agreement and within the first 6-month period after the occurrence of a
Change in Control, either:

                  (i) The Employee  voluntarily  resigns his employment for Good
         Reason; or

                  (ii) The Company terminates the Employee's  employment for any
         reason other than Cause or Disability.

The  Severance  Payment  shall be made in a lump sum not more than five business
days following the date of the employment  termination and shall be in an amount
determined under Subsection (d) below. The Severance Payment shall be in lieu of
any further  payments to the Employee under Section 3 and any further accrual of
benefits  under Section 4 with respect to periods  subsequent to the date of the
employment termination.

         (d) Amount.  The amount of the Severance  Payment shall be equal to the
sum of the following:

                  (i) One and a half times the  Employee's  annual  rate of Base
         Compensation,  as in effect on the date of the employment  termination;
         plus

                  (ii) One and a half times the last annual bonus awarded to the
         Employee by the Company prior to the date of the employment termination
         (regardless of when paid).  If the Company has determined that no bonus
         shall be awarded to the Employee for a fiscal year, such bonus shall be
         included in the calculation as zero.

         (e) Incentive Programs. If, during the term of this Agreement, a Change
in Control occurs with respect to the Company that is not a merger that is being
accounted for as a pooling of interests,  the Employee shall become fully vested
in all awards  heretofore  or hereafter  granted to him under all stock  option,
stock appreciation  rights,  restricted stock, phantom stock or similar plans or
agreements  of the  Company,  regardless  of any  provisions  in such  plans  or
agreements that do not provide for full vesting.  (To the extent that such plans
or agreements  provide for full vesting on an earlier date than this  Agreement,
such plans or agreements shall prevail.)


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         (f) Insurance  Coverage.  During the 18-month period  commencing upon a
termination of employment  described in Subsection (c) above, the Employee (and,
where applicable, his dependents) shall be entitled to continue participation in
the group insurance plans maintained by the Company,  including life, disability
and health insurance  programs,  as if he were still an employee of the Company.
Where  applicable,  the  Employee's  salary for  purposes of such plans shall be
deemed to be equal to his Base  Compensation.  To the  extent  that the  Company
finds it impossible  to cover the Employee  under its group  insurance  policies
during such  18-month  period,  the Company  shall  provide  the  Employee  with
individual  policies  which offer at least the same level of coverage  and which
impose not more than the same costs on him. The  foregoing  notwithstanding,  in
the event that the Employee  becomes  eligible for  comparable  group  insurance
coverage in connection with new employment, the coverage provided by the Company
under  this  Subsection  (f)  shall  terminate  immediately.  Any  group  health
continuation   coverage  that  the  Company  is  required  to  offer  under  the
Consolidated Omnibus Budget  Reconciliation Act of 1986 ("COBRA") shall commence
when coverage under this Subsection (f) terminates.

         (g) No  Mitigation.  The Employee shall not be required to mitigate the
amount of any  payment  contemplated  by this  Section 6 (whether by seeking new
employment or in any other manner).  Except as expressly  provided in Subsection
(f) above,  no such payment  shall be reduced by earnings  that the Employee may
receive from any other source.

         7.       Involuntary Termination Without Cause.

         (a)  Continuation  Period.  In the event that,  during the term of this
Agreement, the Company terminates the Employee's employment for any reason other
than Cause or Disability  and Section 6 does not apply,  then the Employee shall
be entitled to receive all of the  payments  and benefit  coverage  described in
this Section 7. Such payments and benefit coverage shall continue for the period
(the  "Continuation   Period")  commencing  on  the  date  when  the  employment
termination is effective and ending on the earlier of:

                  (i)  The date six months after such date; or

                  (ii)  The date of the Employee's death.

         (b) Compensation. During the Continuation Period, the Company shall pay
the Employee  compensation  at an annual rate equal to his Base  Compensation at
the rate in effect on the date of the employment termination.  Such amount shall
be paid at periodic  intervals in accordance with the Company's standard payroll
procedures.

         (c) Insurance  Coverage.  During the Continuation  Period, the Employee
(and, where applicable, his dependents) shall be

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entitled to continue  participation  in the group insurance plans  maintained by
the Company,  including life, disability and health insurance programs, as if he
were still an employee of the Company.  Where applicable,  the Employee's salary
for purposes of such plans shall be deemed to be equal to his Base Compensation.
To the extent that the Company finds it  impossible to cover the Employee  under
its group insurance  policies during the Continuation  Period, the Company shall
provide the  Employee  with  individual  policies  which offer at least the same
level of  coverage  and which  impose not more than the same  costs on him.  The
foregoing  notwithstanding,  in the event that the Employee becomes eligible for
comparable  group  insurance  coverage in connection  with new  employment,  the
coverage  provided  by the Company  under this  Subsection  (c) shall  terminate
immediately. Any group health continuation coverage that the Company is required
to offer under COBRA shall  commence when  coverage  under this  Subsection  (c)
terminates.

         (d) Incentive  Programs.  The  Continuation  Period shall be counted as
employment  with the Company for  purposes  of vesting  under all stock  option,
stock  appreciation  rights,  restricted  stock,  phantom stock or similar plans
maintained   by  the   Company   (any   contrary   provisions   of  such   plans
notwithstanding).  The preceding  sentence shall not be construed to require the
Company to grant any new awards to the Employee during the Continuation  Period.
The Continuation Period shall also be counted as employment with the Company for
purposes of determining  the expiration  date of any stock option granted by the
Company  and held by the  Employee  when his  employment  terminates.  Any other
provision  of  this  Agreement  notwithstanding,  the  Continuation  Period  for
purposes of this  Subsection (d) shall not exceed three months in the event that
the  Company  terminates  the  Employee's  employment  for   performance-related
reasons,  as determined by the Board.  (There is no Continuation  Period for any
purpose in the event that the termination is for Cause.)

         (e) No  Mitigation.  The Employee shall not be required to mitigate the
amount of any  payment  contemplated  by this  Section 7 (whether by seeking new
employment or in any other manner).  Except as expressly  provided in Subsection
(c) above,  no such payment  shall be reduced by earnings  that the Employee may
receive from any other source.

         8.       Limitation on Payments.

         (a)  Application.  This Section 8 shall apply to the Employee  only if,
after the  application  of this  Section 8, the present  value of his  aggregate
payments or property transfers from the Company will be greater than the present
value of his payments or property transfers from the Company would have been if:

                  (i)  This Section 8 did not apply; and


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                  (ii) Such present  value had been reduced by the amount of the
         excise tax  described in section  4999 of the Internal  Revenue Code of
         1986, as amended (the "Code").

In all  other  cases,  this  Section  8 shall  not  apply to the  Employee.  All
determinations  under  this  Subsection  (a)  shall  be made by the  independent
auditors  retained by the Company most  recently  prior to the Change in Control
(the "Auditors").

         (b) Basic Rule. Any provision of this Agreement  other than  Subsection
(a) above notwithstanding, the Company shall not be required to make any payment
or  property  transfer  to, or for the  benefit  of, the  Employee  (under  this
Agreement or otherwise) that would be  nondeductible by the Company by reason of
section  280G of the Code or that would  subject the  Employee to the excise tax
described in section 4999 of the Code. All calculations required by this Section
8 shall be  performed  by the  Auditors,  based on  information  supplied by the
Company and the Employee,  and shall be binding on the Company and the Employee.
All fees and expenses of the Auditors shall be paid by the Company.

         (c)  Reductions.  If the amount of the  aggregate  payments or property
transfers  to the  Employee  must be  reduced  under  this  Section  8, then the
Employee  shall  direct  in which  order the  payments  or  transfers  are to be
reduced,  but no change in the timing of any payment or  transfer  shall be made
without the Company's consent.  As a result of uncertainty in the application of
sections  280G and 4999 of the Code at the time of an initial  determination  by
the Auditors hereunder, it is possible that a payment will have been made by the
Company that should not have been made (an  "Overpayment") or that an additional
payment  that will not have been made by the  Company  could  have been made (an
"Underpayment").  In the event that the Auditors,  based upon the assertion of a
deficiency by the Internal  Revenue  Service against the Company or the Employee
that the Auditors believe has a high  probability of success,  determine that an
Overpayment has been made, such Overpayment shall be treated for all purposes as
a loan to the  Employee  that he  shall  repay  to the  Company,  together  with
interest at the applicable  federal rate specified in section  7872(f)(2) of the
Code; provided,  however, that no amount shall be payable by the Employee to the
Company if and to the extent that such payment  would not reduce the amount that
is  nondeductible  under section 280G of the Code or is subject to an excise tax
under section 4999 of the Code. In the event that the Auditors determine that an
Underpayment  has  occurred,   such  Underpayment  shall  promptly  be  paid  or
transferred  by the Company to, or for the  benefit of, the  Employee,  together
with interest at the applicable  federal rate specified in section 7872(f)(2) of
the Code.

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         9.       Successors.

         (a)  Company's  Successors.  The Company  shall  require any  successor
(whether   direct  or  indirect   and  whether  by  purchase,   lease,   merger,
consolidation,  liquidation  or  otherwise) to all or  substantially  all of the
Company's  business  and/or  assets,  by an  agreement  in  substance  and  form
satisfactory to the Employee, to assume this Agreement and to agree expressly to
perform this  Agreement in the same manner and to the same extent as the Company
would be required to perform it in the absence of a  succession.  The  Company's
failure to obtain such  agreement  prior to the  effectiveness  of a  succession
shall be a breach of this Agreement and shall entitle the Employee to all of the
compensation and benefits to which he would have been entitled  hereunder if the
Company had  involuntarily  terminated his employment  without Cause immediately
after such succession becomes effective.  For all purposes under this Agreement,
the term "Company" shall include any successor to the Company's  business and/or
assets which  executes and delivers the assumption  agreement  described in this
Subsection (a) or which becomes bound by this Agreement by operation of law.

         (b)  Employee's  Successors.  This  Agreement  and  all  rights  of the
Employee  hereunder  shall inure to the benefit of, and be  enforceable  by, the
Employee's  personal  or legal  representa-  tives,  executors,  administrators,
successors, heirs, distributees, devisees and legatees.

         10.      Miscellaneous Provisions.

         (a) Notice.  Notices and all other communications  contemplated by this
Agreement  shall be in writing  and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt  requested  and postage  prepaid.  In the case of the  Employee,  mailed
notices  shall be addressed to him at the home  address  which he most  recently
communicated  to the  Company in  writing.  In the case of the  Company,  mailed
notices shall be addressed to its corporate headquarters,  and all notices shall
be directed to the attention of its Secretary.

         (b) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification,  waiver or discharge is agreed to in writing
and signed by the Employee and by an  authorized  officer of the Company  (other
than the Employee). No waiver by either party of any breach of, or of compliance
with,  any condition or provision of this  Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.

         (c) Whole Agreement.  No agreements,  representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement

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have been made or  entered  into by either  party with  respect  to the  subject
matter   hereof.   This  Agreement   supersedes  any  employment   agreement  or
understanding,  whether oral or written,  made before the date of this Agreement
between Employee and the Company.

         (d) No Setoff;  Withholding Taxes. There shall be no right of setoff or
counterclaim, with respect to any claim, debt or obligation, against payments to
the Employee under this Agreement.  All payments made under this Agreement shall
be subject to reduction to reflect taxes required to be withheld by law.

         (e)  Choice of Law.  The  validity,  interpretation,  construction  and
performance  of this  Agreement  shall be  governed  by the laws of the State of
California.

         (f) Severability.  The invalidity or  unenforceability of any provision
or provisions of this Agreement shall not affect the validity or  enforceability
of any other provision hereof, which shall remain in full force and effect.

         (g)  Arbitration.  Except  as  otherwise  provided  in  Section  9, any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration in San Francisco in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.  Discovery
shall be permitted to the same extent as in a proceeding under the Federal Rules
of  Civil  Procedure,  including  (without  limitation)  such  discovery  as  is
specifically  authorized  by  section  1283.05 of the  California  Code of Civil
Procedure,  without  need  of  prior  leave  of  the  arbitrator  under  section
1283.05(e) of such Code. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction  thereof.  All fees and expenses of the
arbitrator and such Association shall be paid as determined by the arbitrator.

         (h) No  Assignment.  The rights of any person to  payments  or benefits
under this Agreement  shall not be made subject to option or assignment,  either
by  voluntary  or  involuntary  assignment  or by  operation  of law,  including
(without limita-

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tion) bankruptcy,  garnishment,  attachment or other creditor's process, and any
action in violation of this Subsection (h) shall be void.


         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized  officer,  as of the day and year
first above written.




                                             ______________________________


                                             PARADIGM TECHNOLOGY, INC.



                                             By ___________________________

                                             Title ________________________


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