AGREEMENT

                  Agreement  made as of the 6th day of  November,  1996,  by and
between Cylink Corporation, a California corporation with its principal place of
business at 910 Hermosa Court, Sunnyvale,  California 94086 (the "Company"), and
Fernand Sarrat residing at ______________________________ (the "Executive").

                              W I T N E S S E T H :

                  WHEREAS,  the  Company  desires  to  employ  Executive  as its
President and Chief Executive  Officer and Executive is willing to serve in such
capacity; and

                  WHEREAS,  the  Company and  Executive  desire to set forth the
terms and conditions of such employment.

                  NOW,  THEREFORE,  in  consideration of the premises and of the
mutual  covenants and  agreements  herein  contained,  the Company and Executive
agree as follows:

                  1.       Employment.

                  The Company hereby agrees to employ  Executive,  and Executive
agrees  to be  employed  by the  Company,  on the terms  and  conditions  herein
contained,  and,  effective  as of


<PAGE>

November 6, 1996 as its President  and Chief  Executive  Officer  ("CEO") and in
such other executive  capacities (not  inconsistent  with Executive's  duties as
President and CEO) with the Company and its affiliated entities as assigned from
time to time by the Board of Directors of the Company (the  "Board").  Executive
shall report only to the Board and the Chairman of the Board.  As President  and
CEO, Executive shall have duties,  authority and  responsibilities  commensurate
with the duties,  authority  and  responsibilities  of a  president  and a chief
executive  officer of a similar  type  company.  During the term of  Executive's
employment,  he shall be based at the principal office of the Company,  which is
currently in the Palo Alto,  California area, provided,  however, that Executive
shall be required  to travel as  reasonably  necessary  in  connection  with the
official  business  of the  Company.  Executive  shall  relocate  his  permanent
residence and his family to the Palo Alto, California,  area within one (1) year
of the Effective Date.  During the Employment  Term, the Company shall recommend
the Executive for election as a director of the Company.  If so requested by the
Board,  Executive  shall also serve on the Board of Directors of the Company and
as a  director  and  officer  of  its  affiliated  entities  without  additional
compensation. The Executive shall devote substantially all of his business time,
energy,  skill and efforts to the performance of his duties  hereunder and shall
faithfully and


                                       2
<PAGE>

diligently  serve the  Company.  The  Executive  shall  perform  his  duties and
responsibilities  to the  best  of his  abilities  in a  diligent,  trustworthy,
businesslike  and efficient  manner.  The foregoing shall not prevent  Executive
from  participating  in  not-for-profit  activities or from managing his passive
personal  investments provided that these activities do not materially interfere
with Executive's obligations hereunder.

                  2.       Term of Employment.

                  Executive's  employment  under this  Agreement  shall be for a
term (the  "Employment  Term")  commencing  on November 6, 1996 (the  "Effective
Date") and  terminating,  unless  otherwise  terminated  earlier as  provided in
Section  9 hereof,  on  December  31,  2001 (the  "Original  Employment  Term"),
provided  that  the  Employment  Term  shall be  extended  (subject  to  earlier
termination as provided in Section 9 hereof) for additional one (1) year periods
(the "Additional Terms"),  unless, at least thirty (30) days prior to the end of
the  Original  Employment  Term  or any  Additional  Term,  the  Company  or the
Executive  has  notified  the other in writing  that the  Employment  Term shall
terminate at the end of the then current term. If and when this  Agreement is so
extended,  the term "Employment Term" used herein shall also refer to the


                                       3
<PAGE>

period of such extension.  Notwithstanding  anything else herein, the provisions
of  Section  12,  13,  14 and 16  hereof  shall  survive  and  remain  in effect
notwithstanding  the  termination  of the  Employment  Term or a  breach  by the
Company or Executive of this Agreement or any of its terms.

                  3.       Compensation.

                           (a) As  compensation  for  his  services  under  this
Agreement,  the  Company  shall  pay  Executive  a salary  at a rate of at least
$300,000  per year ("Base  Salary").  Such Base Salary shall be payable in equal
installments  (not less  frequently  than monthly) and subject to withholding in
accordance with the Company's normal payroll practices.

                           (b)  Executive's  Base Salary may be increased by the
Board, in its sole discretion, from time to time.

                           (c) In addition to the Base Salary, for each calendar
year completed during the Employment Term, the Company shall pay to Executive an
annual bonus which shall not be less than  $100,000 per year,  provided that the
minimum annual bonus for the 1996 calendar year shall be prorated by multiplying
$100,000 by a fraction the  numerator of which is


                                       4
<PAGE>

the number of days during 1996 that the  Executive  was  employed by the Company
and the  denominator  of which is 365. The Company shall pay fifty percent (50%)
of the minimum  annual  bonus in July of each  calendar  year of the  Employment
Term,  with the remainder of such year's minimum annual bonus paid in January of
the following  calendar year. Any annual bonuses beyond the annual minimum bonus
shall be discretionary  with the Board or a Committee  thereof (the "Committee")
and, if declared and paid,  shall be paid at such time as bonuses are  generally
paid or as otherwise determined by the Board or Committee.

                           (d) The  Company  shall pay  Executive  a  $2,000,000
special bonus in January 2001 if Executive remains continuously  employed by the
Company  through  December 31, 2000. The Company may offset against such special
bonus (after any applicable  taxes are withheld) any amounts owed the Company by
the Executive.

                           (e) The Company  shall  reimburse  Executive  for all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent  with the Company's  policies in effect form
time to time with respect to travel,  entertainment and other business expenses,
subject  to  the   Company's   requirements   with  respect



                                       5
<PAGE>

to reporting and documentation of such expenses.

                  4.       Benefits and Fringes.

                           (a) During the Employment  Term,  Executive  shall be
entitled to (i) all benefits and fringes, if any, as are generally provided from
time to time by the Company to its senior executive officers, including, without
limitation,  any life,  medical  and  disability  insurance  plans and  pension,
incentive,  profit-sharing,  deferred  compensation  and  other  similar  plans,
practices, policies and programs, subject to the Executive's satisfaction of the
applicable eligibility requirements and with due credit against any annual bonus
plan or program for the minimum  annual  bonus set forth in Section 3(c) hereof,
and (ii)  such  other  benefits  and  fringes  set forth in this  Agreement.  In
addition,  the  Company  shall  reimburse  Executive  annually  during each full
calendar year during the  Employment  Term for the  reasonable  annual cost of a
policy of term life insurance in the amount of $1,250,000,  upon presentation of
evidence of payment of the premiums on such  policy.  To the extent a commercial
life  insurance  policy has not been  obtained,  the Company will  self-fund the
$1,250,000 life insurance policy for the sixty (60) day period commencing on the
Effective Date. In addition,  during the Original  Employment  Term,



                                       6
<PAGE>

the Company shall  reimburse  Executive  annually during each full calendar year
during  the  Employment  Term for the  reasonable  annual  cost of a policy  for
additional term life insurance in the amount of the lesser of (i) $2,000,000, or
(ii)  the  outstanding  principal  of the  Loan  under  Section  6  hereof  (the
"Additional Life Insurance").  The foregoing  reimbursements  for life insurance
premiums shall, based on Executive's  representation  that he is in good health,
be limited to payment of only a reasonable  amount (which  includes,  but is not
limited to,  standard  premium  amounts).  The Company  shall  gross-up  for tax
purposes the deemed income to Executive for providing life insurance  under this
Section 4(a) such that the  economic  effect to Executive is the same as if such
insurance was provided to Executive on a non-taxable  basis. Such gross up shall
be in accordance with Section 19 hereof. The Executive shall grant the Company a
first security  interest through a collateral  assignment in the Additional Life
Insurance to secure the loan under Section 6 hereof.

                           (b) During the Employment Term, the Company shall, in
its discretion,  either pay Executive a monthly automobile allowance of $500, or
make  available to Executive an  automobile of the type provided to other senior
executives of the Company for his


                                       7
<PAGE>

exclusive  use in  connection  with the  official  business  of the  Company and
incidental personal use. If an automobile is made available,  Executive shall be
responsible  for all costs  associated  with  garaging  and  operating  any such
automobile,  other than those costs arising out of the official  business of the
Company,  provided that the Company shall be  responsible  for  maintenance  and
insurance.  Executive  shall be  responsible  for any  income  tax  consequences
arising from the use of the automobile under this arrangement.

                           (c) No later  than  sixty  (60)  days  after  (i) the
Effective Date or (ii) any required increase in coverage hereunder,  and subject
to Executive  cooperating with the insurance company  underwriting  requirements
and being accepted for the policy coverage at not more than  reasonable  premium
rates (with  respect to (i) above) and at no more than one  hundred  twenty-five
percent  (125%) of standard  premium  rates (with  respect to (ii)  above),  the
Company  shall  provide,  during the  Employment  Term,  a long term  disability
coverage  policy or policies  for  Executive's  benefit in an amount equal to at
least  sixty-six  and  two-thirds  percent  (66 and 2/3%) of the  greater of (A)
$500,000 per annum,  or (B) the sum of Executive's  then current Base Salary and
minimum  annual bonus,  provided that the amounts in (A) or (B) above and/or the
percentage



                                       8
<PAGE>

above  shall be limited or reduced  to the extent  that the  Company  after good
faith effort is unable to obtain such policy.  The long term  disability  policy
shall be based upon the same waiting  period  (which shall be no longer than six
(6) months) and  substantially the same terms as the Company's current long term
disability policies for its executives.

                           (d) The Company agrees to reimburse Executive for (i)
all  reasonable  expenses  incurred by Executive in moving any items of personal
property owned by Executive and his family from Connecticut to California,  (ii)
the reasonable  cost of up to three (3) one-person  round trip airfare trips per
month  from  Connecticut  to  California  (coach  class),  which  may be used by
Executive,  his spouse,  or any of his children,  until Executive  relocates his
family  to  California,  but in no event  for more  than one (1) year  after the
Effective  Date, and (iii) the  reasonable  cost of three (3) round trip airfare
trips for  Executive's  family from  Connecticut  to California  during the same
period as  specified  in (ii).  In  addition,  during  the  period  prior to his
relocation (but in no event for more than one (1) year from the Effective Date),
the Company shall provide a suitable apartment for Executive's use when he is at
the Company's  headquarters.  The Company shall also reimburse Executive for the
following reasonable costs:


                                       9
<PAGE>

                                (i) All reasonable  transaction costs associated
with Executive purchasing his new residence in the area of the Company's current
headquarters,  including, but not limited to, closing costs, inspections,  title
insurance,  reasonable  legal  expenses  (other  than  for any  litigation)  and
statutory expenses; and

                                (ii) All reasonable transaction costs associated
with  Executive  selling his current  principal  residence,  including,  but not
limited to, standard brokerage commissions, closing costs, legal expenses (other
than for any  litigation)  and statutory  fees,  but not any costs of repairing,
changing or decorating the residence  prior to, or as a condition of, selling or
any costs to pay off or bond any liens or judgments.

                  In addition,  the Company  shall gross up for tax purposes any
deemed income arising pursuant to the benefits provided under this Section 4(d),
including  this  sentence,  so that the economic  benefit is the same as if such
benefits  were  provided  on a  non-taxable  basis.  Such  gross  up shall be in
accordance with Section 19 hereof.

                  5.       Stock Options.

                  On November 6, 1996, the  Compensation  Committee of the Board
(the  "Compensation  Committee")  granted  Executive  non-qualified  options  to
purchase 1,000,000


                                       10
<PAGE>

shares  of  Company  common  stock at an  exercise  price of $11.00  per  share,
pursuant and subject to the Company's  1994 Flexible  Stock  Incentive Plan (the
"Plan"),  provided that options to purchase  250,000 shares of such common stock
were conditioned on shareholder approval of an amendment to the Plan, adopted at
the Board  meeting  held on  November 6, 1996,  increasing  the number of shares
permitted to be issued  under the Plan and the number  permitted to be issued to
any individual.  The terms of the Options,  which will be set forth in an Option
agreement,  substantially  in the  form as set  forth in the  Option  agreement,
annexed  as Exhibit A hereto  (as  specifically  modified  by this  Section  5),
include that the Options (i) shall fully vest upon the occurrence of a Change in
Control of the Company  (as such term is  currently  defined in the Plan),  (ii)
shall be for a maximum  ten (10) year  term,  and (iii)  shall  vest and  become
exercisable  ratably  over a five (5) year  period on the last day of each month
during such period, if the Executive is employed on each vesting date,  provided
that the  initial  twenty  percent  (20%) of the  Options  shall not vest and be
exercisable until the first  anniversary of the grant. In addition,  the Options
will provide that in the event of a termination  of  Executive's  employment (i)
prior to the second  anniversary of the Effective Date without Cause or for Good
Reason, or (ii) as a result of


                                       11
<PAGE>

the  Executive's  death or  Disability,  in addition  to any  Options  which are
already vested and exercisable,  the Executive's  Options shall vest, and become
immediately  exercisable for a period of three (3) months after such termination
(except in the case of a death or  Disability  termination,  in which case,  the
period will be one (1) year),  but in no event beyond the original  Option term,
with respect to 200,000 Options, or in the case of Disability,  100,000 Options.
Upon any other  termination,  the periods of exercise are those set forth in the
annexed form agreement.

                  6.       Relocation Loan; etc.

                           (a) In  connection  with the transfer of  Executive's
principal place of employment to California from Connecticut,  the Company shall
provide Executive with a five (5) year interest-free mortgage loan in the amount
of up to $2,400,000 for purposes of  Executive's  acquisition of a new principal
residence  (the "Loan").  The Loan shall not be for more than the purchase price
of the  residence  and shall  promptly  be  reduced to  $2,000,000  upon sale by
Executive of his residence in  Connecticut  (or, if Executive does not sell such
residence, within two (2) years after the making of the Loan). The Loan shall be
subject to, and governed by, the terms and  conditions  of a loan  agreement and
mortgage  between the Executive  and the


                                       12
<PAGE>

Company,  which the parties shall enter into at the time the Executive purchases
the new residence.  The Company shall retain a first mortgage  security interest
in the  residence  during the term of the Loan.  The Loan is intended to satisfy
the requirements of Temporary Treasury  Regulation Section  1.7872-5T(c)(1)  and
the parties  hereto agree to execute such  documents as are  necessary to comply
therewith.

                           (b) In the  event  the  Original  Employment  Term is
renewed,  (i) the Loan,  which shall be evidenced by a promissory note, shall be
converted  to, or  substituted  with, an  interest-bearing  loan (secured by the
first mortgage) with a thirty (30) year amortization schedule and with a rate of
interest equal to the lesser of (i) the rate then charged by Bank of America for
similar  mortgages,  or (ii) the lesser of (A) eight  percent  (8%),  or (B) the
percentage equal to the number determined by dividing the difference between the
sum of  Executive's  then  current  Base  Salary and minimum  annual  bonus less
$400,000 by $10,000 (provided that if originally (B) is the lower amount, as (B)
increases  a new  calculation  under (ii) shall be made and the rate of interest
adjusted accordingly.



                                       13
<PAGE>

                           (c)  Notwithstanding  anything else herein,  the Loan
shall  become  due and  payable in full upon the  earliest  of (i) sale or other
transfer of the residence  securing the Loan, (ii) uncured breach of the term of
the mortgage (which shall have normal  commercial  default  provisions) or (iii)
one hundred  twenty (120) days after  Executive  commenced  other  substantially
full-time  employment  or  consulting.  In addition,  the Loan shall be promptly
reduced by the after-tax  amount of the bonus referred to in Section 3(d) hereof
upon receipt by Executive of such bonus.

                           (d)  The  Loan  referred  to in (a)  above  shall  be
forgiven  in the  Specified  Amount (as defined  below),  and, to the extent the
Specified Amount exceeds the outstanding  balance of the Loan, the Company shall
pay Executive  such excess in the event (i)  Executive is still  employed at the
end of the  Original  Employment  Term,  (ii)  terminated  theretofore  for Good
Reason, or (iii) is terminated  theretofore by the Company without Cause. In the
case of (i) the Specified  Amount is the amount by which the Appraised  Value of
his residence secured by the mortgage at the end of the Original Employment Term
is less than his purchase cost of the residence (or, if the residence costs more
than $2.4 million,  the relative percentage of the


                                       14
<PAGE>

difference based on the ratio of $2.4 million to the actual purchase price), but
in no event more than $2,000,000.  Appraisal shall be determined by an appraisal
obtained  from an appraiser  mutually  agreed upon by Executive  and the Company
(paid for by the Company) and, if they cannot agree on an appraiser, the average
appraisal obtained from three (3) appraisers  appointed by the AAA in accordance
with its procedures (paid for by the Company).

                  In the event of (ii) or (iii), the same terms shall apply, but
the Appraisals  shall occur at the time of termination  and, if those Appraisals
show a  Specified  Amount,  another  Appraisal  shall occur at the time the Loan
becomes due. If the second appraisal occurs and shows a Specified  Amount,  then
the amount due shall be based on the lesser of the two Specified Amounts. If the
first  appraisal  shows a difference,  no payment shall be made, but Interest on
the Loan thereafter shall be paid only on principal of the then remaining amount
on the Loan less the aforesaid difference (subject to the limitation).

                  In the  event  of  termination  of the  Employment  Term,  the
following provisions shall apply:

                           (A) In the event of  termination  by the  Company for
Cause,  the Loan  shall  become  due and  payable in full one (l) year after the
termination,  provided that, if such


                                       15
<PAGE>

termination is in the Original  Employment Term, the Loan shall be converted to,
or be substituted by, an Interest (as defined herein) bearing  similarly secured
loan, with quarterly  amortization on a 30-year  amortization  basis during such
one year period.

                           (B) In the  event  of  voluntary  termination  by the
Executive other than for Good Reason or in the event of the  Executive's  death,
the Loan shall become immediately due and payable in full.

                           (C) In the event of termination  for  Disability,  by
the Company  without Cause or by the  Executive for Good Reason,  the Loan shall
become due and payable in full three (3) years after the  Termination,  provided
that, if such Termination is in the Original  Employment Term, the Loan shall be
converted to, or be substituted by, an Interest bearing  similarly secured loan,
with quarterly payments of Interest (as defined herein) only.

                  (e) During the Original  Employment  Term,  the Company  shall
reimburse  Executive's  property  taxes and  reasonable  home owner's  insurance
(building and furnishings  only) including,  without  limitation,  fire,  flood,
earthquake,  and  mudslide  coverage  for the new  residence  in the Palo  Alto,
California area (the  "Residence  Reimbursement").  The Residence


                                       16
<PAGE>

Reimbursement shall be made promptly upon presentation of invoices or notices of
the amount due. The  Residence  Reimbursement  shall not exceed  $42,000 for any
calendar  year.   Notwithstanding  the  foregoing,   in  the  event  Executive's
employment is  terminated  by the Company for Cause or by the Executive  without
Good Reason,  Executive  will promptly  refund to the Company the portion of any
Residence  Reimbursement  received  or made on  behalf  of  expenses  which  are
allocable to the period  subsequent  to the date of  termination.  The Residence
Reimbursement  (and the amounts payable under this sentence) shall be grossed up
in such  manner  than  the  economic  effect  to  Executive  is the  same as the
Residence  Reimbursement  was provided to Executive on a nontaxable  basis.  The
gross up shall be in accordance with Section 19 hereof.

                  (f)  Interest  shall  mean  the  lower  of (i) the  prevailing
commercial  mortgage  rates of Bank of America,  N.A.  for  mortgages of similar
amounts, periods and terms, and (ii) eight (8%) percent per annum.

                  7.       Child's Medical and Schooling Expenses.


                                       17
<PAGE>

                  Certain  benefits as set forth below shall be  conferred  upon
Executive  with  respect  to  Executive's  child who is  currently  in a special
program (the "Child"),  provided  Executive complies with the provisions of this
Section  7. The  Company  agrees  to pay for the  Executive  up to  $60,000  per
calendar year for COBRA coverage and supplemental medical and schooling expenses
(until  the  earlier  of the end of the  Original  Employment  Term or the Child
completing  high school)  incurred by the Child in a facility  equivalent to the
facility  in which the Child is  enrolled  as of the  Effective  Date,  provided
Executive uses his best efforts to mitigate such expenses  through any available
programs (including  governmental programs) or other medical coverage (including
available  spousal or COBRA  coverage).  The Executive  will provide the Company
with information and documentation to support such expenses  consistent with the
Company's  requirements with respect to reporting and documentation of expenses.
In addition,  the Company  shall  gross-up  for tax purposes any income  arising
pursuant to the benefits provided under this Section 7, including this sentence,
so that the economic  effect to Executive is the same as if such  benefits  were
provided  in a  non-taxable  basis.  Such gross up shall be in  accordance  with
Section 19 hereof.



                                       18
<PAGE>

                  8.       Vacation.

                  During the  Employment  Term,  Executive  shall be entitled to
four (4) weeks  paid  vacation  in each full  calendar  year  (prorated  for any
partial year) to be taken at such times as mutually  agreed by the Executive and
the Chairman of the Board or the Board.  Unused  vacation in any  calendar  year
shall be lost and not carried over from year to year.

                  9.       Termination.

                           (a) Executive's employment under this Agreement shall
terminate prior to December 31, 2001 upon the occurrence of any of the following
events:

                                (i)  Automatically  on the  date of  Executive's
death.

                                (ii) Upon  written  notice by the Company to the
Executive,  if the Executive (as determined by the Board in good faith) fails to
regularly  perform the material duties hereunder by reason of mental or physical
illness or incapacity  for an aggregate  period of more than 180 days during any
365 day period (a "Disability"), provided that, during the Employment Term prior
to such termination, the Company's obligations hereunder shall be reduced by any
payments being received by Executive under any long-term disability program.

                                (iii) Upon written  notice by the Company to the
Executive for Cause.  Cause shall mean (A) the Executive  being convicted of (or
pleading nolo  contendere to) a felony (other than a  traffic-related  offense);
(B) the barring of the Executive by any  regulatory


                                       19
<PAGE>

authority from holding his positions or any  limitations  imposed on the Company
by any regulatory agency if the Executive  continued to hold his positions;  (C)
willful  refusal by the  Executive  to attempt to properly  perform his material
obligations  under this  Agreement,  or attempt to follow any  direction  of the
Board  consistent  with this  Agreement,  which in either  case is not  remedied
within  ten (10)  business  days  (with  appropriate  reasonable  adjustment  if
Executive  is at the time of  notice  away on  vacation)  after  receipt  by the
Executive of written  notice from the Company  specifying  the details  thereof,
provided the refusal to follow a direction  shall not be Cause if the  Executive
in good faith  believes that such  direction is not legal and promptly  notifies
the Board in writing of such belief;  (D) the Executive's  willful misconduct or
material gross  negligence  with regard to the business,  assets or employees of
the Company or its affiliated entities (including as willful misconduct, without
limitation,  the Executive's  willful breach of any fiduciary duty he may owe to
the Company or its affiliates  under applicable law or this agreement but not de
minimis  personal use of Company assets or reasonable good faith expense account
disputes),  (E) the  Executive's  theft,  dishonesty or fraud with regard to the
Company or its  affiliates  which is intended to enrich the Executive or another
person or entity but not de minimis personal use of Company assets or reasonable
good faith expense  account  disputes,  or (F) any other material  breach by the
Executive  of this  Agreement  that  remains  uncured for twenty (20) days after
written notice thereof is given to the Executive. During any period in which the
Executive is charged with  committing a crime covered by (A) above,  the Company
may suspend  Executive  from his titles,  duties and  authority  herein  pending
resolution of his status under applicable law; such suspension shall be with pay
for up to six (6) months and thereafter shall be without pay.


                                       20
<PAGE>

                                (iv)  Immediately  upon  written  notice  to the
Executive by the Company  without  Cause.  A  termination  of this  Agreement by
virtue  of  the  Company  notifying  Executive  that  the  Agreement  shall  not
automatically extend pursuant to Section 2 hereof shall constitute a termination
of Executive by the Company other than for Cause as of the end of the Employment
Term.

                                (v)  Upon  the  voluntary   termination  of  the
Executive  without Good Reason upon thirty (30) days prior written notice to the
Company (which the Company may, in its sole discretion, make effective earlier).
A notice by Executive of non-renewal  of the  Employment  Term shall be deemed a
voluntary termination by Executive.

                                (vi) Upon written  notice by the  Executive  for
Good Reason  stating with  specificity  the details of the Good  Reason,  if the
stated  Good Reason is not cured  within  twenty (20) days of the giving of such
notice. Any notice for Good Reason shall be given within ninety (90) days of the
later of (i) the occurrence of the triggering event, or (ii) the date upon which
Executive  could be  reasonably  expected to know of such event.  "Good  Reason"
shall mean (A) any material reduction in authority,  duties or  responsibilities
(except  temporarily in connection with a suspension as set forth in (iii) above
or during any period of  physical  or mental  illness);  (B) any  reduction,  in
Executive's title or level of reporting;  (C) the relocation of the Executive to
a facility or a location more than fifty (50) miles from the Executive's then


                                       21
<PAGE>

present  location,  without the Executive's  written  consent;  or (D) any other
material  breach of any  provision of this  Agreement by the Company,  including
without  limitation,  a  reduction  by the Company in the Base Salary or minimum
annual bonus of the Executive as in effect; immediately prior to such reduction.
In addition,  the Executive may terminate  employment by written notice given to
the Company within the thirty (30) day period following the first anniversary of
a Change in Control of the Company (as  currently  defined in the Plan) and have
such termination treated as a termination for Good Reason.

                           (b) Upon such earlier  termination  of the Employment
Term,  the  Executive  shall be  promptly  paid any unpaid  salary  and  accrued
vacation  through  his date of  termination,  a  prorated  portion of his unpaid
annual  minimum bonus for the calendar year of his  termination,  reimbursed for
any expenses  incurred in  connection  with the business of the Company prior to
his date of termination  which he would be otherwise  entitled to  reimbursement
for in accordance with the Company's  policies on the  reimbursement of business
expenses,  receive any  benefits or fringes due under any benefit or fringe plan
or arrangement in accordance  with the terms of said plan or arrangement due for
the period prior to such termination. In


                                       22
<PAGE>

addition,  if the  termination is pursuant to Section  9(a)(iv) or (a)(vi) above
and prior to the Executive's  sixty-fifth birthday,  the Executive shall receive
in full settlement of all amounts owed him,  provided he signs a release running
to the Company and its related entities and their respective officers, directors
and employees of all claims,  relating to his employment and termination thereof
(other  than any  right to  indemnification  under  the  Company's  Articles  of
Incorporation or By-Laws or the  Indemnification  Agreement annexed as Exhibit B
hereto,  which  shall  survive)  in such  form as  reasonably  requested  by the
Company, (i) twelve (12) monthly installments of severance pay each in an amount
equal to the  greater  of  $41,375  or  one-twelfth  of the then sum of his Base
Salary and minimum annual bonus,  subject to the offset of any amounts due under
Section  6  hereof,  and  (ii)  payment  by  the  Company  of the  premiums  for
Executive's  and  his  dependents'  COBRA  coverage  for  the  Company's  health
insurance  plan that  generally  applies to  executives  for the period in which
Executive is  receiving  severance  pursuant to (i) above or, if earlier,  until
Executive and his dependents  cease to be eligible for such COBRA  coverage.  In
addition,  in the event  Executive's  employment is terminated prior to December
31,  2000  pursuant  to Section  9(a)(iv) or  9(a)(vi),  the Company  shall pay,
provided Executive (or, in


                                       23
<PAGE>

the case of his death,  his executors)  executes the release of claim  described
above,  the special bonus in Section 3(d) hereof  (subject to the same rights of
offset as set forth  therein).  The  Company's  payment  obligations  under this
Section 9(b) (other than those in the first sentence) shall immediately cease in
the event Executive  materially  breaches any of his obligations  under Sections
12, 13 or 14 of this Agreement.

                           (c) If the  Employment  Term ends early  pursuant  to
Section  9(a)(ii)  hereof on account of Disability,  and Executive  executes the
release of claim set forth in  subsection  (b) above,  the Company  shall pay to
Executive  monthly,  until the second anniversary of the date of the termination
for Disability,  the amount of $27,750,  less any payments to which Executive is
entitled for such month under any disability benefit plan or the like sponsored,
or  contributed  to,  by the  Company  (including,  without  limitation,  Social
Security);  provided, however, that in the event of Executive's death during the
payment  period,  the Company  shall not be  obligated  to pay any such  amounts
subsequent to the date of Executive's death. In addition, in the event Executive
is terminated for Disability prior to December 31, 2000 and such Disability is a
"Total and Permanent  Disability"  within the meaning of Section 72(m)(7) of the
Internal



                                       24
<PAGE>

Revenue Code of 1986, as amended (the "Code"), the Company shall pay (subject to
Executive's  execution of the release of claim described in subsection (b) above
and the right to offset as provided in Section 3(d)),  the special bonus payable
under Section 3(d) hereof. The Company's payment  obligations under this Section
9(c) shall immediately cease in the event Executive  materially  breaches any of
his obligations under Sections 12, 13 or 14 of this Agreement.  After the end of
such two (2) year period, Executive shall only be entitled to receive amounts as
he may be entitled to under any  disability  policy  specified  in Section  4(c)
hereof or otherwise sponsored by the Company.

                           (d) If the  Employment  Term ends early  pursuant  to
Section 9 hereof for any reason, except as expressly provided in this Section 9,
Executive  shall  cease to have any rights to salary,  bonus or  benefits  other
than:  (i) salary or bonus  which has accrued but is unpaid as of the end of the
Employment  Term,  and (ii) but only to the extent  provided  in any  benefit or
equity plan or arrangement in which Executive has participated as an employee of
the Company,  any benefits or rights which by their specific terms extend beyond
termination of Executive's employment.

                                       25
<PAGE>

                           (e) All aforesaid  amounts in this Section 9 shall be
subject to required  withholding.  The Company and its affiliated entities shall
have  no  other  obligations  to the  Executive  upon a  termination  except  as
specifically provided in this Agreement.

                  10.      Special Tax Provision.

                           (a)  Anything  in  this  Agreement  to  the  contrary
notwithstanding, in the event that any amount or benefit paid, payable, or to be
paid, or distributed,  distributable, or to be distributed to or with respect to
Executive  (whether  pursuant to the terms of this  Agreement or any other plan,
arrangement or agreement with the Company,  any person whose actions result in a
change of ownership or effective  control  covered by Section  280G(b)(2) of the
Code or any person  affiliated with the Company or such person) as a result of a
change in ownership or effective  control of the Company or a direct or indirect
parent  (within the meaning of Section 280G of the Code)  thereof (or the assets
of any of the foregoing) covered by Code Section 280G(b)(2)  (collectively,  the
"Covered  Payments") is or becomes subject to the excise tax imposed by or under
Section  4999 of the Code (or any similar tax that may  hereafter  be  imposed),
and/or any  interest or  penalties  with respect to such excise tax (such excise
tax,


                                       26
<PAGE>

together with such interest and penalties, is hereinafter  collectively referred
to as the "Excise Tax"), the Company shall pay to Executive an additional amount
(the "Tax  Reimbursement  Payment")  such that after payment by Executive of all
taxes (including,  without limitation,  any interest or penalties and any Excise
Tax  imposed  on or  attributable  to the  Tax  Reimbursement  Payment  itself),
Executive retains an amount of the Tax Reimbursement Payment equal to the sum of
(i) the amount of the Excise Tax  imposed  upon the Covered  Payments,  and (ii)
without  duplication,  an  amount  equal to the  product  of (A) any  deductions
disallowed  for  federal,  state or local  income  tax  purposes  because of the
inclusion of the Tax Reimbursement Payment in Executive's adjusted gross income,
and (B) the highest applicable  marginal rate of federal,  state or local income
taxation,  respectively,  for the calendar  year in which the Tax  Reimbursement
Payment is made or is to be made.  The  intent of this  Section 10 is that after
Executive  pays  federal,  state and local  income  tax and any  payroll  taxes,
Executive  will be in the same position as if Executive  were not subject to the
Excise Tax under Section 4999 of the Code and did not receive the extra payments
pursuant  to  this  Section  10  and  this  Section  10  shall  be   interpreted
accordingly.

                                       27
<PAGE>

                           (b) Except as  otherwise  provided in Section  10(a),
for purposes of determining  whether any of the Covered Payments will be subject
to the Excise Tax and the amount of such Excise Tax, such Covered  Payments will
be treated as "parachute  payments" (within the meaning of Section 280G(b)(2) of
the Code) and such  payments  in excess  of the Code  Section  280G(b)(3)  "base
amount" shall be treated as subject to the Excise Tax, unless, and except to the
extent that, the Company's  independent  certified public accountants  appointed
prior to the change in  ownership  covered by Code Section  280G(b)(2)  or legal
counsel   (reasonably   acceptable  to  Executive)   appointed  by  such  public
accountants (or, if the public accountants  decline such appointment and decline
appointing such legal counsel,  such independent certified public accountants as
promptly  mutually  agreed on in good faith by the Company and  Executive)  (the
"Accountant"),  deliver a written opinion to Executive,  reasonably satisfactory
to  Executive's  legal counsel,  that, in the event such  reporting  position is
contested by the Internal Revenue Service,  there will be a more likely than not
chance of success with respect to a claim that the Covered Payments (in whole or
in  part)  do  not  constitute   "parachute   payments,"   represent  reasonable
compensation  for  services  actually  rendered  (within  the meaning of Section



                                       28
<PAGE>

280G(b)(4)  of the  Code) in  excess  of the  "base  amount"  allocable  to such
reasonable compensation,  or such "parachute payments" are otherwise not subject
to such Excise Tax (with  appropriate  legal  authority,  detailed  analysis and
explanation  provided therein by the  Accountant);  and the value of any Covered
Payments which are non-cash  benefits or deferred  payments or benefits shall be
determined by the  Accountant in accordance  with the principles of Section 280G
of the Code.

                           (c) For purposes of determining the amount of the Tax
Reimbursement  Payment,  Executive shall be deemed: to pay federal, state and/or
local income taxes at the highest  applicable  marginal rate of income  taxation
for the calendar year in which the Tax Reimbursement Payment is made or is to be
made, and to have otherwise  allowable  deductions for federal,  state and local
income tax purposes at least equal to those  disallowed  due to the inclusion of
the Tax Reimbursement Payment in Executive's adjusted gross income.

                           (d)(i)(A)  In  the  event  that  prior  to  the  time
Executive  has filed any of  Executive's  tax returns for the  calendar  year in
which the change in ownership event covered by Code Section 280G(b)(2) occurred,
the Accountant determines,  for any reason whatsoever, the


                                       29
<PAGE>

correct  amount of the Tax  Reimbursement  Payment  to be less  than the  amount
determined at the time the Tax Reimbursement  Payment was made,  Executive shall
repay to the  Company,  at the time  that the  amount of such  reduction  in Tax
Reimbursement Payment is determined by the Accountant,  the portion of the prior
Tax Reimbursement  Payment attributable to such reduction (including the portion
of the Tax  Reimbursement  Payment  attributable  to the Excise Tax and federal,
state and local  income  tax  imposed on the  portion  of the Tax  Reimbursement
Payment  being  repaid by  Executive,  using  the  assumptions  and  methodology
utilized  to  calculate  the  Tax  Reimbursement   Payment  (unless   manifestly
erroneous)),  plus interest on the amount of such repayment at the rate provided
in Section 1274(b)(2)(B) of the Code.

                                 (B) In the  event  that the  determination  set
forth in (A) above is made by the  Accountant  after the filing by  Executive of
any of  Executive's  tax  returns for the  calendar  year in which the change in
ownership event covered by Code Section 280G(b)(2) occurred but prior to one (1)
year after the occurrence of such change in ownership,  Executive  shall file at
the  request  of the  Company  an  amended  tax  return in  accordance  with the
Accountant's  determination,  but no  portion of the Tax  Reimbursement  Payment
shall be required


                                       30
<PAGE>

to be refunded to the Company  until actual refund or credit of such portion has
been made to Executive, and interest payable to the Company shall not exceed the
interest  received or credited to Executive by such tax authority for the period
it held such portion (less any tax Executive must pay on such interest and which
Executive is unable to deduct as a result of payment of the refund).

                                 (C) In the event  Executive  receives  a refund
pursuant  to (B) above and repays such amount to the  Company,  Executive  shall
thereafter  file for any  refunds or  credits  that may be due to  Executive  by
reason  of the  repayments  to the  Company.  Executive  and the  Company  shall
mutually agree upon the course of action,  if any, to be pursued (which shall be
at the expense of the Company) if Executive's claim for such refund or credit is
denied.

                              (ii) In the  event  that the  Excise  Tax is later
determined  by the  Accountant  or the  Internal  Revenue  Service to exceed the
amount taken into account hereunder at the time the Tax Reimbursement Payment is
made (including by reason of any payment the existence or amount of which cannot
be determined at the time of the Tax Reimbursement  Payment),  the Company shall
make an additional Tax Reimbursement Payment in respect of such excess (plus any
interest or  penalties  payable  with respect to such excess) once the amount of
such excess is finally determined.

                              (iii)  In the  event of any  controversy  with the
Internal  Revenue  Service (or other  taxing  authority)  under this Section 10,
subject to the second  sentence of


                                       31
<PAGE>

subpart  (i)(C)  above,  Executive  shall  permit the Company to control  issues
related to this Section 10 (at its  expense),  provided  that such issues do not
potentially  materially adversely affect Executive,  but Executive shall control
any other issues.  In the event the issues are  interrelated,  Executive and the
Company  shall in good faith  cooperate so as not to  jeopardize  resolution  of
either issue,  but if the parties  cannot agree  Executive  shall make the final
determination with regard to the issues. In the event of any conference with any
taxing  authority as to the Excise Tax or  associated  income  taxes,  Executive
shall  permit the  representative  of the Company to  accompany  Executive,  and
Executive  and his  representative  shall  cooperate  with the  Company  and its
representative.

                              (iv)  With  regard  to any  initial  filing  for a
refund or any other action  required  pursuant to this Section 10 (other than by
mutual  agreement) or, if not required,  agreed to by the Company and Executive,
Executive shall  cooperate  fully with the Company,  provided that the foregoing
shall not apply to actions that are provided  herein to be at  Executive's  sole
discretion.

                           (e) The Tax  Reimbursement  Payment,  or any  portion
thereof,  payable  by the  Company  shall be paid not  later  than the fifth day
following the  determination by the Accountant,  and any payment made after such
fifth  day  shall  bear   interest  at  the  rate   provided  in  Code   Section
1274(b)(2)(B). The Company shall use its best efforts to cause the Accountant to

                                       32
<PAGE>

promptly  deliver  the  initial  determination  required  hereunder  and, if not
delivered,  within ninety (90) days after the change in ownership  event covered
by Section  280G(b)(2)  of the Code,  the Company  shall pay  Executive  the Tax
Reimbursement  Payment  set  forth in an  opinion  from  counsel  recognized  as
knowledgeable  in the  relevant  areas  selected by  Executive,  and  reasonably
acceptable to the Company,  within five (5) days after delivery of such opinion.
In  accordance  with  Section  9(e),  the  Company  may  withhold  from  the Tax
Reimbursement  Payment and  deposit  into  applicable  taxing  authorities  such
amounts as they are required to withhold by  applicable  law. To the extent that
Executive  is required to pay  estimated  or other taxes on amounts  received by
Executive  beyond any  withheld  amounts,  Executive  shall  promptly  make such
payments.  The amount of such payment  shall be subject to later  adjustment  in
accordance with the determination of the Accountant as provided herein.

                           (f) The  Company  shall  be  responsible  for (i) all
charges of the Accountant, (ii) if (e) is applicable, the reasonable charges for
the opinion given by Executive's  counsel,  and (iii) all reasonable  charges in
connection  with the preparation and filing of any amended tax returns on behalf
of the Executive requested by the Company,  required  hereunder,


                                       33
<PAGE>

or required by applicable  law. The Company shall  gross-up for tax purposes any
income to Executive arising pursuant to this subsection (f) so that the economic
effect  to  Executive  is  the  same  as if  the  benefits  were  provided  on a
non-taxable basis. Such gross-up shall be in accordance with Section 19 hereof.

                           (g) Executive and the Company shall mutually agree on
and  promulgate  further  guidelines in  accordance  with this Section 10 to the
extent,  if any,  necessary to effect the reversal of excessive or shortfall Tax
Reimbursement  Payments. The foregoing shall not in any way be inconsistent with
Section 10(d)(i)(C) hereof.

                  11.      No Duty to Mitigate/Set-Off.

                  The  Company's  obligation  to make  payments  provided  under
Section  9 of this  Agreement,  other  than as  specifically  set  forth in this
Agreement,  shall not be  affected  by any  set-off,  counterclaim,  recoupment,
defense,  or other claim, right or action which the Company may have against the
Executive or others. The Company agrees that if Executive's  employment with the
Company  is  terminated  during  the  Employment  Term,  Executive  shall not be
required to seek other employment or to attempt in any way to reduce any amounts
payable to Executive by


                                       34
<PAGE>

the Company  pursuant to this Agreement.  Further,  the amount of any payment or
benefit  provided for in this Agreement shall not be reduced by any compensation
earned by Executive or benefit provided to Executive as the result of employment
by another employer or otherwise. Any amounts due under Section 9 are inclusive,
and in lieu of, any amounts payable under any other salary  continuation or cash
severance  arrangement  of the Company and to the extent paid or provided  under
any other such arrangement shall be offset from the amount due under Section 9.

                  12.      Inventions and Other Intellectual Property.

                  The  Company  and  Executive  agree to  promptly  execute  the
Proprietary Information and Invention Agreement, annexed as Exhibit C hereto.

                  13.      Confidential Information.

                  Executive acknowledges that the information,  observations and
data obtained by him while  employed by the Company  pursuant to this  Agreement
concerning the business or affairs of the Company or any of its  subsidiaries or
affiliates  or any  predecessor  thereof  ("Confidential  Information")  are the
property of the Company or such subsidiary or affiliate.


                                       35
<PAGE>

Executive  agrees that he shall not disclose to any  unauthorized  person or use
for his own  account any  Confidential  Information  without  the prior  written
consent  of the  Chairman  of the Board or the Board  unless  and  except to the
extent that the  aforementioned  matters become generally known to and available
for use by the public other than as a result of Executive's acts or omissions to
act or, while employed,  he discloses based on his good faith determination that
to do so is in the best  interests of the Company.  If Executive  receives legal
process,  he may comply with it provided  he promptly  notifies  the Company and
cooperates  with the Company in obtaining a protective  order.  Executive  shall
deliver to the Company at the  termination  of the  Employment  Term,  or at any
other time the  Company may  request,  all  memoranda,  notes,  plans,  records,
reports,  computer  tapes and software and other  documents and data (and copies
thereof)  relating  to the  Confidential  Information,  the Work  Product or the
business of the Company or any of its  subsidiaries  or affiliates  which he may
then possess or have under his control.

                  14.      Non-Compete, Non-Solicitation.

                           (a) Executive  acknowledges that in the course of his
employment  with the Company  pursuant to this Agreement he will become familiar
with trade secrets of and other


                                       36
<PAGE>

Confidential  Information  concerning  the  Company  and  its  subsidiaries  and
affiliates  and  predecessors  thereof and that his services will be of special,
unique and extraordinary value to the Company.

                           (b) During the Employment  Term and for two (2) years
thereafter,  Executive shall not enter into  Competition with the Company or its
affiliates  to the  extent  such  Competition  requires  Executive  to  divulge,
disclose or  communicate  to any third party any Company  "trade secret" as that
term  is  defined  under   California  law.  For  purposes  of  this  Agreement,
Competition shall mean participating,  directly or indirectly,  as an individual
proprietor,  partner, stockholder,  officer, employee, director, joint venturer,
investor,  lender,  consultant or in any capacity  whatsoever (within the United
States  or in any  foreign  country  where  the  Company  or its  affiliates  do
business)  in a business  in  competition  with any  business  conducted  by the
Company or its affiliates with regard to which Executive worked or otherwise had
responsibilities  or had  access  to  material  Confidential  Information  while
employed  by the  Company  or  its  affiliates;  provided,  however,  that  such
participation  shall not  include  (i) the mere  ownership  of not more than two
percent (2%) of the total outstanding stock of a publicly


                                       37
<PAGE>

held company,  (ii) the performance of services for any enterprise to the extent
such services are not performed,  directly or indirectly,  for a business in the
aforesaid  competition,  (iii) any  activity  engaged in with the prior  written
approval of the Chairman of the Board, or (iv)  Executive's  employment by a non
Competitive  division  (or  other  business  unit)  of a  company  which  is  in
Competition  with the  Company so long as  Executive  is not  involved  with the
competitive division (or other business unit).  Notwithstanding anything else in
this Section 14(b) to the contrary, subsequent to the termination of Executive's
employment hereunder, Executive may, in his sole discretion, passively invest in
any entity,  provided  Executive does not divulge,  disclose or communicate  any
Company  "trade  secrets" or  Confidential  Information  to such  company or its
affiliates,  employees, officers, consultants,  directors, lenders, or investors
and further  provided  Executive  does not render  services  to such  company in
violation of this Section 14 or otherwise  violates  this Section 14 (other than
by making such passive investments).

                           (c) During the Employment  Term and for two (2) years
thereafter,  Executive shall not directly or indirectly  solicit for Competitive
products or induce any customer of the Company or its  affiliates  to terminate,
or otherwise to cease,  reduce, or diminish in any



                                       38
<PAGE>

way its relationship with the Company or its affiliates.

                           (d) During the  Employment  Term and the one (1) year
thereafter,  Executive  shall not  recruit,  solicit or induce  any  nonclerical
employees of the Company or its affiliates to terminate their  employment  with,
or otherwise  cease their  relationship  with,  the Company or its affiliates or
hire or assist another person or entity to hire any nonclerical  employee of the
Company or its  affiliates  or any  person who within six (6) months  before had
been  a  nonclerical   employee  of  the  Company  or  any  of  its  affiliates.
Notwithstanding  the foregoing,  if requested by any entity with which Executive
is not affiliated,  Executive may serve as a reference for any person who at the
time of the request is not an employee of the Company or any of its affiliates.

                           (e) If, at the time of  enforcement  of this  Section
14, a court holds that the  restrictions  stated herein are  unreasonable  under
circumstances  then existing,  the parties hereto agree that the maximum period,
scope  or  geographical  area  reasonable  under  such  circumstances  shall  be
substituted  for the stated  period,  scope or area and that the court  shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area



                                       39
<PAGE>

permitted by law.

                  15.      Enforcement.

                  Because Executive's  services are unique and because Executive
has  access to  Confidential  Information  and  intellectual  properties  of the
Company and its affiliates, the parties hereto agree that money damages would be
an inadequate remedy for any breach of this Agreement. Therefore, in the event a
breach or threatened breach of this Agreement,  the Company or its successors or
assigns may, in addition to other  rights and remedies  existing in their favor,
apply to any court of competent  jurisdiction  for specific  performance  and/or
injunctive or other relief in order to enforce,  or prevent any  violations  of,
the provisions hereof (without posting a bond or other security).

                  16.      Indemnification.

                  Executive   shall  be  entitled  to  be  indemnified  for  his
activities as an officer or director to the full extent provided in the Articles
of  Incorporation  and  By-Laws  of the  Company  and  in  accordance  with  the
Indemnification  Agreement  annexed as Exhibit B hereto,  which the  Company and
Executive  agree to promptly  execute.  In  addition,  the  Company  shall cover

                                       40
<PAGE>

Executive under Directors and Officers Liability  Insurance both during and, for
six (6) years  after,  the  Employment  Term in the same  amount and to the same
extent as the Company covers its other officers and directors.

                  17.      Executive Representations.

                  Executive  represents and warrants to the Company that (i) the
execution,  delivery and performance of this Agreement by Executive does not and
will not conflict with,  breach,  violate or cause a default under any contract,
agreement,  instrument,  order, judgment or decree to which Executive is a party
or by which he is bound,  (ii) except with respect to agreements which have been
furnished to the Company and relate primarily to  confidentiality,  intellectual
properties  and/or  ethical  conduct  entered into between  Executive and IBM or
between  Executive and other entities in the course of his employment  with IBM,
Executive  is not a party to or bound by any  employment  agreement,  change  in
control agreement,  non-compete agreement or confidentiality  agreement with any
other person or entity,  (iii) upon the execution and delivery of this Agreement
by the Company,  this  Agreement  shall be the valid and binding  obligation  of
Executive,  enforceable in accordance with its terms, (iv) Executive is a United
States  citizen or a


                                       41
<PAGE>

resident  alien  thereof  entitled to work therein,  and (v)  Executive  will in
performing  his duties not utilize  any  confidential  information  of any other
person or entity.

                  18.      Entire Agreement; Modification.

                  This Agreement constitutes the full and complete understanding
of  the  parties   hereto  and  will   supersede   all  prior   agreements   and
understandings, oral or written, with respect to the subject matter hereof. Each
party  to this  Agreement  acknowledges  that no  representations,  inducements,
promises or agreements,  oral or otherwise,  have been made by either party,  or
anyone acting on behalf of either party,  which are not embodied herein and that
no other  agreement,  statement or promise not contained in this Agreement shall
be valid or binding.  This Agreement may not be modified or amended except by an
instrument in writing signed by the party against whom or which  enforcement may
be sought.

                  19.      Gross Ups.

                  All gross ups  hereunder  shall be  determined by agreement of
the Company's,  and  Executive's  accountants.  The Executive  shall provide the
Company's  accountants with such information as they reasonably request in order
to  make  the  necessary  determination  as to


                                       42
<PAGE>

Executive's tax rates and the deductibility of various items. In calculating the
gross up, the  Company's  gross up items when combined  with  Executive's  other
deductions  shall  receive the most favored  treatment and the Company shall get
the  full  benefits  of  any  deductions  available.  If  Executive  voluntarily
terminates  employment without Good Reason or is terminated with Cause, any lost
tax deduction on any gross up item shall be treated as if such  termination  did
not occur. Gross ups shall be paid as soon as reasonably  possible after payment
of the  respective  item  (and  shall  generally  be  withheld  and  paid to the
applicable taxing authorities), subject to adjustment at year end (including, if
applicable, repayment).

                  20.      Survival.

                  The  provisions of this  agreement  which by their terms imply
continuation beyond the end of the Employment Term shall survive notwithstanding
any termination of the Employment Term.

                  21.      Severability.

                  Any term or  provision of this  Agreement  which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or


                                       43
<PAGE>

unenforceability  without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or  enforceability of
any of the terms of provisions of this Agreement in any other jurisdiction.

                  22.      Waiver of Breach.

                  The waiver by any party of a breach of any  provisions of this
Agreement, which waiver must be in writing to be effective, shall not operate as
or be construed as a waiver of any subsequent breach.

                  23.      Notices.

                  All notices  hereunder shall be in writing and shall be deemed
to have been duly given when  delivered by hand, or one (1) day after sending by
express mail or other  "overnight mail service," or three (3) days after sending
by certified or registered  mail,  postage  prepaid,  return receipt  requested.
Notice shall be sent as follows:  if to  Executive,  to the address as listed in
the Company's records,  and if to the Company, to the Company at the address set
forth on the first page of this  Agreement,  attention  of the  Chairman  of the
Board. Either party may change the notice address by notice given as aforesaid.

                                       44
<PAGE>

                  24.      Assignability; Binding Effect.

                  This Agreement  shall be binding upon and inure to the benefit
of Executive and Executive's legal representatives,  heirs and distributees, and
shall be binding  upon and inure to the benefit of the Company,  its  successors
and assigns. This Agreement may not be assigned by the Executive. This Agreement
may not be assigned by the Company, except in connection with a merger or a sale
by the Company of all or substantially  all of its assets and then only provided
the assignee  specifically  assumes in writing all of the Company's  obligations
hereunder.

                  25.      Legal Fee Reimbursement.

                  The Company agrees to pay  Executive's  reasonable  legal fees
associated with entering into this Agreement up to $10,000 upon  presentation of
an invoice and time sheets for such legal services.

                  26.      Governing Law.

                  All issues pertaining to the validity, construction, execution
and  performance of this Agreement shall be construed and governed in accordance
with the laws of the State of California,  without giving effect to the conflict
or choice of law provisions thereof.

                                       45
<PAGE>

                  27.      Headings.

                  The  headings  in  this  Agreement  are  intended  solely  for
convenience  or reference  and shall be given no effect in the  construction  or
interpretation of this Agreement.

                  28.      Counterparts.

                 This Agreement may be executed in several  counterparts,  each
of which  shall be  deemed to be an  original  but all of which  together  shall
constitute one and the same instrument.

                  IN WITNESS  WHEREOF,  the Company has caused this Agreement to
be duly  executed and  Executive  has hereunto set his hand as of the date first
set forth above.

                                          CYLINK CORPORATION


                                          By:    _________________________
                                                 Name:
                                                 Title:


                                          ________________________________
                                          Fernand Sarrat



                                       46
<PAGE>

                                    EXHIBIT A

                               CYLINK CORPORATION

                       NONQUALIFIED STOCK OPTION AGREEMENT


                  This Agreement is made as of November 6, 1996,  between CYLINK
CORPORATION,  a  California  corporation  (the  "Company"),  and Fernand  Sarrat
("Optionee").

                                   WITNESSETH:

                  WHEREAS,  the  Company has  adopted  its 1994  Flexible  Stock
Incentive  Plan (the "Plan"),  which Plan is  incorporated  in this Agreement by
reference and made a part of it; and

                  WHEREAS,  the Company regards Optionee as a valuable  employee
of or service  provider to the Company,  and has determined  that it would be to
the advantage and in the interests of the Company and its  shareholders to grant
the options  provided  for in this  Agreement  to Optionee as an  inducement  to
remain in the employ or service of the Company and as an incentive for increased
efforts during such employment or service;

                  NOW,  THEREFORE,  in  consideration  of the  mutual  covenants
hereinafter set forth, the parties to this Agreement hereby agree as follows:

                  1. Option  Grant.  The Company  hereby  grants to Optionee the
right and  option  to  purchase  from the  Company  on the terms and  conditions
hereinafter  set forth,  all or any part of an aggregate of 1,000,000  shares of
the Company's  Common Stock,  $0.01 par value (the "Stock").  This option is not
intended to satisfy the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") and qualify as an incentive  stock option.  All
of the terms and  conditions  of this  Option  Grant are  subject to  Optionee's
Employment Agreement dated November 6, 1996 (the "Employment Agreement"), and in
the event of any  conflict  between  Optionee's  Employment  Agreement  and this
Option Grant, the terms of the Employment Agreement shall prevail.

                  2. Option  Price.  The per share  purchase  price of the Stock
subject to this option shall be $11.00, which price is not less than one hundred
percent  (100%) of the per share fair market value of such Stock as of the Grant
Date (defined below) as determined by the Board of Directors of the Company or a
Committee designated by it (the "Committee"). The term "Option Price" as used in
this  agreement  refers to the per share  purchase price of the Stock subject to
this option.


                                       1
<PAGE>

                  3. Option Period. This option shall be exercisable only during
the Option Period,  and during such Option  Period,  the  exercisability  of the
option  shall be subject  to the  limitations  of  paragraph  4 and the  vesting
provisions of paragraph 5. The Option Period shall  commence on November 6, 1996
(the "Grant  Date") and except as provided in paragraph 4, shall  terminate  ten
(10) years from the Grant Date (the "Termination Date").

                  4. Limits on Option  Period.  The Option Period may end before
the Termination Date, as follows:

                           (a) If Optionee  ceases to be a bona fide employee of
or service  provider to the Company or an Affiliate (as defined in the Plan) for
any reason other than  disability  (within the meaning of  subparagraph  (c)) or
death during the Option Period,  unless  otherwise  determined by the Committee,
(i) the Option  Period shall  terminate  three (3) months after the date of such
cessation of employment or service or on the Termination  Date,  whichever shall
first  occur,  and  (ii) the  option  shall be  exercisable  only to the  extent
exercisable under paragraph 5 on the date of Optionee's  cessation of employment
or service and shall thereafter cease to be exercisable.

                           (b)  If  Optionee  dies  while  in the  employ  of or
service to the  Company or an  Affiliate,  unless  otherwise  determined  by the
Committee,  (i) the Option Period shall end one (1) year after the date of death
or on the Termination  Date,  whichever  shall first occur,  and (ii) Optionee's
executor or  administrator  or the person or persons to whom  Optionee's  rights
under this option  shall pass by will or by the  applicable  laws of descent and
distribution  may  exercise  this  option only to the extent  exercisable  under
paragraph 5 on the date of Optionee's death.

                           (c) If Optionee's employment or service is terminated
by reason of medically determinable  disability,  unless otherwise determined by
the  Committee,  (i) the Option  Period shall end one (1) year after the date of
Optionee's  cessation  of  employment  or  service or on the  Termination  Date,
whichever  shall first occur,  and (ii) the option shall be exercisable  only to
the extent exercisable under paragraph 5 on the date of Optionee's  cessation of
employment or service.

                           (d) If  Optionee  is on a leave of  absence  from the
Company or an Affiliate because of Optionee's disability,  or for the purpose of
serving the government of the country in which the principal place of employment
of Optionee is located,  either in a military or civilian capacity,  or for such
other  purpose or reason as the  Committee  may approve,  Optionee  shall not be
deemed during the period of such absence,  by virtue of such absence  alone,  to
have terminated employment or service with the Company or an Affiliate except as
the Committee may otherwise expressly provide.

                  5. Vesting of Right to Exercise Options.  Subject to the terms
of the Employment  Agreement,  and any limitations  contained in this Agreement,
the Optionee shall


                                       2
<PAGE>

have the right to exercise  the options  granted  hereunder  as to 1.666% of the
number  of shares  of Stock  covered  by the  option  per  month for each  month
following the Grant Date, such that the option shall be fully  exercisable  five
(5) years after the Grant Date. Provided,  however,  that the Optionee shall not
have the right to exercise any options unless and until the Optionee  remains in
the  Company's  employment  for a period of one year from the date the  Optionee
commences his employment by the Company.

                           (a) Any portion of the option  that is not  exercised
shall accumulate and may be exercised at any time during the Option Period prior
to the Termination Date. No partial exercise of this option may be for less than
five percent (5%) of the total  number of shares of Stock then  available  under
this  option.  In no event shall the  Company be  required  to issue  fractional
shares.

                  6. Method of Exercise.  Optionee may exercise this option with
respect to all or any part of the shares of Stock then subject to such  exercise
as follows:

                           (a) By  giving  the  Company  written  notice of such
exercise,  specifying the number of such shares of Stock as to which this option
is exercised.  Such notice shall be accompanied by an amount equal to the Option
Price of such shares,  in the form of any one or  combination  of the following:
cash, a certified  check,  bank draft,  postal or express money order payable to
the order of the Company in lawful money of the United States. The Committee, at
its sole  discretion,  may also  permit  Optionee  to pay the Option  Price with
shares of Stock valued at fair market value,  a promissory  note of the Optionee
or in any  combination of the foregoing.  The shares of Stock shall be valued in
accordance  with  procedures  established  by the  Committee.  Any note  used to
exercise  this  option  shall be a full  recourse,  interest-bearing  obligation
containing such terms as the Committee shall determine.  If a promissory note is
used, the Optionee agrees to execute such further documents as the Committee may
deem necessary or appropriate in connection with issuing the note,  perfecting a
security interest in the Stock purchased with the note, and any related terms or
conditions that the Committee may propose.  Such further  documents may include,
not by way of limitation,  a security agreement,  an escrow agreement,  a voting
trust agreement and an assignment  separate from certificate.  In the event that
the exercise  price is satisfied by the Committee  retaining  from the shares of
Stock otherwise to be issued to Optionee shares of Stock having a value equal to
the exercise price, the Committee may issue Optionee an additional option,  with
terms  identical  to this  option  agreement,  entitling  Optionee  to  purchase
additional  Stock  in an  amount  equal  to the  number  of  shares  of Stock so
retained.

                           (b)  Optionee  shall  be  required,  as  a  condition
precedent to acquiring Stock through  exercise of the option,  to execute one or
more  agreements  relating to  obligations  in connection  with ownership of the
Stock or  restrictions  on  transfer of the Stock no less  restrictive  than the
obligations and restrictions to which the other  shareholders of the Company are
subject at the time of such exercise.

                           (c) If required by the Committee, Optionee shall give
the Company satisfactory assurance in writing,  signed by Optionee or Optionee's
legal  representative,  as the


                                       3
<PAGE>

case may be, that such shares are being  purchased for investment and not with a
view to the distribution thereof;  provided,  however, that such assurance shall
be deemed  inapplicable  to (1) any sale of such shares by such Optionee made in
accordance with the terms of a registration  statement covering such sale, which
may hereafter be filed and become effective under the Securities Act of 1933, as
amended  (the  "Securities  Act"),  and with  respect  to  which  no stop  order
suspending the effectiveness  thereof has been issued, and (2) any other sale of
such  shares with  respect to which in the  opinion of counsel for the  Company,
such  assurance  is not  required  to be  given  in  order  to  comply  with the
provisions of the Securities Act.

                  As soon as practicable after receipt of the notice required in
paragraph 6(a) and  satisfaction  of the conditions set forth in paragraphs 6(b)
and 6(c),  the Company  shall,  without  transfer or issue tax and without other
incidental  expense  to  Optionee,  deliver  to  Optionee  at the  office of the
Company,  at 910 Hermosa Court,  Sunnyvale,  California 94086,  attention of the
Secretary,  or such other place as may be mutually acceptable to the Company and
Optionee,  a  certificate  or  certificates  of such shares of Stock;  provided,
however, that the time of such delivery may be postponed by the Company for such
period as may be  required  for it with  reasonable  diligence  to  comply  with
applicable  registration  requirements  under the Securities Act, the Securities
Exchange Act of 1934, as amended,  any applicable  listing  requirements  of any
national  securities exchange or the Nasdaq Stock Market, and requirements under
any other law or  regulation  applicable  to the  issuance  or  transfer of such
shares.

                  7.       Corporate Transactions.

                           (a) If there should be any change in a class of Stock
subject  to  this  option,   through  merger,   consolidation,   reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of two
percent  (2%)) or other change in the  corporate  structure of the Company,  the
Company  may make  appropriate  adjustments  in order  to  preserve,  but not to
increase,  the  benefits to  Optionee,  including  adjustments  in the number of
shares of such Stock subject to this option and in the per share  purchase price
thereof.  Any adjustment made pursuant to this paragraph 7 as a consequence of a
change in the corporate  structure of the Company shall not entitle  Optionee to
acquire a number of shares of such  Stock of the  Company  or shares of stock of
any successor  company  greater than the number of shares Optionee would receive
if, prior to such change,  Optionee had actually held a number of shares of such
Stock equal to the number of shares subject to this option.

                           (b) For  purposes of this  paragraph  7, a "Corporate
Transaction"   shall   include   any  of  the   following   shareholder-approved
transactions to which the Company is a party:

                                       (i) a merger  or  consolidation  in which
         the Company is not the surviving  entity,  except for a transaction the
         principal  purpose  of which is to change  the  state of the  Company's
         incorporation;

                                       (ii)   the   sale,   transfer   or  other
         disposition of all or substantially all of the assets of the Company in
         liquidation or dissolution of the Company; or

                                       4
<PAGE>

                                       (iii)  any  reverse  merger  in which the
         Company is the surviving entity but in which securities possessing more
         than fifty  percent  (50%) of the total  combined  voting  power of the
         Company's outstanding securities are transferred to a holder or holders
         different from those who held such securities immediately prior to such
         merger.

                            (c) In the event of any Corporate Transaction,  this
option shall  terminate as of the closing of the  Corporate  Transaction  to the
extent unexercised;  provided,  however,  that notwithstanding the terms of this
option, the surviving or acquiring  corporation or its parent company may assume
the outstanding option, or issue in place hereof options providing substantially
equal value and having substantially equivalent provisions as this option.

                  8.  Limitations  on  Transfer.   This  option  shall,   during
Optionee's  lifetime,  be exercisable only by Optionee,  and neither this option
nor any right hereunder shall be transferable by Optionee by operation of law or
otherwise  other than by will or the laws of descent  and  distribution.  In the
event of any attempt by Optionee to alienate,  assign, pledge,  hypothecate,  or
otherwise  dispose of this option or of any right hereunder,  except as provided
for in this Agreement, or in the event of the levy of any attachment, execution,
or similar process upon the rights or interest hereby conferred,  the Company at
its  election  may  terminate  this option by notice to Optionee and this option
shall thereupon become null and void.

                  9. No  Shareholder  Rights.  Neither  Optionee  nor any person
entitled to exercise  Optionee's rights in the event of his death shall have any
of the rights of a  shareholder  with respect to the shares of Stock  subject to
this option  except to the extent the  certificates  for such shares  shall have
been issued upon the exercise of this option.

                  10. NO EFFECT ON TERMS OF EMPLOYMENT.  SUBJECT TO THE TERMS OF
ANY WRITTEN EMPLOYMENT  CONTRACT TO THE CONTRARY,  THE COMPANY (OR ITS AFFILIATE
WHICH EMPLOYS OPTIONEE) SHALL HAVE THE RIGHT TO TERMINATE OR CHANGE THE TERMS OF
EMPLOYMENT  OF  OPTIONEE  AT ANY TIME  AND FOR ANY  REASON  WHATSOEVER,  WITH OR
WITHOUT CAUSE.

                  11. Notice. Any notice required to be given under the terms of
this Agreement shall be addressed to the Company in care of its Secretary at the
Office of the Company set forth in Section 6 hereof,  and any notice to be given
to Optionee  shall be  addressed  to  Optionee at the address  given by Optionee
beneath Optionee's signature to this Agreement,  or such other address as either
party to this  Agreement  may hereafter  designate in writing to the other.  Any
such notice shall be deemed to have been duly given when  enclosed in a properly
sealed envelope or wrapper  addressed as aforesaid,  registered or certified and
deposited  (postage or  registration  or  certification  fee  prepaid) in a post
office or branch post office regularly maintained by the United States.

                  12. Lock-Up Agreement.  Optionee,  if requested by the Company
and an  underwriter of Common Stock or other  securities of the Company,  agrees
not to sell or otherwise


                                       5
<PAGE>

transfer  or dispose of any Common  Stock of the  Company  held by the  Optionee
(except  Common Stock included in such  registration)  during the 180 day period
following the effective  date of a  registration  statement of the Company filed
under the  Securities  Act, or such  shorter  period of time as the  underwriter
shall require. The Company may impose stop-transfer instructions with respect to
such Common Stock  subject to the  foregoing  restriction  until the end of said
period.

                  13.  Committee  Decisions  Conclusive.  All  decisions  of the
Committee upon any question arising under the Plan or under this Agreement shall
be conclusive.

                  14. Successors. This Agreement shall be binding upon and inure
to the benefit of any successor or successors of the Company.  Where the context
permits,  "Optionee" as used in this Agreement shall include  Optionee's spouse,
executor,  administrator or other legal  representative or the person or persons
to whom  Optionee's  rights pass by will or the  applicable  laws of descent and
distribution.

                  15. Withholding. Optionee agrees to withholding of shares from
exercise for satisfaction of any applicable  federal,  state or local income tax
or employment tax withholding requirements.  The Committee may issue Optionee an
additional  option,  with terms  identical to this option  agreement,  entitling
Optionee to purchase additional Stock in an amount equal to the number of shares
so retained.

                  16.  California  Law.  The  interpretation,   performance  and
enforcement  of this  Agreement  shall be  governed  by the laws of the State of
California.









                  IN WITNESS  WHEREOF,  the Company and Optionee  have  executed
this Agreement as of the day and year first above written.


CYLINK CORPORATION                                    GRANTEE


By: -------------------------------------  -------------------------------------

       Robert B. Fougner
Title: Corporate Secretary
       ----------------------------------

                                       6
<PAGE>


                                            Address:
                                                     -------------------------

                                            ----------------------------------

                                            ----------------------------------


                                       7

<PAGE>

                                   EXHIBIT B


                           INDEMNIFICATION AGREEMENT

     THIS AGREEMENT is entered into,  effective as of 11/6,  1996 by and between
CYLINK CORPORATION,  California corporation (the "Company"),  and Fernand Sarrat
("Indemnitee").

     WHEREAS,  it is essential to the Company to retain and attract as directors
and officers the most capable person available;

     WHEREAS, Indemnitee is a director and/or officer of the Company;

     WHEREAS,  both the Company and  Indemnitee  recognize the increased risk of
litigation  and other claims  currently  being  asserted  against  directors and
officers of corporations; and

     WHEREAS,  in recognition of Indemnitee's  need for  substantial  protection
against  personal  liability  in order to  enhance  Indemnitee's  continued  and
effective  service to the Company,  and in order to induce Indemnitee to provide
services  to the Company as a director  and/or  officer,  the Company  wishes to
provide  in this  Agreement  for the  indemnification  of and the  advancing  of
expenses to  Indemnitee  to the fullest  extent  (whether  partial or  complete)
permitted  by  California  law and as set forth in this  Agreement,  and, to the
extent  insurance  is  maintained,  for the  coverage  of  Indemnitee  under the
Company's directors' and officers' liability insurance policies.

     NOW, THEREFORE,  in consideration of the above premises and of Indemnitee's
continuing  to serve the  Company  directly  or, at its  request,  with  another
enterprise,  and  intending to be legally  bound  hereby,  the parties  agree as
follows:

     1. Certain Definitions:

        (a) Board: the Board of Directors of the Company.

        (b)  Change in  Control:  shall be deemed  to have  occurred  if (i) any
"person"  (as such term is used in  Sections  13(d) and 14(d) of the  Securities
Exchange  Act of 1934,  as amended (the  "Act")),  other than a trustee or other
fiduciary holding  securities under an employee benefit plan of the Company or a
corporation  owned directly or indirectly by the  shareholders of the Company in
substantially the same proportions as their ownership of stock of


<PAGE>

the  Company,  is or becomes  the  "Beneficial  Owner" (as defined in Rule 13d-3
under  the  Act),   directly  or  indirectly,   of  securities  of  the  Company
representing 30% or more of the total voting power  represented by the Company's
then outstanding Voting Securities, or (ii) during any period of two consecutive
years,  individuals who at the beginning of such period constitute the Board and
any new director  whose  election by the Board or nomination for election by the
Company's  shareholders  was approved by a vote of at least  two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose  election or  nomination  for  election  was  previously  so
approved,  cease for any reason to  constitute  a majority of the Board,  or, or
(iii) the  shareholders of the Company approve a merger or  consolidation of the
Company with any other  corporation,  other than a merger or consolidation  that
would result in the Voting  Securities  of the Company  outstanding  immediately
prior thereto  continuing to represent  (either by remaining  outstanding  or by
being converted into Voting  Securities of the surviving entity) at least 80% of
the total voting power  represented  by the Voting  Securities of the Company or
such   surviving   entity   outstanding   immediately   after  such   merger  or
consolidation,  or  (iv)  the  shareholders  of the  Company  approve  a plan of
complete  liquidation of the Company or an agreement for the sale or disposition
by the  Company  (in one  transaction  or a  series  of  transaction)  of all or
substantially all of the Company's assets.

        (c) Expenses:  any expense,  liability,  or loss,  including  attorneys'
fees, judgments, fines, ERISA excise taxes and penalties,  amounts paid or to be
paid in settlement, any interest, assessments, or other charges imposed thereon,
and any  federal,  state,  local,  or foreign  taxes  imposed as a result of the
accrual or deemed receipt of any payments under this Agreement, paid or incurred
in  connection   with   investigating,   defending,   being  a  witness  in,  or
participating  in (including  on appeal),  or preparing for any of the foregoing
in, any Proceeding relating to any Indemnifiable Event.

        (d) Indemnifiable Event: any event or occurrence that takes place either
prior to or after the  execution  of this  Agreement,  related  to the fact that
Indemnitee  is or was a  director  or an  officer  of the  Company,  or  while a
director  or  officer  is or was  serving  at the  request  of the  Company as a
director,  officer, employee, trustee, agent, or fiduciary of another foreign or
domestic corporation,  partnership, joint venture, employee benefit plan, trust,
or other enterprise, or was a director, officer, employee, or agent of a foreign
or domestic corporation that was a predecessor  corporation of the Company or of
another enterprise at the request of such predecessor corporation, or related to
anything done or not done by Indemnitee in any such capacity, whether or not the
basis of the Proceeding is alleged action in an official capacity as a director,
officer,  employee,  or  agent  or in any  other  capacity  while  serving  as a
director, officer, employee, or agent of the Company, as described above.

        (e) Independent Counsel: the person or body appointed in connection with
Section 3.

        (f) Potential Change in Control: shall be deemed to have occurred if (i)
the Company enters into an agreement or arrangement,  the  consummation of which
would


<PAGE>

result in the occurrence of a Change in Control;  (ii) any person (including the
Company) publicly  announces an intention to take or to consider  taking actions
that, if  consummated,  would  constitute a Change in Control;  (iii) any person
(other than a trustee or other fiduciary  holding  securities  under an employee
benefit  plan of the Company  acting in such  capacity or a  corporation  owned,
directly or indirectly,  by the shareholders of the Company in substantially the
same proportions as their ownership of stock of the Company),  who is or becomes
the  Beneficial  Owner,  directly or  indirectly,  of  securities of the Company
representing  10% or more of the  combined  voting power of the  Company's  then
outstanding  Voting  Securities,  increases  his  beneficial  ownership  of such
securities by 5% or more over the percentage so owned by such person on the date
hereof,  or (iv) the Board adopts a resolution to the effect that,  for purposes
of this Agreement, a Potential Change in Control has occurred.

        (g) Proceeding: (i) any threatened,  pending, or completed action, suit,
or proceeding,  or whether civil, criminal,  administrative,  investigative,  or
other; (ii) any inquiry,  hearing,  or  investigation,  whether conducted by the
Company or any other party, that Indemnitee in good faith believes might lead to
the institution of any such action, suit, or proceeding.

        (h) Reviewing  Party:  the person or body  appointed in accordance  with
Section 3.

        (i) Voting Securities: any securities of the Company that vote generally
in the election of directors.

     2. Agreement to Indemnify:

        (a) General  Agreement.  In the event  Indemnitee  was, is, or becomes a
party to or witness or other participant in, or is threatened to be made a party
to or witness or other  participant in, a Proceeding by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee from
and against any and all Expenses to the fullest extent  permitted by law, as the
same exists or may hereafter be amended or  interpreted  (but in the case of any
such  amendment  or  interpretation,  only to the extent that such  amendment or
interpretation  permits the Company to provide  broader  indemnification  rights
than  were  permitted  prior  thereto).  The  parties  hereto  intend  that this
Agreement  shall  provide  for  indemnification  in  excess  of  that  expressly
permitted  by  statute,  including,   without  limitation,  any  indemnification
provided by the Company's  Articles of  Incorporation,  its bylaws,  vote of its
shareholders or disinterested directors, or applicable law.

        (b) Initiation of Proceeding. Notwithstanding anything in this Agreement
to the contrary, Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Proceeding initiated by Indemnitee against
the Company or any director or officer of the Company unless (i) the Company has
joined in or the Board has consented to the initiation of such Proceeding;  (ii)
the Proceeding is one to enforce
<PAGE>

indemnification  rights under Section 5; or (iii) the  Proceeding  is instituted
after a Change in Control and Independent Counsel has approved its initiation.

        (c) Expense Advances.  If so requested by Indemnitee,  the Company shall
advance  (within ten  business  days of such  request)  any and all  Expenses to
Indemnitee (an "Expense Advance");  provided that, if and to the extent that the
Reviewing  Party  determines  that  Indemnitee  would not be  permitted to be so
indemnified under applicable law, the Company shall be entitled to be reimbursed
by Indemnitee  (who hereby agrees to reimburse the Company) for all such amounts
theretofore  paid. If Indemnitee has commenced  legal  proceedings in a court of
competent  jurisdiction  to secure a  determination  that  Indemnitee  should be
indemnified  under  applicable law, as provided in Section 4, any  determination
made by the  Reviewing  Party  that  Indemnitee  would  not be  permitted  to be
indemnified  under  applicable law shall not be binding and Indemnitee shall not
be required to  reimburse  the  Company  for any Expense  Advance  until a final
judicial  determination  is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or have lapsed). Indemnitee's obligation to
reimburse  the Company for Expense  Advances  shall be unsecured and no interest
shall be charged thereon.

        (d) Mandatory  Indemnification.  Notwithstanding  any other provision of
this Agreement  (other than Section 2(f) below),  to the extent that  Indemnitee
has been successful on the merits in defense of any Proceeding relating in whole
or in part to an  Indemnifiable  Event or in  defense  of any  issue  or  matter
therein,  Indemnitee  shall be  indemnified  against  all  Expenses  incurred in
connection therewith.

        (e)  Partial  Indemnification.  If  Indemnitee  is  entitled  under  any
provision  of this  Agreement  to  indemnification  by the Company for some or a
portion of Expenses, but not, however, for the total amount thereof, the Company
shall  nevertheless  indemnify  Indemnitee  for the  portion  thereof  to  which
Indemnitee is entitled.

        (f)  Prohibited  Indemnification.  No  indemnification  pursuant to this
Agreement  shall be paid by the  Company on account of any  Proceeding  in which
judgment is rendered  against  Indemnitee for an accounting of profits made from
the purchase or sale by Indemnitee of securities of the Company  pursuant to the
provisions  of Section  16(b) of the Act or similar  provisions  of any federal,
state, or local laws.

     3. Reviewing  Party.  Prior to any Change in Control,  the Reviewing  Party
shall be any appropriate person or body consisting of a member or members of the
Board or any other  person or body  appointed by the Board who is not a party to
the  particular   Proceeding  with  respect  to  which   Indemnitee  is  seeking
indemnification:  after a Change in Control,  the  Reviewing  Party shall be the
Independent Counsel referred to below. With respect to all matters arising after
a Change in Control  (other  than a Change in Control  approved by a majority of
the directors on the Board who were directors  immediately  prior to such Change
in Control)  concerning  the rights of  Indemnitee  to  indemnity  payments  and
Expense Advances under this Agreement or any other agreement or under applicable
law or the Company's Articles of


<PAGE>


Incorporation  or Bylaws now or hereafter in effect relating to  indemnification
for  Indemnifiable  Events,  the  Company  shall  seek  legal  advice  only from
independent  Counsel  selected by Indemnitee  and approved by the Company (which
approval  shall  not be  unreasonably  withheld),  and  who  has  not  otherwise
performed  services for the Company or the Indemnitee  (other than in connection
with  indemnification  matters)  within  the last five  years.  The  Independent
Counsel  shall not include any person who,  under the  applicable  standards  of
professional  conduct  then  prevailing,  would have a conflict  of  interest in
representing  either  the  Company  or  Indemnitee  in an  action  to  determine
Indemnitee's  rights under this  Agreement.  Such  counsel,  among other things,
shall render its written opinion to the Company and Indemnitee as to whether and
to what  extent the  Indemnitee  should be  permitted  to be  indemnified  under
applicable law. The Company agrees to pay the reasonable fees of the Independent
Counsel  and to  indemnify  fully  such  counsel  against  any and all  expenses
(including attorneys' fees), claims, liabilities,  loss, and damages arising out
of or  relating to this  Agreement  or the  engagement  of  Independent  Counsel
pursuant hereto.

     4. Indemnification Process and Appeal.

        (a)   Indemnification   Payment.   Indemnitee   shall  be   entitled  to
indemnification of Expenses, and shall receive payment thereof, from the Company
in accordance  with this Agreement as soon as practicable  after  Indemnitee has
made written  demand on the Company for  indemnification,  unless the  Reviewing
Party has given a written opinion to the Company that Indemnitee is not entitled
to indemnification under applicable law.

        (b) Suit to Enforce  Right.  Regardless  of any action by the  Reviewing
Party,  if Indemnitee has not received full  indemnification  within thirty days
after making a demand in accordance with Section 4(a). Indemnitee shall have the
right to enforce its  indemnification  rights under this Agreement by commencing
litigation  in any  court  in the  State of  California  having  subject  matter
jurisdiction   thereof  and  in  which  venue  is  proper   seeking  an  initial
determination  by the court or challenging  any  determination  by the Reviewing
Party or any aspect  thereof.  The Company hereby consents to service of process
and to appear in any such proceeding.  Any  determination by the Reviewing Party
not challenged by the Indemnitee shall be binding on the Company and Indemnitee.
The remedy  provided  for in this  Section 4 shall be in  addition  to any other
remedies available to Indemnitee in law or equity.

        (c)  Defense to  Indemnification, Burden of Proof and  Presumptions.  It
shall be a defense to any action  brought by  Indemnitee  against the Company to
enforce  this  Agreement  (other  than an action  brought to enforce a claim for
Expenses  incurred in defending a Proceeding in advance of its final disposition
where the required  undertaking has been tendered to the Company) that it is not
permissible under applicable law for the Company to indemnify Indemnitee for the
amount claimed.  In connection with any such action or any  determination by the
Reviewing  Party  or  otherwise  as to  whether  Indemnitee  is  entitled  to be
indemnified  hereunder,  the burden of proving  such a defense or  determination
shall be on the  Company.  Neither  the  failure of the  Reviewing  Party or the
Company (including its Board, independent


<PAGE>

legal counsel,  or its  shareholders) to have made a determination  prior to the
commencement of such action by Indemnitee that  indemnification  of the claimant
is proper under the  circumstances  because  Indemnitee  has met the standard of
conduct  set  forth  in  applicable  law,  nor an  actual  determination  by the
Reviewing Party or Company (including its Board,  independent legal counsel,  or
its  shareholders)  that the Indemnitee had not met such applicable  standard of
conduct,  shall be a defense  to the  action or  create a  presumption  that the
Indemnitee has not met the applicable standard of conduct.  For purposes of this
Agreement,  the  termination  of any claim,  action,  suit,  or  proceeding,  by
judgment,   order,   settlement   (whether  with  or  without  court  approval),
conviction,  or upon a plea of nolo  contendere,  or its  equivalent,  shall not
create a presumption  that  Indemnitee did not meet any  particular  standard of
conduct  or have any  particular  belief  or that a court  has  determined  that
indemnification is not permitted by applicable law.

     5.  Indemnification  for Expenses Incurred in Enforcing Rights. The Company
shall  indemnify  Indemnitee  against any and all Expenses  and, if requested by
Indemnitee,  shall  (within ten  business  days of such  request),  advance such
Expenses to Indemnitee,  that are incurred by Indemnitee in connection  with any
claim asserted against or action brought by Indemnitee for

        (i) Indemnification of Expenses or Expense Advances by the Company under
this Agreement or any other  agreement or under  applicable law or the Company's
Articles  of  Incorporation  or Bylaws now or  hereafter  in effect  relating to
indemnification for Indemnifiable Events, and/or

        (ii)  recovery  under  directors'  and  officers'   liability  insurance
policies maintained by the Company.

regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification. Expense Advances, or insurance recovery, as the case may be.

     6. Notification and Defense of Proceeding.

        (a)  Notice.  Promptly  after  receipt  by  Indemnitee  of notice of the
commencement of any Proceeding.  Indemnitee shall, if a claim in respect thereof
is to be made against the Company  under this  Agreement,  notify the Company of
the  commencement  thereof,  but the  omission so to notify the Company will not
relieve the Company from any liability that it may have to Indemnitee, except as
provided in Section 6(c).

        (b)  Defense.  With  respect to any  Proceeding  as to which  Indemnitee
notifies the Company of the commencement  thereof, the Company shall be entitled
to  participate  in the  Proceeding  at its own expense and except as  otherwise
provided below,  to the extent the Company so wishes,  it may assume the defense
thereof with counsel  reasonably  satisfactory to Indemnitee.  After notice from
the company to Indemnitee of its election to assume the defense


<PAGE>

of any  Proceeding,  the Company  shall not be liable to  Indemnitee  under this
Agreement or otherwise for any Expenses  subsequently  incurred by Indemnitee in
connection  with the defense of such Proceeding  other than reasonable  costs of
investigation or as otherwise provided below. Indemnitee shall have the right to
employ his or her own legal counsel in such Proceeding, but all Expenses related
thereto  incurred after notice from the Company of its assumption of the defense
shall be at Indemnitee's  expense unless: (i) the employment of legal counsel by
Indemnitee has been  authorized by the Company,  (ii)  Indemnitee has reasonably
determined that there may be a conflict of interest  between  Indemnitee and the
Company in the defense of the  Proceeding,  (iii) after  Change in Control,  the
employment  of  counsel  by  Indemnitee  has been  approved  by the  Independent
Counsel,  or (iv) the Company shall not in fact have employed  counsel to assume
the  defense  of such  Proceeding,  in each of which  case all  Expenses  of the
Proceeding  shall be borne by the Company.  The Company shall not be entitled to
assume the defense of any  Proceeding  brought by or on behalf of the Company or
as to which  Indmenitee shall have made the  determination  provided for in (ii)
above.

        (c)  Settlement of Claims.  The Company shall not be liable to indemnify
Indemnitee  under this Agreement or otherwise for any amounts paid in settlement
of any Proceeding  effected  without the Company's  written  consent,  provided,
however,  that if a Change in Control has occurred,  the Company shall be liable
for  indemnification  of  Indemnitee  for  amounts  paid  in  settlement  if the
Independent  Counsel has approved the  settlement.  The Company shall not settle
any  Proceeding  in any manner that would  impose any penalty or  limitation  on
Indemnitee  without  Indemnitee's  written consent.  Neither the Company nor the
Indemnitee will unreasonably  withhold their consent to any proposed settlement.
The Company shall not be liable to indemnify the Indemnitee under this Agreement
with regard to any judicial  award if the Company was not given a reasonable and
timely  opportunity,  at its  expense,  to  participate  in the  defense of such
action; he Company's  liability  hereunder shall not be excused if participation
in the Proceeding by the Company was barred by this Agreement.

     7.  Establishment  of  Trust.  In the  event of a Change  in  Control  or a
Potential  Change in  Control,  the  Company  shall,  upon  written  request  by
Indemnitee,  create a Trust for the benefit of the  Indemnitee  and from time to
time  upon  written  request  of  Indemnitee  shall  fund the Trust in an amount
sufficient to satisfy any and all Expenses reasonably anticipated at the time of
each such request to be incurred in  connection  with  investigating,  preparing
for,   participating  in,  and/or  defending  any  Proceeding   relating  to  an
Indenmifiable Event. The amount or amounts to be deposited in the Trust pursuant
to the foregoing funding  obligation shall be determined by the Reviewing Party.
The terms of the Trust  shall  provide  that upon a Change in  Control,  (i) the
Trust shall not be revoked or the principal thereof invaded, without the written
consent of the Indemnitee,  (ii) the Trustee shall advance,  within ten business
days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and
the Indemnitee hereby agrees to reimburse the Trust under the same circumstances
for which the  Indemnities  would be required  to  reimburse  the Company  under
Section 2(c) of this  Agreement,  (iii) the Trust shall continue to be funded by
the Company in accordance with the funding  obligation set forth above, (iv) the
Trustee  shall  promptly  pay  to the  Indemnitee  all  amounts  for  which  the
Indemnitee shall be


<PAGE>


entitled to indemnification pursuant to this Agreement or otherwise, and (v) all
unexpended  funds  in the  Trust  shall  revert  to  the  Company  upon a  final
determination  by the Reviewing Party or a court of competent  jurisdiction,  as
the case may be, that the Indemnitee has been fully  indemnified under the terms
of this  Agreement.  The Trustee shall be chosen by the  Indemnitee.  Nothing in
this Section 7 shall  relieve the Company of any of its  obligations  under this
Agreement.  All income  earned on the assets held in the Trust shall be reported
as income by the Company for federal,  state,  local,  and foreign tax purposes.
The Company shall pay all costs of  establishing  and  maintaining the Trust and
shall indemnify the Trustee against any and all expenses  (including  attorney's
fees), claims, liabilities, loss, and damages arising out of or relating to this
Agreement or the establishment and maintenance of the Trust.

     8. Non-Exclusivity. The rights of Indemnitee hereunder shall be in addition
to any  other  right  Indemnitee  may  have  under  the  Company's  Articles  of
Incorporation, Bylaws, applicable law, or otherwise. To the extent that a change
in  applicable  law (whether by statute or judicial  decision)  permits  greater
indemnification  by  agreement  than  would  be  afforded  currently  under  the
Company's Articles of Incorporation.  Bylaws, applicable law, or this Agreement,
it is the intent of the parties  that  Indemnitee  enjoy by this  Agreement  the
greater benefits so afforded by such change.

     9. Liability  Insurance.  To the extent the Company  maintains an insurance
policy or policies  providing  directors'  and  officers'  liability  insurance,
Indemnitee  shall be covered by such policy or policies,  in accordance with its
or their terms, to the maximum extent of the coverage  available for any Company
director or officer.

     10. Period of Limitations. No legal action shall be brought and no cause of
action  shall be asserted by or on behalf of the Company or any affiliate of the
Company against Indemnitee,  Indemnitee's spouse, heirs,  executors, or personal
or legal  representatives  after the  expiration  of two years  from the date of
accrual of such cause of action,  or such  longer  period as may be  required by
state law under the  circumstances.  Any claim or cause of action of the Company
or its affiliate  shall be  extinguished  and deemed released unless asserted by
the timely filing of a legal action within such period; provided,  however, that
if any shorter period of  limitations is otherwise  applicable to any such cause
of action the shorter period shall govern.

     11. Amendment of this Agreement. No supplement,  modification, or amendment
of this Agreement  shall be binding  unless  executed in writing by both of  the
parties  hereto.  No waiver of any of the  provisions  of this  Agreement  shall
operate as a waiver of any other provisions hereof (whether or not similar), nor
shall  such  waiver  constitute  a  continuing  waiver.  Except as  specifically
provided herein,  no failure to exercise or any delay in exercising any right or
remedy hereunder shall constitute a waiver thereof.

     12. Subrogation.  In the event of payment under this Agreement, the Company
shall be  subrogated  to the  extent  of such  payment  to all of the  rights of
recovery  of  Indemnitee,  who shall  execute all papers  required  and shall do
everything that may be necessary to secure



<PAGE>


such rights,  including the execution of such documents  necessary to enable the
Company effectively to being suit to enforce such rights.

     13. No Duplication of Payments.  The Company shall not be liable under this
Agreement  to make any  payment  in  connection  with  any  claim  made  against
Indemnitee to the extent  Indemnitee has otherwise  received  payment (under any
insurance  policy,  Bylaw, or otherwise) of the amounts otherwise  indemnifiable
hereunder.

     14. Binding  Effect.  This Agreement shall be binding upon and inure to the
benefit  of and be  enforceable  by the  parties  hereto  and  their  respective
successors  (including  any direct or indirect  successor by  purchase,  merger,
consolidation,  or otherwise to all or substantially  all of the business and/or
assets  of the  Company),  assigns,  spouses,  heirs,  and  personal  and  legal
representatives.  The Company  shall  require and cause any  successor  (whether
direct or indirect by purchase,  merger,  consolidation,  or  otherwise) to all,
substantially  all, or a substantial  part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to  Indemnitee,
expressly to assume and agree to perform  this  Agreement in the same manner and
to the same  extent  that the  Company  would be  required to perform if no such
succession had taken place.  The  indemnification  provided under this Agreement
shall  continue as to Indemnitee for any action taken or not taken while serving
in an indemnified  capacity  pertaining to an Indemnifiable Event even though he
or she may have ceased to serve in such capacity at the time of any Proceeding.

     15.  Severability.  If any provision (or portion thereof) of this Agreement
shall be held by a court of  competent  jurisdiction  to be  invalid,  void,  or
otherwise  unenforceable,  the remaining  provisions shall remain enforceable to
the  fullest  extent  permitted  by  law.  Furthermore,  to the  fullest  extent
possible, the provisions of this Agreement (including,  without limitation, each
portion of this Agreement containing any provision held to be invalid,  void, or
otherwise  unenforceable,  that is not itself invalid,  void, or  unenforceable)
shall be  constructed  so as to give  effect  to the  intent  manifested  by the
provision held valid, void or uneforceable.

     16.  Governing Law. This  Agreement  shall be governed by and construed and
enforced in accordance  with the laws of the State of  California  applicable to
contracts  made and to be performed in such State  without  giving effect to the
principles of conflicts of laws.


<PAGE>


     17. Notices. All notices,  demands,  and other  communications  required or
permitted  hereunder  shall be made in writing  and shall be deemed to have been
duly given if delivered by hand,  against receipt,  or mailed,  postage prepaid,
certified or registered  mail,  return receipt  requested,  and addressed to the
Company at:

        CYLINK CORPORATION
        910 Hermosa Court
        Sunnyvale, CA 94086
        Attn: President

and to Indemnitee at:

        Same as above
        --------------------
        --------------------
        Attn: Fernand Sarrat

        Notice of change of address be effective  only when given in  accordance
with this Section.  All notices  complying  with this Section shall be deemed to
have been  received on the date of delivery or on the third  business  day after
mailing.

     18.   Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

     IN WITNESS  WHEREOF,  the parties  hereto have duly  executed and delivered
this Agreement as of the day specified above.


CYLINK CORPORATION                           INDEMNITEE:


By: /s/ ROBERT FOUGNER                        /s/ FERNAND SARRAT
   ---------------------------               ---------------------------
   [Signature]                               [Signature]

Title: Corporate Secretary                        FERNAND SARRAT
      ------------------------               ---------------------------
                                             [Print Name]


<PAGE>

                                   EXHIBIT C
                               CYLINK CORPORATION

                          PROPRIETARY INFORMATION AND
                      INVENTIONS AND EMPLOYMENT AGREEMENT

     I  recognize  that  Cylink   Corporation   (the   "Company")  a  California
corporation,  is engaged in a continuous  program of research,  development  and
production  respecting  its  business,  present  and  future.  As  used  in this
Agreement, the term "Company" means Cylink Corporation, its successor companies,
subsidiaries and all affiliated  companies or operations in which it may have an
interest whether by stock ownership, joint venture arrangements or otherwise.

     I understand that:

     A. As part of my  employment  by the  Company,  I am  expected  to make new
contributions and inventions of value to the Company;

     B. My employment  creates a relationship of confidence and trust between me
and the Company with respect to any information:

        (1) Applicable to the business of the Company; or

        (2) Applicable to the business of any client or customer of the Company,
which may be made known to me by the Company or by any client or customer of the
Company, or learned by me in such context during the period of my employment.

     C. The Company possesses and will continue to possess  information that has
been created,  discovered,  developed,  or otherwise become known to the Company
(including, without limitation,  information created, discovered,  developed, or
made known by me during the period of or  arising  out of my  employment  by the
Company)  and/or in which  property  rights  have  been  assigned  or  otherwise
conveyed to the Company,  which information has commercial value in the business
in which the  Company  is  engaged.  All of the  aforementioned  information  is
hereinafter called "Proprietary  Information".  By way of illustration,  but not
limitation, Proprietary Information includes trade secrets,

                                      -1-


<PAGE>

processes, structures,  formulas, data and know-how,  improvements,  inventions,
techniques, marketing plans, strategies, forecasts, and customer lists.

     D. As used herein, the period of my employment includes any time in which I
may be retained by the Company as a consultant.

     In consideration of my employment or continued employment,  as the case may
be, and the  compensation  received by me from the Company  from time to time, I
hereby agree as follows:

     1. All  Proprietary  Information  shall be the sole property of the Company
and its assigns,  and the Company and its assigns shall be the sole owner of all
patents and other rights in connection therewith. I hereby assign to the Company
any right I may have or acquire in such Proprietary  Information.  At all times,
both during my employment by the Company and after its termination,  I will keep
in  confidence  and trust  all  Proprietary  Information,  and I will not use or
disclose any Proprietary Information or anything directly relating to it without
the written  consent of the Company,  except as may be necessary in the ordinary
course of  performing  my duties as an employee of the Company.  Notwithstanding
the  foregoing,  it is understood  that, at all such times, I am free to use (a)
information  in the public domain not as a result of a breach of this  Agreement
and (b) my own skill, knowledge,  know-how and experience to whatever extent and
in whatever way I wish.

     2. I agree that  during the period of my  employment  by the Company I will
not, without the Company's express written consent,  engage in any employment or
business other than for the Company.

     3. In the event of the termination of my employment by me or by the Company
for any reason,  I will deliver to the Company all  documents  and data (whether
written or  electronically  stored) of any nature pertaining to my work with the
Company and I will not take with me or deliver to anyone else any  documents  or
data of any description or any  reproduction  of any  description  containing or
pertaining to any Proprietary Information.

     4. I will promptly  disclose to the Company,  or any persons  designated by
it,  all  improvements,   inventions,   designs,  ideas,   copyrightable  works,
discoveries, trade marks, copyrights, trade secrets, formulas, processes,

                                      -2-


<PAGE>


techniques,  know-how, and data, whether or not patentable, made or conceived or
reduced to  practice  or learned by me,  either  alone or jointly  with  others,
during  the  period  of my  employment  which  are  related  to or useful in the
business  of the  Company,  or result  from tasks  assigned me by the Company or
result from use of premises owned, leased, or contracted for by the Company (all
said improvements, inventions, designs, ideas, copyrightable works, discoveries,
trade marks,  copyrights,  trade  secrets,  formulas,   processes,   techniques,
know-how, and data shall be collectively hereinafter call "Inventions").

     5. I agree that all  Inventions  shall be the sole  property of the Company
and its assigns,  and the Company and its assigns shall be the sole owner of all
patents and other rights in connection therewith. I hereby assign to the Company
any rights I may have or acquire in such  Inventions.  I further agree as to all
such  Inventions to assist the Company in every proper way (but at the Company's
expense) to obtain and from time to time enforce  patents on said  inventions in
any and all  countries,  and to that end I will execute all documents for use in
applying for and  obtaining  such patents  thereon and  enforcing  same,  as the
Company  may desire,  together  with any  assignments  thereof to the Company or
persons  designated  by it. My obligation to assist the Company in obtaining and
enforcing  patents for such  Inventions in any and all countries  shall continue
beyond the termination of my employment,  but the Company shall compensate me at
a reasonable  rate after such  termination  for time actually spent by me at the
Company's request on such assistance.

     Any  provision  in this  Agreement  requiring me to assign my rights in any
invention  does not  apply to an  invention  which  qualifies  fully  under  the
provisions of Section 2870 of the California  Labor Code. That section  provides
as follows:

          Any  provision  in an  employment  agreement  which  provides  that an
     employee shall assign,  or offer to assign,  any of his or her rights in an
     invention to his or her employer  shall not apply to an invention  that the
     employee  developed  entirely  on his or her own  time  without  using  the
     employer's  equipment,  supplies,  facilities,  or trade secret information
     except for those inventions that either;

                                      -3-


<PAGE>


          (1) Relate at the time of  conception  or reduction to practice of the
     invention to the employer's business, or actual or demonstrably anticipated
     research or development of the employer.

          (2) Result from any work performed by the employee for the employer.

I  acknowledge  that receipt and execution of this  Agreement by me  constitutes
written notification,  as required by Section 2872 of the California Labor Code,
regarding above Section 2870 and its protective effect on certain  inventions by
me.

     6. As a matter of record I have identified on Exhibit A attached hereto all
inventions or  improvements  relevant to the subject  matter of my employment by
the Company which have been made or conceived or first reduced to practice by me
alone or jointly with others  prior to my  engagement  by the  Company,  which I
desire to remove from the operation of this Agreement;  and I covenant that such
list is complete. If there is no such list on Exhibit A, I represent that I have
made no such inventions and improvements at the time of signing this Agreement.

     7. I represent  that my  performance of all the terms of this Agreement and
as an employee of the Company does not, to the best of my present  knowledge and
belief,  and  will  not  breach  any  agreement  or duty  to keep in  confidence
proprietary  information  acquired by me in  confidence  or in trust prior to my
employment by the Company. I have not entered into, and I agree I will not enter
into, any agreement either written or oral in conflict herewith.

     8. I understand  as part of the  consideration  for the offer of employment
extended to me by the Company and of my  employment  or continued  employment by
the Company, that I have not brought and will to bring with me to the Company or
use in the  performance of my  responsibilities  at the Company any materials or
documents of a former employer which are not generally  available to the public,
unless I have obtained written  authorization from the former employer for their
possession and use.

     Accordingly,  this is to advise  the  company  that the only  materials  or
documents of a former  employer which are not generally  available to the public
that I will bring to

                                      -4-


<PAGE>


the Company or use in my employment are identified on Exhibit A attached hereto,
and as to  each  such  item,  I  represent  that I have  obtained  prior  to the
effective data of my employment with the Company written authorization for their
possession and use in my employment with the Company.

     I also  understand  that,  in my employment  with the Company,  I am not to
breach  any  obligation  of  confidentiality  or  duty  that  I have  to  former
employers,  and I agree  that I shall  fulfill  all such  obligations during  my
employment with the Company.

     9. I agree that the Company is not by reason of this Agreement obligated to
continue me in its employment.

     10. I agree that any breach of this Agreement by me would cause irreparable
damage to the Company and that,  in the event of such breach,  the Company shall
have,  in addition to any and all remedies of law,  the right to an  injunction,
specific  performance or other  equitable  relief to prevent the violation of my
obligations hereunder.

     11. If any provision hereof shall be declared unenforceable for any reason,
such  unenforceability  shall not affect  the  enforceability  of the  remaining
provisons  of this  Agreement.  Further,  such  provision  shall be reformed and
construed to the extent  permitted  by law so that it would be valid,  legal and
enforceable to the maximum extent possible.

     12. This Agreement  shall be effective as of the first day of my employment
by the Company, namely:________________________________________________________.

     13. This Agreement shall be binding upon me, my heirs, executors,  assigns,
and  administrators,  shall inure to the benefit of the Company,  is successors,
and assigns and shall survive my employment by the Company.


Dated  Date of Hire                    By  /s/ Fernand Sarrat
-----  ----------------                    -------------------------------


ACCEPTED AND AGREED TO:
CYLINK CORPORATION


By   Robert Fougner
   ---------------------------
       Corporate Secretary

                                      -5-

<PAGE>


CYLINK CORPORATION


Dear Sirs:

     1. The  following  is a complete  list of all  inventions  or  improvements
relevant to the  subject  matter of my  employment  by Cylink  Corporation  (the
"Company")  which have been made or conceived or first reduced to practice by me
alone or jointly with others prior to my engagement by the Company:


          X         No inventions or improvements
     ----------

                    See Below
     ----------


     ---------------------------------------------------------------------------


     ---------------------------------------------------------------------------


     ---------------------------------------------------------------------------


                    Additional sheets attached
     ----------


     2. I  propose  to  bring  to my  employment  the  following  materials  and
documents of a former employer which are not generally  available to the public,
which materials and documents may be used in my employment:


          X         No materials
     ----------

                    See Below
     ----------


     ---------------------------------------------------------------------------


     ---------------------------------------------------------------------------


     ---------------------------------------------------------------------------


                    Additional sheets attached
     ----------

     The signature below confirms that my continued  possession and use of these
materials is authorized.

                                   Very truly yours,


                                   /s/ Fernand Sarrat
                                   ------------------------------

                                      -6-