EXHIBIT  10.40

                              EMPLOYEMENT AGREEMENT


         THIS AGREEMENT  ("Agreement")  is made and entered into effective as of
the 11th day of February 1999 by and between SSE TELECOM,  INC.  ("Telecom"),  a
Delaware   corporation   (as  used  herein,   Telecom  and  its  affiliates  and
subsidiaries are collectively  referred to as the "Company",  unless the context
requires  otherwise  or it is  otherwise  specifically  provided)  and GEORGE M.
WALLEY ( the "Executive").

         WHEREAS,  the  Company  wishes to retain the  Executive  as a full time
employee of the Company in an executive capacity; and

         WHEREAS,  the Executive wishes to maintain employment by the Company on
the terms and conditions set forth below;

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  contained herein and intending to be legally bound the parties hereto
agree as follows:

         1.  Term.  The  Executive's  employment  commenced  on July 7, 1998 and
subject to the  provisions  of Section 8 hereof,  the Company  hereby  agrees to
continue such employment  with the Company upon the terms and conditions  herein
provided.

         2. Duties.  The  Executive,  subject to the  directions  and control of
Telecom's Board of Directors, shall devote his full time, attention and energies
to the business and affairs of Telecom and promote the  interests and welfare of
Telecom. The Executive shall also provide services to and for the benefit of the
subsidiaries and affiliates of Telecom as such duties may, from time to time, be
specified  by the Board of Directors of Telecom.  The  Executive  shall serve as
Executive Vice  President,  Product  Development,  reporting to Telecom's  Chief
Executive  Officer.  The Executive agrees to perform his duties in an efficient,
trustworthy and business-like manner,  consistent with the policies set forth by
the Board of  Directors  of Telecom  who shall have the power to alter or change
the general  practices of the business as such Board deems necessary to the best
interests of the Company.  The Executive shall not,  during the term hereof,  be
interested directly or indirectly, in any manner, as partner, officer, director,
stockholder, advisor, employee or in any capacity in any other business, without
Telecom's  written  consent;  provided,  however,  that nothing herein contained
shall be deemed to prevent or limit the right of the Executive to participate as
a passive  investor in any business  venture which is not  competitive  with the
Company's business.

         3. Compensation plan; Base Salary; Annual Review

     (a) Compensation  Plan. As compensation for the Executive's  services under
this Agreement, Executive shall be entitled to receive during his employment the
base  salary  and  fringe  benefits  in  accordance  with this  Section 3 and in
accordance with the compensation plan fixed for each fiscal year of the Company,
commencing  with the current fiscal year, and bonuses in accordance with Section
4 and stock options in accordance with Section 5.

     (b) Annual Review. The Company will review the compensation  payable by the
Company to the Executive not less frequently than annually,  with the purpose of
adjusting  the  Executive's  compensation  in such a manner as the Company shall
deem  appropriate.  Any such adjustment may modify the Executive's  base salary,
establish  provisions for the obtaining of bonus  compensation,  provide for the
granting of stock  options and fix the fringe  benefits to be made  available to
the Executive.  Nothing herein shall be deemed to obligate the Company to adjust
the Executive's  compensation,  the parties hereby acknowledging that, except as
otherwise provided in Section 8, this is an at will employment agreement.

         4. Bonuses.  Bonus  compensation  shall be payable in cash and/or stock
options  in  accordance  with the  bonus  compensation  plan put into  effect by
Telecom's Board of Directors for each fiscal year. The bonus  compensation  plan
will be  administered  by the  Compensation  Committee  of  Telecom's  Board  of
Directors.  For the fiscal year beginning  October 1, 1998, and each fiscal year
thereafter,   the  Executive   shall  have  the  opportunity  to  earn  a  bonus
compensation  with a target range of forty percent (40%) of base salary upon the
Company's achieving certain  pre-established  goals in operating profit and cash
flow.  For subsequent  years,  pre-established  goals,  which are subject to the
approval of the Compensation Committee





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of Telecom's Board of Directors,  will be mutually determined by the Company and
the Executive  for each fiscal year,  prior to or within thirty (30) days of the
commencement of each fiscal year.

         5. Expenses.  The Executive any incur reasonable expenses in connection
with  promoting and operating the  Company's  business,  including  expenses for
entertainment,  travel and similar  items.  If Executive  has complied  with the
Company  policy  regarding  business  expenses,  the Company will  reimburse the
Executive for all such expenses upon the Executive's periodic presentation of an
itemized  account  of  such  expenditures.  However,  in  no  event  shall  said
Executive's business expenses exceed the Company's policy.

         6. Fringe  Benefits.  The  Company  has adopted  policies in respect to
fringe  benefits  for  employees  in the  nature of health  and life  insurance,
holidays,  vacation, sick leave policies and disability. A copy of the Company's
present policies in respect to fringe benefits has been delivered by the Company
to Executive.  The company may from time to time amend its present  policies and
adopt other fringe  benefits to be generally  available  to all  employees.  The
Company  covenants and agrees that Executive shall be entitled to participate in
any such fringe benefit  policies adopted by the Company to the same extent that
such fringe  benefits  shall be  available  to and for the benefit of  executive
level employees.  The Company will give the Executive a vacation of fifteen (15)
days with pay each year during the term of this Agreement, the time for vacation
to be determined by mutual agreement between Company and Executive.

         7. Termination of Employment.

     (a)  Termination  With  Cause.  The Company may  terminate  this  Agreement
without any further compensation to Executive beyond the date of termination for
breech of this Agreement,  willful or gross misconduct in performance of duties,
dishonesty, fraud, theft, embezzlement or any criminal act.

     (b) Termination Without Cause. (i) Without cause, the Company may terminate
this  Agreement at any time upon fifteen (15) days written  notice to Executive.
In such event,  the  Executive,  if requested by the Company,  shall continue to
render his services and shall be paid his regular compensation up to the date of
termination.  In addition,  if Executive is terminated without cause, (a) within
the first twelve (12) month period from the Effective  Date, the Executive shall
be  entitled  to  receive,  and  shall  receive,  "Continuing  Compensation"  as
hereafter  defined in  subsection  (iii) for a period of twelve (12) months from
the date of termination,  payable in monthly installments during the twelve (12)
months  period  following  termination,  (b) within the second twelve (12) month
period  from  the  Effective  Date,  the  Executive  shall  receive   Continuing
Compensation  for a period  of nine  (9)  months  from the date of  termination,
payable  in monthly  installments  during  the nine (9) month  period  following
termination;  and  (c) at any  time  after  twenty-four  (24)  months  from  the
Effective Date, the Executive shall receive Continuing Compensation for a period
of six (6) months form the date of termination,  payable in monthly installments
during the six (6) month period following  termination.  (ii) Without cause, the
Executive  may  terminate  this  Agreement  upon not less than  sixty  (60) days
written notice to the Company.  In such event,  unless otherwise directed by the
Company,  Executive  shall continue to render his services and shall continue to
be paid his regular  compensation  up to the date of  termination of employment.
Bonus compensation that has been earned by the Executive through the date of his
termination  shall be paid to the  Executive.  (iii)  "Continuing  Compensation"
means and includes the following:  (x) the Executive's  base salary as in effect
as of the effective date of termination,  (y) any bonus  compensation that would
have been  earned by  Executive  based on the  factors or  elements of the bonus
compensation  plan which  would have been  achieved  by  Executive  through  the
effective date of  termination,  and (z) the fringe benefits  customarily  being
made  available  by the Company to  Executive  for health,  life and  disability
insurance,  but excluding the accrual of holidays,  vacation and sick leave, and
further  excluding  any  participitory  contributions  by the Company to 401k or
stock purchase or similar plans.  If the Company is obligated to make payment of
any continuing  compensation,  such payments shall be made during the applicable
period at the same time that the Company  would make such  payments on behalf of
its regular employees.

     (c) Termination Upon Change of Control.

     (i) If the Executive's  employment is terminated by the Company as a result
of a "Change  of  Control"  (as  defined  below),  such  termination  shall be a
termination  without cause and Executive shall be entitled to





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receive Continuing  Compensation as defined in subsection (b)(iii) above for the
period provided in subsection  (b)(i).  For purposes of this subsection  (c)(i),
the  following  shall also be deemed a  termination  of  Executive's  employment
without cause if such occurs following a change in control: a material reduction
in Executive's  position,  responsibilities,  title, salary or benefits, or as a
condition of continued  employment,  the  Executive is required to relocate from
the San Francisco Bay area.

     (ii) For  purposes of this  Section 8 (c), a "Change of  Control"  shall be
deemed to have taken place if (A) a third person, including a "Group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires
shares of Telecom  having  50% or more of the total  number of votes that may be
cast for the election of Directors of Telecom;  or (B) as the result of any cash
tender or exchange offer, merger or other business  combination,  sale of assets
or contested  election or any  combination  of the  foregoing  transactions  ( a
"Transaction"), the persons who were Directors of Telecom before the Transaction
shall cease to constitute a majority of the Board of Telecom.

     (d) Death  During  Employment.  If the  Executive  dies  during the term of
employment,   the  Company  shall  pay  to  the  estate  of  the  Executive  the
compensation  which would otherwise be payable to the Executive  through the end
of the month in which his death occurs,  including payments for accrued vacation
and accrued bonus

         8. Protective Covenants; Remedies.

     (a) Non-Disclosure of Confidential Information.  Executive will not, during
the term of this  Agreement,  or at any  time  during  the two (2)  year  period
thereafter,  divulge,  furnish  or make  accessible  to  anyone  other  than the
Company,  the  directors  and officers of the Company,  unless  otherwise in the
regular  course of business of the Company,  any knowledge or  information  with
respect to (i) confidential or secret documents, processes, plans, models, sales
data,   contracts,   financial   costs,   product  prices,   devices,   business
opportunities,  or any other material relating to the business and activities of
Telecom or its  subsidiaries  or affiliates,  or (ii) any other  confidential or
secret  aspect of the  business of Telecom or its  subsidiaries  or  affiliates,
including without  limitation any lists or other information with respect to any
clients  or  customers  of  Telecom  or its  subsidiaries  or  affiliates  ( the
foregoing  being  hereafter   collectively  referred  to  as  the  "Confidential
Information").  The Executive acknowledges that such Confidential Information is
of special and peculiar  value to the  Company;  is the property of the Company,
the product of years of experience and trial and error;  is not generally  known
to the  Company's  competitors;  and is regularly  used in the  operation of the
Company's business.

     (b)  Non-Competition.  The  Executive  agrees  that during the term of this
Agreement  and  for  (i)  the six (6)  month  period  following  termination  of
Executive's  employment,  or (ii)  the  period  of any  Continuing  Compensation
payable as provided in Section 8(b),  whichever is longer,  the  Executive  will
not,  directly or indirectly,  own, manage,  operate,  control,  be employed by,
participate  in, or be  connected  in any  manner  with  ownership,  management,
operation or control of any business,  directly in competition with the business
conducted  by  Telecom,  its  subsidiaries  or  affiliates,  at the  time of the
termination of this Agreement.

     (c) Suspension of Time.  Notwithstanding any provision of this Agreement to
the  contrary,  the time periods for the  protective  covenants set forth herein
shall be  suspended  during  the  period  of any  breach  or  violation  of such
protective covenant, and likewise shall be suspended for the time in which there
shall  be  pending  in any  court  of  competent  jurisdiction,  any  action  or
proceeding to enforce such covenant where temporary or injunctive relief has not
been granted.

     (d)  Acknowledgement   Regarding   Protective   Covenants.   The  Executive
acknowledges and understands  that the covenants  provided for in this Section 9
are limited to the  covenants set forth herein and do not preclude the Executive
upon the  termination  of this  Agreement  for obtaining  gainful  employment or
utilizing  the  Executive's   general   business   skills,   and  that  numerous
opportunities  exist for the  Executive  to utilize  such  skills.  Although the
Executive  agrees  that the  time  and area  restraints  set  forth  herein  are
reasonable; nevertheless, if for any reason now unforeseen, a court of competent
jurisdiction  finds that the time and/or area restraints agreed to herein by the
parties are unreasonable  then the time and/or area restraints  agreed to herein
shall be reduced to an area and/or duration deemed  reasonable by the court. The
Executive  acknowledges  that he has  read  and  understands  the  terms of this
Agreement,  that  same was  specifically  negotiated,  and  that the  protective
covenants  agreed upon herein are necessary for





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the  protection  of the Company's  business as a result of the business  secrets
that will be disclosed during employment.

     (e)  Remedies.  In  addition  to any other  rights and  remedies  which are
available  to the  Company,  with  respect  to any  breach or  violation  of the
protective  covenants  set forth herein,  it is  recognized  and agreed that the
Company shall be entitled to obtain  injunctive  relief which would prohibit the
Executive from continuing any breach or violation of such protective  covenants.
The  Company  may  pursue  any  of  the  remedies   allowed  by  this  Agreement
concurrently or  consecutively in and order as to any breach or violation of the
protective covenants,  and the pursuit of any such remedies at any time will not
be deemed an  election of remedies or waiver of the right to pursue the other of
such  remedies  as to that  breach or  violation,  or as to any other  breach or
violation of this Agreement.  Pursuit of one or more remedies shall not preclude
pursuit of any other  remedies  herein  provided or any other remedy that may be
available to the Company.

         9. Disputes. In the event of any litigation between the Company and the
Executive  arising out of this agreement,  and the rights and obligations of the
parties hereunder,  the prevailing party shall be entitled to seek an award from
the court to recover his or its reasonable attorney's fees and court costs.

         10.  Notices.  Any notice  required or permitted to be given under this
agreement  shall be deemed  sufficient if in writing,  and sent by registered or
certified  mail  to his  residence,  in the  case  of the  Executive,  or to its
principle office, in the case of the Company.

         11. Waiver of Breach.  The failure of either party to insist in any one
or more instances upon  performance of any terms or conditions of this Agreement
shall  not be  construed  as a waiver of future  performance  of any such  term,
covenant, or condition, but the obligations of either party with respect thereto
shall continue on full force and effect.

         12.  Assignment.  Executive  acknowledges  that  said  services  to  be
rendered by him are unique and  personal.  Accordingly,  the  Executive  may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement.  The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon  successors and assigns of the
Company.

         13. Entire Agreement. This Agreement supercedes all previous agreements
between the Company and  Executive  and  contains the entire  understanding  and
agreement  between the parties with respect to the subject  matter  hereof,  and
cannot  be  amended,  modified  or  supplemented  in  any  respect  except  by a
subsequent written agreement entered into by both parties.

         14. Applicable Law. The validity,  enforceability and interpretation of
this  Agreement  shall be  determined  and  governed by the laws of the State of
Delaware.

         15. Number of Agreements.  This Agreement may be executed in any number
of counterparts, any one of which may be deemed original.

         16.  Severability.  If any of the provisions of this Agreement are held
to be invalid or unenforceable,  all other provisions hereof shall  nevertheless
continue in full force and effect.

         17.  Pronouns.  The use of any word in any  gender  shall be  deemed to
include any other gender and the use of any word in the singular shall be deemed
to include the plural where the context requires.

         18.  Headings.  The section  headings  used in this  Agreement  are for
convenience  only and are not to be  controlling  with  respect to the  contents
thereof.


IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date set forth above.





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DATE: 2/11/99                        COMPANY:  SSE TELECOM, INC.
                                     By: /s/ Leon F. Blachowicz
                                     Leon F. Blachowicz, President and
                                     Chief Executive Officer

DATE: 2/12/99                        EXECUTIVE:
                                     /s/ George M. Walley
                                     George M. Walley



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