EXHIBIT
        10.33  **HI/FN,
          INC.**
  **ALBERT
          E. SISTO EMPLOYMENT AGREEMENT**
  This
          Employment Agreement (the “Agreement”) is entered into as of November 16, 2006,
          by and between Hi/fn, Inc. (the “Company”) and Albert E. Sisto
          (“Executive”).
  1.  Duties
          and Scope of Employment .
  (a)  Positions
          and Duties .
          As of
          November 9, 2006 (the “Effective Date”), Executive will serve as the Company’s
          Interim Chief Executive Officer. Executive will report to the Company’s Board of
          Directors (the “Board”) and will continue in his role as Chairman of the Board.
          As of the Effective Date, Executive will render such business and professional
          services in the performance of his duties, consistent with Executive’s position
          within the Company, as will reasonably be assigned to him by the Board.
          The
          period Executive is employed by the Company under this Agreement is referred
          to
          herein as the “Employment Term”.
  Subject
          to the termination and notice provisions herein, Executive agrees to remain
          employed with the Company until the date upon which a successor Chief Executive
          Officer commences employment with the Company. However, in the event that
          the
          Company desires to retain Executive as its regular Chief Executive Officer,
          then
          this Agreement will be terminated and the parties hereto will negotiate
          a new
          employment agreement covering the terms and conditions of Executive’s ongoing
          role.
  (b)  Board
          Membership .
          Executive was appointed to serve as a member of the Board prior to the
          Effective
          Date and was appointed Chairman of the Board on the Effective Date. During
          the
          Employment Term, at each annual meeting of the Company’s stockholders at which
          Executive’s term as a member of the Board has otherwise expired, the Company
          will nominate Executive to serve as a member of the Board. Executive’s service
          as a member of the Board will be subject to any required stockholder approval.
          Upon the termination of Executive’s employment for any reason, unless otherwise
          requested by the Board, Executive will be deemed to have resigned from
          all
          positions held at the Company and its affiliates, except that of Chairman
          of the
          Board, voluntarily, without any further required action by Executive, as
          of the
          end of Executive’s employment and Executive, at the Board’s request, will
          execute any documents necessary to reflect his resignation.
  (c)  Obligations .
          During
          the Employment Term, Executive will devote Executive’s full business efforts and
          time to the Company and will use good faith efforts to discharge Executive’s
          obligations under this Agreement to the best of Executive’s ability and in
          accordance with each of the Company’s corporate guidance and ethics guidelines,
          conflict of interests policies and code of conduct. For the duration of
          the
          Employment Term, Executive agrees not to actively engage in any other
          employment, occupation, or consulting activity for any direct or indirect
          remuneration without the prior approval of the Board (which approval will
          not be
          unreasonably withheld); provided, however, that Executive may, without
          the
          approval of the Board, serve in any capacity with any civic, educational,
          or
          charitable organization, provided such services do not interfere with
          Executive’s obligations to Company. Executive expects to serve as a member of
          the Board of Directors of Digital Signal Corporation, Tulip Ego Lifestyle,
          and
          Validity Sensors, Inc. and such service will not constitute a violation
          of this
          section 1(c).
  
   Executive
          hereby represents and warrants to the Company that Executive is not party
          to any
          contract, understanding, agreement or policy, written or otherwise, that
          would
          be breached by Executive’s entering into, or performing services under, this
          Agreement. Executive further represents that he has disclosed to the Company
          in
          writing all threatened, pending, or actual claims that are unresolved and
          still
          outstanding as of the Effective Date, in each case, against Executive of
          which
          he is aware, if any, as a result of his employment with his current employer
          (or
          any other previous employer) or his membership on any boards of directors.
  (d)  Other
          Entities .
          Executive agrees to serve and will be appointed, without additional
          compensation, as an officer and director for each of the Company’s subsidiaries,
          partnerships, joint ventures, limited liability companies and other affiliates,
          including entities in which the Company has a significant investment as
          determined by the Company. As used in this Agreement, the term “affiliates” will
          include any entity controlled by, controlling, or under common control
          of the
          Company.
  2.  At-Will
          Employment .
          Executive and the Company agree that Executive’s employment with the Company
          constitutes “at-will” employment. Executive and the Company acknowledge that
          this employment relationship may be terminated at any time, upon written
          notice
          to the other party, with or without good cause or for any or no cause,
          at the
          option either of the Company or Executive.
  3.  Compensation .
  (a)  Base
          Salary .
          As of
          the Effective Date, the Company will pay Executive an annual salary of
          $350,000
          as compensation for his services (such annual salary, as is then effective,
          to
          be referred to herein as “Base Salary”). The Base Salary will be paid
          periodically in accordance with the Company’s normal payroll practices and be
          subject to the usual, required withholdings.
  (b)  Annual
          Incentive .
          Executive will be eligible to receive annual cash incentives payable for
          the
          achievement of performance goals established by the Board or by the Compensation
          Committee of the Board (the “Committee”). During the Employment Term, Executive’s
          target annual incentive (“Target Annual Incentive”) will equal 65% of
          Executive’s Base Salary. The actual earned annual cash incentive, if any,
          payable to Executive for any performance period will depend upon the extent
          to
          which the applicable performance goal(s) specified by the Committee are
          achieved
          or exceeded and will be adjusted for under- or over-performance.
  (c)  Stock
          Options .
  (i)  Following
          the Effective Date, the Committee will grant an
          option to
          purchase 225,000 shares of Company common stock at a per share exercise
          price
          equal to the closing price per share on the Nasdaq Global Market (“Nasdaq”) for
          the common stock of the Company on the date of grant (the “Option”). The Option
          will be granted under and subject to the terms, definitions and provisions
          of
          the Company’s Amended and Restated 1996 Equity Incentive Plan (the “Plan”) and
          will be scheduled to vest 1/36 th of the
          shares subject to the Option each month following the Effective Date, subject
          to
          Executive’s continued employment with the Company as its Chief Executive Officer
          (whether on an interim basis or otherwise) through each scheduled vesting
          date.
          Upon Executive ceasing to be the Company’s Chief Executive Officer (whether on
          an interim
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   basis
          or
          otherwise), all vesting of the Option will terminate immediately and the
          unvested portion of the Option will immediately terminate. Notwithstanding
          the
          foregoing vesting schedule, if during the first year of the Employment
          Term
          while Executive is acting as the Company’s Chief Executive Officer, the Company
          hires a successor Chief Executive Officer other than Executive, the Option
          will
          immediately vest and become exercisable as to 75,000 shares in addition
          to the
          number of shares subject to the Option that have vested as of such date.
          Except
          as provided in this Agreement, the Option will be subject to the Company’s
          standard terms and conditions for options granted under the Plan.
  (ii)  Following
          the Effective Date, the Committee will grant Executive 75,000 shares of
          restricted stock (the “Stock Grant”). The Stock Grant will be granted under and
          subject to the terms, definitions and provisions of the Plan, and will
          vest six
          (6) months from the Effective Date, subject to Executive’s continued employment
          with the Company as its Chief Executive Officer on such date. Subject to
          the
          provisions of Section 7 of this Agreement, upon Executive’s termination as the
          Company’s Chief Executive Officer, all further vesting of the Stock Grant will
          terminate immediately and such shares will be forfeited to the Company
          at no
          cost to the Company. Notwithstanding the foregoing, if during the first
          six (6)
          months of the Employment Term, the Company hires a successor Chief Executive
          Officer other than Executive, the Stock Grant will fully vest. Except as
          provided in this Agreement, the Stock Grant will be subject to the Company’s
          standard terms and conditions for restricted stock granted under the
          Plan .
  4.  Employee
          Benefits .
  (a)  Generally .
          Executive will be eligible to participate in accordance with the terms
          of all
          Company employee benefit plans, policies and arrangements that are applicable
          to
          other executive officers of the Company, as such plans, policies and
          arrangements may exist from time to time.
  (b)  Vacation .
          Executive will be entitled to receive paid annual vacation in accordance
          with
          Company policy for other senior executive officers.
  5.  Expenses .
          The
          Company will reimburse Executive for reasonable travel, entertainment and
          other
          expenses incurred by Executive in the furtherance of the performance of
          Executive’s duties hereunder, in accordance with the Company’s expense
          reimbursement policy as in effect from time to time.
  6.  Termination
          of Employment .
          In the
          event Executive’s employment with the Company terminates for any reason,
          Executive will be entitled to any (a) unpaid Base Salary accrued up to the
          effective date of termination; (b) unpaid, but earned and accrued annual
          incentive for any completed fiscal year as of his termination of employment;
          (c) pay for accrued but unused vacation; (d) benefits or compensation
          as provided under the terms of any employee benefit and compensation agreements
          or plans applicable to Executive (e) unreimbursed business expenses
          required to be reimbursed to Executive, and (f) rights to indemnification
          Executive may have under the Company’s Articles of Incorporation, Bylaws, the
          Agreement, or separate indemnification agreement, as applicable.
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   7.  Severance .
          If
          Executive’s employment with the Company is terminated by the Company without
          Cause or by Executive for Good Reason, and the termination is in Connection
          with
          a Change of Control, then, subject to Executive signing and not revoking
          a
          separation agreement and release of claims in a form acceptable to the
          Company,
          the Stock Grant will vest in full.
  (a)  For
          purposes of this Agreement, “Cause” means:
  (i)  A
          failure
          by Executive to substantially perform Executive’s duties as an employee, other
          than a failure resulting from the Executive’s complete or partial incapacity due
          to physical or mental illness or impairment;
  (ii)  A
          willful
          act by Executive that constitutes misconduct;
  (iii)  Circumstances
          where Executive intentionally or negligently imparts material confidential
          information relating to the Company or its business to competitors or to
          other
          third parties other than in the course of carrying out Executive’s
          duties;
  (iv)  A
          material violation by Executive of a federal or state law or regulation
          applicable to the business of the Company;
  (v)  A
          willful
          violation of a material Company employment policy or the Company’s insider
          trading policy;
  (vi)  Any act
          or omission by Executive constituting dishonesty (other than a good faith
          expense account dispute) or fraud, with respect to the Company or any of
          its
          affiliates, or any other misconduct which is injurious to the financial
          condition of the Company or any of its affiliates or is injurious to the
          business reputation of the Company or any of its affiliates;
  (vii)
          Executive’s
          failure to cooperate with the Company in connection with any actions, suits,
          claims, disputes or grievances against the Company or any of its officers,
          directors, employees, shareholders, affiliates, divisions, subsidiaries,
          predecessor and successor corporations, and assigns, whether or not such
          cooperation would be adverse to Executive’s own interest; or
  (viii)
          Executive’s
          conviction or plea of guilty or no contest to a felony.
  (b)  Change
          of Control .
          For
          purposes of this Agreement, “Change of Control” will mean the occurrence of any
          of the following events:
  (i)  The
          sale,
          lease, conveyance or other disposition of all or substantially all of the
          Company’s assets to any “person” (as such term is used in Section 13(d) of the
          Securities Exchange Act of 1934, as amended (the “Exchange Act”)), entity or
          group of persons acting in concert;
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   (ii)  Any
          person or group of persons becoming the “beneficial owner” (as defined in Rule
          13d-3 under the Exchange Act), directly or indirectly, of securities of
          the
          Company representing 50% or more of the total voting power represented
          by the
          Company’s then outstanding voting securities;
  (iii)  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 or its controlling entity) at least 50% of the total voting
          power represented by the voting securities of the Company or such surviving
          entity (or its controlling entity) outstanding immediately after such merger
          or
          consolidation; or
  (iv)  A
          contest
          for the election or removal of members of the Board that results in the
          removal
          from the Board of at least 50% of the incumbent members of the
          Board.
  (c)  Good
          Reason .
          For
          purposes of this Agreement, “Good Reason” means (without Executive’s
          consent):
  (i)  A
          material reduction in Executive’s title, authority, status, or responsibilities,
          unless Executive is provided with a comparable position (i.e. a position
          of
          equal or greater organizational level, duties, authority, compensation
          and
          status);
  (ii)  The
          reduction of Executive’s aggregate Base Salary and Target Annual Incentive as in
          effect immediately prior to such reduction (other than a reduction applicable
          to
          executives generally); or
  (iii)  A
          relocation of Executive’s principal place of employment by more than fifty (50)
          miles.
  (d)  In
          Connection with a Change of Control .
          For
          purposes of this Agreement, a termination of Executive’s employment with the
          Company is “in Connection with a Change of Control” if Executive’s employment is
          terminated within twelve (12) months following a Change of Control
  8.  Indemnification .
          Subject
          to applicable law, Executive will be provided indemnification to the maximum
          extent permitted by the Company’s Articles of Incorporation or Bylaws,
          including, if applicable, any directors and officers insurance policies,
          with
          such indemnification to be on terms determined by the Board or any of its
          committees, but on terms no less favorable than provided to any other Company
          executive officer or director and subject to the terms of any separate
          written
          indemnification agreement.
  9.  Confidential
          Information .
          As a
          condition of employment with the Company, Executive will execute the Company’s
          standard form of Proprietary Information
          and Inventions Agreement (the
“Confidential Information Agreement”).
  10.  Assignment .
          This
          Agreement will be binding upon and inure to the benefit of (a) the heirs,
          executors and legal representatives of Executive upon Executive’s death, and
          (b) any
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   successor
          of the Company. Any such successor of the Company will be deemed substituted
          for
          the Company under the terms of this Agreement for all purposes. For this
          purpose, “successor” means any person, firm, corporation, or other business
          entity which at any time, whether by purchase, merger, or otherwise, directly
          or
          indirectly acquires all or substantially all of the assets or business
          of the
          Company. None of the rights of Executive to receive any form of compensation
          payable pursuant to this Agreement may be assigned or transferred except
          by will
          or the laws of descent and distribution. Any other attempted assignment,
          transfer, conveyance, or other disposition of Executive’s right to compensation
          or other benefits will be null and void.
  11.  Notices .
          All
          notices, requests, demands and other communications called for hereunder
          will be
          in writing and will be deemed given (a) on the date of delivery if
          delivered personally; (b) one (1) day after being sent overnight by a
          well-established commercial overnight service, or (c) four (4) days after
          being mailed by registered or certified mail, return receipt requested,
          prepaid
          and addressed to the parties or their successors at the following addresses,
          or
          at such other addresses as the parties may later designate in
          writing:
  If
          to the
          Company:
  Attn :
          Chairman of the Compensation Committee
 c/o
          Corporate Secretary
 750
          University Avenue
 Los
          Gatos, CA 95032
  If
          to
          Executive:
  at
          the
          last residential address known by the Company.
  12.  Severability .
          If any
          provision hereof becomes or is declared by a court of competent jurisdiction
          to
          be illegal, unenforceable, or void, this Agreement will continue in full
          force
          and effect without said provision.
  13.  Arbitration . The
          Parties agree that any and all disputes arising out of the terms of this
          Agreement, their interpretation, and any of the matters herein released,
          will be
          subject to arbitration in Santa Clara County before JAMS, pursuant to its
          Employment Arbitration Rules & Procedures (“JAMS Rules”). The Arbitrator
          will administer and conduct any arbitration in accordance with California
          law,
          including the California Code of Civil Procedure, and the Arbitrator will
          apply
          substantive and procedural California law to any dispute or claim, without
          reference to any conflict-of-law provisions of any jurisdiction. To the
          extent
          that the JAMS rules conflict with California law, California law will take
          precedence. The Arbitrator may grant injunctions and other relief in such
          disputes. The decision of the Arbitrator will be final, conclusive, and
          binding
          on the parties to the arbitration. The Parties agree that the prevailing
          party
          in any arbitration will be entitled to injunctive relief in any court of
          competent jurisdiction to enforce the arbitration award. The
          Arbitrator will award
          attorneys’ fees and costs to the prevailing party, except as prohibited by law.
          The
          Parties hereby agree to waive their right to have any dispute between them
          resolved in a court of law by a judge or jury.
          This
          paragraph will not prevent either party from seeking injunctive relief
          (or any
          other provisional remedy) from any court having jurisdiction over the Parties
          and the subject matter
  -6-
   of
          their
          dispute relating to Executive’s obligations under this Agreement and the
          Confidential Information Agreement.
  14.  Integration .
          This
          Agreement, together with the Confidential Information Agreement and the
          standard
          forms of equity award grant that describe Executive’s outstanding equity awards,
          represents the entire agreement and understanding between the parties as
          to the
          subject matter herein and supersedes all prior or contemporaneous agreements
          whether written or oral. No waiver, alteration, or modification of any
          of the
          provisions of this Agreement will be binding unless in a writing and signed
          by
          duly authorized representatives of the parties hereto. In entering into
          this
          Agreement, no party has relied on or made any representation, warranty,
          inducement, promise, or understanding that is not in this Agreement. To
          the
          extent that any provisions of this Agreement conflict with those of any
          other
          agreement to be signed upon Executive’s hire, the terms in this Agreement will
          prevail.
  15.  Waiver
          of Breach .
          The
          waiver of a breach of any term or provision of this Agreement, which must
          be in
          writing, will not operate as or be construed to be a waiver of any other
          previous or subsequent breach of this Agreement.
  16.  Survival .
          The
          Confidential Information Agreement will survive the termination of this
          Agreement.
  17.  Headings .
          All
          captions and Section headings used in this Agreement are for convenient
          reference only and do not form a part of this Agreement.
  18.  Tax
          Withholding .
          All
          payments made pursuant to this Agreement will be subject to withholding
          of
          applicable taxes.
  19.  Governing
          Law .
          This
          Agreement will be governed by the laws of the state of California without
          regard
          to its conflict of laws provisions.
  20.  Code
          Section 409A .
          The
          Company and the Executive agree to work together in good faith to consider
          amendments to this Agreement necessary or appropriate to avoid imposition
          of any
          additional tax or income recognition prior to actual payment to Executive
          under
          Internal Revenue Code Section 409A and any temporary or final Treasury
          Regulations and Internal Revenue Service guidance thereunder.
  21.  Acknowledgment .
          Executive acknowledges that he has had the opportunity to discuss this
          matter
          with and obtain advice from his private attorney, has had sufficient time
          to,
          and has carefully read and fully understands all the provisions of this
          Agreement, and is knowingly and voluntarily entering into this
          Agreement.
  22.  Counterparts .
          This
          Agreement may be executed in counterparts, and each counterpart will have
          the
          same force and effect as an original and will constitute an effective,
          binding
          agreement on the part of each of the undersigned.
  
  -7-
   IN
          WITNESS WHEREOF, each of the parties has executed this Agreement, in the
          case of
          the Company by a duly authorized officer, as of the day and year written
          below.
  COMPANY:
  HI/FN,
          INC.
  /s/
                  William R. Walker
                
                Date:
                    November 16, 2006William
                    R. Walker
                  Vice
                    President of Finance, Chief Financial Officer
                  and
                    Secretary
  
  
 EXECUTIVE:
 /s/
                  Albert E. Sisto
                
                Date:
                    November 16, 2006ALBERT
                    E. SISTO
  
 **[SIGNATURE
            PAGE TO SISTO EMPLOYMENT AGREEMENT]**
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