Exhibit 10.21

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT


         THIS AMENDED AND RESTATED  EMPLOYMENT  AGREEMENT (this  "Agreement") is
made as of March 2, 1998, and amended and restated in its entirety  effective as
of  January  25,  1999,  by and  between W. Keith  Kennedy  (hereinafter  called
"Employee") and WATKINS-JOHNSON  COMPANY, a California corporation  (hereinafter
called the "Company").

         In  consideration  of the mutual covenants herein contained the parties
hereto agree as follows:

         1.       Term and Scope of Employment.

                  (a) The  Company  agrees  to  employ  Employee  in Palo  Alto,
California for a period of thirty-six (36) months, commencing March 9, 1998, and
ending March 9, 2001, for the purpose of rendering  services in connection  with
the Company's  business.  Employee agrees to accept  employment with the Company
for such purpose. In performing his duties hereunder, Employee shall observe and
comply with all directions  given by the Board of Directors of the Company or by
his superiors.

                  (b) Employee shall devote his full time, attention, and effort
to the business of the Company,  and shall not during the term of this Agreement
engage in any other  business  (whether as an employee,  partner,  consultant or
otherwise)  without the consent of the Company;  but this shall not be construed
as preventing  Employee from investing his assets in such form or manner as will
not interfere with the services he agreed to render to the Company hereunder.

                  (c)  Employee  agrees to inform the Board of  Directors of the
Company, or his superiors,  of all of his work and transactions on behalf of the
Company,  and to disclose to them his  knowledge of the  Company's  business and
affairs.


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         2.       Salary.

                  For his services the Company  agrees to pay Employee an annual
salary of not less than Four Hundred and Sixty-Five  Thousand Dollars ($465,000)
payable in equal biweekly installments.  In addition to the above amount, at the
sole  discretion of the Board of Directors,  Employee may be granted  bonuses or
other  compensation  in an amount to be  determined  in  accordance  with  Board
policy.

         3.       Termination.

                  (a) For Cause.  During the term of this Agreement,  Employee's
employment  may be  terminated  by the  Company  for Cause (as  defined  below),
effective  immediately  upon the day it sends Notice of Termination (as required
by Section 10(b)) to Employee,  at which time compensation  will cease.  "Cause"
for this purpose,  shall mean fraud,  misappropriation,  embezzlement or willful
engagement  by Employee  in  misconduct  which is  demonstrably  and  materially
injurious  to the  Company  and its  subsidiaries  taken as a  whole.  An act or
omission of Employee shall not be considered  "willful"  unless done, or omitted
to be done, by Employee without good faith and a reasonable  belief that the act
or omission  was in the best  interests  of the  Company  and its  subsidiaries.
Employee may not be terminated  for Cause unless and until there shall have been
delivered to Employee a copy of a resolution duly adopted by affirmative vote of
not less than  three-quarters of the entire membership of the Company's Board of
Directors  at a meeting  of the Board  called and held for that  purpose  (after
reasonable  notice to Employee and an  opportunity  for Employee,  together with
Employee's counsel,  to be heard before the Board),  finding Employee was guilty
of the  conduct  set forth in the  first  sentence  of this  Section  3(a),  and
specifying the  particulars  thereof in detail.  Notwithstanding  the foregoing,
Employee  shall  have the right to  contest  such  termination  for  Cause  (for
purposes of this  Agreement) by arbitration in accordance with the provisions of
Section 9.

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                  (b) Without Cause. Company may terminate Employee's employment
without Cause. In the event Company  terminates  Employee's  employment  without
Cause,  in addition to the entire  compensation  provided for  hereunder for the
remainder  of the term  specified in Section 1(a) (which shall be paid in a lump
sum),  Employee shall be entitled to receive upon such termination without Cause
(in a lump sum)  severance  compensation  equal to six (6) month's  base salary,
less all amounts required by law to be withheld and deducted; provided, however,
that if the  Company  terminates  Employee's  employment  other  than for death,
Disability or Cause,  or Employee  terminates  his  Employment  for Good Reason,
prior to the date of  occurrence of a Change in Control if such  termination  is
effected by the Company (or the actions or decisions  giving rise to  Employee's
termination for Good Reason are taken or made by the Company) in anticipation of
a Change of Control such termination  shall for all purposes  hereunder have the
same  consequences as a termination by Employee under  subparagraph  (c) of this
Section 3 (any such  termination,  action or  decision  effected,  taken or made
within  90 days  prior  to the  date of any  such  Change  in  Control  shall be
conclusively deemed to be in anticipation of a Change in Control).

                  (c) Change in Control.  This Agreement shall not be terminated
upon a Change in Control,  as defined in subparagraph  (d) of this Section 3. In
the event of a Change in Control,  the  provisions  of this  Agreement  shall be
binding  on and  shall  inure  to the  benefit  of the  surviving  or  resulting
corporation,  or (in the case of a Change in Control of the kind  referred to in
Section  3(c)(i)(z))  the  corporation  to which  the  applicable  assets of the
Company have been transferred;  provided,  however,  that (a) Employee may treat
the occurrence of a Change in Control as a material breach of this Agreement and
may terminate  this  Agreement  upon written  notice given (in  accordance  with
Section 10(b)) within 120 days of the occurrence of a Change in Control,  unless
Employee's  employment has  theretofore  been  terminated in accordance with any
other  provisions  of  this  Agreement,  and (b)  Employee  may  terminate  this
Agreement for Good Reason at any time  following  the  occurrence of a Change in
Control and during the  remainder of the term of this  Agreement as specified in
Section 1(a).  Upon such  termination,  or upon a

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termination  of Employee by the Company  without Cause at any time following the
occurrence of a Change in Control, the Company shall:

                         (i)   pay to Employee as  severance  pay in a lump sum,
in cash,  on the fifth day  following  the Date of  Termination  (as  defined in
subparagraph  (g) of this  Section 3), an amount  equal to the  aggregate of (x)
299.999% of  Employee's  "Base  Compensation"  (as defined  below),  plus (y) an
amount equal to (A) the amount previously  determined by the Board as Employee's
target bonus for the calendar  year in which Notice of  Termination  is given by
Employee or the Company,  as the case may be, multiplied by (B) a fraction,  the
numerator  of which  shall be the number of days that have  elapsed  during such
calendar  year,  through  and  including  the  date  on  which  such  Notice  of
Termination  is given,  and the  denominator  of which  shall be 365;  provided,
however,  that if the lump sum  severance  payment  under this Section 3, either
alone or together  with other  payments (or the value of other  benefits)  which
Employee has the right to receive from the Company in  connection  with a Change
in Control,  would not be  deductible  (in whole or in part) by the Company as a
result of such lump sum payment  constituting a "parachute  payment" (as defined
in Section 280G of the Internal Revenue Code of 1986, as amended  (collectively,
the "Code")),  such lump sum severance payment (or, at Employee's election, such
other payments and/or  benefits,  or a combination of such other payments and/or
benefits and such lump sum  severance  payment)  shall be reduced to the largest
amount as will result in no portion of the lump sum severance payment under this
Section 3 not being fully  deductible by the Company as a result of Section 280G
of the Code.  The  determination  of the amount of any such  required  reduction
pursuant to the foregoing provision,  and the valuation of any non-cash benefits
for purposes of such  determination,  shall be made exclusively by the firm that
was acting as the Company's  auditors prior to the Change in Control (whose fees
and expenses  shall be borne by the Company),  and such  determination  shall be
conclusive and binding.  The term "Base  Compensation"  shall mean an average of
the annual  cash  compensation  paid to  Employee  by the Company and any of its
subsidiaries in the form of salary or bonuses  (including any amount that is the
subject of an

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elective  deferral  by  Employee)  during  the five  taxable  years  immediately
preceding the Change in Control  which was  includable in gross income (or would
have been so  included  but for any such  elective  deferral)  by  Employee  for
federal income tax reporting purposes; and

                         (ii)  arrange to  provide  Employee,  for a  thirty-six
month period (or such shorter  period as Employee may elect),  with  disability,
accident,  group  life,  medical  and dental  insurance,  all of which  shall be
prepaid,  substantially  similar to those  insurance  benefits which Employee is
receiving  immediately  prior to a  termination  by Employee  under this Section
3(c).  Benefits  otherwise  receivable by Employee pursuant to this Section 3(c)
shall be reduced to the extent  comparable  benefits  are  actually  received by
Employee during such thirty-six  month period (or such shorter period elected by
Employee), and any such benefits actually received by Employee shall be reported
by Employee to the Company.

                  (d) Definition of Change in Control. A Change in Control shall
be  deemed  to  have  occurred  if  (i)  there  shall  be  consummated  (x)  any
consolidation  or  merger  of the  Company  in  which  the  Company  is not  the
continuing or surviving  corporation,  (y) any other  consolidation or merger to
which the  Company is a party,  regardless  of whether  shares of the  Company's
Common Stock would be converted into cash,  securities or other property,  other
than a merger of the Company in which the holders of the Company's  Common Stock
immediately prior to the merger have the same proportionate  ownership of common
stock (or the equivalent fully voting  securities) of the surviving  corporation
or other entity  immediately after the merger, or (z) any sale, lease,  exchange
or other transfer (in one  transaction or a series of related  transactions)  of
all, or  substantially  all, of the assets of the  Company,  or (ii) the Company
consummates   (in  one  or  a  series  of   transactions)   the  disposition  of
substantially all of its business operations,  or (iii) any "person" (as defined
in Sections 13(d) and 14(d) of the Securities  Exchange Act of 1934, as amended,
shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 30% or more of the Company's outstanding Common
Stock,  or (iv) during any period of two consecutive  years,  individuals who at
the  beginning  of such period  constitute  the entire Board

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of Directors of the Company  shall cease for any reason to constitute a majority
thereof  unless the election,  or the  nomination  for election by the Company's
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.

                  (e) Disability.  If, as a result of Employee's  incapacity due
to physical or mental  illness,  Employee shall have been absent from his duties
with the Company on a full-time basis for six  consecutive  months and within 30
days after written  Notice of  Termination  is  thereafter  given by the Company
Employee  shall not have  returned to the  full-time  performance  of Employee's
duties, the Company may terminate this Agreement for "Disability."

                  (f) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean any of the following (without Employee's express written consent):

                           (A)  the  assignment  to  Employee  by the Company of
duties  inconsistent  with, or a substantial  alteration in the nature or status
of, Employee's  responsibilities  immediately prior to a Change in Control other
than any such alteration  primarily  attributable to the fact that the Company's
securities are no longer publicly traded;

                           (B)  a reduction  by the Company in  Employee's  base
salary  in  effect  on the date of a  Change  in  Control  or as the same may be
increased from time to time during the term of this Agreement;

                           (C)  failure  by the  Company to  continue  in effect
without substantial change any compensation,  incentive, welfare or benefit plan
or arrangement,  as well as any plan or arrangement whereby Employee may acquire
securities,  in which  Employee  is  participating  at the  time of a Change  in
Control  (or any other  plans  providing  Employee  with  substantially  similar
benefits,  hereinafter  referred  to as "Benefit  Plans"),  or the taking of any
action by the Company which would adversely affect  Employee's

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participation in or materially reduce Employee's benefits under any such Benefit
Plan or deprive  Employee of any material  fringe benefit enjoyed by Employee at
the time of a Change in  Control;  unless an  equitable  substitute  arrangement
(embodied in an ongoing  substitute or  alternative  Benefit Plan) has been made
for the benefit of Employee  with respect to the Benefit  Plan in question.  For
purposes of the foregoing,  Benefit Plans shall include,  but not be limited to,
the Company's  Employee  Stock  Ownership  Plan,  Employees'  Profit Sharing and
Investment  Plan,  Deferred  Compensation  (401K)  Plan,  1991 Stock  Option and
Incentive Plan, Top Management  Incentive  Bonus Plan,  and/or any other plan or
arrangement to receive and exercise stock options or stock appreciation  rights,
incentive,  bonus or other award plans,  group life  insurance  plans,  medical,
dental, accident and disability plans;

                           (D)  a   relocation   of  the   Company's   principal
executive offices to a location outside the San  Francisco-Oakland-San  Jose Bay
Area, or Employee's  relocation to any place other than the principal  executive
offices  of the  Company,  except for  required  travel by  Employee  on Company
business to an extent  substantially  consistent with Employee's business travel
obligations at the time of a Change in Control;

                           (E)  any  material  breach  by  the  Company  of  any
provision of this Agreement;

                           (F)  any   failure  by  the  Company  to  obtain  the
assumption  of this  Agreement  by any  successor  or assign of the  Company  as
required in Section 7; or

                           (G)  any   purported    termination   of   Employee's
employment which is not effected pursuant to a Notice of Termination  satisfying
the requirements of Section 10(b) below. For purposes of this Agreement, no such
purported termination shall be effective.

                  (g) Date of Termination.  "Date of Termination" shall mean (a)
for  Disability,  30 days  after  Notice  of  Termination  is given to  Employee
(provided Employee has not returned to the

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performance  of  Employee's  duties on a  full-time  basis  during  such  30-day
period), or (b) if Employee's employment is terminated for any other reason, the
date on which Notice of Termination is given by the Company or Employee,  as the
case may be.

         4.  Nondisclosure  and  Assignment of Rights in Company Data.  "Company
Data" is  hereby  defined  to mean for  purposes  of this  Agreement,  programs,
improvements,  records,  ideas,  files,  drawings,  documents,  customer  lists,
investment opportunities,  sales and marketing techniques and devices, formulae,
specifications,   research,  studies,   investigations,   processes,  data,  and
information disclosed to or known by Employee as a consequence, whether directly
or indirectly,  of his employment by Company which is not generally known in the
industry  in which the  Company  is or may  become  engaged  and which  involves
special  techniques  or know-how in  connection  with the  industry in which the
Company is or may become engaged,  and,  without  limiting the generality of the
foregoing,  anything not within the public domain and public knowledge,  whether
or not patentable or copyrightable.  The parties hereto  acknowledge that in the
course of his employment, Employee will himself, or with others, have access to,
use, come in contact with,  obtain,  make,  evolve or conceive  Company Data. As
further  consideration  for  Company's  entering into this  Agreement,  Employee
hereby sells, assigns and transfers to Company all right, title, and interest he
has or at any time may have to Company  Data,  and to any and all other  Company
Data at any time used in the  business of Company in which  Employee  may have a
right, title, or interest, and such Company Data shall be the sole and exclusive
property of Company.

         5. Assignment.  The rights and obligations of Employee  hereunder shall
not be assignable  and any attempted  assignment  shall be void.  The rights and
obligations  of Company  hereunder may be assigned as a part of any  transaction
which  includes  the transfer of all or  substantially  all of the assets of the
Company, whether such transfer is made pursuant to a sale of assets or stock, or
a merger, reorganization, or otherwise.

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         6. No Obligation to Mitigate Damages. Employee shall not be required to
mitigate  damages or the amount of any payment provided for under this Agreement
by seeking other  employment  or otherwise,  nor shall the amount of any payment
provided  for under this  Agreement  be reduced  by any  compensation  earned by
Employee as a result of employment by another employer or by retirement benefits
after the Date of  Termination,  or otherwise,  except to the extent provided in
Section 3 above.

         7. Successor to the Company. The Company shall require any successor or
assign  (whether  direct or indirect,  by  purchase,  merger,  consolidation  or
otherwise)  to all or  substantially  all of the business  and/or  assets of the
Company,  by agreement  satisfactory  to  Employee,  expressly,  absolutely  and
unconditionally 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 it if no
such  succession  or  assignment  had taken  place.  As used in this  Agreement,
"Company"  shall mean the Company as  hereinbefore  defined and any successor or
assign to its business  and/or assets which  executes and delivers the agreement
provided for in this Section 7 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.

         8. Heirs of Employee.  This Agreement shall inure to the benefit of and
be  enforceable  by Employee's  personal and legal  representatives,  executors,
administrators,  successors,  heirs,  distributees,  devisees and  legatees.  If
Employee  should die while any amounts are still payable to him  hereunder,  all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Employee's  devisees,  legatee, or other designee
or, if there be no such designee, to Employee's estate.

         9. Arbitration.  Any dispute,  controversy or claim arising under or in
connection  with  this  Agreement,  or  the  breach  hereof,  shall  be  settled
exclusively by arbitration in accordance with the Commercial  Arbitration  Rules
of the American Arbitration  Association then in effect. Judgment upon the

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award rendered by Arbitrator(s) may be entered in any court having  jurisdiction
thereof. Any arbitration held pursuant to this Section 9 shall take place in San
Francisco, California.

         10.      Notice.

                  (a) General.  For purposes of this Agreement,  notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly  given  when  delivered  or mailed by United  States
registered mail, return receipt requested, postage prepaid, as follows:

                           If to the Company:

                           Watkins-Johnson Company
                           3333 Hillview Avenue
                           Palo Alto, California 94304
                           Attention:  Corporate Secretary


                           If to Employee:

                           W. Keith Kennedy
                           26955 Orchard Hill Lane
                           Los Altos Hills, California  94022


or such other address as either party may have furnished to the other in writing
in accordance  herewith,  except that notices of address shall be effective only
upon receipt.

                  (b)  Notice  of  Termination.  Any  purported  termination  of
employment  shall be communicated by a written Notice of Termination to Employee
in  accordance  with  paragraph  (a) of this  Section  10,  and shall  state the
specific termination  provisions in this Agreement relied upon, and set forth in
reasonable  detail  the facts and  circumstances  claimed to provide a basis for
termination of Employee's employment.

         11. Nonwaiver, Complete Agreement, Governing Law. No provisions of this
Agreement may be modified, waived or discharged unless in writing signed by both
parties. No waiver by either party

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hereto at any time of any breach by the other party of, or compliance  with, any
condition or provision of this Agreement  shall be deemed a waiver of similar or
dissimilar  provisions  or  conditions at the same or at any prior or subsequent
time. No agreements or representations,  oral or otherwise,  express or implied,
with respect to the subject  matter  hereof have been made by either party which
are not set forth expressly in this Agreement.  This Agreement shall be governed
by and construed in accordance with the laws of the State of California.

         12. Legal Fees and Expenses. The Company shall pay all reasonable legal
fees  and  expenses  which  Employee  may  incur as a  result  of the  Company's
contesting the validity,  enforceability or Employee's good faith interpretation
of, or good faith determinations under, this Agreement;  provided, however, that
the Company  shall not pay any legal fees and  expenses  incurred by Employee in
contesting the termination of Employee's employment for Cause if, as a result of
such contest, it is determined that Employee was in fact terminated for Cause.

         13. Validity.  The invalidity or  unenforceability of any provisions of
this  Agreement  shall not affect the  validity or  enforceability  of any other
provision of this Agreement, which shall remain in full force and effect.

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

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date first above written.

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                                                    WATKINS-JOHNSON COMPANY


                                                    By   /s/ Dean A. Watkins
                                                         -------------------
                                                         Title: Chairman



                                                         /s/ Keith Kennedy
                                                         -------------------

                                                         Keith Kennedy

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