Document:

EXECUTIVE RETENTION AGREEMENT
                              AMENDED AND RESTATED

         This Executive Retention Agreement (the "Agreement") is entered into as
of June 1, 1998,  (the "Effective  Date") by and between Robert B. Fougner,  who
resides at 2475  Elevado  Road,  Vista,  CA 92084 (the  "Executive")  and Cylink
Corporation (the "Company"), and amended and restated as of April 1, 2002.

         WHEREAS, the Executive has faithfully and diligently served the Company
as its General Counsel and Corporate Secretary since December 18, 1989;

         NOW,  THEREFORE in  consideration  of Executive's  past services and to
encourage  Executive's  continued  services on the Company's behalf, the parties
agree to the following:

                          PART I - NATURE OF AGREEMENT

1. Waiver Of Employment  Agreement.  In  consideration  of the special  services
rendered by Executive and the nature of Executive's duties, this Agreement shall
not be construed as a contract of  employment.  Executive has been and continues
to serve "at will", and the Company is free at all times to discharge  Executive
from its continued service,  subject to the terms and benefits described in this
Agreement.

2. Conditions For Benefits.  This Agreement will address certain benefits in the
event of (i)  Executive's  separation  from the  Company's  service,  and (ii) a
Change in Control or a Corporate Transaction,  as those terms are defined in the
Company's  1994 Stock  Incentive  Plan, as amended (the  "Plan"),  except that a
Corporate Transaction shall also include any acquisition of more than 50% of the
Company's  outstanding  securities  by any entity or related  group of  entities
(collectively with a Corporate Transaction, a "Corporate Event").

3. Executive Compensation.  This Agreement shall not replace, affect or limit in
any way Executive's  eligibility for continued  adjustments in compensation  and
benefits including but not limited to merit increases in salary, bonuses, awards
under  the Plan and  similar  benefits  offered  to  other  Company  executives,
provided  however  that  Executive's  eligibility  for  such  adjustments  shall
continue only for so long as Executive remains in the Company's service. Nothing
in this  Agreement  shall be construed as an obligation on behalf of the Company
to grant any such adjustments in Executive's compensation and benefits.

4. Commuting and Telecommuting.  The Company acknowledges that Executive intends
to move his  principal  place of  residence  more than 100  miles  away from the
Company's  principal  place of business.  In  consideration  for the Executive's
agreement

<PAGE>

Executive Retention Agreement
Cylink Corporation
Robert B. Fougner

to continue his  employment at the Company's  offices on a full time basis,  the
Company shall provide  Executive,  at the Company's  expense,  with (i) suitable
rental  living  quarters,  cleaning  services  and  utilities,  for  Executive's
exclusive  use,  comparable to those  previously  provided for relocation of the
Company's  senior  employees,  and  (ii)  payment  of all  travel  expenses  for
commuting  (e.g.  airfare,   parking  and  local  transportation)   between  the
Executive's  principal place of residence and the Company's offices. The Company
further agrees to the Telecommuting Agreement attached to this Agreement.

                        PART II - SEPARATION FROM SERVICE

5. Involuntary  Termination.  In the event Executive's  employment is terminated
either: (i) by the Company for any reason except for Good Cause, as that term is
defined  herein,  or (ii) by the  Executive  for Good  Reason,  as that  term is
defined  herein,  then the Company  agrees to compensate  the Executive with the
following remuneration:

         5.1      Severance.  The Company shall continue to pay Executive salary
                  and bonus for a period of six months (the "Severance Period"),
                  subject to tax  withholdings  as required by law, based on the
                  highest  amount paid by Executive over any twelve month period
                  prior to notice of  termination,  pro rated  monthly,  for the
                  duration of the Severance Period. At Executive's  option, this
                  severance may be paid in full at time of  termination  or over
                  the Severance Period in accordance with the Company's standard
                  payroll   practices.   In  the  event  of  termination   under
                  subsections   (iv)  or  (v)  of  Section  8  ("Termination  By
                  Executive  For Good  Reason"),  Executive's  Severance  Period
                  shall be  increased  to an amount  equal  twelve  (12)  months
                  salary and bonus  calculated in  accordance  with this Section
                  5.1.

         5.2      Benefits. The Company shall pay Executive's cost of exercising
                  his rights under COBRA to continuing  medical  benefits during
                  the Severance Period.

         5.3      Consulting  Agreement.  The  Company  and  Executive  shall be
                  deemed to have entered into the Consulting  Agreement  annexed
                  hereto as Attachment "A" effective  immediately as of the date
                  of Executive's

                                       2
<PAGE>

Executive Retention Agreement
Cylink Corporation
Robert B. Fougner

                  separation from service.  Except as  specifically  provided in
                  this  Agreement,  the Company  shall be under no obligation to
                  employ Executive under said Consulting Agreement.

         5.4      Extension  Of Stock Option  Period.  Subject to any other time
                  limitations  imposed by law,  the  ninety  (90) day period for
                  exercise of all outstanding Stock Options previously issued to
                  Executive shall be extended for the duration of the Consulting
                  Agreement.

         5.5      Automobile.  The automobile used  exclusively by Executive for
                  Company   business  (the   Executive   Automobile)   shall  be
                  transferred  to  Executive,  at  the  Company's  expense,  and
                  Executive's  severance payments shall be "grossed up" to cover
                  payment of all taxes,  fees and costs incurred by Executive as
                  a  consequence  of this  transfer.  Executive is authorized to
                  execute a transfer of title and  registration on the Company's
                  behalf necessary to effect this transfer.

         5.6      Office  Equipment.  Executive shall be permitted to retain his
                  personal laptop computer,  peripheral equipment, and a copy of
                  his work product (subject to his professional  obligations and
                  code of ethics concerning client confidentiality)

6.  Termination  For Good Cause.  The following  grounds shall serve as the sole
basis for  termination of Executive's  employment by the Company for Good Cause:
(i) a material  breach by Executive of his duty of loyalty to the Company except
when  required by law,  (ii) a  persistent  and  continuing  refusal to follow a
written  instruction  addressed  personally to Executive by the Company's  Chief
Executive Officer, except when Executive has a good faith basis for believing he
is   precluded   by  law  from  doing  so,   (iii)  in  the  event  of  material
misappropriation  by Executive  of Company  assets for personal use (which shall
specifically  exclude disputes  concerning  Executive's  handling of his expense
accounts and personal property used regularly by Executive in conducting Company
business),  in the event  Executive  is convicted  of a felony  involving  fraud
(other than disputes  concerning taxes) or serious bodily harm (other than those
arising from a traffic related accident).

7. Notice Of  Termination  For Good Cause And Cure.  Termination  for Good Cause
shall be deemed to have occurred ninety (90) days following Notice (as that term
is

                                       3

<PAGE>

Executive Retention Agreement
Cylink Corporation
Robert B. Fougner

defined herein) which sets forth specifically the grounds which constitute "Good
Cause" and the Company's intention to terminate Executive's  employment,  unless
prior to  expiration  of said  ninety (90) day period  Executive  cures all such
stated grounds or, in the event cure within said ninety period is impracticable,
Executive commences to effect such cure and diligently  continues to do so until
cure is completed.

8.  Termination  By Executive  For Good Reason.  In the event  Executive  serves
written notice to the Company of his resignation due to any one of the following
reasons, then Executive's  resignation shall be deemed to have occurred for Good
Reason: (i) a material change in Executive's  responsibility,  including without
limitation,  either the  assignment of any of  Executive's  responsibilities  to
other  personnel  or  the  addition  of  additional   responsibility  previously
fulfilled by other personnel,  without Executive's consent,  (ii) a reduction in
Executive's  title or  direct  reporting  relationship  to the  Chief  Executive
Officer of the Company or its parent  corporation,  if any (iii) a reduction  in
Executive's  salary or  denial  of bonus  payments  commensurate  with  previous
bonuses paid to Executive for satisfactory performance, unless such reduction is
part of a fiscal plan by the Company for a period of less than twelve months due
to the Company's  severe  financial under  performance and provided such plan is
applied equitably to all of the Company's officers,  (iv) subject to Part III of
this Agreement,  the occurrence of a Change In Control or a Corporate Event, (v)
a change in the  Company's  Chief  Executive  Officer,  (vi) upon  completion of
Executive's  Year 2001 Goals annexed to this First  Amendment as Attachment  "A"
but, for purposes of this subsection  (vi), no earlier than December  January 1,
2002,  or (vii) at any time after March 29, 2002.  Any reduction in the benefits
described  in  Section  4  ("Commuting  and  Telecommuting")  shall be  deemed a
reduction in salary or bonus for purposes of subsection  (iii) of this Section 7
(regardless of whether such reduction is part of a fiscal austerity program).

9. Notice Of Termination  For Good Reason.  Termination for Good Reason shall be
deemed to have  occurred  thirty  (30) days  following  Notice  (as that term is
defined herein) which sets forth specifically the grounds which constitute "Good
Reason" and the  Executive's  intention to  terminate  his  employment  with the
Company.

10.  Death  or  Disability.  In the  event of  Executive's  (i)  death,  or (ii)
Executive  resigns due to a disability  certified by a licensed  physician which
materially impairs  Executive's  ability to fulfill his  responsibilities  for a
period exceeding ninety (90) days (a  "Disability")  then,  subject to any other
limitations  which may be imposed by law, the period for

                                       4

<PAGE>

Executive Retention Agreement
Cylink Corporation
Robert B. Fougner

exercise of Executive's Stock Options shall be extended until twelve (12) months
from the date of death or commencement of Executive's disability.

11.  Indemnification.  In the event of Executive's separation from the Company's
service for any reason,  Executive  shall  continue to be  indemnified  and held
harmless  for claims  arising  out of or related  in any way  whatsoever  to his
activities  as an officer  of the  Company to the full  extent  provided  in the
Company's  Articles  of  Incorporation,  By-Laws  and  in  accordance  with  the
Indemnification  Agreement previously executed by the parties. In addition,  the
Company shall  continue to cover  Executive  under the  Company's  Directors and
Officers  Liability  Insurance  for  any  claims  related  to  such  activities,
regardless  of whether the claim is asserted  prior to or following  the date of
termination of Executive's employment.

                    III. CHANGE OF CONTROL OR CORPORATE EVENT

12.  Acceleration  Of Stock  Options.  In the event of a Change in  Control or a
Corporate  Event,  all  outstanding  Stock  Options  issued to  Executive  shall
immediately vest and become exercisable regardless of the date of grant.

13. Special Bonus. In the event of a Corporate Event,  Executive shall receive a
bonus equal to the cumulative amount of Executive's  annual bonuses,  consistent
with the  President's  letter dated  August 24,  1998,  and salary that has been
unpaid due to corporate austerity programs in effect since fiscal year 2000.

                             IV. GENERAL PROVISIONS

14.  Entire  Agreement;   Modification.   This  Agreement,   and  all  documents
incorporated  herein,  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 in this Agreement, 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.

                                       5

<PAGE>

Executive Retention Agreement
Cylink Corporation
Robert B. Fougner

15.  Survival.  The provisions of this Agreement  which,  by their terms,  imply
continuation   beyond  the  end  of   Executive's   employment   shall   survive
notwithstanding any termination of Executive's employment.

16.  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  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.

17. 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 or be construed as a waiver of any subsequent breach.

18.  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 provided by the
Executive in the  Company's  records and, if to the Company,  at the address set
forth on the first  page of this  Agreement,  attention  of the Chief  Executive
Officer. Either party may change the notice address by notice in accordance with
this Section.

19.  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,  in  such  event,  only on the  condition  that  the  assignee
specifically  assumes in writing  all of the  Company's  obligations  under this
Agreement.

20.  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.

                                       6

<PAGE>

Executive Retention Agreement
Cylink Corporation
Robert B. Fougner

21. Arbitration.

         21.1     In the event of any dispute of any kind whatsoever between the
                  parties,  arising  out  of or  related  in  any  way  to  this
                  Agreement,  the parties  agree to submit all such  disputes to
                  binding  arbitration.  Each party shall be entitled to appoint
                  one  arbitrator,  who  shall  not  be an  affiliate,  officer,
                  director, employee, agent, vendor or contractor of that party.
                  The  appointed   arbitrators  shall  then  appoint  a  neutral
                  arbitrator  who shall serve as Chairman,  and the  arbitration
                  shall be conducted by the arbitrators so chosen.  The parties'
                  arbitrators shall be experienced  executives in the technology
                  industry,  and the  Chairman  shall be an attorney  practicing
                  litigation  in the field of  employment  law. The  arbitration
                  shall be conducted in Santa Clara County,  California.  Demand
                  for  arbitration  shall be made in writing and shall be served
                  upon the party or parties to whom the demand is  addressed  in
                  the  manner  provided  for  the  tender  of  notices  in  this
                  Agreement.  If the party  receiving the demand for arbitration
                  does not appoint its arbitrator within 30 days after receiving
                  such notice, the arbitrator appointed by the party serving the
                  demand for arbitration  shall be further empowered to serve as
                  the sole arbitrator, notwithstanding that he fails to meet the
                  qualifications for the Chairman set forth in this Section.

         21.2     The arbitrators  are authorized to award any remedy,  legal or
                  equitable,  as  well  as  any  interim  relief  as  they  deem
                  appropriate in their discretion. However,  notwithstanding the
                  foregoing,  the  arbitrators  shall  have no  power to add to,
                  subtract  from,  or modify any of the terms or  conditions  of
                  this Agreement.

         21.3     Subject to the arbitration  agreement  stated in this Article,
                  the federal and state  courts  located in Santa Clara  County,
                  California  shall have exclusive  jurisdiction  over all other
                  legal proceedings between the parties. Executive agrees to the
                  personal  jurisdiction  of said  courts and to the  receipt of
                  service  of process  in the same form as other  notices  under
                  this  Agreement.  Application may be made to any such court to
                  assist the arbitrators in performing their arbitral duties, to
                  confirm  their  award  and to  enforce  any  such  award  as a
                  judgment of said court.

                                       7

<PAGE>

Executive Retention Agreement
Cylink Corporation
Robert B. Fougner

22. 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.

23. 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: /s/ William P. Crowell
                                           -----------------------------
                                           William P. Crowell
                                           President & CEO

                                       EXECUTIVE

                                       /s/ Robert B. Fougner
                                       -----------------------------
                                       Robert B. Fougner

                                       8
<PAGE>

Document Form No. D3-301-006                             Telecommuting Agreement
Revision A                                                      October 30, 2001
--------------------------------------------------------------------------------

                            TELECOMMUTING AGREEMENT

This   Telecommuting   agreement  is  entered  into  between  Cylink Corporation
("CYLINK") and Robert B. Fougner ("EMPLOYEE") effective as of April 1, 2002.

1.   EMPLOYEE  agrees to work at his/her home work space at 2475  Elevado  Road,
     Vista, CA,  approximately 1-2 weeks per month, subject to the necessity for
     Employee's  participation  in  meetings  at  Cylink's  facilities  or other
     locations,  as determined  by Employee in his best judgment and  reasonable
     discretion (generally referred to as "telecommuting").

2.   CYLINK   will  provide  EMPLOYEE  with:  (List  equipment  department  will
     provide)

     Personal computer, peripherals, fax/printer, dedicated teleco line,
     ---------------------------------------------------------------------------

     Broadband service provider, broadband receiver and installation
     ---------------------------------------------------------------------------

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

3.   EMPLOYEE will provide:

     Facilities, liability insurance, office furnishings
     ---------------------------------------------------------------------------

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

4.   CYLINK agrees to reimburse EMPLOYEE for reasonable business expenses,  such
     as long distance telephone charges,  according to the Telecommuting  Policy
     and Finance Department  guidelines.  CYLINK will not reimburse EMPLOYEE for
     any other  expenses  incurred while  telecommuting,  such as public utility
     charges.

5.   EMPLOYEE  is  required  to  comply  with the  department's  record  keeping
     practice regarding attendance and absence notification.

6.   EMPLOYEE will be expected to meet all agreed upon performance  measures and
     objectives.

7.   The telecommuter shall hold harmless and otherwise indemnify Cylink for any
     injuries that occur to third parties,  including  members of telecommuter's
     family.  By entering into the  Telecommuting   Agreement  with Cylink,  the
     employee  represents  and  warrants  that they have  homeowner's  liability
     insurance  coverage  for  injuries to third  parties for an amount not less
     than $250,000.

8.   This Agreement is subject to Employee's Executive Retention  Agreement,  as
     Amended and Restated (the "Retention Agreement").  EMPLOYEE continues to be
     subject  to  all  policies,   procedures  and  guidelines  of  CYLINK   and
     understands and agrees that certain  policies and notices are available and
     accessible  only  at  CYLINK'S  offices.

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

                   Cylink Corporation Proprietary Information        Page 1 of 2
                     Document is Uncontrolled When Printed

<PAGE>

Document No. D3-301-006                                  Telecommuting Agreement
Revision A                                                      October 30, 2001
--------------------------------------------------------------------------------

9.   This  Agreement is in effect for as long as Employee is employed  under the
     Retention Agreement.

10.  Upon completion of the telecommuting  arrangement,  EMPLOYEE (may keep/must
     return): (List equipment EMPLOYEE may keep or must return)
     ---------------------------------------------------------------------------

     Employee may keep all equipment provided by Cylink
     ---------------------------------------------------------------------------

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

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

11.  EMPLOYEE  has read and  understands  the Cylink  Corporation  Telecommuting
     Policy which is specifically incorporated by reference into this Agreement.

        Dated: 4/1/02                            /s/ [ILLEGIBLE]
              ----------------------            ----------------------
                                                    Employee Name

                                                CYLINK CORPORATION

        Dated: 4/18/02                          by: /s/ [ILLEGIBLE]
              ----------------------               -------------------
                                                      Manager's Name

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

                   Cylink Corporation Proprietary Information        Page 2 of 2
                     Document is Uncontrolled When Printed

<PAGE>

                                 ATTACHMENT "A"

<PAGE>

                               CYLINK CORPORATION
                              CONSULTANT AGREEMENT

THIS  AGREEMENT,  by and between  CYLINK  Corporation  ("CYLINK"),  a California
corporation  with principal  offices  located at 910 Hermosa  Court,  Sunnyvale,
California, 94086, and ROBERT B. FOUGNER ("CONSULTANT") is made and entered into
as of the date of termination of  CONSULTANT's  full time employment with CYLINK
(the "Effective  Date"), in accordance with the terms of CONSULTANT's  Executive
Retention Agreement dated as of June 1,1998, as Amended and Restated as of April
1, 2002.

                                   WITNESSETH

In consideration of the undertakings set forth herein,  the parties hereby agree
with each other as follows:

1. APPOINTMENT

CYLINK  hereby  appoints  CONSULTANT,  and the  CONSULTANT  hereby  accepts such
appointment,  to accept  employment from CYLINK as an independent  consultant in
the manner hereinafter described.

2. STATEMENT OF WORK

   A. At least once a month,  CONSULTANT will report in writing to CYLINK on the
      progress of the work described in Subparagraph B, herein.

   2. CONSULTANT  agrees to accept employment for the Projects agreed to by both
      parties in  writing  from time to time.  Nothing  stated  herein  shall be
      construed as an  obligation by either party to employ  CONSULTANT  for any
      specific Project.

3. TERM

This  Agreement  commences  as of the  date  of  CONSULTANT's  termination  from
CYLINK's full time employment,  and shall continue for a period of two years, or
until  CONSULTANT  exercises all of his  outstanding  options to purchase CYLINK
stock, whichever shall first occur.

4. PAYMENT

The amount of Payment shall be agreed by the parties in writing for each Project
during the term of this  Agreement.  Any  expenses  incurred  by  CONSULTANT  in
performing the Statement of Work shall be the sole responsibility of CONSULTANT,
unless otherwise agreed in the Project Statement.

                                       1
<PAGE>

Consultant Agreement
Cylink Corporation
Robert B. Fougner

5. RELATIONSHIP OF THE PARTIES

   CONSULTANT will serve as an independent  contractor,  and this Agreement will
   not be  deemed to  create a  partnership,  joint  enterprise,  or  employment
   relationship  between  the  parties  nor a  right  to any of  the  rights  or
   privileges otherwise resulting therefrom.  The authority of the CONSULTANT is
   limited  to the  performance  of the  functions  set forth in the  Agreement.
   CONSULTANT  shall make  appropriate  filings  with  taxing  authorities  as a
   self-employed  entity,  and shall be liable for all required  payments to the
   local, State, Federal and other taxing authorities  (including income tax and
   social  security and SDI payments).  CONSULTANT  agrees to indemnify and hold
   CYLINK  harmless for any claims for payments made by said taxing  authorities
   resulting from performance of CONSULTANT pursuant to this Agreement.

   Neither  party  shall  have  authority  to make any  Agreement  or incur  any
   liability on behalf of the other party,  nor shall either party be liable for
   any  acts,   omissions   to  act,   contracts,   commitments,   promises   or
   representations made by the other, except as specifically  authorized in this
   Agreement or as the parties may otherwise agree.

6. OTHER OBLIGATIONS

   CONSULTANT  represents and warrants to CYLINK that CONSULTANT is now under no
   contract  or  Agreement,   with  any  other  person,  firm,   association  or
   corporation  that will, in any manner,  prevent  CONSULTANT from giving,  and
   CYLINK  from  receiving,   the  full  benefit  of  CONSULTANT's  services  in
   accordance  with the terms of this  Agreement.  CYLINK agrees that during the
   Term of this Agreement or any extension or renewal  thereof,  CONSULTANT may,
   after  written  notice to CYLINK,  be employed by other  persons,  firms,  or
   corporations  engaged  in the same or  similar  business  as that of  CYLINK,
   provided,   however,   that  CONSULTANT  will  observe  all  of  his  ethical
   obligations the Code of Professional Responsibility governing attorney client
   confidentiality with respect to CYLINK's confidential information.

   CONSULTANT  agrees  that it  will  not  solicit  the  services  of any of the
   employees,  consultants,  suppliers or customers of CYLINK during the term of
   this Agreement and for six (6) months thereafter.

                                       2
<PAGE>

Consultant Agreement
Cylink Corporation
Robert B. Fougner

7. AUDIT AND RECORDS

   CYLINK  or its duly  authorized  representatives  shall  have  access  at all
   reasonable  times during the Term of this Agreement and for a period of three
   (3) years  thereafter  to  CONSULTANT's  records and all other  documentation
   pertaining to CONSULTANT's services hereunder for the purpose of auditing and
   verifying  the  cost of such  services.  CONSULTANT  shall  also  retain  all
   documents,  notes and records  pertaining  to this  Agreement or any services
   rendered hereunder for a period of three (3) years.

8. NOTICES

   Any notice or demand  required or permitted to be given under this  Agreement
   shall be in  writing  and  shall be  deemed  to have  been  duly  given  when
   delivered  personally  or  received by  registered  mail or  certified  mail,
   postage prepaid, at the following respective addresses (or such other address
   as the parties  may agree to):

   CYLINK                             CONSULTANT
   ------                             ----------
   CYLINK  Corporation                2475 Elevado Road
   3131 Jay Street                    Vista, CA 92084
   Santa  Clara,  CA. 95054
   (408) 735-5800                     760-941-4464

9. ASSIGNMENT

   This Agreement is not assignable without prior written approval of CYLINK and
   any attempt to assign any rights,  duties or obligations  herein without such
   approval shall be void.

10. GOVERNING LAW AND JURISDICTION

    This Agreement shall be  interpreted,  construed and governed by the laws of
    the State of  California.  The parties  agree to submit all  disputes of any
    kind  whatsoever  arising out of this Agreement to arbitration in accordance
    with the procedure stated in CONSULTANT's Executive Retention Agreement.

                                       3
<PAGE>

Consultant Agreement
Cylink Corporation
Robert B. Fougner

11. GENERAL PROVISIONS

    Deviations from these terms and conditions are not valid unless confirmed in
    writing by an  authorized  representative  of both  parties.  All rights and
    remedies,  whether  conferred hereby or by any other instrument or law shall
    be cumulative,  and may be exercised singularly or concurrently.  Failure by
    either  party to enforce any  contract  term shall not be deemed a waiver of
    future  enforcement  of that or any other  term.  If any  provision  of this
    Agreement is held invalid under any applicable  statute or rule of law, such
    invalidity  shall not affect any other provisions of the Agreement which can
    be  given  effect  without  the  invalid  provisions,  and to  this  end the
    provisions of this  Agreement are declared to be severable.  Notwithstanding
    the  above,  such  invalid  provision  or clause  shall be  construed to the
    extent possible, in accordance with the original intent of the parties.

                                       4
<PAGE>

                            FIRST AMENDMENT TO LEASE

        This First Amendment to Lease (the "Amendment") is dated as of August 5,
1999, for reference  purposes  only, and is made between  Orchard Jay Investors,
LLC, a California  limited liability company,  and David J. Brown  (collectively
"Landlord") and Cylink Corporation,  a California corporation  ("Tenant"),  with
reference  to the  following  facts and  circumstances,  which are  conclusively
agreed between the parties:

            A.  Landlord  and Tenant are parties to a lease dated for  reference
        purposes as of May 10, 1999 (the "Lease").  All capitalized words having
        an assigned  meaning in the Lease shall continue to have such meaning in
        this Amendment unless explicitly modified.

            B.  Pursuant  to the  Lease,  Tenant has leased  from  Landlord  two
        buildings located at 3131 and 3151 Jay Street,  Santa Clara,  California
        (the "Existing Premises"), within Landlord's Project.

            C. Tenant  wishes to lease the  remaining  building of the  Project,
        located at 3101 Jay Street,  Santa Clara,  California,  on the terms set
        forth herein.  Accordingly,  Landlord and Tenant wish to amend the Lease
        on the terms and conditions set forth below.

            D.  Landlord and Tenant  acknowledge  Tenant's  intent to sublease a
        portion of the First  Floor  Space (as defined  below)  after  execution
        hereof  (but also  agree  that such  subleasing  shall be subject to the
        provisions of the Lease  relating to subleasing  and shall not be deemed
        approved hereby).

        Now,  therefore,  in  consideration  of all of the  foregoing  facts and
circumstances,  and for good and valuable consideration, the receipt of which is
acknowledged by each party,  Landlord and Tenant agree to and do amend the Lease
as follows:

1.      Description of Additional Space:

        Landlord's  building at 3101 Jay Street,  Santa Clara,  California  (the
"3101 Building"),  is a two-story  building.  As used herein, the first story of
the 3101

<PAGE>

First Amendment To Lease                                            Page 2 of 16
--------------------------------------------------------------------------------

        Building,  comprised of 22,099 square feet of gross leasable area,  will
        be referred to as the "First  Floor  Space" and the second  story of the
        3101  Building,  comprised of 24,625 square feet of gross leasable area,
        will be referred to as the "Second  Floor  Space".  The First and Second
        Floor  Spaces are shown on the drawing  attached  hereto as Exhibit "A".
        The First  Floor  Space does not include all space on the first floor of
        the 3101 Building.  Rather, the cross-hatched portion of the first floor
        is not a part of the First Floor Space,  but rather  constitutes a lobby
        and access area which is a part of the Second Floor Space.

2.      Demise of Additional Space

        Pursuant to the terms and conditions hereof, and of the Lease,  Landlord
hereby leases to Tenant (a) the First Floor Space,  beginning on the First Floor
Commencement Date (as defined herein) and for the term specified herein; and (b)
the Second Floor Space,  beginning on the Second Floor Commencement Date and for
the term specified herein.

        Tenant  acknowledges  and agrees that  Landlord is currently  party to a
lease  of  the  Second   Floor   Space  with   TollBridge   Technologies,   Inc.
("TollBridge"), the current tenant, and that the lease of the Second Floor Space
to Tenant is subject to the rights of  TollBridge.  Landlord is only required to
deliver the Second Floor Space to Tenant after TollBridge's  possessory interest
terminates or is terminated  and after  Landlord has had a reasonable  period of
time to deliver the Second Floor Space in  accordance  with  Paragraph 11 below.
Landlord  represents  to  Tenant  that  it is  not  contractually  obligated  to
TollBridge for a term in excess of five (5) years from the commencement  date of
such lease  (currently  estimated to be September 1, 1999) plus whatever partial
month may be added pursuant to the terms thereof if the commencement date is not
the first day of a month.  Landlord  shall not agree to extend  the term of such
lease beyond such five (5) year term. When the  commencement  date of such lease
is established, Landlord shall give Tenant written notice of such date.

        This Amendment creates an indivisible,  single Lease of all of the space
leased  to  Tenant,  and  shall  not  under  any  circumstances  be deemed to be
divisible  into  separate  leases on the  separate  buildings.  Except as herein
provided,  all of the terms and  provisions of the Lease,  including  Landlord's
--------------------------------------------------------------------------------

<PAGE>

First Amendment To Lease                                            Page 3 of 16
--------------------------------------------------------------------------------

remedies  under the Lease,  shall apply to all space  leased as a whole,  and if
Landlord is allowed to terminate the Lease,  such right is to be exercised as to
all of the property.  A termination which occurs at a time when Tenant is not in
possession  of the Second  Floor Space  shall  nevertheless  terminate  Tenant's
rights to the Second Floor Space.

3.      Term for Additional Space

        The  parties  agree that this Lease as  amended  shall  expire as to all
space  (including the Existing  Premises,  the First Floor Space, and the Second
Floor  Space) on the same day.  Accordingly,  the lease  terms for the First and
Second Floor Spaces shall be as follows.

            A. The Lease  Term for the First  Floor   Space  shall  begin on the
         First Floor  Commencement  Date (as defined  below) and run through the
         Expiration  Date under the Lease (as defined  therein) unless the Lease
         is sooner terminated under and pursuant to its terms.

            B. The Lease  Term for the Second  Floor  Space  shall  begin on the
         Second Floor  Commencement  Date (as defined below) and run through the
         Expiration  Date under the Lease (as defined  therein) unless the Lease
         is sooner terminated under and pursuant to its terms.

4.      Option To Extend Terms on Additional Space

        The First and  Second  Floor  Spaces  shall be  subject  to the  options
provided to Tenant  pursuant to Paragraph 2 of the First Addendum to Lease.  The
option  granted  thereby  shall be a  single,  indivisible  option  which may be
exercised  only as to the total space leased by Tenant  (including  the Existing
Premises and the 3101 Building). Rent and other terms during any option term for
the First and  Second  Floor  Spaces  shall be  determined  as set forth in said
Paragraph 2.

5.      Modification Of Option Provision

        Paragraph 2A of the option  granted in Paragraph 2 of the First Addendum
--------------------------------------------------------------------------------

<PAGE>

First Amendment To Lease                                            Page 4 of 16
--------------------------------------------------------------------------------

to the Lease is hereby modified to provide that the Earliest Exercise Date shall
be the date  which is 360 days  before the date the Lease Term would end but for
the exercise of the option and the Last Exercise Date shall be the date which is
270 days before the Lease Term would end but for the exercise of the option.

6.      Effect On Right Of First Offer

        With the execution of this Amendment,  Tenant's rights under Paragraph 1
of the First Addendum to Lease shall be eliminated,  Tenant having  obtained the
rights to all of the First Offer Space described  therein,  and such Paragraph 1
shall be of no further force or effect.

7.      Commencement Dates

        The Tenant  Improvements  for the First Floor Space shall be constructed
according to the timeline which is attached hereto as Exhibit "B". If the Tenant
Improvements  are  completed  by October 1, 1999,  or if they would have been so
completed but for delays caused by Tenant in regard to the schedule presented in
the timeline,  then the First Floor  Commencement Date shall be October 1, 1999.
However,  if Landlord's delay and failure to meet the schedule set forth in such
timeline  causes the First Floor Space to be  completed  after  October 1, 1999,
then the First Floor Commencement Date shall be the date of such completion.  In
the event that Landlord completes construction and tenders the First Floor Space
to  Tenant  prior to the  First  Floor  Commencement  Date,  Tenant  shall  have
occupancy  thereof  without being  obligated to pay Base Monthly Rent,  and such
occupancy  shall be subject to all other  terms and  conditions  of the Lease as
amended hereby,  including the duty to pay Tenant's Share of Operating Expenses.

        The Second Floor  Commencement  Date shall be the date on which Landlord
shall  tender  the  Second  Floor  Space  to  Tenant  in  compliance   with  the
requirements for condition thereof set forth above and below. Landlord agrees to
use reasonable  efforts to obtain  possession of the Second Floor Space from the
then-occupant(s)  thereof,  by legal process if  necessary,  in the event of any
holdover past the term of the TollBridge Lease.
--------------------------------------------------------------------------------

<PAGE>

First Amendment To Lease                                            Page 5 of 16
--------------------------------------------------------------------------------

        Landlord  agrees  that (1) it will  provide  Tenant  with  copies of any
Notices of Default given to  TollBridge;  (2) it will provide Tenant with copies
of any Complaint filed against TollBridge seeking possession of the Second Floor
Space;  (3) it will provide Tenant with copies of any Judgment entered in regard
to such a  Complaint;  (4) it will  keep  Tenant  apprised  of  progress  on any
eviction  action  against  TollBridge  with the  intent  that  Tenant  have good
information  on the likely date on which  Landlord  will gain  possession of the
Second Floor Space;  (5) it will  reasonably  cooperate with Tenant in regard to
marketing the Second Floor Space for sublease (without waiving the provisions of
the Lease relating to subleases) in advance of Landlord's delivery of possession
to Tenant;  (6) it will give Tenant written notice when it obtains possession of
the Second Floor Space from  TollBridge;  and (7) it will not,  without Tenant's
written  agreement,  tender the Second Floor Space to Tenant any sooner than (a)
if such  notice is given  during the first two years  following  the First Floor
Commencement  Date,  ninety (90) days after the date  Landlord  gives  notice to
Tenant  that  it  has  obtained  possession  of  the  Second  Floor  Space  from
TollBridge,  and (b) if such notice is given thereafter,  thirty (30) days after
the date Landlord gives notice to Tenant that it has obtained  possession of the
Second Floor Space from TollBridge.  Notwithstanding the foregoing,  Tenant will
not be entitled to any such notices or notice periods if TollBridge's lease ends
by its terms on expiration of the lease term thereof.

        Upon delivery of the Second Floor Space,  Landlord and Tenant shall sign
a further  Amendment to this Lease, in form reasonably  prepared and approved by
Landlord,  reflecting the Second Floor  Commencement  Date and the acceptance of
possession of the Second Floor Space pursuant  hereto.  However,  the failure to
execute such an Amendment shall not invalidate or otherwise  affect the lease of
such space.

8.      Base Monthly Rent

        As used in both of the  tables set forth in this  Paragraph,  Month 1 is
the first full month after the  Commencement  Date under the Lease and Month 120
is the final month of the Lease. Notwithstanding this reference, however, Tenant
shall begin to make Base Monthly Rent  payments for the First Floor Space on the
First Floor Commencement Date and for the Second Floor Space on the Second
--------------------------------------------------------------------------------

<PAGE>

First Amendment To Lease                                            Page 6 of 16
--------------------------------------------------------------------------------

Floor  Commencement  Date, as more fully set forth in the examples  which follow
each table.

        The Base Monthly Rent from the First Floor  Commencement  Date until the
Second Floor Space is tendered to Tenant shall be as set forth in the  following
Table I, where Column A represents the Base Monthly Rent under the Lease for the
Existing Premises, Column B represents the additional Base Monthly Rent paid for
occupancy of the First Floor Space, and Column C represents the sum of Columns A
and B and thus the total Base Monthly Rent which is due:

TABLE I: BASE MONTHLY RENT UNTIL SECOND FLOOR SPACE IS DELIVERED

        -----------------------------------------------------------
                             A               B               C
        -----------------------------------------------------------
        Mo.    Thru    BMR/Existing     BMR 1st Fl.      Total BMR
        -----------------------------------------------------------

        -----------------------------------------------------------
        1       12      $174,406.96     $47,512.85      $221,919.81
        -----------------------------------------------------------
        13      24      $179,639.17     $48,617.80      $228,256.97
        -----------------------------------------------------------
        25      36      $185,028.34     $49,722.75      $234,751.09
        -----------------------------------------------------------
        37      48      $190,579.19     $50,827.70      $241,406.89
        -----------------------------------------------------------
        49      60      $196,296.57     $51,932.65      $248,229.22
        -----------------------------------------------------------
        61      72      $202,185.47     $53,037.60      $255,223.07
        -----------------------------------------------------------
        73      84      $208,251.03     $54,142.55      $262,393.58
        -----------------------------------------------------------
        85      96      $214,498.56     $55,247.50      $269,746.06
        -----------------------------------------------------------
        97      108     $220,933.52     $56,352.45      $277,285.97
        -----------------------------------------------------------
        109     120     $227,561.52     $57,457.40      $285,018.92
        -----------------------------------------------------------

However,  rent for the First Floor Space under Table I shall be applicable  only
from and after the First Floor Commencement Date. Thus, for purposes of example,
if the First Floor  Commencement  Date occurs on the first day of Month 2 of the
Lease, then the Base Monthly Rent for the Existing Premises for Month 1 would be
$174,406.96  and the Base  Monthly  Rent for the First  Floor Space would not be
payable in Month 1, the Base  Monthly Rent for the First Floor Space for Month 2
would  be  $47,512.85,  the  total  Base  Monthly  Rent  for  Month 2  would  be
$221,919.81 and the rent for the following 118 months of the Lease
--------------------------------------------------------------------------------

<PAGE>

First Amendment To Lease                                            Page 7 of 16
--------------------------------------------------------------------------------

for the First Floor Space and the  Existing  Premises  would be as set forth for
months 3 through 120 in Table I.

        In the event that, for any reason,  the  Commencement  Date of the Lease
for the Existing  Premises  does not occur until after First Floor  Commencement
Date, Tenant shall nonetheless begin paying Base Monthly Rent on the First Floor
Space on the First Floor  Commencement Date at the rate shown in Column B above,
and shall  continue at that rate through the  Commencement  Date under the Lease
and thence for 120 months at the total rates shown in Table I, Column C.

        The Base Monthly Rent for all space leased from Landlord from the Second
Floor Commencement Date until the end of the Lease Term shall be as set forth in
the  following  Table II, where Column A represents  the Base Monthly Rent under
the Lease for the Existing  Premises,  Column B represents the  additional  Base
Monthly Rent paid for  occupancy  of the First Floor Space,  Column C represents
the additional  Bases Monthly Rent paid for occupancy of the Second Floor Space,
and Column D represents  the sum of Columns A, B, and C, and thus the total Base
Monthly Rent which is due:

TABLE II: BASE MONTHLY RENT AFTER SECOND FLOOR SPACE IS DELIVERED

    ----------------------------------------------------------------------------
                         A               B               C               D
    ----------------------------------------------------------------------------
    Mo.    Thru    BMR/ Existing    BMR 1st Fl.     BMR 2nd Fl.      Total BMR
    ----------------------------------------------------------------------------

    ----------------------------------------------------------------------------
    1       12      $174,406.96     $47,512.85      $52,943.75      $274,863.56
    ----------------------------------------------------------------------------
    13      24      $179,639.17     $48,617.80      $54,175.00      $282,431.97
    ----------------------------------------------------------------------------
    25      36      $185,028.34     $49,722.75      $55,406.25      $290,157.34
    ----------------------------------------------------------------------------
    37      48      $190,579.19     $50,827.70      $56,637.50      $298,044.39
    ----------------------------------------------------------------------------
    49      60      $196,296.57     $51,932.65      $57,868.75      $306,097.97
    ----------------------------------------------------------------------------
    61      72      $202,185.47     $53,037.60      $59,100.00      $314,323.07
    ----------------------------------------------------------------------------
    73      84      $208,251.03     $54,142.55      $60,331.25      $322,724.83
    ----------------------------------------------------------------------------
    85      96      $214,498.56     $55,247.50      $61,562.50      $331,308.56
    ----------------------------------------------------------------------------
    97      108     $220,933.52     $56,352.45      $62,793.75      $340,079.72
    ----------------------------------------------------------------------------
    109     120     $227,561.52     $57,457.40      $64,025.00      $349,043.92
    ----------------------------------------------------------------------------

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

<PAGE>

First Amendment To Lease                                            Page 8 of 16
--------------------------------------------------------------------------------

However, the amounts of rent shown in Table II shall be applicable only from and
after the Second Floor Commencement Date. Thus, for purposes of example,  if the
Second Floor Commencement Date occurs on the first day of Month 61 of the Lease,
then this Table II would not be applicable for months 1 through 60 of the Lease,
the  Base  Monthly  Rent for the  Second  Floor  Space  for the  first  month of
occupancy  (Month  61) would be  $59,100.00  and the rent for the  following  59
months of the Lease for the Second  Floor Space would be as set forth for months
62 through 120 in the table,  Column C. If the Second  Floor  Commencement  Date
does not fall on the first day of a month,  then the  partial  month in which it
falls shall be prorated.

        The  amounts of Base  Monthly  Rent for the First  Floor Space set forth
under  Column B in each of the above  tables  shall be in  addition to all other
sums payable under the Lease as Base Monthly Rent for the Existing Premises, and
the amounts  payable for the Second Floor Space under Column C of Table II shall
be in addition to all amounts payable for the First Floor Space and the Existing
Premises.

        All sums  stated  as Base  Monthly  Rent in this  Paragraph  shall be in
addition to all Additional Rent, expenses, and other sums required to be paid by
Tenant pursuant to the Lease as amended by this Amendment.

9.      Tenant Improvements

        Landlord  shall  construct  improvements  for Tenant in the First  Floor
Space  pursuant to the plans  identified as follows:  "Project 845 - Jay Street,
Building A, First Floor Tenant  Improvements,  Permit 2, dated  1/12/99,  by DES
Architects"  (the  "Plans"),  and at a cost  to be  paid by  Landlord  which  is
expected to be $447,561.00. Except as provided below in regard to changes to the
Plans  which  cause  increased  expenses,  or  unless  Tenant  otherwise  causes
increased  expense,  Tenant will not be responsible for any cost of construction
in excess of this amount.

        If Tenant  wishes  changes  in the  Plans,  any  increased  expenses  of
constructing the improvements as a result of Tenant's requested changes shall be
paid by Tenant  under the  provisions  of Exhibit  "B" to the  Lease,  the

--------------------------------------------------------------------------------
<PAGE>

First Amendment To Lease                                            Page 9 of 16
--------------------------------------------------------------------------------

Improvement Agreement,  Paragraph 5A and B. Such expenses shall include, but not
be limited to, all hard  construction  costs,  architecture  costs,  engineering
costs,  City  fees,  and any and all  other  expenses  reasonable  and  normally
incurred in conjunction with such construction.

        Such  construction   shall  be  conducted   pursuant  to  the  following
additional terms and conditions:

            A. The provisions of Exhibit B, the Interior Improvement  Agreement,
         shall not apply to  construction of Tenant  Improvements  for Tenant in
         the First Floor Space except as specifically  adopted and  incorporated
         herein.

            B.  Landlord and Tenant will  consult on the Plans,  and Tenant will
         have a reasonable  opportunity to request and obtain  changes  therein,
         and will thereafter  execute an approved set of Plans as modified and a
         memorandum   approving   any  increase  in  costs   occasioned  by  the
         modifications  to the Plans,  if any.  Thereafter,  any  changes to the
         Plans  will be made only on  written  Change  Order,  executed  by both
         parties and  containing  agreement  to Tenant's  payment of  additional
         costs of such Change Orders.  In each case, at the time of agreement to
         the changes,  Tenant will pay Landlord the agreed  amount of additional
         cost at the times specified above

            C. In the event of any changes or  modifications  to the Plans which
         increase  the  cost of  construction,  Tenant  will  pay  Landlord,  in
         addition  to  all  other  amounts   specified   hereunder,   Landlord's
         construction  management  fee of Four Percent (4%) of the hard costs of
         construction on such increased costs.

            D. Upon Landlord's  completion of the Tenant Improvements called for
         hereby,  Landlord  and Tenant shall walk through the First Floor Space,
         using  reasonable  efforts  to locate and  identify  any  defective  or
         incomplete  construction.  Thereafter,  an agreement  shall be executed
         which will  contain a list of all "punch  list" items which the parties
         agree are to be  corrected by  Landlord,  and

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

<PAGE>

First Amendment To Lease                                           Page 10 of 16
--------------------------------------------------------------------------------

        Landlord will use reasonable diligence to correct and complete same.

            E. Landlord and Tenant adopt and incorporate  Paragraphs 9 and 12 of
        the  Interior   Improvement   Agreement  as  applicable  to  the  Tenant
        Improvements being constructed in the First Floor Space by Landlord.  If
        there  is  any  inconsistency  between  this  Amendment  and  the  Lease
        (including the Interior  Improvement  Agreement),  this Amendment  shall
        prevail.

            F.  Tenant  shall not be entitled to any credit or payment or future
        construction  of improvements  if the  improvements  shown on the Plans,
        with or without any further changes or  adjustments,  are constructed by
        Landlord at a lesser  cost than set forth  herein.  Notwithstanding  the
        foregoing,  in the  event  that,  after  the  accounting  called  for by
        Paragraph 5C of the  Interior  Improvement  Agreement,  Exhibit B to the
        Lease,  it is determined  that amounts paid by Tenant exceed what is due
        hereunder, Landlord shall refund the overpayment.

10.     Warranty for Building Shell and Grounds

        The limited  warranty  provided by Paragraph 8 of the First  Addendum to
Lease shall apply to the 3101 Building and surrounding parking, landscaping, and
grounds  as they  existed  prior  to  construction  of the  Tenant  Improvements
referenced in Paragraph 9 above and prior to the  construction of the TollBridge
tenant improvements referenced in Paragraph 11 below.

11.     Condition of Second Floor Space

        Tenant has reviewed the plans for construction of tenant improvements in
the Second Floor Space for the existing tenant,  which are described as follows:
"Project 845 - Jay Street, Building A, Second Floor Tenant Improvements,  Permit
3 Re-submittal, dated 7/30/99, by DES Architects". Tenant will accept the Second
Floor Space for the term  created  hereby in their  "AS-IS"  condition  with the
construction  set forth in such plans (and  including  reasonable  changes

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

<PAGE>

First Amendment To Lease                                           Page 11 of 16
--------------------------------------------------------------------------------

made by Landlord by agreement  with  TollBridge,  or its  successors  during the
course of  construction)  completed at Landlord's  expense,  with all latent and
patent faults, without warranty or obligation on the part of Landlord to provide
any   further   interior   improvements   or  tenant   improvement   allowances.
Notwithstanding the foregoing,  in the event that Tenant takes possession of the
Second  Floor Space prior to the  expiration  of said  warranties  (as set forth
below in this  paragraph),  Tenant shall be entitled to the same warranties with
regard to the Second Floor Space as Landlord granted to Tenant under Paragraph 9
of the  Interior  Improvement  Agreement,  Exhibit B to the Lease,  for a period
beginning on the Commencement Date for the Existing Premises or the commencement
date of the  TollBridge  lease,  whichever is earlier,  and running for eighteen
(18) months  thereafter.  Tenant shall have no obligation  to restore the Second
Floor Space to a better  condition  than it's condition when it was delivered to
Tenant.

        Upon  surrender of  possession  of the Second Floor Space by the current
tenant thereof,  Landlord will attempt to cause the person or persons  obligated
under the Lease with  TollBridge  to return the Second Floor Space in accordance
with the  requirements of the current tenant's lease. If the current tenant does
not turn the Second Floor Space over to Landlord in the required condition, then
Landlord will remove or cause to be removed all items of personal property which
are not  attached  to the  premises;  will  cause the Second  Floor  Space to be
cleaned to "broom clean"  condition;  and, to the extent that Landlord has funds
available  pursuant to the current  Tenant's  security deposit or from available
insurance  proceeds actually  received,  Landlord will use such funds to restore
the Second Floor Space to the condition in which the current  tenant is required
to return it. Landlord shall not be required to expend its own funds beyond what
is available through the current tenant's security deposit for such restoration,
and may reserve and not spend on restoration  sufficient funds from the security
deposit  to pay  for any  rent  loss  during  the  period  between  turnover  of
possession by the current tenant and the Second Floor Commencement Date.

12.     Increased Security Deposit; Amendment to Security Deposit Clause

        Tenant has provided to Landlord,  on execution of the Lease,  a Security
Deposit  in the  total  sum of  $827,561.22,  of which  $227,561.22  (the  "Cash
Deposit") is a cash deposit and the remaining $600,000.00 (the "Additional

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

<PAGE>

First Amendment To Lease                                           Page 12 of 16
--------------------------------------------------------------------------------

Deposit") is currently made by a letter of credit. On execution  hereof,  Tenant
shall deposit an additional  cash deposit as part of the Cash Deposit in the sum
of $57,457.40.  In addition thereto,  Tenant shall deposit a letter of credit or
cash to increase the  Additional  Deposit  from  $600,000.00  to  $1,400,000.00.
Following these deposits, the total Security Deposit, including Cash Deposit and
Additional Deposit, will be $1,685,018.60.

        Upon delivery of the Second Floor Space,  Tenant shall further  increase
the Cash Deposit by a further cash deposit of  $64,025.00,  with the result that
the total Security Deposit,  including Cash Deposit and Additional Deposit, will
be increased to $1,749,043.60.

        The foregoing deposits shall be held,  treated,  and applied pursuant to
the provisions of the Lease relating thereto, as amended hereby. Paragraph 3B of
the First Addendum to Lease is deleted hereby,  and the following is substituted
therefore:

            B.  Notwithstanding the foregoing,  the Additional Deposit,  whether
        then held as a cash or letter of credit  deposit,  shall be  released by
        Landlord if (1) four years have passed after the Commencement Date under
        the Lease and (2) Tenant has achieved all of the following  goals during
        the calendar quarters immediately preceding the date of release

                1. Net Income per Tenant's audited financial statements has been
            profitable  each  quarter  for  six  consecutive  calendar  quarters
            immediately preceding the release;

                2  Income  from  Continuing   Operations  per  Tenant's  audited
            financial  statements  has  been  profitable  each  quarter  for six
            consecutive calendar quarters immediately preceding the release;

                3. The aggregate  total of profit for Net Income and Income from
            Continuing Operations per

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

<PAGE>

First Amendment To Lease                                           Page 13 of 16
--------------------------------------------------------------------------------

            Tenant's  audited  financial  statements  for  the  six  immediately
            preceding  calendar quarters as shown by Tenant's audited financials
            is at least $15,000,000.00.

                4. Tenant is not then in default past any applicable cure period
            provided in the Lease

            In addition,  the  achievement  of these goals must be documented to
            Landlord in form and substance reasonably approved by Landlord,  and
            Tenant's  audited  financials  must be in accordance  with generally
            accepted accounting principles, consistently applied. Release of the
            Additional  Deposit  shall not take place  until at least four years
            have passed after the Commencement Date under the Lease.

13.     Tenant's Share

        Beginning on the First Floor Commencement Date, the Tenant's Share under
the Lease shall  remain 100% of the  Existing  Premises,  shall be  increased to
47.30% of the 3101 Building, and shall be increased to 82.73% of the Project. In
the event  Tenant  takes early  occupancy  of the First Floor Space prior to the
First Floor  Commencement  Date,  then the Tenant's  Share shall be so increased
from the first day of early occupancy.  Notwithstanding the foregoing, until the
Commencement  Date for the Existing Premises (if such Commencement Date is later
than the First Floor Commencement Date), Tenant's Share of the Existing Premises
shall be 0% and Tenant's Share of the Project shall be determined  solely by the
space of which it has possession, if any..

        Beginning  on the Second Floor  Commencement  Date,  the Tenant's  Share
under the Lease shall be 100% of each of the three  Buildings (the 3101 Building
and the Existing Premises) and 100% of the Project.

14.     Parking

        Effective  on the First  Floor  Commencement  Date,  Tenant's  Allocated
Parking  Stalls shall be increased to 445 stalls.  Effective on the Second Floor
Commencement Date, Tenant's Allocated Parking Stalls shall be all on-site

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

<PAGE>

First Amendment To Lease                                           Page 14 of 16
--------------------------------------------------------------------------------

parking stalls.  From and after the Second Floor  Commencement  Date, Tenant may
designate a further five (5) parking stalls for use as "Visitor" spaces, subject
to all of the terms and provisions of the Lease and in particular,  to Paragraph
7 of the First Addendum to Lease.

15.     Continuing Obligation

        Except  as  expressly  set  forth  in  this  Amendment,  all  terms  and
conditions  of the Lease  remain in full  force  and  effect,  and all terms and
conditions of the Lease are incorporated herein as though set forth at length.

16.     Effect of Amendment

        This  Amendment  modifies  the Lease.  In the event of any  conflict  or
discrepancy  between the Lease and/or any other previous  documents  between the
parties  and the  provisions  of this  Amendment,  then the  provisions  of this
Amendment shall control.  Except as modified  herein,  the Lease shall remain in
full force and effect.

17.     Authority

        Each individual executing this Amendment represents and warrants that he
or she is duly  authorized  to and  does  execute  and  deliver  this  Amendment
pursuant to express authority from Tenant or Landlord,  as applicable,  pursuant
to and in  accordance  with the By-Laws and the other  organic  documents of the
signing party.

18.     Entire Agreement

        The Lease, as modified by this  Amendment,  constitutes and contains the
entire  agreement  between the parties,  and there are no binding  agreements or
representations   between  the  parties  except  as  expressed  herein.   Tenant
acknowledges  that neither Landlord nor Landlord's  Agents have made any legally
binding  representations  or warranties as to any matter except for such matters
which  are  expressly  set  forth  herein  and  in  the  Lease,   including  any
representations  or warranties  relating to the condition of the Premises or the
improvements  thereto or the  suitability  of the  Premises  or the  Project for
Tenant's

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<PAGE>

First Amendment To Lease Page                                      Page 15 of l6
--------------------------------------------------------------------------------

business.

19.     Commissions

        Commissions  on this  transaction  will be subject to the  provisions of
Paragraph  15.13 of the Lease,  and  commissions to Retained Real Estate Brokers
will be paid by Landlord pursuant to Landlord's  separate written agreement with
such Brokers.

20.     Subordination and Non-Disturbance Agreement

        Not later than the First Floor Commencement  Date,  Landlord will obtain
for  Tenant  the  written  agreement  of Wells  Fargo  Bank  incorporating  this
Amendment into the Subordination and Non-Disturbance  Agreement executed by said
lender with regard to the original Lease.

21.     Elevator Access

        Tenant  acknowledges  that, from time to time during the period when the
Second Floor Space is not under Tenant's control, the tenant thereof,  currently
TollBridge, will be required to service, maintain, and when necessary repair the
elevator,  which requires access to elevator facilities through a portion of the
First Floor Space. Tenant agrees that during such period,  Tenant will cooperate
reasonably  with the Second  Floor  Space  tenant and its  vendors  and  service
providers to allow such service, maintenance, and repair at reasonable times and
on reasonable conditions.  Tenant shall not be responsible for any damage caused
by such entry and access into the First Floor Space.

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

<PAGE>

First Amendment To Lease                                           Page 16 of 16
--------------------------------------------------------------------------------

LANDLORD:                                TENANT:

Orchard Jay Investors, LLC, a            Cylink Corporation, a California
California limited liability company     corporation

By: ___________________                  By: /s/ [ILLEGIBLE]
     Michael J. Biggar                      ------------------------
      Managing Member
                                         /s/ [ILLEGIBLE]
Dated: ___________________               ---------------------------
                                                [Print Title]

                                                    CFO
David J. Brown                           ---------------------------
                                                [Print Title]

                                         By: /s/ Robert B. Fougner
                                            ------------------------
By: Orchard Jay Investors, LLC
    his authorized agent                      Robert B. Fougner
                                         ---------------------------
                                                 [Print Name]

By: _________________________                 Corporate Secretary
      Michael J. Biggar                  ---------------------------
       Managing Member                           [Print Title]

Dated: ______________________

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

<PAGE>

                                   Exhibit A

                        First Floor Space, 3101 Building

                                [GRAPHIC OMITTED]

                        Not a part of First Floor Space

                                 Page One of Two

<PAGE>

                                    Exhibit A

                        Second Floor Space, 3101 Building

                                [GRAPHIC OMITTED]

                                 Page Two of Two

<PAGE>

                                    Exhibit B

                             Schedule of Performance
                        First Floor Tenant Improvements

            Action                                         Responsible
             Items                        Due Date            Party
            ------                        --------         -----------

A.      Delivery to                      Completed.          Tenant
        Landlord of
        Tenant's Interior
        Interior

B.      Delivery to                      Completed.          Landlord
        Tenant of Revised
        First Floor Plans

C.      Approval by                      8/10/99             Tenant
        Tenant of Revised
        First Floor Plans

D.      Delivery to Tenant               8/11/99             Landlord
        of Constuction Cost
        Estimate for Revised
        Plans

E.      Approval by Tenant               8/13/99             Tenant
        of Construction
        Costs for Revised
        Plans

F.      Issuance of                      8/9/99              Landlord
        Building Permit
        for Original Plans

G.      Commencement of                  8/23/99             Landlord
        construction
        of First Floor
        Improvements

H.      Issuance of Building             8/31/99             Landlord
        Permit for Revised
        Plans

I.      Substantial                      10/1/99             Landlord
        Completion
        of First Floor
        ImprovementsEMPLOYMENT AGREEMENT

         Agreement made as of the 23rd day of July, 2001 (the "Effective Date"),
by and between Cylink Corporation,  a California  corporation with its principal
place of  business  at 3131 Jay  Street,  Santa  Clara,  California  95054  (the
"Company"),  and Mr. Philip Breeden residing at 57 San Benito Ave., Atherton, CA
94027 (the "Executive").

                              W I T N E S S E T H :

         WHEREAS,  the Company  desires to employ  Executive  as Vice  President
Engineering, 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 mutual covenants and agreements
herein contained, the Company and Executive agree as follows:

1. Employment.

         1.1.  The Company  hereby  agrees to employ  Executive,  and  Executive
agrees  to be  employed  by the  Company,  on the terms  and  conditions  herein
contained,  as of the Effective Date, as its Vice President Engineering,  and in
such other executive  capacities  assigned by the Chief Executive  Officer which
are not inconsistent with Executive's duties.  Executive's duties, authority and
responsibilities  shall be  commensurate  with those of a similar  position  for
another  company  similar in size and business.  During the term of  Executive's
employment,  he  shall be based at the  Company's  principal  office;  provided,
however,  that Executive shall be required to travel

                                       1

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

as reasonably necessary in connection with the official business of the Company.
Executive  shall  maintain  his  permanent   residence  within  the  surrounding
community. If so requested by the Chief Executive Officer,  Executive shall also
serve as an officer of the  Company's  affiliated  entities  without  additional
compensation.

         1.2. The Executive shall devote substantially all of his business time,
energy,  skill and efforts to the performance of his duties and shall faithfully
serve the  Company  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 the "Effective Date" and terminating,  unless
otherwise  terminated  earlier as provided in this  Agreement,  on July 23, 2006
(the "Original  Employment  Term"),  provided that the Employment  Term shall be
extended  (subject to earlier  termination  as provided in this  Agreement)  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 expire at the end of the then
                                       2

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

current term. If and when this  Agreement is so extended,  the term  "Employment
Term" used in this Agreement shall include all such extensions.  The Executive's
obligations concerning the Company's Inventions,  Confidential Information,  not
to compete or solicit the Company's  customers or  employees,  and the Company's
obligations to provide indemnification, as provided elsewhere in this Agreement,
shall  survive  and  remain in effect  notwithstanding  the  termination  of the
Employment  Term or a breach of this  Agreement  by either  the  Company  or the
Executive.

3. Compensation.

         3.1. As compensation for his services under this Agreement, the Company
shall pay  Executive an annual  salary of $185,000  ("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.

         3.2.  Executive's Base Salary may be increased from time to time by the
Chief  Executive  Officer,  but solely in his  discretion  and not as an implied
obligation of this Agreement. Executive's Base Salary may also be decreased from
time to time by the Chief Executive  Officer in his sole discretion based on his
assessment of the Executive's performance or changes in the scope of Executive's
responsibilities,  provided that  Executive  will be given written  notice and a
minimum  of ninety  (90) days to cure any such  assessment  which,  in the Chief
Executive Officer's discretion, warrants such a reduction.

                                       3

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

         3.3. In addition to the Base Salary,  for each calendar year  completed
during the  Employment  Term, the Company shall pay to Executive an annual bonus
of $70,000 based,  in part, on  achievement of performance  goals which shall be
determined by the Chief Executive  Officer in  consultation  with the Executive.
The actual bonus may vary in the sole discretion of the Chief Executive  Officer
based on his  assessment  of the  Executive's  performance  (and  subject to any
Company austerity plans).

         3.4. 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  then current  policies with respect to
travel,  entertainment  and other  business  expenses,  subject to the Company's
requirements concerning reporting and documentation of such expenses.

4. Benefits.

         4.1. During the Employment Term, Executive shall be entitled to (i) all
benefits,  if any, which are generally provided from time to time by the Company
to its senior executive officers,  including,  without limitation, (i) any life,
medical and disability insurance plans, (ii) incentive, profit-sharing, deferred
compensation   and  similar  such  plans,   subject  to:  (A)  the   Executive's
satisfaction  of the eligibility  requirements,  if any, and (B) with due credit
for the minimum annual bonus already provided under this
                                       4

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

Agreement, and (iii) all other benefits provided under this Agreement.

5. Stock Options.

         5.1.  The  Compensation  Committee  of  the  Board  (the  "Compensation
Committee"),  or its delegee,  authorized  granting to Executive on September 4,
2001,  options to purchase 170,000 shares of Company common stock at an exercise
price of $0.54 per share,  pursuant and subject to the  Company's  1994 Flexible
Stock  Incentive  Plan (the  "Plan").  Such options  shall be  non-qualified  or
incentive  stock options,  or a combination  thereof as determined by the Plan's
Administrator.  The terms of the options,  as more fully set forth in the option
agreement  annexed  hereto as  Attachment A, and  specifically  modified by this
Section 5, shall provide that (i) they shall be for a maximum six (6) year term,
and (ii) shall vest and become exercisable ratably over a two (2) year period on
the last day of each  month  during  such  period,  provided  the  Executive  is
employed by the Company on each vesting date.

         5.2. Furthermore,  in the event of a "Corporate Transaction" or "Change
In Control" during the Term of this Agreement, the Executive will be entitled to
vesting  of all of the  Executive's  then  unvested  options  (the  "Accelerated
Options")  under  all  option  agreements  granted  during  the  period  of  his
employment, subject to the provisions of this Section 5:

         5.2.1.   In the  event of a  "Corporate  Transaction"  the  Accelerated
                  Options shall
                                       5

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

                  fully vest  immediately  prior to closing unless the Company's
                  successor in interest, or its parent, offers to:

         5.2.2.   either  (i)  assume  the  Executive's  Accelerated  Options in
                  accordance  with  Section  11 of the  Plan and  allow  them to
                  continue  vesting  in  accordance  with their  terms,  or (ii)
                  replace them with equivalent options,  having the same vesting
                  schedule as the  original  grant by the  Company,  to purchase
                  publicly  traded  shares in the successor  corporation  or its
                  Parent  by  exchanging  them at the  same  rate of  conversion
                  offered to the Company's common  shareholders in the Corporate
                  Transaction, and

         5.2.3.   provided  further  that the  successor  in interest  agrees to
                  fully vest all such assumed or exchanged  Accelerated  Options
                  on the earlier of: (i) the first  anniversary of his continued
                  employment following such Corporate Transaction,  or (ii) upon
                  termination  of the  Agreement by the Company or its successor
                  in interest if such  termination  occurs  either  without good
                  Cause or by the Executive for Good Reason.

         5.3. In the event of a Change In Control, the Accelerated Options shall
vest on the earlier of: (i) the first anniversary of such Change In Control,  or
(ii) upon  termination  of the  Agreement  by the  Company or its  successor  in
interest  if  such  termination  occurs  either  without  good  Cause  or by the
Executive for Good Reason. For purposes of the

                                       6

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

Agreement and this Amendment,  the terms "Corporate  Transaction" and "Change in
Control"  shall  have the  definitions  of the Plan,  except  that a  "Corporate
Transaction"  shall  also  include  the  acquisition  of  more  than  50% of the
Company's  outstanding  securities  by any person or related group of persons as
defined  in  Section  13(d)(3)  of the  Securities  Act of 1934,  other than the
entities and transactions identified on Attachment "B".

6. Paid Time Off ("PTO").

         During  the  Employment  Term,  Executive  shall  be  entitled  to PTO,
including  vacation,  equal  to the  greater  of:  (i)  fifteen  days  plus  one
additional  day for each year of employment by the Company,  or (ii) twenty days
plus one additional day for each year of employment under this Agreement; but in
no event more than 25 days, in each full calendar year (prorated for any partial
year) to be taken at such  times as  mutually  agreed by the  Executive  and the
Chief Executive Officer.

7. Termination.

         7.1. Executive's  employment under this Agreement shall terminate prior
to expiration of the Employment Term  (including any Additional  Terms which may
be in effect) upon the occurrence of any of the following events:

         7.1.1.   Automatically on the date of Executive's death.

         7.1.2.   Upon  written  notice by the Chief  Executive  Officer  to the
                  Executive  for

                                       7

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

                  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  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 Chief Executive Officer consistent
                  with  this  Agreement,   provided  the  refusal  to  follow  a
                  direction  shall not be Cause if the  Executive  in good faith
                  believes that such  direction is not legal or is contrary to a
                  specific   provision  of  published   Professional   Standards
                  applicable to Executive's  duties,  and promptly  notifies the
                  Company's  General Counsel 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

                                       8

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

                  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, (F) the Executive's inability to competently perform
                  his assigned  duties,  or (G) any other material breach by the
                  Executive of this  Agreement  that remains  uncured for thirty
                  (30)  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. In the event of any Corporate
                  Transaction  or Change  in  Control,  subsections  (F) and (G)
                  shall be deemed eliminated and without force or effect.

         7.1.3.   Upon  written  notice by the Chief  Executive  Officer  to the
                  Executive,  if the  Executive  (as  determined  by  the  Chief
                  Executive  Officer 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

                                       9

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

                  hereunder  shall be reduced by any payments  being received by
                  Executive under any long-term disability program.

         7.1.4.   Upon written  notice by the  Executive to the Chief  Executive
                  Officer 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.  "Good
                  Reason"  shall mean any  material  breach of any  provision of
                  this  Agreement by the Company,  including  but not limited to
                  (i) any reduction in Executive's duties or responsibilities as
                  Vice President of  Engineering  (other than those duties which
                  may no  longer  be  required  if the  Company  ceases  to be a
                  publicly  traded  company) or (ii) any demand that he relocate
                  his principal residence beyond any of the counties immediately
                  adjacent to San Francisco Bay, without his consent. 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.

         7.1.5.   Immediately  upon written notice to the Executive by the Chief
                  Executive Officer without Cause.

         7.1.6.   Upon the voluntary  termination by the Executive  without Good
                  Reason  upon  thirty  (30) days  prior  written  notice to the
                  Company (which the

                                       10

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

                  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.

         7.2.  Upon  such  earlier  termination  of  the  Employment  Term,  the
Executive  shall be promptly  paid (i) any unpaid  salary and  accrued  vacation
through his date of  termination,  (ii) a prorated  portion of his unpaid annual
bonus,  as determined  by the Chief  Executive  Officer in accordance  with this
Agreement,  for the calendar year of his  termination,  (iii) 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 in accordance with
the  Company's  policies on the  reimbursement  of business  expenses,  and (iv)
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.

         7.3. In addition,  if the  termination is by the Company without Cause,
or by the  Executive  for Good  Reason,  as  provided  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

                                       11

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

Articles of Incorporation or By-Laws or the Indemnification Agreement annexed as
Attachment C hereto,  which shall survive) in such form as reasonably  requested
by the Company:

         7.3.1.   Thirteen  bi-weekly  installments  of severance pay each in an
                  amount equal to one  twenty-sixth  of the then sum of his Base
                  Salary and annual bonus,  based on the amount paid for service
                  during  the  prior  six month  period  (or,  in the event of a
                  corporate austerity program applied to Executive together with
                  other officers of the Company,  then the amount that otherwise
                  would have been paid in  accordance  with  Section  3.3),  pro
                  rated if  necessary,  and subject to the offset of any amounts
                  due, and

         7.3.2.   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  this
                  Agreement or, if earlier,  until  Executive and his dependents
                  cease to be eligible for such COBRA  coverage.  The  Company's
                  payment  obligations  under this Section  (other than those in
                  the  first  sentence)  shall  immediately  cease in the  event
                  Executive  materially  breaches any of his  obligations  under
                  this   Agreement   concerning   the   Company's    Inventions,
                  Confidential  Information,  and not to

                                       12

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

                  compete or solicit the Company's customers or employees.

         7.3.3.   If the  Employment  Term ends early on account of  Disability,
                  Executive shall be entitled to receive only such amounts as he
                  otherwise be entitled to under any disability policy sponsored
                  by the Company in accordance with this Agreement.

         7.4. If the  Employment  Term ends early pursuant to this Section 7 for
any other reason,  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) to the limited 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.

         7.4.1.   All  aforesaid  amounts  in this  Section  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.

8. No Duty to Mitigate/Set-Off.

Except as  specifically  stated in this Agreement,  the Company's  obligation to
make any  payments  to the  Executive  shall  not be  affected  by any  set-off,
counterclaim,

                                       13

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

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 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 7 are  inclusive,  and in lieu of, any
amounts   payable  under  any  other  salary   continuation  or  cash  severance
arrangement  of the  Company.  To the  extent  any  such  payments  are  made to
Executive  under any other salary  continuation  or cash severance  arrangement,
such payments shall be offset from the amount due Executive under Section 7.

9. Inventions and Other Intellectual Property.

The Company and Executive agree to promptly execute the Proprietary  Information
and  Invention  Agreement,  annexed  hereto  as  Attachment  D, and any  revised
versions  which are  subsequently  issued by the Company as part of its standard
terms of employment.

                                       14

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Employment Agreement
Phillip Breeden
July 23, 2001

10. Confidential Information.

         Executive   acknowledges   that  the  trade  secrets,   know  how,  and
proprietary  information and observations  concerning the business or affairs of
the Company, or any of its subsidiaries or affiliates or any predecessor thereof
(collectively "Confidential Information"), obtained by him while employed by the
Company  pursuant  to this  Agreement  are the  property  of the Company or such
subsidiary  or  affiliate.  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 Chief  Executive  Officer  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. If Executive receives legal process,  he may comply with it
provided he promptly  notifies the Company and  diligently  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 or business of the Company or any of its  subsidiaries
or affiliates which he may then possess or have under his control.

11. Non-Compete, Non-Solicitation.

         11.1. Executive  acknowledges that in the course of his employment with
the

                                       15

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Employment Agreement
Phillip Breeden
July 23, 2001

Company  pursuant to this  Agreement he will become  familiar with the Company's
Confidential  Information  and that his services will be of special,  unique and
extraordinary value to the Company.

         11.2.  During  the  Employment  Term and for one (1)  year  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,  or make  use of,  any  Company  Confidential
Information.   For  purposes  of  this  Agreement,   "Competition"   shall  mean
participating,  directly or indirectly,  as an individual  proprietor,  partner,
officer,  employee,  director,  joint  venturer,  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  which  develops or
markets goods,  services or intangible property which is similar to any of those
marketed or developed 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 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 Chief
Executive Officer, or (iv) Executive's  employment by a non Competitive division
(or other business  unit) of a company which is in Competition  with

                                       16

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Employment Agreement
Phillip Breeden
July 23, 2001

the Company so long as Executive is not involved with the  competitive  division
(or other business unit).  Notwithstanding  anything else in this Section 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  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 or  otherwise  violates  this  Section  (other than by
making such passive investments).

         11.3.  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 way its  business  relationship  with the
Company or its affiliates.

         11.4. During the Employment Term and one (1) year thereafter, Executive
shall not recruit, solicit or induce any nonclerical employees of the Company or
its affiliates to terminate  their  employment or otherwise cease their business
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.  Executive  agrees not to circumvent this  prohibition by hiring any
such employee within six (6) months after the employee terminates his employment
with the Company or its affiliates.

                                       17

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Employment Agreement
Phillip Breeden
July 23, 2001

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.

         11.5.  If, at the time of  enforcement  of this Section,  a court holds
that the restrictions  stated herein are unreasonable  under  circumstances then
existing,  the parties 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 permitted by law.

12. Refund Of Benefits.

         In the  event  Executive  is in  breach of  Section  11  ("Non-Compete,
Non-Solicitation"),  or  such  modified  version  as may  be  required  by  law,
Executive will relinquish to the Company:

         12.1. all stock options and other  benefits  under any stock  incentive
plan,  including the Options  granted under this Agreement and  Attachment  "A",
which vested in the  Executive's  interest  during the six months  preceding the
last day of Executive's  employment by the Company. In the event Executive sells
or otherwise  transfers any such Options,  Executive  will refund to the Company
the amount of the gross economic value realized by Executive.

                                       18

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Employment Agreement
Phillip Breeden
July 23, 2001

         12.2. all bonus payments, or any pro rata portions thereof,  which were
paid or otherwise  owed to Executive  for his services  rendered  during the six
months preceding the last day of Executive's employment by the Company.

         12.3. all severance payments  calculated on the basis of salary,  bonus
or both.

         12.4. The  relinquishment of the foregoing  benefits in accordance with
this Section shall not limit or otherwise preclude all other rights and remedies
of the Company due to the Executive's breach of this Agreement.

13. Enforcement.

         Because  Executive's  services  are unique and  because  Executive  has
access to  Confidential  Information  of the  Company  and its  affiliates,  the
parties  hereto  agree  that  money  damages,  while  not  waived,  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,
including  the  award  of  money  damages,  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).

                                       19

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Employment Agreement
Phillip Breeden
July 23, 2001

14. Indemnification.

         Executive  shall be entitled to be indemnified for his activities as an
officer 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
Attachment C hereto,  which the Company and Executive agree to promptly execute.
In addition,  the Company  shall cover  Executive  under  Directors and Officers
Liability  Insurance  during the  Employment  Term in the same amount and to the
same extent as the Company covers its other officers.

15. 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 his former
employer(s),  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

                                       20

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

binding obligation of Executive,  enforceable in accordance with its terms, (iv)
Executive is a United States  citizen or a lawfully  resident  alien entitled to
work within the United  States,  and (v) Executive will in performing his duties
not utilize any confidential information of any other person or entity.

16. Entire Agreement; Modification.

         This Agreement,  and all documents incorporated herein,  constitute 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  in this  Agreement,  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.

17. 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

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Employment Agreement
Phillip Breeden
July 23, 2001

18. 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  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.

19. 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 or
be construed as a waiver of any subsequent breach.

20. 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 last known address provided by
the  Executive in the Company's  records and, if to the Company,  at the address
set forth on the first page of this Agreement, attention of the General Counsel.
Either  party may change the notice  address by notice in  accordance  with this
Section.

                                       22

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

21. 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, in such event,
only on the condition that the assignee  specifically  assumes in writing all of
the Company's obligations under this Agreement.

22. 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.

23. Arbitration.

         23.1.  In the event of any dispute of any kind  whatsoever  between the
parties,  arising  out of or related in any way to this  Agreement,  the parties
agree to submit all such  disputes to binding  arbitration.  Each party shall be
entitled  to appoint one  arbitrator,  who shall not be an  affiliate,  officer,
director,  employee,  agent,  vendor or contractor of that party.  The appointed
arbitrators shall then appoint a neutral arbitrator who shall serve as Chairman,
and the  arbitration  shall be  conducted  by the  arbitrators

                                       23

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

so chosen.  The parties'  arbitrators  shall be  experienced  executives  in the
technology industry, and the Chairman shall be an attorney practicing litigation
in the field of  employment  law.  The  arbitration  shall be conducted in Santa
Clara County,  California.  Demand for arbitration  shall be made in writing and
shall be served upon the party or parties to whom the demand is addressed in the
manner  provided  for the  tender of  notices  in this  Agreement.  If the party
receiving the demand for arbitration  does not appoint its arbitrator  within 30
days after receiving such notice, the arbitrator  appointed by the party serving
the  demand for  arbitration  shall be  further  empowered  to serve as the sole
arbitrator,  notwithstanding  that he fails to meet the  qualifications  for the
Chairman set forth in this Section.

         23.2.  The  arbitrators  are  authorized to award any remedy,  legal or
equitable,  as well as any  interim  relief  as they deem  appropriate  in their
discretion.  However,  notwithstanding the foregoing, the arbitrators shall have
no power to add to,  subtract  from, or modify any of the terms or conditions of
this Agreement.

         23.3. Subject to the arbitration  agreement stated in this Article, the
federal and state courts  located in Santa Clara County,  California  shall have
exclusive  jurisdiction  over all other legal  proceedings  between the parties.
Executive agrees to the personal  jurisdiction of said courts and to the receipt
of service of process in the same form as other  notices  under this  Agreement.
Application  may be  made  to any  such  court  to

                                       24

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

assist the  arbitrators in performing  their arbitral  duties,  to confirm their
award and to enforce any such award as a judgement of said court.

24. Headings And Gender Neutrality.

         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.  The use of  either  masculine  or  feminine  pronouns  in this
Agreement  are  merely a  convenience  of the  draftsperson  and shall be not be
deemed determinative of any person's gender.

25. 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.

                                       25

<PAGE>

Employment Agreement
Phillip Breeden
July 23, 2001

         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: /s/ William P. Crowell
                                                     ------------------------
                                                 Name:  William P. Crowell
                                                 Title: CEO and President

                                                 EXECUTIVE

                                                 /s/ Philip Breeden
                                                 ------------------
                                                 Philip Breeden

                                       26

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