Document:

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                                                                   EXHIBIT 10.35

                                    AGREEMENT

        This Agreement is made by and between Networks Associates, Inc. ("the
Company"), and you, Prabhat Goyal, as of January 2, 2001 (the "Effective Date").

        1. You will serve as Special Advisor to the Company from the Effective
Date until one year after the Effective Date (the "Employment Term"). As of the
Effective Date, you resign as Chief Financial Officer and Vice President,
Finance and Administration of the Company and although you will remain an
employee of the Company, you relinquish all other officer and director positions
with the Company and its affiliates. You will render such business and
professional services in the performance of your duties, consistent with your
position within the Company, as shall reasonably be assigned to you by the
Company's Board of Directors (the "Board") or its Chief Executive Officer
("CEO"). You will devote your business efforts and time to the Company and such
of its subsidiaries as the Board or CEO may designate. Your employment with the
Company will end one year after the Effective Date (the "End Date").

        2. At-Will Employment. Your employment with the Company constitutes
"at-will" employment. You and the Company acknowledge that this employment
relationship may be terminated at any time, upon written notice to the other
party, with or without good cause or for any or no cause, at the option of
either you or the Company.

        3. Employee Benefits and Office.

               (a) Employee Benefits. During the Employment Term, you will be
eligible to participate in accordance with the terms of all Company employee
benefit plans that are applicable to other employees of the Company, as such
plans and terms may exist from time to time, provided you are determined to be
an employee of the Company according to the terms of such plans. However, you
will not accrue any additional vacation under Company's vacation policy after
the Effective Date and you shall not be permitted to participate in the
Company's 401(k) plan. In the event you are determined to ineligible to
participate in the Company's employee benefit plans and subject to compliance
with Sections 5, 10, 11, 12 and 15 and Exhibit A, the Company shall provide you
with the same level of Company subsidized health (i.e., medical, vision and
dental) coverage and executive benefits as in effect for you on the day of such
determination through the End Date.

               (b) Office. From the Effective Date until your termination of
service to the Company, you will be entitled to the use of an office and support
staff as reasonably necessary to carry out your duties under this Agreement.

        4. Compensation.

               (a) Base Salary. During the Employment Term, the Company will pay
you as compensation for your services a base salary at the annualized rate of
$300,012 (the "Base Salary"). The Base Salary will be paid through payroll
periods that are consistent with the Company's normal

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payroll practices, assuming that you are in compliance with all of your
obligations under this Agreement, including (without limitation) Sections 5, 10,
11, 12 and 15 and Exhibit A.

               (b) Bonus. The Company will pay you 100% of your target bonus of
$200,000 in equal monthly tranches, assuming that you are in compliance with all
of your obligations under this Agreement, including (without limitation)
Sections 5, 10, 11, 12 and 15 and Exhibit A.

               (c) Stock Options. During the Employment Term, your unexpired
stock options will continue to vest and become exercisable pursuant to the terms
and conditions of the stock option plans and the applicable stock option
agreements by and between you and the Company (or its related applicable
entity), assuming in each case that you are providing services to the Company on
each vesting date and that you are in compliance with all of your obligations
under this Agreement, including (without limitation) Sections 5, 10, 11, 12 and
15 and Exhibit A. For purposes of clarification, the post-termination
exercisability period with respect to your McAfee.com stock options will not
begin while you are providing services to the Company pursuant to this
Agreement. During the Employment Term, only your unexpired stock options to
purchase Company Common Stock will continue to be subject to the terms and
conditions of the Change of Control Agreement entered into between you and the
Company on April 18, 1996 (the "Change of Control Agreement").

               (d) Indemnification and D&O Insurance. The parties agree that you
will continue to be covered by the terms and conditions of the Indemnity
Agreement entered into between you and the Company on April 18, 1996 (the
"Indemnity Agreement") and that the parties' rights and obligations thereunder
are unaffected by this Agreement.

        5. Settlement Agreement and Release. On the date you sign this
Agreement, you will sign and deliver to the Company a Settlement Agreement and
Release in the form attached as Exhibit A.

        6. Severance.

               (a) Termination other than for Cause. If the Company terminates
your service to the Company for any reason other than Cause, or you resign as
described in Section 6(c), then, subject to your compliance with Sections 5, 10,
11, 12 and 15 and Exhibit A, you will receive (i) all of the compensation
described in Section 4, including the continued payment of your annual Base
Salary ($300,012) and annual target bonus ($200,000) through the End Date, (ii)
continued vesting of your unexpired stock options to purchase Company Common
Stock through the End Date and ninety (90) days following such period to
exercise such vested options, (iii) continued coverage under the Change of
Control Agreement during such period, ignoring the requirement that you remain a
Company employee, and (iv) the same level of Company subsidized health (i.e.,
medical, vision and dental) coverage and executive benefits as in effect for you
on the day of your termination through the End Date. You will not receive any
other compensation or benefits from the Company except as may required by law in
accordance with established Company plans and policies.

               (b) Voluntary Termination or Termination for Cause. If you
voluntarily terminate your service to the Company for a reason other than as
described in Section 6(c) or the Company terminates your employment for Cause,
then (i) you will receive the Base Salary through the date of

                                       -2-
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termination, and (ii) you shall not receive any other compensation or benefits
from the Company except as may required by law in accordance with established
Company plans and policies. For example (but not by way of limitation), you will
not receive any of the other compensation described in Section 4.

               (c) Definition of Cause. Termination of your employment for
"Cause" means termination due to your willful misconduct or gross negligence
which is materially injurious to the Company and its subsidiaries taken as a
whole and/or your failure to satisfy any of your obligations under this
Agreement, including (but not limited to) your obligations under Sections 5, 10,
11, 12 and 15 and Exhibit A; provided, however, that the determination that you
have failed to satisfy your obligations under this Agreement must be made in
good faith by the Board and you will be given written notice by the Board
detailing the specific facts of such breach, and a reasonable opportunity (of
least thirty (30) days) to cure same. You will also receive the above-described
severance if you resign from your employment as a result of a material reduction
in your compensation or benefits, a request to move your primary work location
to a place more than twenty-five (25) miles from your work location at the time
this Agreement is executed without your written consent, or if there is a
change, without your written consent, such that you no longer directly report to
the CEO or Board.

               (d) Removal of Files. Following your termination of employment,
you may remove your personal files from the Company's premises. Any file
containing "Employment Information" (as defined in Section 10) may not be
removed from the Company's premises without the written consent of the Board or
CEO.

               (e) Excise Tax. If any payment or benefit you would receive
pursuant to a Change in Control from the Company or otherwise ("Payment") would
(i) constitute a "parachute payment" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) but for this
sentence, be subject to the excise tax imposed by Section 4999 of the Code (the
"Excise Tax"), then such Payment shall be reduced to the Reduced Amount. The
"Reduced Amount" shall be either (x) the largest portion of the Payment that
would result in no portion of the Payment being subject to the Excise Tax or (y)
the largest portion, up to and including the total, of the Payment, whichever
amount, after taking into account all applicable federal, state and local
employment taxes, income taxes, and the Excise Tax (all computed at the highest
applicable marginal rate), results in your receipt, on an after-tax basis, of
the greater amount of the Payment notwithstanding that all or some portion of
the Payment may be subject to the Excise Tax. If a reduction in payments or
benefits constituting "parachute payments" is necessary so that the Payment
equals the Reduced Amount, reduction shall occur in the following order unless
you elect in writing within three (3) business days of the Change in Control a
different order: reduction of cash payments; cancellation of accelerated vesting
of stock awards; reduction of employee benefits. In the event that acceleration
of vesting of stock award compensation is to be reduced, such acceleration of
vesting shall be cancelled in the reverse order of the date of grant of your
stock awards unless you elect in writing a different order for cancellation.

                    (i) The accounting firm engaged by the Company for general
audit purposes as of the day prior to the effective date of the Change in
Control shall perform the foregoing calculations. The Company and you shall
equally share all expenses with respect to the determinations by such accounting
firm required to be made hereunder.

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                    (ii) The accounting firm engaged to make the determinations
hereunder shall provide its calculations, together with detailed supporting
documentation, to the Company and you within thirty (30) calendar days after the
date on which your right to a Payment is triggered (if requested at that time by
the Company or you) or such other time as requested by the Company or you. Any
good faith determination of the accounting firm made hereunder shall be final,
binding and conclusive upon the Company and you.

                    (iii) If the accounting firm determines that no Excise Tax
is payable with respect to a Payment, either before or after the application of
the reduction set forth in this Section 6(e), it shall furnish the Company and
you with an opinion reasonably acceptable to you that no Excise Tax will be
imposed with respect to such Payment.

        7. Assignment. This Agreement will be binding upon and inure to the
benefit of (a) your heirs, executors and legal representatives upon your death
and (b) any successor of the Company. Any such successor of the Company will be
deemed substituted for the Company under the terms of this Agreement for all
purposes. For this purpose, "successor" means any person, firm, corporation or
other business entity which at any time, whether by purchase, merger or
otherwise, directly or indirectly acquires all or substantially all of the
assets or business of the Company. None of your rights to receive any form of
compensation payable pursuant to this Agreement may be assigned or transferred
except by will or the laws of descent and distribution. Any other attempted
assignment, transfer, conveyance or other disposition of your right to
compensation or other benefits will be null and void.

        8. Notices. All notices, requests, demands and other communications
called for hereunder shall be in writing and will be deemed given (a) on the
date of delivery if delivered personally, (b) one (1) day after being sent by a
well established commercial overnight service, or (c) four (4) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors at the following addresses, or at
such other addresses as the parties may later designate in writing:

               If to the Company:

               Networks Associates, Inc.
               3965 Freedom Cir.
               Santa Clara, CA  95054

               Attn: General Counsel

               If to you:

               at the last residential address known by the Company.

        9. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.

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        10. Confidentiality. During the Employment Term and thereafter, you
agree to use your best efforts to maintain in confidence the existence of this
Agreement, the contents and terms of this Agreement, including any documents
incorporated by reference, the consideration for this Agreement, any Company
proprietary information, technical data, trade secrets or know-how, including,
but not limited to, research, product plans, products, services, customer lists
and customers (including, but not limited to, customers of the Company on whom
you called or with whom you became acquainted during the term of your
employment), markets, software, developments, inventions, processes, formulas,
technology, designs, drawings, engineering, hardware configuration information,
marketing, finances or other business information disclosed to you by the
Company either directly or indirectly in writing or orally (hereinafter
collectively referred to as "Employment Information"). You agree to take every
reasonable precaution to prevent disclosure of any Employment Information to
third parties, and agree that there will be no publicity, directly or
indirectly, concerning any Employment Information. You agree to take every
precaution to disclose Employment Information only to those attorneys,
accountants, governmental entities and family members who have a reasonable need
to know of such Employment Information.

        11. Non-Competition and Non-Solicitation. With respect to the businesses
of the Company or any of its subsidiaries on either the Effective Date or the
date of your termination of employment from the Company and all of it
subsidiaries (collectively, the "Businesses"), you agree that during the period
beginning on the Effective Date and ending on the date on which your employment
with the Company terminates, you, directly or indirectly, whether as employee,
owner, sole proprietor, partner, director, member, consultant, agent, founder,
co-venturer or otherwise, will not engage, participate or invest in (except for
any indirect investments as a result of your investments in venture funds or
mutual funds) any business activity anywhere in the world that is directly
competitive with the principal products or services of the Businesses; and that
during period beginning on the Effective Date and ending one year after the date
on which you terminate employment, you, directly or indirectly, whether as
employee, owner, sole proprietor, partner, director, member, consultant, agent,
founder, co-venturer or otherwise, will (a) not hire or attempt to employ,
recruit or otherwise solicit, induce or influence any person to leave employment
with the Businesses; and (b) not directly or indirectly solicit business from
any of the Businesses' customers and users on behalf of any business that
directly competes with the Businesses.

        12. Non-Disparagement. You and the Company agree to refrain from making
any negative comments about the other concerning their respective business,
products or services, officers, employees and directors and to refrain from any,
defamation, libel or slander of the other and their respective officers,
directors, employees, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, predecessor and successor corporations, and assigns or
tortious interference with the contracts and relationships of the other and
their respective officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns.

        13. Entire Agreement. This Agreement (including Exhibit A), together
with the Change in Control Agreement, the Indemnity Agreement and your stock
option agreements, represents the entire agreement and understanding between the
Company and you concerning your employment relationship with the Company or any
of its subsidiaries, and supersedes and replaces any and all prior agreements
and understandings concerning your employment relationship with the Company.

                                       -5-
<PAGE>   6

        14. Arbitration and Equitable Relief.

               (a) Except as provided in Section 14(d) below, you and the
Company agree that to the extent permitted by law, any dispute or controversy
arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof will be settled by arbitration to be held in the County of San
Francisco, California, in accordance with the National Rules for the Resolution
of Employment Disputes then in effect of the American Arbitration Association
(the "Rules"). The arbitrator may grant injunctions or other relief in such
dispute or controversy. The decision of the arbitrator will be final, conclusive
and binding on the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.

               (b) The arbitrator will apply California law to the merits of any
dispute or claim (with the exception of its conflict of laws provisions). You
hereby expressly consent to the personal jurisdiction of the state and federal
courts located in California for any action or proceeding arising from or
relating to this Agreement and/or relating to any arbitration in which the
parties are participants.

               (c) The Company will pay the direct costs and expenses of the
arbitration. The Company and you each will pay your own counsel fees and
expenses.

               (d) The Company or you may apply to any court of competent
jurisdiction for a temporary restraining order, preliminary injunction, or other
interim or conservatory relief, as necessary to enforce the provisions of this
Agreement, without breach of this arbitration agreement and without abridgement
of the powers of the arbitrator.

               (e) You understand that nothing in this Section 14 modifies your
at-will status. Either the Company or you can terminate the employment
relationship at any time, with or without cause.

               (f) YOU HAVE READ AND UNDERSTAND THIS SECTION 14, WHICH DISCUSSES
ARBITRATION. YOU UNDERSTAND THAT BY SIGNING THIS AGREEMENT, YOU AGREE TO THE
EXTENT PERMITTED BY LAW, TO SUBMIT ANY FUTURE CLAIMS ARISING OUT OF, RELATING
TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION THEREOF TO BINDING
ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF YOUR RIGHT
TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
ASPECTS OF THE EMPLOYER/EXECUTIVE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO,
THE FOLLOWING CLAIMS:

                    (i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT;
BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD
FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL
INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION;
NEGLIGENT OR INTENTIONAL

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INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION;

                    (ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE
OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, THE AMERICANS WITH
DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, AND ANY LAW OF ANY
STATE; AND

                   (iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND
REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

        15. Cooperation with Company. During and after the Employment Term, you
will cooperate fully with the Company, including, but not limited to, responding
to the reasonable requests of the Company's Chairman of the Board, CEO or
General Counsel, in connection with any and all existing or future litigation,
arbitrations, mediations or investigations brought by or against the Company or
any of its affiliates, agents, officers, directors or employees, whether
administrative, civil or criminal in nature, in which the Company reasonably
deems your cooperation necessary or desirable. You agree to provide reasonable
advice, assistance and information, including offering and explaining evidence,
providing sworn statements, participating in discovery and trial preparation and
testimony as may reasonably be deemed necessary or desirable by the Company
relating to its position in any such legal proceedings. You also agree to
promptly send the Company copies of all correspondence (for example, but not
limited to, subpoenas) received by you in connection with any such legal
proceedings, unless you are expressly prohibited by law from so doing. You will
act in good faith to furnish the information and cooperation required by this
Section 15 and the Company will act in good faith so that the requirement to
furnish such information and cooperation does not create an undue hardship for
you. The Company will reimburse you for reasonable out-of-pocket expenses
incurred by you as a result of your cooperation, within ten (10) days of the
presentation of appropriate documentation thereof, in accordance with the
Company's standard reimbursement policies and procedures. The failure by you to
cooperate fully with the Company in accordance with this Section 15 will be a
material breach of the terms of this Agreement which will result in all
commitments of the Company to make additional payments to you becoming null and
void. Notwithstanding anything in this Section, it is agreed that if possible
the Company will provide you with reasonable advance notice regarding these
activities, and that any requests made hereunder by the Company will be made in
good faith and reasonable.

        16. No Oral Modification, Cancellation or Discharge. This Agreement may
be changed or terminated only in writing (signed by you and the Board or CEO).

        17. Withholding. The Company is authorized to withhold, or cause to be
withheld, from any payment or benefit under this Agreement the full amount of
any applicable withholding taxes.

        18. Governing Law. This Agreement will be governed by the laws of the
State of California (with the exception of its conflict of laws provisions).

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<PAGE>   8

        19. Authority. The Company represents and warrants that the person
signing this Agreement on its behalf has full authority to act for the Company.

        20. Acknowledgment. You acknowledge that you (i) have read this
Agreement, (ii) have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of your own choice or that you
voluntarily have declined to seek counsel, (iii) understand the terms and
consequences of this Agreement, and (iv) are fully aware of the legal and
binding effect of this Agreement.

                                       -8-
<PAGE>   9

        IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below:

        PRABHAT GOYAL

        /s/ Prabhat Goyal
        -----------------------------
        Prabhat Goyal

        NETWORKS ASSOCIATES, INC.

        /s/ Kent H. Roberts
        -----------------------------
        Vice President, Legal Affairs

                                       -9-
<PAGE>   10
                             AMENDMENT TO AGREEMENT

     This Amendment is made as of January 2, 2001, by and between Network
Associates, Inc., a Delaware corporation (the "COMPANY") and Prabhat Goyal
("EMPLOYEE").

     WHEREAS, Employee and the Company entered into an agreement effective
January 2, 2001, regarding the employment relationship between Employee and the
Company (the "EMPLOYMENT AGREEMENT").

     WHEREAS, the Company and Employee desire to amend the Employment Agreement
to provide clarification as to the employment relationship between the parties.

     NOW, THEREFORE, the parties agree as follows:

     1.   Section 1 of the Employment Agreement is hereby amended in its
entirety to read as follows:

          "1.  Positions, Duties and Term of Employment.

               (a)  You will serve as Special Advisor to the Company from the
          Effective Date until one year after the Effective Date (the
          "Employment Term"). As of the Effective Date, you resign as Chief
          Financial Officer and Vice President, Finance and Administration of
          the Company and although you will remain an employee of the Company,
          you relinquish all other officer and director positions with the
          Company and its affiliates. You will render such business and
          professional services in the performance of your duties, consistent
          with your position within the Company, as shall reasonably be
          assigned to you by the Company's Board of Directors (the "Board") or
          its Chief Executive Officer ("CEO"). Your employment with the Company
          will end one year after the Effective Date (the "End Date"). As a
          Special Advisor, you will no longer be considered an officer for
          purposes of Section 16 of the Securities Act of 1934, as amended.
          Additionally, you will no longer be subject to the Company's insider
          trading policies and shall not be subject to any pre-clearance
          requirements or trading windows for the purchase or sale of your
          Company stock.

               (b)  During the Employment Term and thereafter, you may, subject
          to Sections 10, 11, and 12, engage in any other employment or
          consulting activities for any other entity or person whatsoever. In
          the event you obtain alternative employment with an employer other
          than the Company or any of its affiliates, your role with the Company
          shall either be governed by this Agreement, or, if mutually agreed
          upon in writing between you and the Company, by terms which may
          include, among other things, your change in status from an employee
          to consultant. Absent Cause for terminating your employment (as
          defined in Section 6), and subject to your continued compliance with
          the terms of this Agreement, the Company agrees to use its best faith

<PAGE>   11

          efforts to ensure that you will continue to be an employee, or to
          otherwise provide consulting or advisory services to the Company,
          through the End Date."

     2.   Section 3(a) of the Employment Agreement is hereby amended to add the
following sentence to the end of Section 3(a):

          "On the Effective Date, the Company will pay all accrued and unused
          vacation earned through that date, subject to standard payroll
          deductions and withholdings."

     3.   Section 10 of the Employment Agreement is hereby amended to read in
its entirety as follows:

          "10. Confidentiality.

               (a)  Employment Information. During the Employment Term and
          thereafter, you agree to use your best efforts to maintain in
          confidence the existence of this Agreement, the contents and terms of
          this Agreement, including any documents incorporated by reference and
          the consideration for this Agreement (the "Employment Information").
          You agree to take every reasonable precaution to prevent disclosure
          of any Employment Information to third parties, and agree that there
          will be no publicity, directly or indirectly, concerning any
          Employment Information. Notwithstanding the above, you may disclose
          Employment Information in confidence to those attorneys, accountants,
          governmental entities, and family members who have a reasonable need
          to know of such Employment Information.

               (b)  Confidential Information. During the Employment Term and
          thereafter, you agree to hold in the strictest confidence, and not
          use, except for the benefit of the Company to fulfill your employment
          obligations, or to disclose to any person, firm or corporation
          without written authorization of the Board any "Confidential
          Information." You understand that "Confidential Information" means
          any proprietary Company information, technical data, trade secrets
          or know-how, including, but not limited to, research, product plans,
          products, services, customer lists and customers (including, but not
          limited to, customers of the Company on whom you called or with whom
          you became acquainted during the term of your employment), markets,
          software, developments, inventions, processes, formulas, technology,
          designs, drawings, engineering, hardware configuration information,
          marketing, finances or other business information disclosed to you by
          the Company either directly or indirectly in writing or orally. You
          further understand that "Confidential Information" does not include
          any of the foregoing items which have become publicly known and made
          generally available through no wrongful act of yours or of others who
          were under confidentiality obligations as to the item or items
          involved. You are free to use your own skill, knowledge, know-how and
          experience to whatever extent and in whichever way you wish,
          provided such use does not in any way involve the use of Confidential
          Information."

                                      -2-

<PAGE>   12
     4.   The last sentence of Section 15 is hereby amended in its entirety to
read as follows:

          "Notwithstanding anything in this Section, it is agreed (i) that if
          possible the Company will provide you with reasonable advance notice
          regarding these activities, (ii) that any requests made hereunder by
          the Company will be made in good faith, shall be reasonable, and will
          not unreasonably interfere with your duties to any employer other than
          the Company, (iii) that you are at all times able to respond to legal
          process and otherwise act as required by applicable law, and (iv)
          that this Section 15 will not apply to any litigations, arbitrations
          or mediations, or if a conflict of interest develops, between you and
          the Company."

     5.   This Amendment and the Employment Agreement, to the extent not amended
hereby, represents the entire agreement and understanding between Employee and
the Company concerning Employee's employment relationship with the Company or
any of its subsidiaries, and supercedes and replaces any and all prior
agreements and understandings concerning Employee's employment relationship with
the Company.

     IN WITNESS WHEREOF, this Amendment has been entered into as of the date
first set forth above.

NETWORK ASSOCIATES, INC.                EMPLOYEE

By: /s/ KENT ROBERTS                    Prabhat K. Goyal
------------------------------          ------------------------------
By: Kent Roberts                        Prabhat Goyal

Vice President, Legal Affairs           Prabhat K. Goyal
------------------------------          ------------------------------
Title                                   Printed Name

                                      -3-<PAGE>   1
                                                                   EXHIBIT 10.36

                                   AGREEMENT

        This Agreement is made by and between Networks Associates, Inc. ("the
Company"), and you, Peter Watkins, as of December 26, 2000 (the "Effective
Date").

        1.     Positions, Duties and Term of Employment.

               (a) You will serve as Special Advisor to the Company from the
Effective Date until one year after the Effective Date (the "Employment Term").
As of the Effective Date, you resign as President and Chief Operating Officer of
the Company and although you will remain an employee of the Company, you
relinquish all other officer and director positions with the Company and its
affiliates. You will render such business and professional services in the
performance of your duties, consistent with your position within the Company, as
shall reasonably be agreed upon by you and the Company's Board of Directors (the
"Board") or its Chief Executive Officer ("CEO"). Your employment with the
Company will end one year after the Effective Date (the "End Date"). As a
Special Advisor, you will no longer be considered an officer for purposes of
Section 16 of the Securities Act of 1934, as amended. Additionally, you will no
longer be subject to the Company's insider trading policies and shall not be
subject to any pre-clearance requirements or trading windows for the purchase or
sale of your Company stock.

               (b) During the Employment Term and thereafter, you may, subject
to Sections 10, 11, and 12, engage in any other employment or consulting
activities for any other entity or person whatsoever. In the event you obtain
alternative employment with an employer other than the Company or any of its
affiliates, your role with the Company shall either be governed by this
Agreement, or, if mutually agreed upon in writing between you and the Company,
by terms which may include, among other things, your change in status from an
employee to consultant. Absent Cause for terminating your employment (as defined
in Section 6), and subject to your continued compliance with the terms of this
Agreement, the Company agrees to use its best faith efforts to ensure that you
will continue to be an employee, or to otherwise provide consulting or advisory
services to the Company, through the End Date.

        2. At-Will Employment. Your employment with the Company constitutes
"at-will" employment. You and the Company acknowledge that this employment
relationship may be terminated at any time, upon written notice to the other
party, with or without good cause or for any or no cause, at the option of
either you or the Company.

        3.     Employee Benefits and Office.

               (a) Employee Benefits. During the Employment Term, you will be
eligible to participate in accordance with the terms of all Company employee
benefit plans that are applicable to other employees of the Company, as such
plans and terms may exist from time to time, provided you are determined to be
an employee of the Company according to the terms of such plans. However, you
will not accrue any additional vacation under Company's vacation policy after
the

<PAGE>   2

Effective Date and you shall not be permitted to participate in the Company's
401(k) plan. In the event you are determined to be ineligible to participate in
the Company's employee benefit plans and subject to compliance with Sections 5,
10, 11, 12 and 15 and Exhibit A, the Company shall provide you with the same
level of Company subsidized health (i.e., medical, vision and dental) coverage
and executive benefits as in effect for you on the day of such determination
through the End Date. On the Effective Date, the Company will pay all accrued
and unused vacation earned through that date, subject to standard payroll
deductions and withholdings.

               (b) Office. From the Effective Date until the End Date (or
earlier if mutually agreed upon in writing), you will be entitled to the use of
an office and support staff as reasonably necessary to carry out your duties
under this Agreement.

        4.     Compensation.

               (a) Base Salary. During the Employment Term, the Company will pay
you a base salary of $550,000 (the "Base Salary"). The Base Salary will be paid
through payroll periods that are consistent with the Company's normal payroll
practices, assuming that you are in compliance with all of your obligations
under this Agreement, including (without limitation) Sections 5, 10, 11, 12 and
15 and Exhibit A.

               (b) Stock Options. During the Employment Term, your stock options
will continue to vest and become exercisable pursuant to the terms and
conditions of the stock option plans and the applicable stock option agreements
by and between you and the Company. During the Employment Term, only your stock
options to purchase Company Common Stock will continue to be subject to the
terms and conditions of the Change of Control Agreement entered into between you
and the Company on May 1, 1995 (the "Change of Control Agreement"). With respect
to your McAfee.com stock options, without making any representations or
warranties, it is the Company's understanding that during the Employment Term
such stock options will continue to vest according to their terms and that the
post-termination exercisability period will not begin while you are employed by
the Company under this Agreement or otherwise providing consulting or advisory
services to the Company.

               (c) Indemnification and D&O Insurance. The parties agree that you
will continue to be covered by the terms and conditions of the Indemnity
Agreement entered into between you and McAfee Associates on May 1, 1995 (the
"Indemnity Agreement") and that the parties' rights and obligations thereunder
are unaffected by this Agreement.

        5. Settlement Agreement and Release. On the date you sign this
Agreement, you will sign and deliver to the Company a Settlement Agreement and
Release in the form attached as Exhibit A.

        6.     Severance.

               (a) Termination other than for Cause. If the Company terminates
your employment for any reason other than Cause, or you resign as described in
Section 6(c), then,

                                      -2-
<PAGE>   3

subject to your compliance with Sections 5, 10, 11, 12 and 15 and Exhibit A, you
will receive (i) all of the compensation described in Section 4, including the
continued payment of your annual Base Salary ($550,000) through the End Date,
(ii) continued vesting of your stock options to purchase Company Common Stock
through the End Date and ninety (90) days following such period to exercise such
vested options, (iii) continued coverage under the Change of Control Agreement
during such period, ignoring the requirement that you remain a Company employee,
and (iv) the same level of Company subsidized health (i.e., medical, vision and
dental) coverage and executive benefits as in effect for you on the day of your
termination through the End Date. You will not receive any other compensation or
benefits from the Company except as may required by law in accordance with
established Company plans and policies.

               (b) Voluntary Termination or Termination for Cause. If you
voluntarily terminate your employment with the Company for a reason other than
as described in Section 6(c) or the Company terminates your employment for
Cause, then (i) you will receive the Base Salary through the date of
termination, and (ii) you shall not receive any other compensation or benefits
from the Company except as may required by law in accordance with established
Company plans and policies. For example (but not by way of limitation), you will
not receive any of the other compensation described in Section 4.

               (c) Definition of Cause. Termination of your employment for
"Cause" means termination due to your willful misconduct or gross negligence
which is materially injurious to the Company and its subsidiaries taken as a
whole and/or your failure to satisfy any of your obligations under this
Agreement, including (but not limited to) your obligations under Sections 5, 10,
11, 12 and 15 and Exhibit A; provided, however, that the determination that you
have failed to satisfy your obligations under this Agreement must be made in
good faith by the Board and you will be given written notice by the Board
detailing the specific facts of such breach, and a reasonable opportunity (of
least thirty (30) days) to cure same. You will also receive the above-described
severance if you resign from your employment as a result of a material reduction
in your compensation or benefits, a request to move your primary work location
to a place more than twenty-five (25) miles from your work location at the time
this Agreement is executed without your written consent, or if there is a
change, without your written consent, such that you no longer directly report to
the CEO or Board.

               (d) Removal of Files. Following your termination of employment,
you may remove your personal files from the Company's premises. Any file
containing "Employment Information" (as defined in Section 10) may not be
removed from the Company's premises without the written consent of the Board or
CEO.

               (e) Excise Tax. If any payment or benefit you would receive
pursuant to a Change in Control from the Company or otherwise ("Payment") would
(i) constitute a "parachute payment" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) but for this
sentence, be subject to the excise tax imposed by Section 4999 of the Code (the
"Excise Tax"), then such Payment shall be reduced to the Reduced Amount. The
"Reduced Amount" shall be either (x) the largest portion of the Payment that
would result in no portion of the Payment being subject to the Excise Tax or (y)
the largest portion, up to and including the total, of the Payment, whichever
amount, after taking into account all applicable federal, state

                                      -3-
<PAGE>   4

and local employment taxes, income taxes, and the Excise Tax (all computed at
the highest applicable marginal rate), results in your receipt, on an after-tax
basis, of the greater amount of the Payment notwithstanding that all or some
portion of the Payment may be subject to the Excise Tax. If a reduction in
payments or benefits constituting "parachute payments" is necessary so that the
Payment equals the Reduced Amount, reduction shall occur in the following order
unless you elect in writing within three (3) business days of the Change in
Control a different order: reduction of cash payments; cancellation of
accelerated vesting of stock awards; reduction of employee benefits. In the
event that acceleration of vesting of stock award compensation is to be reduced,
such acceleration of vesting shall be cancelled in the reverse order of the date
of grant of your stock awards unless you elect in writing a different order for
cancellation.

                      (i) The accounting firm engaged by the Company for general
audit purposes as of the day prior to the effective date of the Change in
Control shall perform the foregoing calculations. The Company and you shall
equally share all expenses with respect to the determinations by such accounting
firm required to be made hereunder.

                      (ii) The accounting firm engaged to make the
determinations hereunder shall provide its calculations, together with detailed
supporting documentation, to the Company and you within thirty (30) calendar
days after the date on which your right to a Payment is triggered (if requested
at that time by the Company or you) or such other time as requested by the
Company or you. Any good faith determination of the accounting firm made
hereunder shall be final, binding and conclusive upon the Company and you.

                      (iii) If the accounting firm determines that no Excise Tax
is payable with respect to a Payment, either before or after the application of
the reduction set forth in this Section 6(e), it shall furnish the Company and
you with an opinion reasonably acceptable to you that no Excise Tax will be
imposed with respect to such Payment.

        7. Assignment. This Agreement will be binding upon and inure to the
benefit of (a) your heirs, executors and legal representatives upon your death
and (b) any successor of the Company. Any such successor of the Company will be
deemed substituted for the Company under the terms of this Agreement for all
purposes. For this purpose, "successor" means any person, firm, corporation or
other business entity which at any time, whether by purchase, merger or
otherwise, directly or indirectly acquires all or substantially all of the
assets or business of the Company. None of your rights to receive any form of
compensation payable pursuant to this Agreement may be assigned or transferred
except by will or the laws of descent and distribution. Any other attempted
assignment, transfer, conveyance or other disposition of your right to
compensation or other benefits will be null and void.

        8. Notices. All notices, requests, demands and other communications
called for hereunder shall be in writing and will be deemed given (a) on the
date of delivery if delivered personally, (b) one (1) day after being sent by a
well established commercial overnight service, or (c) four (4) days after being
mailed by registered or certified mail, return receipt requested, prepaid and

                                      -4-
<PAGE>   5

addressed to the parties or their successors at the following addresses, or at
such other addresses as the parties may later designate in writing:

               If to the Company:

               Networks Associates, Inc.
               3965 Freedom Cir.
               Santa Clara, CA  95054

               Attn: General Counsel

               If to you:

               at the last residential address known by the Company and to
               Steven L. Friedlander, Esq., Cooley Godward LLP, One Maritime
               Plaza, 20th Floor, San Francisco, CA 94111.

        9. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.

        10.    Confidentiality.

               (a) Employment Information. During the Employment Term and
thereafter, you agree to use your best efforts to maintain in confidence the
existence of this Agreement, the contents and terms of this Agreement, including
any documents incorporated by reference and the consideration for this Agreement
(the "Employment Information"). You agree to take every reasonable precaution to
prevent disclosure of any Employment Information to third parties, and agree
that there will be no publicity, directly or indirectly, concerning any
Employment Information. Notwithstanding the above, you may disclose Employment
Information in confidence to those attorneys, accountants, governmental
entities, family members and prospective employers who have a reasonable need to
know of such Employment Information.

               (b) Confidential Information. During the Employment Term and
thereafter, you agree to hold in the strictest confidence, and not use, except
for the benefit of the Company to fulfill your employment obligations, or to
disclose to any person, firm or corporation without written authorization of the
Board any "Confidential Information." You understand that "Confidential
Information means any proprietary Company information, technical data, trade
secrets or know-how, including, but not limited to, research, product plans,
products, services, customer lists and customers (including, but not limited to,
customers of the Company on whom you called or with whom you became acquainted
during the term of your employment), markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other business
information disclosed to you by the Company either directly or indirectly in
writing or orally. You further understand that "Confidential Information" does
not include any of the foregoing items which have become publicly

                                      -5-
<PAGE>   6

known and made generally available through no wrongful act of yours or of others
who were under confidentiality obligations as to the item or items involved. You
are free to use your own skill, knowledge, know-how and experience to whatever
extent and in whichever way you wish, provided such use does not in any way
involve the use of Confidential Information. As a Special Advisor, the Company
will provide such materials to you as are necessary to perform your duties as
Special Advisor. As a Special Advisor, the Company does not intend to provide
you with any Confidential information. Nevertheless, to the extent you receive
Confidential Information as a Special Advisor, you acknowledge and agree to be
bound by this Section 10(b) with respect to such Confidential Information.

        11. Non-Solicitation. During period beginning on the Effective Date and
ending one year after the date on which you terminate employment, you, directly
or indirectly, whether as employee, owner, sole proprietor, partner, director,
member, consultant, agent, founder, co-venturer or otherwise, will (a) not hire
or attempt to employ, recruit or otherwise solicit, induce or influence any
person to leave employment with the Company or its subsidiaries (the
"Businesses"); and (b) not directly or indirectly solicit business from any of
the Businesses' customers and users on behalf of any business that directly
competes with the Businesses.

        12. Non-Disparagement. You and the Company agree to refrain from making
any negative comments about the other concerning their respective business,
products or services, officers, employees and directors and to refrain from any,
defamation, libel or slander of the other and their respective officers,
directors, employees, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, predecessor and successor corporations, and assigns or
tortious interference with the contracts and relationships of the other and
their respective officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns.

        13. Entire Agreement. This Agreement (including Exhibit A), together
with the Change in Control Agreement, the Indemnity Agreement and your stock
option agreements, represents the entire agreement and understanding between the
Company and you concerning your employment relationship with the Company or any
of its subsidiaries, and supersedes and replaces any and all prior agreements
and understandings concerning your employment relationship with the Company,
including, without limitation, the December 22, 2000, agreement between the
Company and you.

        14.    Arbitration and Equitable Relief.

               (a) Except as provided in Section 14(d) below, you and the
Company agree that to the extent permitted by law, any dispute or controversy
arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof will be settled by arbitration to be held in the County of San
Francisco, California, in accordance with the National Rules for the Resolution
of Employment Disputes then in effect of the American Arbitration Association
(the "Rules"). The arbitrator may grant injunctions or other relief in such
dispute or controversy. The decision of the arbitrator will be final, conclusive
and binding on the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.

                                      -6-
<PAGE>   7

               (b) The arbitrator will apply California law to the merits of any
dispute or claim (with the exception of its conflict of laws provisions). You
hereby expressly consent to the personal jurisdiction of the state and federal
courts located in California for any action or proceeding arising from or
relating to this Agreement and/or relating to any arbitration in which the
parties are participants.

               (c) The Company will pay the direct costs and expenses of the
arbitration. The Company and you each will pay your own counsel fees and
expenses.

               (d) The Company or you may apply to any court of competent
jurisdiction for a temporary restraining order, preliminary injunction, or other
interim or conservatory relief, as necessary to enforce the provisions of this
Agreement, without breach of this arbitration agreement and without abridgement
of the powers of the arbitrator.

               (e) You understand that nothing in this Section 14 modifies your
at-will status. Either the Company or you can terminate the employment
relationship at any time, with or without cause.

               (f) YOU HAVE READ AND UNDERSTAND THIS SECTION 14, WHICH DISCUSSES
ARBITRATION. YOU UNDERSTAND THAT BY SIGNING THIS AGREEMENT, YOU AGREE TO THE
EXTENT PERMITTED BY LAW, TO SUBMIT ANY FUTURE CLAIMS ARISING OUT OF, RELATING
TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION THEREOF TO BINDING
ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF YOUR RIGHT
TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
ASPECTS OF THE EMPLOYER/EXECUTIVE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO,
THE FOLLOWING CLAIMS:

                      (i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF
EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT
OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR
PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION;

                      (ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE
OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, THE AMERICANS WITH
DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, AND ANY LAW OF ANY
STATE; AND

                      (iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND
REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

                                      -7-
<PAGE>   8

        15. Cooperation with Company. During and after the Employment Term, you
will cooperate with the Company in responding to the reasonable requests of the
Company's Chairman of the Board, CEO or General Counsel, in connection with any
and all existing or future litigation, arbitrations, mediations or
investigations brought by or against the Company or any of its affiliates,
agents, officers, directors or employees, whether administrative, civil or
criminal in nature, in which the Company reasonably deems your cooperation
necessary or desirable. In such matters, you agree to provide the Company with
reasonable advice, assistance and information, including offering and explaining
evidence, providing sworn statements, and participating in discovery and trial
preparation and testimony. You also agree to promptly send the Company copies of
all correspondence (for example, but not limited to, subpoenas) received by you
in connection with any such legal proceedings, unless you are expressly
prohibited by law from so doing. You will act in good faith to furnish the
information and cooperation required by this Section 15 and the Company will act
in good faith so that the requirement to furnish such information and
cooperation does not create an undue hardship for you. The Company will
reimburse you for reasonable out-of-pocket expenses incurred by you as a result
of your cooperation, within ten (10) days of the presentation of appropriate
documentation thereof, in accordance with the Company's standard reimbursement
policies and procedures. The failure by you to cooperate fully with the Company
in accordance with this Section 15 will be a material breach of the terms of
this Agreement which will result in all commitments of the Company to make
additional payments to you becoming null and void. Notwithstanding anything in
this Section, it is agreed (i) that if possible the Company will provide you
with reasonable advance notice regarding these activities, (ii) that any
requests made hereunder by the Company will be made in good faith, shall be
reasonable, and will not unreasonably interfere with your duties to any employer
other than the Company, (iii) that you are at all times able to respond to legal
process and otherwise act as required by applicable law, and (iv) that this
Section 15 will not apply to any litigations, arbitrations or mediations, or if
a conflict of interest develops, between you and the Company.

        16. No Oral Modification, Cancellation or Discharge. This Agreement may
be changed or terminated only in writing (signed by you and the Board or CEO).

        17. Withholding. The Company is authorized to withhold, or cause to be
withheld, from any payment or benefit under this Agreement the full amount of
any applicable withholding taxes.

        18. Governing Law. This Agreement will be governed by the laws of the
State of California (with the exception of its conflict of laws provisions).

        19. Authority. The Company represents and warrants that the person
signing this Agreement on its behalf has full authority to act for the Company.

        20. Acknowledgment. You acknowledge that you (i) have read this
Agreement, (ii) have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of your own choice or that you
voluntarily have declined to seek counsel, (iii) understand the terms and
consequences of this Agreement, and (iv) are fully aware of the legal and
binding effect of this Agreement.

                                      -8-
<PAGE>   9

        IN WITNESS WHEREOF, the undersigned have executed this Agreement as set
forth below:

        PETER WATKINS

        /s/ PETER WATKINS
        -------------------------------
        Peter Watkins

        NETWORKS ASSOCIATES, INC.

    By: /s/ KENT H. ROBERTS
        -------------------------------
        Kent H. Roberts, Vice President

                                      -9-
<PAGE>   10
                                   EXHIBIT A

                        SETTLEMENT AGREEMENT AND RELEASE

     This Settlement Agreement and Release ("Agreement") is made by and between
Networks Associates, Inc. (the "Company"), and Peter Watkins ("Employee").

     WHEREAS, Employee was employed by the Company as its President and Chief
Operating Officer; and

     WHEREAS, the Company and Employee have entered into an Agreement dated
December 26, 2000 (the "Initial Agreement") whereby Employee resigned as
President and Chief Operating Officer and agreed to serve as Special Adviser to
the Company;

     NOW THEREFORE, in consideration of the mutual promises made herein, the
Company and Employee (collectively referred to as "the Parties") hereby agree
as follows:

     1.   Termination.  Employee's position with the Company as its President
and Chief Operating Officer terminated on December 26, 2000.

     2.   Consideration.  As consideration for this Agreement, the Company has
entered into the Initial Agreement and will pay the compensation described in
Section 4 of the Initial Agreement.

     3.   Confidential Information.  Employee shall continue to comply with
Section 10 of the Initial Agreement.

     4.   Employee Release of Claims.  Employee, on behalf of himself, and his
respective heirs, family members, executors and assigns, hereby fully and
forever releases the Company and its past, present and future officers, agents,
directors, employees, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, parents, predecessor and successor corporations, and
assigns, from, and agrees not to sue or otherwise institute or cause to be
instituted any legal or administrative proceedings concerning any claim, duty,
obligation or cause of action relating to any matters of any kind, whether
presently known or unknown, suspected or unsuspected, that he may possess
arising from any omissions, acts or facts that have occurred up until and
including the date that Employee executes this Agreement including, without
limitation,

          (a)  any and all claims relating to or arising from Employee's
employment relationship with the Company or his resignation as President and
Chief Operation Officer of the Company;

          (b)  any and all claims for wrongful discharge of employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a covenant of good faith and fair dealing,
both express and implied; promissory estoppel; negligent or

<PAGE>   11
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; unfair business practices; defamation; libel;
slander; negligence; personal injury; assault; battery; invasion of privacy;
false imprisonment; and conversion;

          (c)  any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of 1974, The Worker
Adjustment and Retraining Notification Act, the California Fair Employment and
Housing Act, and Labor Code Section 201, et seq. and Section 970, et. seq. and
all amendments to each such Act as well as the regulations issued thereunder.

          (d)  any and all claims for violation of the federal, or any state,
constitution;

          (e)  any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination; and

          (f)  any and all claims for attorneys' fees and costs.

     Employee agrees that the release set forth in this section shall be and
remain in effect in all respects as a complete general release as to the
matters released. Notwithstanding the foregoing, this release does not extend
to (i) any obligations incurred under this Agreement, the Initial Agreement,
the Change in Control Agreement or the Indemnity Agreement, and any of the
Employee's vested benefits, including his 401(k) benefits.

     Employee acknowledges and agrees that any breach of this paragraph shall
constitute a material breach of the Agreement and of the Initial Agreement.
Employee shall also be responsible to the Company for all costs, attorneys'
fees and any and all damages incurred by the Company in defending against a
claim or suit brought or pursued by Employee in violation of this provision.

     5.   Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges
that he is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Employee and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
the ADEA after the date he executes of this Agreement. Employee acknowledges
that the consideration given for this waiver and release Agreement is in
addition to anything of value to which Employee was already entitled. Employee
further acknowledges that he has been advised by this writing that (a) he should
consult with an attorney prior to executing this Agreement; (b) he has at least
twenty-one (21) days within which to consider this Agreement; (c) he has seven
(7) days following the execution of this Agreement by the parties to revoke the
Agreement; and (d) this Agreement shall not be effective until the revocation
period has expired. Any revocation should be in writing and delivered to the
Company's General Counsel at Networks Associates, Inc., 3965

                                      -2-
<PAGE>   12
Freedom Cir., Santa Clara, CA 95054, by close of business on the seventh day
from the date that Employee signs this Agreement.

      6.    Civil Code Section 1542. Employee represents that he is not aware
of any claims against the Company other than the claims that are released by
this Agreement. Employee acknowledges that he has been advised by legal counsel
and is familiar with the provisions of California Civil Code Section 1542,
which provides as follows:

            A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
            CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
            THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
            MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
            DEBTOR.

      Employee, being aware of said code section, agrees to expressly waive any
rights he may have thereunder, as well as under any other statute or common law
principles of similar effect.

      7.    No Pending or Future Lawsuits. Employee represents that he has no
lawsuits, claims, or actions pending in his name, or on behalf of any other
person or entity, against the Company or any other person or entity referred to
herein. Employee and the Company also represents that they do not intend to
bring any claims on their own behalf or on behalf of any other person or entity
against each other or any other person or entity referred to herein.

      8.    Confidentiality. Employee and the Company agree to use their best
efforts to maintain in confidence the existence of this Agreement and the
contents and terms of this Agreement. Notwithstanding the foregoing or anything
to the contrary in this Agreement, Employee and the Company agree to take every
precaution to disclose this Agreement only to those attorneys, accountants,
governmental entities, family members and, in the case of Employee, to
prospective employers who have a reasonable need to know of this Agreement.

      9.    No Cooperation. Employee and the Company agree that they will not
counsel or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against the other and/or any officer, director,
employee, agent, representative, shareholder or attorney of the other, unless
under a subpoena or other court order to do so. Employee and the Company agree
that they are at all times able to respond to legal process and otherwise act
as required by applicable law.

      10.   Non-Disparagement. Employee and the Company agree to refrain from
making any negative comments concerning the other's business, products or
services, officers, employees and directors and to refrain from any,
defamation, libel or slander of the other and their respective officers,
directors, employees, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, predecessor and successor corporations, and assigns or
tortious interference with the contracts and relationships of the other and
their respective officers, directors, employees, investors,

                                      -3-
<PAGE>   13
shareholders, administrators, affiliates, divisions, subsidiaries, predecessor
and successor corporations, and assigns.

     11.  No Admission of Liability. Employee and the Company understand and
acknowledge that no action taken by Employee or the Company, either previously
or in connection with this Agreement shall be deemed or construed to be (a) an
admission of the truth or falsity of any claims heretofore made, if any, or (b)
an acknowledgment or admission by Employee or the Company of any fault or
liability whatsoever to the other or to any third party.

     12.  Costs. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with this Agreement.

     13.  Arbitration. The Parties agree that any and all disputes arising out
of the terms of this Agreement, their interpretation, and any of the matters
herein released, shall be subject to binding arbitration as described in the
Initial Agreement.

     14.  Authority. Employee and the Company represent and warrant that they
have the capacity to act on their own behalf and on behalf of all who might
claim through them to bind them to the terms and conditions of this Agreement.

     15.  No Representations. Employee and the Company represent that they have
had the opportunity to consult with their respective attorneys, and have
carefully read and understand the scope and effect of the provisions of this
Agreement. Neither party has relied upon any representations or statements made
by the other party hereto which are not specifically set forth in this
Agreement.

     16.  Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.

     17.  Entire Agreement. This Agreement, the Initial Agreement, the Change
in Control Agreement, the Indemnity Agreement, and Employee's stock option
agreements represent the entire agreement and understanding between the Company
and Employee concerning these matters.

     18.  No Oral Modification. This Agreement may only be amended in writing
signed by Employee and an authorized officer of the Company.

     19.  Governing Law. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of the State of California.

     20.  Effective Date. This Agreement is effective eight (8) days after it
has been signed by both Parties.

                                      -4-

<PAGE>   14
     21.  Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

     22.  Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

          (a)  They have read this Agreement;

          (b)  They have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of their own choice or that they
have voluntarily declined to seek such counsel;

          (c)  They understand the terms and consequences of this Agreement and
of the releases it contains;

          (d)  They are fully aware of the legal and binding effect of this
Agreement.

                                      -5-
<PAGE>   15
     IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.

                                   NETWORK ASSOCIATES, INC.

Dated: Jan. 23, 2001               By: /s/ KENT H. ROBERTS
                                      ---------------------------------
                                      Kent H. Roberts, Vice President,
                                      Legal Affairs

                                   Peter Watkins, an individual

Dated:Jan 23, 2001                 /s/ PETER WATKINS
                                   ------------------------------------
                                              Peter Watkins

                                      -6-

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