CISCO SYSTEMS INC, S-8 POS, 1996-07-29

CISCO SYSTEMS INC
S-8 POS, 1996-07-29
COMPUTER COMMUNICATIONS EQUIPMENT

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<PAGE> 1

As filed with the Securities and Exchange Commission on July 29, 1996

Registration No. 333-05447

================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
POST-EFFECTIVE AMENDMENT NO. 1
TO FORM S-4 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 ON FORM S-8
__________________

CISCO SYSTEMS, INC.
(Exact name of issuer as specified in its charter)

CALIFORNIA 77-0059951
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)

170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Address of principal executive offices) (Zip Code)
__________________
STRATACOM, INC.
1994 STOCK OPTION PLAN
1986 INCENTIVE STOCK OPTION PLAN
(Full title of the plans)
__________________
JOHN T. CHAMBERS
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
CISCO SYSTEMS, INC.
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Name and address of agent for service)
(408) 526-4000
(Telephone number, including area code, of agent for service)
__________________

This Post-Effective Amendment No. 1 to Form S-4 Registration Statement on Form
S-8 relates to 2,271,281 shares of the Common Stock, no par value (the "Common
Stock"), of Cisco Systems, Inc. (the "Registrant") issuable to holders of
options to purchase Common Stock, $0.01 par value of Stratacom, Inc., a Delaware
corporation under both the 1994 Stock Option Plan (1,135,641 shares) and the
1986 Incentive Stock Option Plan (1,135,640 shares), which were assumed by the
Registrant upon the effective time of a merger of a wholly-owned subsidiary of
the Registrant with and into Stratacom, Inc. (the "Merger"), which took place on
July 9, 1996. These shares of Common Stock were originally registered on the
Registrant's Registration Statement on Form S-4 to which this is an amendment;
accordingly, the registration fee in respect of such Common Stock was paid at
the time of the original filing of the Registration Statement relating to such
Common Stock. The Registrant is registering an additional 9,193,337 shares of
Common Stock on a separate Form S-8 which represents the remaining shares
issuable to holders of outstanding options to purchase Common Stock under the
1994 Stock Option Plan (4,636,356 shares), the 1986 Incentive Stock Option Plan
(4,306,981 shares), the 1992 Directors Stock Option Plan (110,000) and the 1992
Employee Stock Purchase Plan (140,000), which were also assumed by the
Registrant.

<PAGE> 2
PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Certain Documents by Reference

Cisco Systems, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):

(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended July 31, 1995 filed with the Commission on October 26, 1995
pursuant to Section 13 of the Securities Exchange Act of 1934 (the
"1934 Act").

(b) (1) The Registrant's Quarterly Reports on Form 10-Q for the
fiscal quarters ended October 31, 1995, January 31, 1996 and April
30, 1996, filed with the Commission on December 12, 1995, March
13, 1996 and June 12, 1996, respectively.

(2) The Registrant's reports on Form 8-K filed with the Commission
on December 6, 1995, April 2, 1996 and April 26, 1996.

(3) The Registrant's reports on Form 10-C filed with the
Commission on February 26, 1996 and July 11, 1996.

(c) The Registrant's Registration Statement No. 0-18225 on Form 8-A
filed with the Commission on January 11, 1990, together with
Amendment No. 1 on Form 8 filed with the Commission on February
15, 1990, in which there is described the terms, rights and
provisions applicable to the Registrant's outstanding Common
Stock.

All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.

Item 4. Description of Securities

Not Applicable.

Item 5. Interests of Named Experts and Counsel

Not Applicable.
<PAGE> 3
Item 6. Indemnification of Directors and Officers

Section 317 of the California Corporations Code authorizes a court
to award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit indemnification (including
reimbursement of expenses incurred) under certain circumstances for liabilities
arising under the Securities Act of 1933, as amended, (the "1933 Act"). The
Registrant's Restated Articles of Incorporation, as amended, and Amended and
Restated Bylaws provide for indemnification of its directors, officers,
employees and other agents to the maximum extent permitted by the California
Corporations Code. In addition, the Registrant has entered into Indemnification
Agreements with each of its directors and officers.

Item 7. Exemption from Registration Claimed

Not Applicable.

Item 8. Exhibits

<TABLE>
<CAPTION>
Exhibit Number Exhibit
-------------- -------

<S> <C>
4.1 Agreement and Plan of Merger, dated as of April 21, 1996 by and between the
Registrant and Stratacom, Inc., incorporated by reference to Appendix A of the Proxy
Statement/Prospectus contained in Registrant's Registration Statement, File Number 333-
05447.
4.2 Restated Articles of Incorporation of the Registrant dated March 1, 1991,
incorporated by reference to the Registrant's Registration Statement, File Number 33-
32778.
4.3 Amended and Restated Bylaws of the Registrant dated
December 20, 1989, incorporated by reference to
Registrant's Registration Statement, File Number 33-32778.
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24.0 Power of Attorney (included on signature page of original filing).
99.1 Stratacom, Inc. 1994 Stock Option Plan.
99.2 Form of Stock Option Agreement used in connection with the 1994 Stock Option Plan.
99.3 Stratacom, Inc. 1986 Incentive Stock Option Plan.
99.4 Form of Incentive Stock Option Agreement used in connection with the 1986 Incentive Stock
Option Plan.
99.5 Form of Stock Option Assumption Agreement used in connection with the 1994 Stock
Option Plan and the 1986 Incentive Stock Option Plan.
</TABLE>

Item 9. Undertakings

A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement (i) to include any prospectus required
by Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts
or events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the

3.
<PAGE> 4

Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into the Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment shall be deemed to be a new Registration Statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the 1994 Stock Option
Plan and/or the 1986 Incentive Stock Option Plan.

B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into the Registration Statement shall
be deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

C. Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnity provisions summarized in Item 6 or
otherwise, the Registrant has been informed that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.

4.
<PAGE> 5
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Post-Effective Amendment No. 1 on Form S-8 to be signed on behalf of the
undersigned, thereunto duly authorized, in the City of San Jose, State of
California, on this 25th day of July 1996.

CISCO SYSTEMS, INC.

By /s/ Larry R. Carter
---------------------------------------------
Larry R. Carter, Vice-President, Finance and
Administration, Chief Financial Officer and
Secretary

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----

<S> <C> <C>
John T. Chambers* President, Chief Executive , 1996
- ----------------------------- Officer and Director (Principal ----------------
John T. Chambers Executive Officer)

/s/ Larry R. Carter Vice President, Finance and July 25, 1996
- ----------------------------- Administration, Chief Financial
Larry R. Carter Officer and Secretary
(Principal Financial and Accounting Officer)

John P. Morgridge* Chairman of the Board , 1996
- ----------------------------- and Director ----------------
John P. Morgridge

Donald T. Valentine* Director , 1996
- ----------------------------- ----------------
Donald T. Valentine

Michael S. Frankel* Director , 1996
- ----------------------------- ----------------
Michael S. Frankel
</TABLE>

5.
<PAGE> 6
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----

<S> <C> <C>
James F. Gibbons* Director , 1996
- ----------------------------- ----------------
James F. Gibbons

Robert L. Puette* Director , 1996
- ----------------------------- ----------------
Robert L. Puette

Masayoshi Son* Director , 1996
- ----------------------------- ----------------
Masayoshi Son

Steve M. West* Director , 1996
- ----------------------------- ----------------
Steve M. West

*By /s/ Larry R. Carter
--------------------------
Attorney in Fact
</TABLE>

6.
<PAGE> 7
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

EXHIBITS

FORM S-8

UNDER

SECURITIES ACT OF 1933

CISCO SYSTEMS, INC.
<PAGE> 8
EXHIBIT INDEX

Exhibit Number Exhibit

4.1 Agreement and Plan of Merger, dated as of April 21, 1996 by
and between the Registrant and Stratacom, Inc., incorporated
by reference to Appendix A of the Proxy Statement/Prospectus
contained in Registrant's Registration Statement, File Number
333-05447.
4.2 Restated Articles of Incorporation of the Registrant dated
March 1, 1991, incorporated by reference to the Registrant's
Registration Statement, File Number 33-32778.
4.3 Amended and Restated Bylaws of the Registrant dated December
20, 1989, incorporated by reference to Registrant's
Registration Statement, File Number 33-32778.
5.0 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Independent Accountants - Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney (included on signature page of original
filing).
99.1 Stratacom, Inc. 1994 Stock Option Plan.
99.2 Form of Stock Option Agreement used in connection with the
1994 Stock Option Plan.
99.3 Stratacom, Inc. 1986 Incentive Stock Option Plan.
99.4 Form of Incentive Stock Option Agreement used in connection
with the 1986 Incentive Stock Option Plan.
99.5 Form of Stock Option Assumption Agreement used in connection
with the 1994 Stock Option Plan and the 1986 Incentive Stock
Option Plan.

<PAGE> 1
EXHIBIT 5.0

July 26, 1996

Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706

Re: Cisco Systems, Inc. Registration Statement for
Offering of 2,271,281 Shares of Common Stock

Ladies and Gentlemen:

We refer to your Post-Effective Amendment No. 1 to Form S-4
Registration Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended, of 1,135,641 shares of the common stock
("Common Stock") of Cisco Systems, Inc. (the "Company") issuable under the
Stratacom, Inc. 1994 Stock Option Plan, and (ii) 1,135,640 shares of Common
Stock issuable under the Stratacom, Inc. 1986 Incentive Stock Option Plan
(collectively, the "Plans"), as such Plans have been assumed by the Company on
July 9, 1996. We advise you that, in our opinion, when such shares have been
issued and sold pursuant to the applicable provisions of the assumed Plans and
in accordance with the Registration Statement, such shares will be validly
issued, fully paid and nonassessable shares of Common Stock.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.

Very truly yours,

/s/ Brobeck, Phleger & Harrison LLP

BROBECK, PHLEGER & HARRISON LLP

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference of our reports dated August 15,
1995, with respect to the financial statements and schedule of Cisco Systems,
Inc. for the year ended July 30, 1995, included in the Annual Report (Form
10-K) for 1995, filed with the Securities and Exchange Commission, in the
Registration Statement on Form S-8 of Cisco Systems, Inc. for the registration
of 2,271,281 shares of its common stock and 2,271,281 options to purchase shares
of its common stock.

/s/ Coopers & Lybrand L.L.P.

San Jose, California
July 25, 1996

<PAGE> 1
EXHIBIT 99.1

STRATACOM, INC.

1994 STOCK OPTION PLAN

1. Purposes of the Plan. The purposes of this Stock Option Plan are
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.

Options granted hereunder may be either Incentive Stock Options
(as defined under Section 422 of the Code) or Nonstatutory Stock Options, at the
discretion of the Board and as reflected in the terms of the written option
agreement.

2. Definitions. As used herein, the following definitions shall
apply:

a. "Administrator" shall mean the Board or any of its Committees
or designated member(s) appointed pursuant to Section 4 of the Plan.

b. "Applicable Laws" shall have the meaning set forth in Section
4(a) below.

c. "Board" shall mean the Board of Directors of the Company.

d. "Code" shall mean the Internal Revenue Code of 1986, as
amended.

e. "Committee" shall mean the Committee appointed by the Board
of Directors in accordance with Section 4(a) of the Plan, if one is appointed.

f. "Common Stock" shall mean the Common Stock of the Company.

g. "Company" shall mean StrataCom, Inc., a Delaware corporation.

h. "Consultant" shall mean any person who is engaged by the
Company or any Parent or Subsidiary to render consulting services and is
compensated for such consulting services, and any director of the Company
whether compensated for such services or not; provided that the term Consultant
shall not include directors who are not compensated for their services or are
paid only a director's fee by the Company.
<PAGE> 2
i. "Continuous Status as an Employee or Consultant" shall mean
the absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Administrator, provided that such leave is for
a period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute. For purposes of this Plan, a change
in status from an Employee to a Consultant or from a Consultant to an Employee
will not constitute a termination of employment.

j. "Director" shall mean a member of the Board.

k. "Employee" shall mean any person, including officers,
directors and Named Executives, employed by the Company or any Parent or
Subsidiary of the Company. Such term may also include, as determined by the
Administrator, any person who has accepted an offer of employment with the
Company or any Parent or Subsidiary of the Company, provided that such person
actually commences employment with the Company or any Parent or Subsidiary of
the Company within the term set forth in the offer letter. The payment of a
director's fee by the Company shall not be sufficient to constitute "employment"
by the Company.

l. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

m. "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the average of the
closing sales prices for such stock as quoted on such system for the last five
trading days before the date of determination (if for a given day no sales were
reported, the closing bid on that day shall be used), as such prices are
reported in The Wall Street Journal or such other source as the Administrator
deems reliable;

(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the average of the mean between the bid and asked prices for the Common
Stock for the last five days before the date of determination; or

(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.

2.
<PAGE> 3
n. "Incentive Stock Option" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

o. "Named Executive" shall mean any individual who, on the last
day of the Company's fiscal year, is the chief executive officer of the Company
(or is acting in such capacity) or among the four highest compensated officers
of the Company (other than the chief executive officer). Such officer status
shall be determined pursuant to the executive compensation disclosure rules
under the Exchange Act.

p. "Nonstatutory Stock Option" shall mean an Option not intended
to qualify as an Incentive Stock Option.

q. "Officer" shall mean a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

r. "Option" shall mean a stock option granted pursuant to the
Plan.

s. "Optioned Stock" shall mean the Common Stock subject to an
Option.

t. "Optionee" shall mean an Employee or Consultant who receives
an Option.

u. "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

v. "Plan" shall mean this 1994 Stock Option Plan.

w. "Rule 16b-3" shall mean Rule 16b-3 promulgated under the
Exchange Act as the same may be amended from time to time, or any successor
provision.

x. "Share" shall mean a share of the Common Stock, as adjusted
in accordance with Section 14 of the Plan.

y. "Subsidiary" shall mean a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan. Subject to the provisions of Section
14 of the Plan, the maximum aggregate number of shares that may be optioned and
sold under the Plan is 2,000,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.

3.
<PAGE> 4
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares that were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. Notwithstanding any other provision of the Plan,
shares issued under the Plan and later repurchased by the Company shall not
become available for future grant or sale under the Plan.

4. Administration of the Plan.

a. Composition of Administrator.

(i) Multiple Administrative Bodies. If permitted by
Rule 16b-3, and by the legal requirements relating to the administration of
incentive stock option plans, if any, of applicable securities laws and the Code
(collectively, the "Applicable Laws"), the Plan may (but need not) be
administered by different administrative bodies with respect to directors,
officers who are not directors and Employees and Consultants who are neither
directors nor officers.

(ii) Administration with respect to Directors and
Officers. With respect to grants of Options to Employees or Consultants who are
also officers or directors of the Company, the Plan shall be administered by (A)
the Board, if the Board may administer the Plan in compliance with Rule 16b-3 as
it applies to a plan intended to qualify thereunder as a discretionary plan and
Section 162(m) of the Code as it applies so as to qualify grants of Options to
Named Executives as performance-based compensation, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted (I) in such a manner as to permit the Plan to comply with Rule 16b-3
as it applies to a plan intended to qualify thereunder as a discretionary plan,
(II) in such a manner as to qualify grants of Options to Named Executives as
performance-based compensation under Section 162(m) of the Code and (III) in
such a manner as to satisfy the Applicable Laws.

(iii) Administration with respect to Other Persons.
With respect to grants of Options to Employees or Consultants who are neither
directors nor officers of the Company, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws. Notwithstanding
the above, the Board may designate one or more of its members to grant options
to such other persons, to the extent allowed by the Applicable Laws.

(iv) General. Once a Committee or Board member(s) has
been appointed pursuant to subsection (ii) or (iii) of this Section 4(a), such
Committee or Board member(s) shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the Board may increase
the size of any Committee and appoint additional members thereof, remove members
(with

4.
<PAGE> 5
or without cause) and appoint new members in substitution therefor, fill
vacancies (however caused) and remove all members of a Committee and thereafter
directly administer the Plan, all to the extent permitted by the Applicable Laws
and, in the case of a Committee appointed under subsection (ii), to the extent
permitted by Rule 16b-3 as it applies to a plan intended to qualify thereunder
as a discretionary plan, and to the extent required under Section 162(m) of the
Code to qualify grants of Options to Named Executives as performance-based
compensation.

b. Powers of the Administrator. Subject to the provisions of the
Plan and in the case of a Committee or designated Board member(s), the specific
duties delegated by the Board to such Committee or designated Board member(s),
the Administrator shall have the authority, in its discretion:

(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(m) of the Plan;

(ii) to select the Employees and Consultants to whom
Options may from time to time be granted hereunder;

(iii) to determine whether and to what extent Options are
granted hereunder;

(iv) to determine the number of shares of Common Stock to
be covered by each such award granted hereunder;

(v) to approve forms of agreement for use under the Plan;

(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the share price and any restriction or
limitation, the transferability of an Option or any vesting schedule,
acceleration or waiver of forfeiture restrictions regarding any Option and/or
the shares of Common Stock relating thereto, based in each case on such factors
as the Administrator shall determine, in its sole discretion);

(vii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount, if any, of any
deemed earnings on any deferred amount during any deferral period); and

(viii) to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common Stock
covered by each Option shall have declined since the date the Option was
granted.

5.
<PAGE> 6
c. Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.

5. Eligibility.

a. Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he or she is
otherwise eligible, be granted an additional Option or Options.

b. Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. In
the case of an Incentive Stock Option, the aggregate Fair Market Value
(determined as of the time such option is granted) of shares with respect to
which Incentive Stock Options granted to an Optionee (under all plans of the
Company or any Parent or Subsidiary) are exercisable for the first time by an
Optionee during any calendar year cannot exceed $100,000. Any option shares
granted in excess of such amount shall be treated as Nonstatutory Stock Options.

c. For purposes of Section 5(b), Incentive Stock Options shall
be taken into account in the order in which they were granted, and the Fair
Market Value of the Shares shall be determined as of the time the Option with
respect to such Shares is granted.

d. The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.

6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 20 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 16 of the Plan.

7. Term of Option. The term of each Option shall be the term stated
in the Option Agreement; provided, however, that in the case of an Incentive
Stock Option, the term shall be no more than ten (10) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Option granted to an Optionee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.

6.
<PAGE> 7
8. Limitation on Grants to Optionees. Subject to adjustment as
provided in this Plan, the maximum number of Shares which may be granted under
options to any Optionee under this Plan for any fiscal year of the Company shall
be 500,000.

9. Option Exercise Price and Consideration.

a. The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:

(i) In the case of an Incentive Stock Option or a
Nonstatutory Stock Option

(A) granted to an Optionee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant;

(B) granted to any Optionee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.

(ii) In the case of an Option granted on or after the
effective date of registration of any class of equity security of the Company
pursuant to Section 12 of the Exchange Act and prior to six months after the
termination of such registration, the per Share exercise price shall be no less
than 100% of the Fair Market Value per Share on the date of grant.

b. The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares that (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (5) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that number of Shares
having a Fair Market Value on the date of exercise equal to the exercise price
for the total number of Shares as to which the Option is exercised, (6) delivery
of a properly executed exercise notice together with irrevocable instructions to
a broker to deliver promptly to the Company the amount of sale or loan proceeds
required

7.
<PAGE> 8
to pay the exercise price, (7) delivery of an irrevocable subscription agreement
for the Shares that irrevocably obligates the option holder to take and pay for
the Shares not more than twelve months after the date of delivery of the
subscription agreement, (8) any combination of the foregoing methods of payment,
or (9) such other consideration and method of payment for the issuance of Shares
to the extent permitted under Applicable Laws. In making its determination as to
the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.

10. Exercise of Option.

a. Procedure for Exercise Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 9(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 14 of the Plan.

Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

b. Termination of Status as an Employee or Consultant. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant, such Optionee may, but only within thirty (30) days (or such other
period of time, not exceeding three (3) months in the case of an Incentive Stock
Option or six (6) months in the case of a Nonstatutory Stock Option, as is
determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of

8.
<PAGE> 9
grant of the Option) after the date of such termination (but in no event later
than the date of expiration of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent that he or she was
entitled to exercise it at the date of such termination. To the extent that the
Optionee was not entitled to exercise the Option at the date of such
termination, or if the optionee does not exercise such Option (which he or she
was entitled to exercise) within the time specified herein, the Option shall
terminate.

c. Disability of Optionee. Notwithstanding the provisions of
Section 10(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of his or her total and
permanent disability (as defined in Section 22(e)(3) of the Code), he or she
may, but only within six (6) months (or such other period of time not exceeding
twelve (12) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) from the date of such termination (but in no event later
than the date of expiration of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent he or she was
entitled to exercise it at the date of such termination. To the extent that he
or she was not entitled to exercise the Option at the date of termination, or if
he does not exercise such Option (which he was entitled to exercise) within the
time specified herein, the Option shall terminate.

d. Death of Optionee. In the event of the death of an Optionee:

(i) during the term of the Option who is at the time of his
death an Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Option may be exercised, at any time within three (3) months (or
such other period of time, not exceeding twelve (12) months, as is determined by
the Administrator, with such determination in the case of an Incentive Stock
Option being made at the time of grant of the Option) following the date of
death (but in no event later than the date of expiration of the term of such
Option as set forth in the Option Agreement), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance
but only to the extent of the right to exercise that would have accrued had the
Optionee continued living and remained in Continuous Status as an Employee or
Consultant three (3) months (or such other period of time as is determined by
the Administrator as provided above) after the date of death, subject to the
limitation set forth in Section 5(b); or

(ii) within one (1) month (or such other period of time not
exceeding three (3) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the termination of Continuous Status as an Employee
or Consultant,

9.
<PAGE> 10
the Option may be exercised, at any time within three (3) months following the
date of death (but in no event later than the date of expiration of the term of
such Option as set forth in the Option Agreement), by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that had accrued at
the date of termination.

e. Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.

11. Withholding Taxes. As a condition to the exercise of Options
granted hereunder, the Optionee shall make such arrangements as the
Administrator may require for the satisfaction of any federal, state, local or
foreign withholding tax obligations that may arise in connection with the
exercise, receipt or vesting of such Option. The Company shall not be required
to issue any Shares under the Plan until such obligations are satisfied.

12. Stock Withholding to Satisfy Withholding Tax Obligations. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by one or some combination of the
following methods: (a) by cash payment, or (b) out of Optionee's current
compensation, (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have been owned by the Optionee for more than six
months on the date of surrender, and (ii) have a fair market value on the date
of surrender equal to or less than Optionee's marginal tax rate times the
ordinary income recognized, or (d) by electing to have the Company withhold from
the Shares to be issued upon exercise of the Option that number of Shares having
a fair market value equal to the amount required to be withheld. For this
purpose, the fair market value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined (the "Tax
Date").

Any surrender by an Officer or Director of previously owned Shares
to satisfy tax withholding obligations arising upon exercise of this Option must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.

10.
<PAGE> 11
All elections by an Optionee to have Shares withheld to satisfy
tax withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:

a. the election must be made on or prior to the applicable Tax
Date;

b. once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made;

c. all elections shall be subject to the consent or disapproval
of the Administrator;

d. if the Optionee is an Officer or Director, the election must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.

In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but such
Optionee shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.

13. Non-Transferability of Options. To the extent prohibited by
Applicable Laws, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution. The designation of a beneficiary by an Optionee will
not constitute a transfer. Such Option may be exercised, during the lifetime of
the Optionee, only by the Optionee or a transferee permitted by this Section 13.
The Administrator has the discretion to make Options transferable by an Optionee
during his or her lifetime with such terms and conditions as determined by the
Administrator on the date of grant, to the extent allowed by Applicable Laws and
to the extent such Options remain exempt under Rule 16b-3.

14. Adjustments Upon Changes in Capitalization or Merger. Subject to
any required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, the number of shares of Common
Stock that have been authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, the maximum number of shares of Common
Stock for which Options may be granted to any Optionee under Section 8 of the
Plan, and the price per

11.
<PAGE> 12
share of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Administrator, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option.

In the event of the proposed dissolution or liquidation of the Company,
the Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Administrator. The Administrator may,
in the exercise of its sole discretion in such instances, declare that any
Option shall terminate as of a date fixed by the Administrator and give each
Optionee the right to exercise his or her Option as to all or any part of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable. In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Administrator determines, in the exercise of
its sole discretion and in lieu of such assumption or substitution, that the
Optionee shall have the right to exercise the Option as to some or all of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable. If the Administrator makes an Option exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option shall be exercisable for
a period of thirty (30) days from the date of such notice, and the Option will
terminate upon the expiration of such period.

15. Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date on which the Administrator makes the determination
granting such Option or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.

16. Amendment and Termination of the Plan.

a. Amendment and Termination. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable;

12.
<PAGE> 13
provided that, the following revisions or amendments shall require approval of
the shareholders of the Company in the manner described in Section 20 of the
Plan:

(i) any increase in the number of Shares subject to the
Plan, other than in connection with an adjustment under
Section 14 of the Plan;

(ii) any change in the designation of the class of persons
eligible to be granted Options;

(iii) any change in the limitation on grants to Optionees as
described in Section 8 of the Plan or other changes which
would require shareholder approval to qualify options granted
hereunder as performance-based compensation under Section
162(m) of the Code; or

(iv) if the Company has a class of equity securities
registered under Section 12 of the Exchange Act at the time
of such revision or amendment, any material increase in the
benefits accruing to participants under the Plan.

b. Shareholder Approval. If any amendment requiring shareholder
approval under Section 13(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 20 of the Plan.

c. Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

17. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

As a condition to the exercise of an Option, if required by Applicable
Law the Company may require the person exercising such Option to represent and
warrant at

13.
<PAGE> 14
the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required
by any of the aforementioned relevant provisions of law.

18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

19. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

20. Shareholder Approval.

a. Continuance of the Plan shall not be subject to approval by
the shareholders of the Company. If the Company seeks shareholder approval, such
shareholder approval shall be obtained in the manner and to the degree required
under applicable federal and state law and the rules of any stock exchange.

b. If such shareholder approval is obtained at a duly held
shareholders' meeting, it must be obtained by the affirmative vote of the
holders of a majority of the outstanding shares of the Company, or if such
shareholder approval is obtained by written consent, it must be obtained by the
unanimous written consent of all shareholders of the Company; provided, however,
that approval at a meeting or by written consent may be obtained by a lesser
degree of shareholder approval if the Board determines, in its discretion after
consultation with the Company's legal counsel, that such a lesser degree of
shareholder approval will comply with all applicable laws and will not adversely
affect the qualification of the Plan under Section 422 of the Code.

c. In the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the shareholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.

d. If any required approval by the shareholders of the Plan
itself or of any amendment thereto is solicited at any time otherwise than in
the manner described in Section 20(c) hereof, then the Company shall, at or
prior to the first annual

14.
<PAGE> 15
meeting of shareholders held subsequent to the later of (1) the first
registration of any class of equity securities of the Company under Section 12
of the Exchange Act or (2) the granting of an Option hereunder to an officer or
director after such registration, do the following:

(i) furnish in writing to the holders entitled to vote for
the Plan substantially the same information that would be required (if proxies
to be voted with respect to approval or disapproval of the Plan or amendment
were then being solicited) by the rules and regulations in effect under Section
14(a) of the Exchange Act at the time such information is furnished; and

(ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to in
subsection (i) hereof not later than the date on which such information is first
sent or given to shareholders.

21. Information to Optionees. The Company shall make available to each
Optionee as required by Applicable Laws, regulations and registrations, during
the period for which such Optionee has one or more Options outstanding, copies
of all annual reports and other information which are provided to all
shareholders of the Company. The Company shall not be required to make available
such information if the issuance of Options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.

15.

<PAGE> 1
EXHIBIT 99.2

STRATACOM, INC.
1994 STOCK OPTION PLAN
STOCK OPTION AGREEMENT - GENERAL TERMS AND CONDITIONS

1. Nature of the Option. If designated an Incentive Stock Option in
the Notice of Grant, this Option is intended to qualify as an Incentive Stock
Option as defined in Section 422 of the Code. If shareholder approval of the
Plan is not obtained within twelve (12) months of adoption by the Company, this
Option will be treated as a Nonstatutory Stock Option.

2. Exercise of Option. This Option shall be exercisable during its
term in accordance with the Exercise Schedule set out in Section 2(i) below and
in accordance with the provisions of Sections 9 and 10 of the Plan as follows:

(i) Right to Exercise.

(a) Subject to subsections 2(i) (b), (c), (d) and (e), below,
this Option shall be exercisable cumulatively to the extent of 25% of the Shares
subject to the Option for each year which has expired after the Vesting
Commencement Date. This Option may be exercised for a period of 30 days after
termination of employment or consulting relationship except as set out in
Sections 7 and 8 of this Stock Option Agreement (but in no event later than the
Expiration Date).

(b) This Option may not be exercised for a fraction of a
share.

(c) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option is governed by
Sections 6, 7 and 8 below and subject to the limitation contained in section 2
(i) (d) and (e).

(d) In no event may this Option be exercised after the date
of expiration of the term of this Option as set forth in Section 10 of this
Agreement (the "Expiration Date").

(e) If designated an Incentive Stock Option in the Notice of
Grant, in the event that this Option becomes exercisable at a time or times
which, when this Option is aggregated with all other incentive stock options
granted to Optionee by the Company or any Parent or Subsidiary, would result in
Shares having aggregate fair market value (determined for each Share as of the
Date of Grant of the option covering such Share) in excess of $100,000 becoming
first available for purchase upon exercise of one or more incentive stock
options during any calendar year, the number of shares in excess of $100,000
shall be treated as subject to an option which is a Nonstatutory Stock Option,
pursuant to Section 5 of the Plan.
<PAGE> 2
(ii) Method of Exercise.

(a) The Option shall be exercisable by written notice stating
the election to exercise the Option, the number of Shares in respect of which
the Option is being exercised, and such other representations and agreements as
to the holder's investment intent with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the Secretary of the Company. The written notice shall
be accompanied by payment of the exercise price for all the shares being
purchased. This Option shall be deemed to be exercised upon receipt by the
Company of said written notice accompanied by said exercise price.

(b) As a condition to the exercise of this Option, the
Optionee agrees to make adequate provisions for federal, state or other tax
withholding obligations, if any, which arise upon the exercise of the Option or
disposition of Shares, whether by withholding, direct payment to the Company, or
otherwise.

(c) No Shares will be issued pursuant to the exercise of an
Option unless such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange upon which the
Shares may then be listed. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to the Optionee on the date on which the
Option is exercised with respect to such shares.

3. Optionee's Representations. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company an investment
representation statement in customary form, a copy of which is available for
Optionee's review from the Company upon request.

4. Method of Payment. Payment of the Exercise Price shall be by any
of the following, or a combination of the following, at the election of the
Optionee: (i) cash; or (ii) check.

5. Restrictions on Exercise. This Option may not be exercised if the
issuance of the Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.

2
<PAGE> 3
6. Termination of Relationship. In the event of termination of
Optionee's Continuous Status as an Employee or Consultant, Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise this Option during the termination Period set out in the Notice
of Grant. To the extent that Optionee was not entitled to exercise this Option
at the date of such termination, or if Optionee does not exercise this Option
within the time specified in the Notice of Grant, the Option shall terminate.

7. Disability of Optionee. Notwithstanding the provisions of Section
6 above, in the event of termination of Optionee's Continuous Status as an
Employee (or Consultant in the case of a Nonstatutory Stock Option) as a result
of total and permanent disability (as defined in Section 22(e)(3) of the Code),
Optionee may, but only within six (6) months from the date of termination of
employment (but in no event later than the date of expiration of the term of
this Option as set forth in Section 10 below), exercise the Option to the extent
otherwise so entitled at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option (to the extent otherwise so entitled)
within the time specified in this Agreement, the Option shall terminate.

8. Death of Optionee. In the event of death of Optionee:

(i) during the term of this Option and while an employee (or
Consultant in the case of a Nonstatutory Stock Option) of the Company and having
been in Continuous Status as an Employee (or Consultant) since the date of Grant
of the Option, the Option may be exercised, at any time within three (3) months
following the date of death (but in no event later than the date of expiration
of the term of this Option as set forth in Section 10 below), by Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent of the right to exercise that would have
accrued had the Optionee continued living and remained in Continuous Status as
an Employee or Consultant three (3) months after the date of death; or

(ii) within thirty (30) days after the termination of Optionee's
Continuous Status as an Employee (or Consultant), the Option may be exercised,
at any time within three (3) months following the date of death (but in no event
later than the date of expiration of the term of this Option as set forth in
Section 10 below), by Optionee's estate or by person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the date of termination.

9. Non-Transferability of Option. This Option may not be transferred
in any manner otherwise than by will or by laws of descent or distribution. The
designation of a beneficiary does not constitute a transfer. An Option may be
exercised during the lifetime of Optionee only by the Optionee or a transferee
permitted by this section. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.

3
<PAGE> 4
10. Term of Option. This Option may be exercised only within five
years of the Vesting Commencement Date set forth on the cover sheet of this
Agreement, and may be exercised during such term only in accordance with the
Plan and the terms of this Option.

11. No Additional Employment Rights. Optionee understands and agrees
that the vesting of Shares pursuant to the Exercise Schedule is earned only by
continuing as an Employee or Consultant at the will of the Company (not through
the act of being hired, being granted this Option or acquiring Shares under this
Agreement). Optionee further acknowledges and agrees that nothing in this
Agreement nor in the Plan which is incorporated in this Agreement by reference
shall confer upon Optionee any right with respect to continuation as an Employee
(or Consultant) with the Company, nor shall it interfere in any way with his or
her right or the Company's right to terminate his or her employment or
consulting relationship at any time, with or without cause.

12. Tax Consequences. Set forth below is a brief summary as of the
date of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(i) Exercise of Incentive Stock Option. If this Option
qualifies as an Incentive Stock Option, there will be no regular federal income
tax liability upon the exercise of the Option, although the excess, if any, of
the fair market value of the Shares on the date of exercise over the Exercise
Price will be treated as an adjustment to the alternative minimum tax for
federal tax purposes and may subject the Optionee to the alternative minimum tax
in the year of exercise.

(ii) Exercise of Nonqualified Stock Option. If this Option does
not qualify as an Incentive Stock Option, there may be a regular federal income
tax liability upon the exercise of the Option. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the fair market value of the Shares on the date of
exercise over the Exercise Price. In addition, the Company will be required to
withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.

(iii) Disposition of Shares. In the case of a Nonqualified Stock
Option, if Shares are held for at least one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. In the case of an Incentive Stock Option, if Shares
transferred pursuant to the Option are held for at least one year after exercise
and are disposed of at least two years after the Date of Grant, any gain
realized on the disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an
Incentive Stock Option are disposed of within such one-year period or within two
years after the Date of Grant, any gain realized on such disposition will be
treated

4
<PAGE> 5
as compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the lesser of (1) fair market value of the Shares on the date
of exercise, or (2) the sales proceeds, over the Exercise Price.

(iv) Notice of Disqualifying Disposition of Incentive Stock Option
Shares. If the Option granted to Optionee in this Agreement is an Incentive
Stock Option and if Optionee sells or otherwise disposes of any of the Shares
acquired pursuant to the Incentive Stock Option on or before the later of (1)
the date two years after the Date of Grant, or (2) the date one year after
transfer of such Shares to the Optionee upon exercise of the Incentive Stock
Option, the Optionee shall notify the Company in writing within thirty (30) days
after the date of any such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee from the early disposition by payment in cash or out
of the current earnings paid to the Optionee.

13. Signature. This Stock Option Agreement shall be deemed executed
by the Company and the Optionee upon execution by such parties of the Notice of
Grant and the Cover Sheet attached to this Stock Option Agreement.

<PAGE> 1
EXHIBIT 99.3
STRATACOM, INC.

1986 INCENTIVE STOCK OPTION PLAN

1. Purposes of the Plan. The purposes of this Stock Option Plan
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to the Employees and
Consultants of the Company, and to promote the success of the Company's
business.

Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Administrator and as
reflected in the terms of the written option agreement.

2. Definitions. As used herein, the following definitions shall
apply:

(a) "Administrator" shall mean the Board or any of its
Committees appointed pursuant to Section 4 of the Plan.

(b) "Applicable Laws" shall have the meaning set forth in
Section 4(a) below.

(d) "Code" shall mean the Internal Revenue Code of 1986,
as amended.

(e) "Common Stock" shall mean the Common Stock of the
Company.

(f) "Committee" shall mean the Committee appointed by the
Board of Directors in accordance with Section 4(a) below, if one is appointed.

(g) "Company" shall mean STRATACOM, INC., a Delaware
corporation.

(h) "Consultant" shall mean (i) any person who is engaged
by the Company or any subsidiary to render consulting services and its
compensated for such consulting services, and (ii) any director of the Company
whether compensated for such services or not; provided, however, that if the
Company registers any class of any equity security pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, the term Consultant shall
thereafter not include directors who are not compensated for their services or
who are paid only a director's fee by the Company.
<PAGE> 2
(i) "Continuous Status as an Employee or Consultant"
shall mean the absence of any interruption or termination of service as an
Employee or Consultant. Continuous Status as an Employee or Consultant shall not
be considered interrupted in the case of sick leave, military leave, or any
other leave of absence approved by the Administrator; provided, however, either
that such leave must be for a period of not more than ninety (90) days or that
re-employment upon the expiration of such leave must be guaranteed by contract
or by statute.

(j) "Employee" shall mean any person, including officers
and directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a director's fee by the Company shall not be sufficient
to constitute "employment" by the Company.

(k) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:

(i) If the Common Stock is listed on any
established stock exchange or a national market system including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value shall
be the average of the closing sales prices for such stock as quoted on such
system for the last five trading days before the date of determination (if for a
given day no sales were reported, the closing bid on that day shall be used), as
such prices are reported in The Wall Street Journal or such other source as the
Administrator deems reliable;

(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the average of the mean between the bid and asked prices
for the Common Stock for the last five days before the date of determination; or

(iii) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.

(l) "Incentive Stock Option" shall mean an Option
intended to qualify as an incentive stock option within the meaning of Section
422 of the Code.

(m) "Nonstatutory Stock Option" shall mean an Option not
intended to qualify as an Incentive Stock Option.

(n) "Option" shall mean a stock option granted pursuant
to the Plan.

(o) "Optioned Stock" shall mean the Common Stock subject
to an

2.
<PAGE> 3
Option.

(p) "Optionee" shall mean an Employee or Consultant who
receives an Option.

(q) "Parent" shall mean a "parent corporation," whether
now or hereafter existing, as defined in Section 424(e) of the Code

(r) "Plan" shall mean this 1986 Incentive Stock Option
Plan.

(s) "Share" shall mean a share of Common Stock, adjusted
in accordance with Section 11 below.

(t) "Subsidiary" shall mean a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan. Subject to the provisions of
Section 11 below, the maximum aggregate number of shares that may be optioned
and sold under the Plan is 4,730,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.

If an Option should expire or become unexercisable for any reason
without having been exercised in full, then the unpurchased Shares that were
subject to the Option shall, unless the Plan has been terminated, become
available for future grant under the Plan.

Notwithstanding any other provision of the Plan, shares issued under
the Plan and later repurchased by the Company shall not become available for
future grant or sale under the Plan.

4. Administration of the Plan.

(a) Composition of Administrator.

(i) Multiple Administrative Bodies. If permitted
by Rule 16b-3 promulgated under the Exchange Act or any successor rule thereto,
as in effect at the time that discretion is being exercised with respect to the
Plan ("Rule 16b-3"), and by the legal requirements relating to the
administration of incentive stock option plans, if any, of applicable securities
laws and the Code (collectively, the "Applicable Laws"), the Plan may (but need
not) be administered by different administrative bodies with respect to
directors, officers who are not directors and Employees who are neither
directors nor officers.

3.
<PAGE> 4
administer the Plan in compliance with Rule 16b-3 as it applies to a plan
intended to qualify thereunder as a discretionary plan, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted (I) in such a manner as to permit the Plan to comply with Rule 16b-3
as it applies to a plan intended to qualify thereunder as a discretionary plan
and (II) in such a manner as to satisfy the Applicable Laws.

(iv) General. Once a Committee has been appointed
pursuant to subsection (ii) or (iii) of this Section 4(a), such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of any Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies (however caused)
and remove all members of a Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws and, in the case of a
Committee appointed under subsection (ii), to the extent permitted by Rule 16b-3
as it applies to a plan intended to qualify thereunder as a discretionary plan.

(b) Powers of the Administrator. Subject to the
provisions of the Plan and in the case of a Committee, the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:

(i) to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(l) of the Plan;

(ii) to select the officers, Consultants and
Employees to whom Options may from time to time be granted hereunder;

(iii) to determine whether and to what extent
Options are granted hereunder;

(iv) to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;

(v) to approve forms of agreement for use under
the Plan;

(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the share price and any restriction or
limitation, or any vesting acceleration or waiver of forfeiture restrictions
regarding any Option and/or the shares of Common Stock relating thereto, based

4.
<PAGE> 5
in each case on such factors as the Administrator shall determine, in its sole
discretion);

(vii) to determine whether, to what extent and
under what circumstances Common Stock and other amounts payable with respect to
an award under this Plan shall be deferred either automatically or at the
election of the participant (including providing for and determining the amount,
if any, of any deemed earnings on any deferred amount during any deferral
period); and

(viii) to reduce the exercise price of any Option
to the then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option shall have declined since the date the Option was
granted.

(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.

5. Eligibility.

(a) Options may be granted only to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he or she is
otherwise eligible, be granted an additional Option or Options.

(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of Stock Options are exercisable for the first time by an
Optionee during any calendar year (under all plans of the Company or any Parent
or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.

(c) For purposes of Section 5(b), Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.

(d) The Plan shall not confer upon any Optionee any right
with respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.

6. Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company as described in Section 18 below. It shall continue
in effect for a term of ten (10) years unless sooner terminated under Section 13
below.

5.
<PAGE> 6
7. Term of Option. The term of each Incentive Stock Option shall
be ten (10) years from the date of grant thereof or such shorter term as may be
provided in the Stock Option Agreement. The term of each Option that is not an
Incentive Stock Option shall be ten (10) years and one (1) day from the date of
grant thereof or such shorter term as may be provided in the Stock Option
Agreement. However, in the case of an Option granted to an Optionee who, at the
time the Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, (a) if the Option is an Incentive Stock Option, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
time as may be provided in the Stock Option Agreement, or (b) if the Option is
not an Incentive Stock Option, the term of the Option shall be five (5) years
and one (1) day from the date of grant thereof or such shorter term as may be
provided in the Stock Option Agreement.

8. Exercise Price and Consideration.

(a) The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Administrator, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the
time of the grant of such Incentive Stock Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than one hundred ten percent (110%) of the Fair Market Value per Share on
the date of grant.

(B) granted to any other Employee, the
per Share exercise price shall be no less than one hundred percent (100%) of the
Fair Market Value per Share on the date of grant.

(ii) In the case of any Option, the per Share
exercise price shall be no less than eighty-five percent (85%) of the Fair
Market Value per Share on the date of grant.

(b) The Administrator shall determine the acceptable form
of consideration for exercising an Option, including the method of payment. In
the case of an Incentive Stock Option, the Administrator shall determine the
acceptable form of consideration at the time of grant. Such consideration may
consist entirely of:

(i) cash;

(ii) check;

6.
<PAGE> 7
(iii) promissory note;

(iv) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;

(v) delivery of a properly executed exercise
notice together with such other documentation as the Administrator and the
broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price;

(vi) any combination of the foregoing methods of
payment; or

(vii) such other consideration and method of
payment for the issuance of Shares to the extent permitted by Applicable Law.

9. Exercise of Option

(a) Procedure for Exercise; Rights as a Stockholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, including performance criteria
with respect to the Company and/or the Optionee, and shall be permissible under
the terms of the Plan; provided, however, than an Incentive Stock Option granted
prior to January 1, 1987 shall not be exercisable while there is outstanding any
incentive stock option which was granted, before the granting of such Incentive
Stock Option, to the same Optionee to purchase stock of the Company, any Parent
or Subsidiary, or any predecessor corporation of such corporations. For purposes
of this provision, an incentive stock option shall be treated as outstanding
until such option is exercised in full or expires by reason of lapse of time.

An Option may not be exercised for a fraction of a share.

An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) above. Until
the issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock certificates
evidencing such shares, no right to vote or receive dividends or any other
rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. No adjustment shall be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 below.

7.
<PAGE> 8
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

(b) Termination of Status as an Employee or Consultant.
If an Employee or Consultant ceases to serve as an Employee or Consultant, then
he or she may, but only within thirty (30) days (or such other period of time
not exceeding three (3) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
the grant of the Option) after the date he or she ceases to be an Employee or
Consultant of the Company (but in no event later than the date of expiration of
the term of such Option as set forth in the Option Agreement, exercise his or
her Option to the extent that he or she was entitled to exercise it at the date
of such termination. To the extent that he or she was not entitled to exercise
the Option at the date of such termination, or if he or she does not exercise
such Option (which he or she was entitled to exercise) within the time specified
herein, the Option shall terminate.

(c) Disability of Optionee. Notwithstanding the
provisions of Section 9(b) above, if an Employee or Consultant is unable to
continue his or her employment or consulting relationship with the Company as a
result of his or her total and permanent disability (as defined in Section
22(e)(3) of the Code), then he or she may, but only within six (6) months (or
such other period of time not exceeding twelve (12) months as is determined by
the Administrator, with such determination in the case of an Incentive Stock
Option being made at the time of the grant of the Option) from the date of
termination (but in no event later than the date of expiration of the term of
such Option as set forth in the Option Agreement), exercise his or her Option to
the extent he or she was entitled to exercise it at the date of termination of
employment or consulting. To the extent that he or she was not entitled to
exercise the Option at the date of termination, or if he or she does not
exercise such Option (which he or she was entitled to exercise) within the time
specified herein, the Option shall terminate.

(d) Death of Optionee. In the event of the death of an
Optionee:

(i) during the term of the Option who is at the
time of his or her death an Employee or Consultant of the Company and who shall
have been in Continuous Status as an Employee or Consultant since the date of
grant of the Option, the Option may be exercised, at any time within three (3)
months following the date of death (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement), by
the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise that would have accrued had the Optionee continued living and remained
in Continuous Status as an Employee or Consultant three (3) months after the
date of death; or

(ii) within one (1) month (or such other period
of time not exceeding three (3) months as is determined by the Administrator,
with such determination in

8.
<PAGE> 9
the case of an Incentive Stock Option being made at the time of grant of the
Option) after the termination of Continuous Status as an Employee or Consultant,
the Option may be exercised, at any time within three (3) months following the
date of death (but in no event later than the date of expiration of the term of
such Option as set forth in the Option Agreement), by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that had accrued at
the date of termination.

(e) Rule 16b-3. Options granted to persons subject to
Section 16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain
such additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.

10. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution. The designation of a
beneficiary by an Optionee does not constitute a transfer. An Option may be
exercised, during the lifetime of the Optionee, only by the Optionee.

11. Adjustments Upon Changes in Capitalization or Merger. Subject
to any required action by the stockholders of the Company, the number of shares
of Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding, and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.

In the event of the proposed dissolution or liquidation of the Company,
the Administrator shall notify the Optionee at least fifteen (15) days prior to
such proposed action. To the extent it has not been previously exercised, the
Option shall terminate immediately prior to the consummation of such proposed
action. In the event of a merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Administrator determines, in the exercise of
its sole

9.
<PAGE> 10
discretion and in lieu of such assumption or substitution, that the Optionee
shall have the right to exercise the Option as to all of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable. If
the Administrator makes an Option fully exercisable in lieu of assumption or
substitution in the event of a merger, then the Administrator shall notify the
Optionee that the Option shall be fully exercisable for a period of thirty (30)
days from the date of such notice, and the Option shall terminate upon the
expiration of such period.

12. Time of Granting Options. The date of grant of an Option
shall, for all purposes, be the date on which the Administrator makes the
determination granting such Option or such other date as is determined by the
Administrator. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.

13. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable; provided, however, that the following revisions or amendments shall
require approval of the stockholders of the Company in the manner described in
Section 18 of the Plan:

(i) any increase in the number of Shares subject
to the Plan, other than in connection with an adjustment under Section 11 above;

(ii) any change in the designation of the class
of persons eligible to be granted Options; or

(iii) if the Company has a class of equity
security registered under Section 12 of the Exchange Act at the time of such
revision or amendment, any material increase in the benefits accruing to
participants under the Plan.

(b) Stockholder Approval. If any amendment requiring
stockholder approval under Section 13(a) above is made subsequent to the first
registration of any class of equity security by the Company under Section 12 of
the Exchange Act, then such stockholder approval shall be solicited as described
in Section 18 below.

(c) Effect of Amendment or Termination. Any such
amendment or termination of the Plan shall not affect Options already granted
and such Options shall remain in full force and effect as if this Plan had not
been amended or terminated, unless mutually agreed otherwise between the
Optionee and the Board, which agreement must be in writing and signed by the
Optionee and the Company.

14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and

10.
<PAGE> 11
delivery of such Shares pursuant thereto complies with all relevant provisions
of law, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed. The
exercise of such Option and the issuance and delivery of such Shares pursuant
thereto shall be further subject to the approval of counsel for the Company with
respect to such compliance.

As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

15. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.

Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

16. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Administrator shall approve.

17. Annual Report to Optionees. The Board of Directors shall cause
an annual report to be sent to the Optionees not later than one hundred twenty
(120) days after the close of the fiscal year adopted by the corporation. Such
report shall be sent at least fifteen (15) days (or, if sent by third-class
mail, thirty-five (35) days) before the annual meeting of stockholders to be
held during the next fiscal year. The annual report shall contain (i) a balance
sheet as of the end of the fiscal year, (ii) an income statement, (iii) a
statement of changes in financial position for the fiscal year, and (iv) any
report of independent accountants or, if there is not such report, the
certificate of an authorized officer of the corporation that the statements were
prepared without audit from the books and records of the corporation.

18. Stockholder Approval.

(a) Continuance of the Plan shall be subject to approval
by the stockholders of the Company within twelve (12) months before or after the
date of the Plan is adopted.

(b) If and in the event that the Company registers any
class of

11.
<PAGE> 12
equity securities pursuant to Section 12 of the Exchange Act, any required
approval of the stockholders of the Company obtained after such registration
shall be solicited substantially in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated thereunder.

(c) If any required approval by the stockholders of the
Plan itself or of any amendment thereto is solicited at any time otherwise than
in the manner described in Section 18(b) hereof, then the Company shall, at or
prior to the first annual meeting of stockholders held subsequent to the later
of (1) the first registration of any class of equity securities of the Company
under Section 12 of the Exchange Act or (2) the granting of an Option hereunder
to an officer or director after such registration, do the following:

(i) furnish in writing to the holders entitled
to vote for the Plan substantially the same information which would be required
(if proxies to be voted with respect to approval or disapproval of the Plan or
amendment were then being solicited) by the rules and regulations in effect
under Section 14(a) of the Exchange Act at the time such information is
furnished; and

(ii) file with, or mail for filing to, the
Securities and Exchange Commission four copies of the written information
referred to in subsection (i) hereof not later than the date on which such
information is first sent or given to stockholders.

12.

<PAGE> 1
EXHIBIT 99.4

STRATACOM, INC.

STOCK OPTION AGREEMENT

STRATACOM, INC., a Delaware corporation (the "Company"), has granted to
1~ ("Optionee"), an option to purchase a total of 2~ shares of Common Stock, at
the price determined as provided herein, and in all respects subject to the
terms, definitions, and provisions of the 1986 Incentive Stock Option Plan (the
"Plan") adopted by the Company, which is incorporated herein by reference. The
terms defined in the Plan shall have the same defined meanings herein.

1. Nature of the Option. This Option is intended to qualify as an
Incentive Stock Option as defined in Section 422A of the Internal Revenue Code
of 1986, as amended (the "Code").

2. Exercise Price. The exercise price shall be $3~ for each share
of Common Stock, which price is not less than the fair market value per share of
the Common Stock on the date of grant.

3. Exercise of Option. This Option shall be exercisable during
its term in accordance with the provisions of Section 9 of the Plan as follows:

(i) Right to Exercise.

(a) Subject to subsections 3(i)(b) and (c),
below, this Option shall be exercisable cumulatively, to the extent of 25% of
the Shares subject to the Option for each year which has expired after the Date
of Grant.

(b) This Option may not be exercised for a
fraction of a share.

(c) In the event of Optionee's death, disability
or other termination of employment, the exercisability of the Option is governed
by Sections 7, 8 and 9 below.

(ii) Methods of Exercise. This Option shall be exercisable
by written notice stating the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such shares of Common Stock as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied
<PAGE> 2
by payment of the exercise price for the total number of shares being purchased.
This Option shall be deemed to be exercised upon receipt by the Company of said
written notice accompanied by said exercise price. A form of notice is attached
to this Agreement as Exhibit A and a form of investment representation letter is
attached hereto as Exhibit B for Optionee's convenience.

No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
Assuming such compliance, the Shares shall be considered to be transferred to
Optionee on the date on which the Option is exercised with respect to such
Shares.

4. Optionee's Representations. By receipt of this Option, by its
execution, and by its exercise in whole or in part, Optionee represents to the
Company that he understands that:

(i) both this Option, and any Shares purchased upon its
exercise, are securities the issuance by the Company of which requires
compliance with federal and state security laws;

(ii) these securities are made available to him only on
the condition that he makes the representation contained in this section (4) to
the Company;

(iii) he has made a reasonable investigation of the affairs
of the Company sufficient to be well informed as to the rights and the value of
these securities;

(iv) he understands that the securities have not been
registered under the Securities Act of 1933 (the "Act") in reliance upon a
specific exemption contained in that Act which depends upon his bona fide
investment intention in acquiring these securities; that his intention is to
hold these securities for his own benefit for an indefinite period; that he has
no present intention of selling or transferring any part thereof (recognizing
that the Option is not transferable) and that there may be certain restrictions
on transfer of the shares subject to the Option;

(v) he understands that the Shares subject to the Option,
in addition to other restrictions on transfer, must be held indefinitely unless
subsequently registered under the Act, or unless an exemption from registration
is available; that Rule 144, the usual exemption from registration is only
available after the satisfaction of certain holding periods and in the presence
of a public market for the Shares; that there is no certainty that a public
market for the Shares will exist, and that otherwise it will be necessary that
the Shares be sold pursuant to another exemption from registration which may be
difficult to satisfy;

2.
<PAGE> 3
(vi) he understands that the certificate representing the
Shares will bear a legend prohibiting their transfer in the absence of their
registration or the opinion of counsel for the Company that registration is not
required, and a legend prohibiting their transfer without the consent of the
Commissioner of Corporations of the State of California; and

(vii) he has read the applicable rules of the Commissioner
of Corporations, which are attached as Exhibit C to this Agreement.

5. Method of Payment. Payment of the exercise price shall be by:

(a) cash; or

(b) check.

6. Restrictions on Exercise. This Option may not be exercised if
the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G"), as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company that may be required by any applicable law or regulation.

7. Termination of Status as an Employee. If Optionee ceases to
serve as an Employee, he may, but only within thirty (30) days after the date he
ceases to be an Employee of the Company, exercise this Option to the extent that
he was entitled to exercise it at the date of such termination. To the extent
that he was not entitled to exercise this Option at the date of such
termination, or if he does not exercise this Option within the time specified
herein, the Option shall terminate.

8. Disability of Optionee. Notwithstanding the provisions of
Section 7 above, if Optionee is unable to continue his employment with the
Company as a result of his total and permanent disability (as defined in Section
422A(c)(9) of the Internal Revenue Code), he may, but only within six (6) months
from the date of termination of employment, exercise his Option to the extent he
was entitled to exercise it at the date of such termination. To the extent that
he was not entitled to exercise the Option at the date of termination, or if he
does not exercise such Option (which he was entitled to exercise) within the
time specified herein, the Option shall terminate.

9. Death of Optionee. In the event of the death of Optionee:

(a) during the term of this Option and while an Employee
of the Company and having been in Continuous Status as an Employee since the
date of grant

3.
<PAGE> 4
of this Option, this Option may be exercised, at any time within three (3)
months following the date of death, by Optionee's estate or by a person who
acquired the right to exercise this Option by bequest or inheritance, but only
to the extent of the right to exercise that would have accrued had Optionee
continued living and remained in Continuous Status as an Employee three (3)
months after the date of death; or

(b) within thirty (30) days after the termination of
Optionee's Continuous Status as an Employee, this Option may be exercised, at
any time within three (3) months following the date of death, by Optionee's
estate or by a person who acquired the right to exercise this Option by bequest
or inheritance, but only to the extent of the right to exercise that had accrued
at the date of termination.

10. Non-Transferability of Option. This Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised
during the lifetime of Optionee only by him. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors, and assigns of
Optionee.

11. Right of First Refusal. In the event, at any time after the
date of this Option, the Optionee or his transferee desires to sell or transfer
in any manner the Shares which he has received under this Option, he shall first
offer such Shares for sale to the Company at the same price, and upon the same
terms (or terms as similar as reasonably possible) upon which he is proposing or
is to dispose of said Shares. Said right of first refusal shall be provided to
the Company for a period of thirty (30) days following receipt by the Company of
written notice by the Optionee of the terms and conditions of said proposed sale
or transfer and the name, address and phone number of each proposed buyer of
transferee. If the Company desires to exercise such right of first refusal, it
shall notify Optionee in writing within such thirty day period. In the event the
Shares are not disposed of on such terms within thirty (30) days following lapse
of the period of the right of first refusal provided to the Company or if the
Optionee proposes to change the price or other terms to make them more favorable
to the buyer, they shall once again be subject to the right of first refusal
herein provided.

12. Involuntary Transfer. In the event, at any time after the date
of this Option, of any transfer by operation of law or other involuntary
transfer (including death or divorce) of all or portion of the Shares by the
record holder thereof, the Company shall have an option to purchase all of the
Shares transferred. Upon such a transfer, the person acquiring the Shares shall
promptly notify the Secretary of the Company of such transfer. The right to
purchase such Shares shall be provided to the Company for a period of thirty
(30) days following receipt by the Company of written notice by the person
acquiring the Shares. With respect to any stock to be transferred pursuant to
this Section 12, the price per Shares shall be the price established by the
Board of Directors as the then fair market value of the Shares.

4.
<PAGE> 5
13. Assignment. The right of the Company to purchase any part of
the Shares under Sections 11 or 12 of this Option may be assigned in whole or in
part to any shareholder or shareholders of the Company or other persons or
organizations.

14. Termination of Repurchase and Refusal Rights. The right of
first refusal granted the Company by Section 11 of this Option and the right of
repurchase granted the Company by Section 12 of this Option shall terminate at
such time as a public market exists for the Company's Common Stock (or any other
stock issued to Optionee in exchange for the Shares purchased under this
Agreement). For the purpose of this Agreement, a "Public Market" shall be deemed
to exist if (i) said stock is listed on a national securities exchange (as that
term is used in the Securities Exchange Act of 1934) or (ii) said stock is
traded on the over-the-counter market and prices are published daily on business
days in a recognized financial journal.

Upon termination of the right of first refusal imposed by this Option
and the expiration or exercise of the Company's repurchase option described
above, a new certificate or certificates representing the Shares not repurchased
shall be issued, on request, without any legend referring to such right of first
refusal or repurchase options.

15. Exempt Transfers. The restrictions on transfer on the Shares
(but not the restriction on transfer of the unexercised option which is the
subject of this Agreement) under Sections 11 and 12 shall not apply to a
transfer to Optionee's spouse or to a trustee for their benefit, or to
Optionee's ancestors or descendants by descent provided that such transferee
shall agree in writing to take such Shares subject to all the terms of this
Agreement, including restrictions on further transfer.

16. Term of Option. This Option may not be exercised more than
five (5) years from the date of grant of this Option, and may be exercised
during such term only in accordance with the Plan and the terms of this Option.

17. Early Disposition of Stock. Optionee understands that, if he
disposes of any Shares received under this Option within two (2) years after the
date of this Agreement or within one (1) year after such Shares were transferred
to him, then he will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal to
the excess of the fair market value of the Shares at the time such Shares were
delivered to him over the price paid for the Shares. Optionee hereby agrees to
notify the Company in writing within thirty (30) days after the date of any such
disposition. Optionee understands that, if he disposes of such Shares at any
time after the expiration of such two-year and one-year holding periods, then
any gain on such sale will be taxed at capital gain rates.

5.
<PAGE> 6
DATE OF GRANT: 6~

STRATACOM, INC.
A California corporation

By:
----------------------------------
Sanjay Subhedar,
Vice President

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OR
CONSULTANT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S
STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY,
NOR SHALL IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE HIS EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE.

Optionee acknowledges receipt of a copy of the Plan and certain
information related thereto and represents that he is familiar with the terms
and provisions thereof, and hereby accepts this Option subject to all of the
terms and provisions thereof. Optionee has reviewed the Plan and this Option in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option.
Optionee hereby agrees to accept as binding, conclusive and final all decision
or interpretations of the Board upon any questions arising under the Plan.

Dated:
------------------------------------

-----------------------------------
1~, Optionee

4~
5~
<PAGE> 7
EXHIBIT A

NOTICE OF EXERCISE OF
INCENTIVE STOCK OPTION

StrataCom, Inc.
1400 Parkmoor Avenue Date of
San Jose, CA 95126 Exercise:_______________

Re: Incentive Stock Option Grant Dated 6~

Gentlemen:

This constitutes notice under my stock option that I elect to purchase
the number of shares of StrataCom, Inc. Common Stock set forth below for the
price set forth below:

Stock option dated: 6~

Number of shares as
to which option is
exercised:
--------------------------------------

Total exercise price:
--------------------------------------

Cash payment delivered herewith:
---------------------------

Unless such documents are enclosed herewith, I hereby agree to execute
such additional documents as may be required pursuant to subparagraph 9(a) of
the 1986 Incentive Stock Option Plan. Please advise what additional documents
may be required.

Very truly yours,

--------------------------------------
1~
<PAGE> 8
EXHIBIT B

, 19
------------------ ----
StrataCom, Inc.
1400 Parkmoor Avenue
San Jose, CA 95126

Gentlemen:

In connection with the proposed purchase of shares of Common
Stock (the "Stock") of StrataCom, Inc., a Delaware corporation (the
"Corporation"), upon the exercise of an Incentive Stock Option dated 6~, by
the undersigned ("Purchaser"), Purchaser hereby agrees, represents and
warrants as follows:

1. Purchase Entirely for Own Account. I represent and warrant
that I am purchasing the Stock solely for my own account for investment and not
with a view to or for sale or distribution of the Stock or any portion thereof
and not with any present intention of selling, offering to sell, or otherwise
disposing of or distributing the Stock or any portion thereof. I also represent
that the entire legal and beneficial interest of the Stock I am purchasing is
being purchased for and will be held for my account only and neither in whole
nor in part for any other person, except that, since I am a resident of the
State of California, my spouse, if any, may have a community property interest
in such shares.

2. Information Concerning Corporation. I represent and warrant
that I have discussed the Corporation and its plans, operations, and financial
condition with its officers and that I have received all such information as I
deem necessary and appropriate to enable me to evaluate the financial risk
inherent in making an investment in the Stock. I further represent and warrant
that I have received satisfactory and complete information concerning the
business and financial condition of the Corporation in respect to all inquiries
in respect thereto.

3. Economic Risk. I represent and warrant that I realize that my
purchase of the Stock will be a highly speculative investment and that I am
able, without impairing my financial condition, to hold the Stock for an
indefinite period of time and to suffer a complete loss on my investment.

4. Restricted Securities. I represent and warrant that the
Corporation has disclosed to me in writing that:
<PAGE> 9
a. the sale of the Stock that I am purchasing has not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), and the Stock must be held indefinitely unless a transfer of the Stock is
subsequently registered under the Securities Act or an exemption from such
registration is available;

b. any shares certificates representing the Stock will
be stamped with the following legends:

(i) "These securities have not been registered
under the Securities Act of 1933. They may not be sold, offered for sale,
pledged or hypothecated in the absence of an effective registration statement as
to the securities under said Act or an opinion of counsel satisfactory to the
Company that such registration is not required."

(ii) "Any legend required to be placed thereon by
the California Commissioner of Corporations."

c. the Corporation will make a notation in its records
of the aforementioned restrictions on transfer and legends.

5. Disposition Under Rule 144. I represent and warrant that I
understand that the shares of the Stock are restricted securities within the
meaning of Rule 144 promulgated under the Act; that the exemption from
registration under Rule 144 will not be available in any event for at least two
(2) years from the date of sale of the Stock to me, and even then will not be
available unless (a) a public trading market then exists for the securities of
the Corporation, (b) adequate information concerning the Corporation is then
available to the public and (c) other terms and conditions of Rule 144 are
complied with; and that any sale of the Stock may be made by me only in
accordance with such terms and conditions.

6. Further Limitations on Disposition. Without in any way
limiting my representations set forth above, I further agree that I shall in no
event make any disposition of all or any portion of the Stock that I am
purchasing unless and until:

a. There is then in effect a Registration Statement
under the Act covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or

b. (i) I shall have notified the Corporation of the
proposed disposition and shall have furnished the Corporation with a detailed
statement of the circumstances surrounding the proposed disposition, (ii) I
shall have furnished the Corporation with an opinion of my own counsel to the
effect that such disposition will not require registration of such Shares under
the Securities Act, and (iii) such opinion of

2.
<PAGE> 10
my counsel shall have been concurred in by counsel for the Corporation and the
Corporation shall have advised me of such concurrence.

Very truly yours,

--------------------------------
1~

ACCEPTED AND AGREED TO:
StrataCom, Inc.

By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------

<PAGE> 1
EXHIBIT 99.5

STRATACOM, INC. 1986 INCENTIVE STOCK OPTION PLAN
STRATACOM, INC. 1994 STOCK OPTION PLAN

CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT

OPTIONEE: 1~

STOCK OPTION ASSUMPTION AGREEMENT issued as of the 9th day of July,
1996 by Cisco Systems, Inc., a California corporation ("Cisco").

WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of Stratacom, Inc., a
Delaware corporation ("Stratacom"), which were granted to Optionee under the
Stratacom, Inc. 1986 Incentive Stock Option Plan and/or the Stratacom, Inc. 1994
Stock Option Plan (the "Plans") and are evidenced by a Stock Option Agreement(s)
(the "Option Agreement(s)") between Stratacom and Optionee.

WHEREAS, Stratacom has this day been acquired by Cisco through merger
of a wholly-owned Cisco subsidiary ("Acquisition Corporation") with and into
Stratacom (the "Merger") pursuant to the Agreement and Plan of Merger dated
April 21, 1996 by and among Cisco, Stratacom and Acquisition Corporation (the
"Merger Agreement").

WHEREAS, the provisions of the Merger Agreement require Cisco to assume
all obligations of Stratacom under all options outstanding under the Plan at the
consummation of the Merger and to issue to the holder of each outstanding option
an agreement evidencing the assumption of such option.

WHEREAS, pursuant to the provisions of the Merger Agreement, the
exchange ratio in effect for the Merger is one (1) share of Cisco common stock
("Cisco Stock") for each outstanding share of Stratacom common stock (the
"Exchange Rate").

WHEREAS, this Agreement is to become effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options under the Plan which have become
necessary by reason of the assumption of those options by Cisco in connection
with the Merger.

NOW, THEREFORE, it is hereby agreed as follows:

1. The number of shares of Stratacom common stock subject to the
stock options held by Optionee under the Plan immediately prior to the Effective
Time (the "Stratacom Options") and the exercise price payable per share are set
forth in Exhibit A
<PAGE> 2
hereto. Cisco hereby assumes, as of the Effective Time, all the duties and
obligations of Stratacom under each of the Stratacom Options. Such assumption is
hereby effected in accordance with the one-for-one Exchange Rate at which shares
of Stratacom common stock were converted into shares of Cisco Stock in
consummation of the Merger. Accordingly, the number of shares of Cisco Stock
purchasable under each Stratacom Option hereby assumed shall be equal to the
same number of shares of Stratacom common stock purchasable under that Stratacom
Option immediately prior to the Merger, and the exercise price per share payable
under each such assumed Stratacom Option shall be equal to the exercise price
per share in effect under that Stratacom Option immediately prior to the Merger.
The specific number of shares of Cisco Stock subject to each Stratacom Option
hereby assumed shall be as set forth for that option in attached Exhibit B, and
the exercise price payable per share of Cisco Stock under the assumed Stratacom
Option shall be as indicated for that option in attached Exhibit B.

2. The following provisions shall govern each Stratacom Option
hereby assumed by Cisco:

- Unless the context otherwise requires, all references
to the "Company" in each Option Agreement(s) and in the Plan (as incorporated
into such Option Agreement(s)) shall mean Cisco, all references to "Shares,"
"Stock" or "Common Stock" shall mean shares of Cisco Stock, and all references
to the "Plan Administrator" shall mean the Compensation Committee of the Cisco
Board of Directors.

- The grant date and the expiration date of each
assumed Stratacom Option and all other provisions which govern either the
exercisability or the termination of the assumed Stratacom Option shall remain
the same as set forth in the Option Agreement(s) applicable to that option and
shall accordingly govern and control Optionee's rights under this Agreement to
purchase Cisco Stock.

- Each assumed Stratacom Option shall remain
exercisable in accordance with the same installment exercise schedule in effect
under the applicable Option Agreement(s) immediately prior to the Effective
Time, with the number of shares of Cisco Stock subject to each such installment
adjusted to reflect the Exchange Rate. Accordingly, no accelerated vesting of
the Stratacom Options shall be deemed to occur by reason of the Merger, and the
grant date for each assumed Stratacom Option shall accordingly remain the same
as in effect under the applicable Option Agreement(s) immediately prior to the
Merger.

- For purposes of applying any and all provisions of
the Option Agreement(s) relating to Optionee's status as an employee with the
Company or his or her consulting or advisory relationship with the Company,
Optionee shall be deemed to continue in such status or relationship for so long
as Optionee renders services as an employee or consultant or advisor,
respectively, to Cisco or any present or future Cisco subsidiary, including
(without limitation) Stratacom. Accordingly, the provisions of the Option

2.
<PAGE> 3
Agreement(s) governing the termination of the assumed Stratacom Option upon the
Optionee's cessation of employee, consultant or advisor status with Stratacom
shall hereafter be applied on the basis of the Optionee's cessation of employee,
consultant or advisor status, as appropriate, with Cisco and its subsidiaries,
and each assumed Stratacom Option shall accordingly terminate, within the
designated time period in effect under the Option Agreement(s) for that option,
following such cessation of employee, consultant or advisor status with Cisco
and its subsidiaries.

- The exercise price payable for the Cisco Stock
subject to each assumed Stratacom Option shall be payable in any of the forms
authorized under the Option Agreement(s) applicable to that option. For purposes
of determining the holding period of any shares of Cisco Stock delivered in
payment of such exercise price, the period for which such shares were held as
Stratacom common stock prior to the Merger shall be taken into account.

- In order to exercise each assumed Stratacom Option,
Optionee must deliver to Cisco a written notice of exercise in which the number
of shares of Cisco Stock to be purchased thereunder must be indicated. The
exercise notice must be accompanied by payment of the exercise price payable for
the purchased shares of Cisco Stock and should be delivered to Cisco at the
following address:

Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134
Attention: Christine Calice

3. Except to the extent specifically modified by this Option
Assumption Agreement, all of the terms and conditions of each Option
Agreement(s) as in effect immediately prior to the Merger shall continue in full
force and effect and shall not in any way be amended, revised or otherwise
affected by this Stock Option Assumption Agreement.

IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the _____ day of ________, 1996.

CISCO SYSTEMS, INC.

By:
----------------------------------

3.
<PAGE> 4
ACKNOWLEDGMENT

The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands that all rights and liabilities with
respect to each of his or her Stratacom Options hereby assumed by Cisco Systems,
Inc. are as set forth in the Option Agreement(s), the Plan and such Stock Option
Assumption Agreement.

--------------------------------------
1~, OPTIONEE

DATED: __________________, 1996

4.
<PAGE> 5
EXHIBIT A

Optionee's Outstanding Options to Purchase Shares of Stratacom, Inc.
Common Stock (Pre-Merger)
<PAGE> 6
EXHIBIT B

Optionee's Outstanding Options to Purchase Shares of Cisco Systems, Inc.
Common Stock (Post-Merger)