XIRCOM INC, S-8, 1997-04-17

XIRCOM INC
S-8, 1997-04-17
COMPUTER COMMUNICATIONS EQUIPMENT

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<PAGE> 1
As filed with the Securities and Exchange Commission on April 17, 1997
Registration No. 33-__________
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933

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

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

CALIFORNIA 95-4221884
- ----------------------------------- ----------------------------------
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)

2300 Corporate Center Drive
Thousand Oaks, California 91320
(Address of Principal Executive Offices)

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

1992 STOCK OPTION PLAN

AND

1992 DIRECTOR STOCK OPTION PLAN

AND

1994 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plan)

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

Steven F. DeGennaro
Chief Financial Officer
XIRCOM, INC.
2300 Corporate Center Drive
Thousand Oaks, California 91320
(Name and address of agent for service)
(805) 376-9300
(Telephone number, including area code, of agent for service)

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

Copy to:
Howard S. Zeprun, Esq.
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Telephone: (415) 493-9300

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
==========================================================================================
Title of Proposed Proposed
Securities to be Amount to Maximum Offering Maximum Aggregate Amount of
Registered be Registered Price Per Share Offering Price Registration Fee
==========================================================================================
<S> <C> <C> <C> <C>
Common Stock,
$0.001 par value

Upon exercise of 600,000 shs. $13.56(1) $8,136,000(1) $2,465.45
options under
1992 Stock
Option Plan

Upon exercise of 200,000 shs. $13.56(1) $2,712,000(1) $ 821.81
options under
1992 Director
Stock Option
Plan

Upon exercise of 150,000 shs. $13.56(1) $2,034,000(1) $ 616.36
options under
1994 Employee
Stock Purchase
Plan

TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,903.63
</TABLE>

- ----------------------
(1) Estimated in accordance with Rule 457 solely for the purpose of calculating
the registration fee on the basis of the average between the high and low
price of the Registrant's Common Stock as reported on the Nasdaq National
Market on April 15, 1997.

================================================================================
<PAGE> 2
XIRCOM, INC.
REGISTRATION STATEMENT ON FORM S-8

PART II

INFORMATION REQUIRED IN REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

There are hereby incorporated by reference in this Registration Statement
the following documents and information heretofore filed with the Securities and
Exchange Commission:

1. The contents of the Registration Statement on Form S-8, file number
33-49170, filed by the Company with the Securities and Exchange Commission on
July 2, 1992.

2. The Company's Annual Report on Form 10-K for the year ended September
30, 1996, filed pursuant to Section 13 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").

3. The Company's Quarterly Report on Form 10-Q for the quarter ending
December 31, 1996, filed pursuant to Section 13 of the Exchange Act.

4. The description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A dated February 11, 1992, filed pursuant to
Section 12 of the Exchange Act, including any amendment or report filed for the
purpose of updating such description.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act on or after the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold shall be deemed to be incorporated by reference in this
Registration Statement and to be part hereof from the date of filing of such
documents.

II-1
<PAGE> 3
ITEM 8. EXHIBITS.
--------

<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
4.1 1992 Stock Option Plan, as amended, together with form
of option agreement thereunder.

4.2 1992 Director Stock Option Plan, as amended, together
with form of option agreement thereunder

4.3 1994 Employee Stock Purchase Plan, as amended

5.1 Opinion of counsel as to legality of securities being
registered.

23.1 Consent of Ernst & Young, LLP, independent auditors.

24.2 Consent of counsel (contained in Exhibit 5.1).

25.1 Power of Attorney (see page II-4).
</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 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 registration statement.

(2) That, for the purpose of determining any liability under
the Securities Act of 1933, as amended (the "Securities 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.

(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 offering.

B. The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in 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
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing

II-2
<PAGE> 4
provisions, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities 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
Securities Act and will be governed by the final adjudication of such issue.

II-3
<PAGE> 5
SIGNATURES

Pursuant to the requirements of the Securities Act that 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 Registration
Statement to be signed on its behalf by the undersigned, thereunto, duly
authorized, in the City of Thousand Oaks, State of California, on April 17,
1997.

XIRCOM, INC.

By: /s/ DIRK I. GATES
----------------------------------
Dirk I. Gates, Chairman, President
and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Dirk I. Gates and Steven F. DeGennaro,
jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Registration Statement on Form S-8 and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitution or substitutes, may do or cause to be
done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------ ---------------------------- --------------
<S> <C> <C>
/s/ DIRK I. GATES Chairman, President and Chief April 17, 1997
-------------------------------- Executive Officer
(Dirk I. Gates)

/s/ STEVEN F. DEGENNARO Vice President, Finance and April 17, 1997
-------------------------------- Chief Financial Officer
(Steven F. DeGennaro)

/s/ MICHAEL F. G. ASHBY Director April 17, 1997
--------------------------------
(Michael F. G. Ashby)

/s/ KENNETH J. BIBA Director April 17, 1997
--------------------------------
(Kenneth J. Biba)

/s/ GARY J. BOWEN Director April 17, 1997
--------------------------------
(Gary J. Bowen)

/s/ J. KIRK MATHEWS Director April 17, 1997
--------------------------------
(J. Kirk Mathews)

/s/ WILLIAM J. SCHROEDER Director April 17, 1997
--------------------------------
(William J. Schroeder)

/s/ DELBERT W. YOCAM Director April 17, 1997
--------------------------------
(Delbert W. Yocam)
</TABLE>

II-4
<PAGE> 6
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- --------- ------------------------------------------------------------ ------------
<S> <C>
4.1 1992 Stock Option Plan, as amended, together with form of
option agreement thereunder

4.2 1992 Director Stock Option Plan, as amended, together with
form of option agreement thereunder

4.3 1994 Employee Stock Purchase Plan, as amended

5.1 Opinion of counsel as to legality of securities being
registered

23.1 Consent of Ernst & Young, LLP, Independent Auditors

24.2(1) Consent of Counsel

25.1(2) Power of Attorney
</TABLE>

- ---------------------
(1) Contained in Exhibit 5.1.
(2) See page II-4

<PAGE> 1
EXHIBIT 4.1

XIRCOM, INC.
1992 STOCK OPTION PLAN

As amended and restated on January 17, 1997

1. Purpose of the Plan. The purpose of the Xircom, Inc. 1992 Stock
Option Plan is to enable Xircom, Inc. to provide an incentive to eligible
employees, consultants and officers whose present and potential contributions
are important to the continued success of the Company, to afford these
individuals the opportunity to acquire a proprietary interest in the Company and
to enable the Company to enlist and retain qualified personnel for the
successful conduct of its business. It is intended that this purpose will be
effected through the granting of (a) stock options, (b) stock purchase rights,
(c) stock appreciation rights, and (d) long-term performance awards.

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

(a) "Administrator" means the Board or such of its
Committees as shall be administering the Plan, in accordance with Section 8 of
the Plan.

(b) "Applicable Laws" means the legal requirements relating
to the administration of stock option plans under applicable securities laws,
California corporate law and the Code.

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

(e) "Committee" means a Committee appointed by the Board in
accordance with Section 8 of the Plan.

(f) "Common Stock" means the Common Stock, $.001 par value,
of the Company.

(g) "Company" means Xircom, Inc., a California corporation.

(h) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.

(i) "Continuous Status as an Employee or Consultant" means
that the employment or consulting relationship is not interrupted or terminated
by the Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Administrator, including sick leave, military leave, or
any other personal leave; provided, however, that for purposes of Continuous
Status as an Employee or Consultant, no such leave may exceed ninety (90) days,
unless reemployment upon the expiration of such leave is guaranteed by contract
(including written Company policies) or statute or unless (in the case of
Options and Rights other than Incentive Stock Options) the Administrator has
expressly designated a longer leave period during which (for purposes of such
Options or Rights) Continuous Status as an Employee or Consultant shall
continue; or (ii) transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successor.

(j) "Director" means a member of the Board.

(k) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.

(l) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
<PAGE> 2
(m) "Exchange Act" means the Securities Exchange Act of
1934, as amended.

(n) "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 Nasdaq National Market, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the day of
determination (or, if the day of determination is not a market trading day, then
on the last market trading day prior to the day of determination), as 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
Stock Market (but not on the Nasdaq National Market) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the day of determination (or, if
the day of determination is not a market trading day, then on the last market
trading day prior to the day of determination), as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;

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

(o) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

(p) "Long-Term Performance Award" means an award under
Section 7 below. A Long-Term Performance Award shall permit the recipient to
receive a cash or stock bonus (as determined by the Administrator) upon
satisfaction of such performance factors as are set out in the recipient's
individual grant. Long-Term Performance Awards will be based upon the
achievement of the Company, Subsidiary and/or individual performance factors or
upon such other criteria as the Administrator may deem appropriate.

(q) "Long-Term Performance Award Agreement" means a written
agreement between the Company and an Optionee evidencing the terms and
conditions of an individual Long-Term Performance Award grant. The Long-Term
Performance Award Agreement is subject to the terms and conditions of the Plan.

(r) "Nonstatutory Stock Option" means any Option that is
not an Incentive Stock Option.

(s) "Notice of Grant" means a written notice evidencing
certain terms and conditions of an individual Option, Stock Purchase Right, SAR
or Long-Term Performance Award grant. The Notice of Grant is part of the Option
Agreement, the SAR Agreement and the Long-Term Performance Award Agreement.

(t) "Officer" means 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.

(u) "Option" means a stock option granted pursuant to the
Plan.

(v) "Option Agreement" means a written agreement between
the Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of the
Plan.

(w) "Option Exchange Program" means a program whereby
outstanding options are surrendered in exchange for options with a lower
exercise price.

(x) "Optioned Stock" means the Common Stock subject to an
Option or Right.

(y) "Optionee" means an Employee or Consultant who holds an
outstanding Option or Right.

(z) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
<PAGE> 3
(aa) "Plan" means this 1992 Stock Option Plan.

(bb) "Restricted Stock" means shares of Common Stock
subject to a Restricted Stock Purchase Agreement acquired pursuant to a grant of
Stock Purchase Rights under Section 6 below.

(cc) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.

(dd) "Right" means and includes SARs, Long-Term Performance
Awards and Stock Purchase Rights granted pursuant to the Plan.

(ee) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or
any successor rule thereto, as in effect when discretion is being exercised with
respect to the Plan.

(ff) "SAR" means a stock appreciation right granted
pursuant to Section 5 of the Plan.

(gg) "SAR Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual SAR
grant. The SAR Agreement is subject to the terms and conditions of the Plan.

(hh) "Share" means a share of the Common Stock, as adjusted
in accordance with Section 10 of the Plan.

(ii) "Stock Purchase Right" means the right to purchase
Common Stock pursuant to Section 6 of the Plan, as evidenced by a Notice of
Grant.

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

3. Shares Subject to the Plan. Subject to the provisions of Section
10 of the Plan, the total number of Shares reserved and available for
distribution under the Plan is 6,600,000 Shares. Subject to Section 10 of the
Plan, if any Shares that have been optioned under an Option cease to be subject
to such Option (other than through exercise of the Option), or if any Option or
Right granted hereunder is forfeited or any such award otherwise terminates
prior to the issuance of Common Stock to the participant, the shares that were
subject to such Option or Right shall again be available for distribution in
connection with future Option or right grants under the Plan; provided, however,
that Shares that have actually been issued under the Plan, whether upon exercise
of an Option or Right, shall not in any event be returned to the Plan and shall
not become available for future distribution under the Plan.

4. Eligibility. Nonstatutory Stock Options and Rights may be granted
to Employees and Consultants. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee or Consultant who has been granted
an Option or Right may be granted additional Options or Rights.

5. Options and SARs.

(a) Options. The Administrator, in its discretion, may
grant Options to eligible participants and shall determine whether such Options
shall be Incentive Stock Options or Nonstatutory Stock Options. Each Option
shall be evidenced by a Notice of Grant which shall expressly identify the
Options as Incentive Stock Options or as Nonstatutory Stock Options, and be in
such form and contain such provisions as the Administrator shall from time to
time deem appropriate. Without limiting the foregoing, the Administrator may at
any time authorize the Company, with the consent of the respective recipients,
to issue new Options or Rights in exchange for the surrender and cancellation of
outstanding Options or Rights. Option agreements shall contain the following
terms and conditions:

(i) Exercise Price; Number of Shares. The per
Share exercise price for the Shares issuable pursuant to an Option shall be such
price as is determined by the Administrator; provided, however, that in the case
of an Incentive Stock Option, the price shall be no less than 100% of the Fair
Market Value of the Common Stock on the date the Option is granted, subject to
any additional conditions set out in Section 5(a)(iv) below.
<PAGE> 4
The Notice of Grant shall specify the number of
Shares to which it pertains.

(ii) Waiting Period and Exercise Dates. At the
time an Option is granted, the Administrator will determine the terms and
conditions to be satisfied before Shares may be purchased, including the dates
on which Shares subject to the Option may first be purchased. The Administrator
may specify that an Option may not be exercised until the completion of the
service period specified at the time of grant. (Any such period is referred to
herein as the "waiting period.") At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised,
which shall not be earlier than the end of the waiting period, if any, nor, in
the case of an Incentive Stock Option, later than ten (10) years, from the date
of grant.

(iii) Form of Payment. 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 which (1) 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 (2) have a Fair
Market Value on the date of surrender not greater than the aggregate exercise
price of the Shares as to which said Option shall be exercised; (5) delivery of
a properly executed exercise notice together with such other documentation as
the Administrator and any broker approved by the Company, 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;

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

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

(iv) Limitations. In addition to the foregoing,
Options, SARs and Stock Purchase Rights granted under the Plan shall be subject
to the following terms and conditions:

(1) Dollar Limitation with Respect to
Incentive Stock Options. To the extent that the aggregate Fair Market Value of
(a) the Shares with respect to which Options designated as Incentive Stock
Options plus (b) the shares of stock of the Company, Parent and any Subsidiary
with respect to which other incentive stock options are exercisable for the
first time by an Optionee during any calendar year under all plans of the
Company and any Parent and Subsidiary exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options. For purposes of the preceding sentence,
(a) Options shall be taken into account in the order in which they were granted,
and (b) the Fair Market Value of the Shares shall be determined as of the time
the Option or other incentive stock option is granted.

(2) Requirements with Respect to
Incentive Stock Options granted to 10% Shareholders. If any Optionee to whom an
Incentive Stock Option is to be granted pursuant to the provisions of the Plan
is, on the date of grant, the owner of Common Stock (as determined under Section
424(d) of the Code) possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any Parent or Subsidiary of the
Company, then the following special provisions shall be applicable to the Option
granted to such individual:

(a) The per Share Option
price of Shares subject to such Incentive Stock Option shall not be less than
110% of the Fair Market Value of Common Stock on the date of grant; and

(b) The Option shall not
have a term in excess of five (5) years from the date of grant.
<PAGE> 5
(3) Limitation on Total Grants Under
Plan. No Employee shall be granted, in any fiscal year of the Company, Options,
SARs granted independently of Options and/or Stock Purchase Rights for greater
than an aggregate of 250,000 shares of Common Stock (subject to appropriate
adjustment pursuant to Section 10 below), provided that a new employee of the
Company may be granted in a single fiscal year upon joining the Company Options,
SARs granted independently of Options and Stock Purchase Rights for up to an
aggregate of 500,000 shares of Common Stock (subject to appropriate adjustment
pursuant to Section 10 below). In addition, no Employee shall be granted, from
December 9, 1993 until the Plan shall terminate pursuant to Section 19 below,
Options, SARs granted independently of Options and/or Stock Purchase Rights for
greater than an aggregate of 500,000 shares of Common Stock (subject to
appropriate adjustment pursuant to Section 10 below).

Except as modified by the preceding provisions of this subsection 5(a)(iv) and
except as otherwise limited by Section 422 of the Code, all of the provisions of
the Plan shall be applicable to the Incentive Stock Options granted hereunder.

(v) Other Provisions. Each Option granted under
the Plan may contain such other terms, provisions, and conditions not
inconsistent with the Plan as may be determined by the Administrator.

(vi) Buyout Provisions. The Administrator may at
any time offer to buy out for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the Administrator shall establish
and communicate to the Optionee at the time that such offer is made.

(b) SARs.

(i) In Connection with Options. At the sole
discretion of the Administrator, SARs may be granted in connection with all or
any part of an Option, either concurrently with the grant of the Option or at
any time thereafter during the term of the Option. The following provisions
apply to SARs that are granted in connection with Options:

(1) The SAR shall entitle the Optionee
to exercise the SAR by surrendering to the Company unexercised a portion of the
related Option. The Optionee shall receive in Exchange from the Company an
amount equal to the excess of (1) the Fair Market Value on the date of exercise
of the SAR of the Common Stock covered by the surrendered portion of the related
Option over (2) the exercise price of the Common Stock covered by the
surrendered portion of the related Option. Notwithstanding the foregoing, the
Administrator may place limits on the amount that may be paid upon exercise of
an SAR; provided, however, that such limit shall not restrict the exercisability
of the related Option.

(2) When an SAR is exercised, the
related Option, to the extent surrendered, shall cease to be exercisable.

(3) An SAR shall be exercisable only
when and to the extent that the related Option is exercisable and shall expire
no later than the date on which the related Option expires.

(4) An SAR may only be exercised at a
time when the Fair Market Value of the Common Stock covered by the related
Option exceeds the exercise price of the Common Stock covered by the related
Option.

(ii) Independent of Options. At the sole
discretion of the Administrator, SARs may be granted without related Options.
The following provisions apply to SARs that are not granted in connection with
Options:

(1) The SAR shall entitle the
Optionee, by exercising the SAR, to receive from the Company an amount equal to
the excess of (1) the Fair Market Value of the Common Stock covered by the
exercised portion of the SAR, as of the date of such exercise, over (2) the Fair
Market Value of the Common Stock covered by the exercised portion of the SAR, as
of the last market trading date prior to the date on which the SAR was granted;
provided, however, that the Administrator may place limits on the aggregate
amount that may be paid upon exercise of an SAR.

(2) SARs shall be exercisable, in
whole or in part, at such times as the Administrator shall specify in the
Optionee's SAR Agreement.
<PAGE> 6
(iii) Form of Payment. The Company's obligation
arising upon the exercise of an SAR may be paid in Common Stock or in cash, or
in any combination of Common Stock and cash, as the Administrator, in its sole
discretion, may determine. Shares issued upon the exercise of an SAR shall be
valued at their Fair Market Value as of the date of exercise.

(i) Procedure for Exercise; Rights as a
Shareholder. Any Option or SAR granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator 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 or SAR 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 or SAR by the person entitled to exercise the
Option or SAR 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 (and, in the case of an Incentive Stock Option, determined
at the time of grant) and permitted by the Option Agreement consist of any
consideration and method of payment allowable under subsection 5(a)(iii) 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. 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 10 of the Plan.

Exercise of an Option in any manner shall result
in a decrease in the number of Shares which thereafter shall 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. Exercise of an SAR in any manner shall, to
the extent the SAR is exercised, result in a decrease in the number of Shares
which thereafter shall be available for purposes of the Plan, and the SAR shall
cease to be exercisable to the extent it has been exercised.

(ii) Rule 16b-3. Options and SARs granted to
individuals subject to Section 16 of the Exchange Act ("Insiders") must comply
with the applicable provisions of 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.

(iii) Termination of Employment or Consulting
Relationship. In the event an Optionee's Continuous Status as an Employee or
Consultant terminates (other than upon the Optionee's death or Disability), the
Optionee may exercise his or her Option or SAR, but only within such period of
time as is determined by the Administrator at the time of grant, not to exceed
six (6) months (three (3) months in the case of an Incentive Stock Option) from
the date of such termination, and only to the extent that the Optionee was
entitled to exercise it at the date of such termination (but in no event later
than the expiration of the term of such Option or SAR as set forth in the Option
or SAR Agreement). To the extent that Optionee was not entitled to exercise an
Option or SAR at the date of such termination, and to the extent that the
Optionee does not exercise such Option or SAR (to the extent otherwise so
entitled) within the time specified herein, the Option or SAR shall terminate.

(iv) Disability of Optionee. In the event an
Optionee's Continuous Status as an Employee or Consultant terminates as a result
of the Optionee's Disability, the Optionee may exercise his or her Option or
SAR, but only within six (6) months from the date of such termination, and only
to the extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option or SAR as set forth in the Option or SAR Agreement). To the extent that
Optionee was not entitled to exercise an Option or SAR at the date of such
termination, and to the extent that the Optionee does not exercise such Option
or SAR (to the extent otherwise so entitled) within the time specified herein,
the Option or SAR shall terminate.

(v) Death of Optionee. Notwithstanding Sections
5(c)(iii) and 5(c)(iv) above, in the event of an Optionee's death either (A)
during Optionee's Continuous Status as an Employee or Consultant, or (B)
following termination of Optionee's Continuous Status as an Employee or
Consultant and prior to the date on which the Option
<PAGE> 7
terminates pursuant to Section 5(c)(iii) or 5(c)(iv) above and the terms of
Optionee's Option or SAR, the Optionee's estate or a person who acquired the
right to exercise the deceased Optionee's Option or SAR by bequest or
inheritance may exercise the Option or SAR, but only within twelve (12) months
(or such lesser period as the Option or SAR Agreement may provide) following the
date of death, and only to the extent that the Optionee was entitled to exercise
it at the date of death (but in no event later than the expiration of the full
term of such Option or SAR as set forth in the Option or SAR Agreement). To the
extent that Optionee was not entitled to exercise an Option or SAR at the date
of death, and to the extent that the Optionee's estate or a person who acquired
the right to exercise such Option does not exercise such Option or SAR (to the
extent otherwise so entitled) within the time specified herein, the Option or
SAR shall terminate.

6. Stock Purchase Rights.

(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that the offeree shall be entitled
to purchase, the price to be paid, and the time within which the offeree must
accept such offer, which shall in no event exceed thirty (30) days from the date
upon which the Administrator made the determination to grant the Stock Purchase
Right. The offer shall be accepted by execution of a Restricted Stock Purchase
Agreement in the form determined by the Administrator.

(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine.

(c) Other Provisions. The Restricted Stock Purchase
Agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in its sole
discretion. In addition, the provisions of Restricted Stock Purchase Agreements
need not be the same with respect to each purchaser.

(d) Rule 16b-3. Stock Purchase Rights granted to Insiders,
and Shares purchased by Insiders in connection with Stock Purchase Rights, shall
be subject to any restrictions applicable thereto in compliance with Rule 16b-3.
An Insider may only purchase Shares pursuant to the grant of a Stock Purchase
Right, and may only sell Shares purchased pursuant to the grant of a Stock
Purchase Right, during such time or times as are permitted by Rule 16b-3.

(e) Rights as a Shareholder. Once the Stock Purchase Right
is exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 10
of the Plan.

7. Long-Term Performance Awards.

(a) Administration. Long-Term Performance Awards are cash
or stock bonus awards that may be granted either alone or in addition to other
awards granted under the Plan. Such awards shall be granted for no cash
consideration. The Administrator shall determine the nature, length and starting
date of any performance period (the "Performance Period") for each Long-Term
Performance Award, and shall determine the performance or employment factors, if
any, to be used in the determination of Long-Term Performance Awards and the
extent to which such Long-Term Performance Awards are valued or have been
earned. Long-Term Performance Awards may vary from participant to participant
and between groups of participants and shall be based upon the achievement of
Company, Subsidiary, Parent and/or individual performance factors or upon such
other criteria as the Administrator may deem appropriate. Performance Periods
may overlap and participants may participate simultaneously with respect to
Long-Term Performance Awards that are subject to different Performance Periods
and different performance factors and criteria. Long-Term Performance Awards
shall be confirmed by, and be subject to the terms of, a
<PAGE> 8
Long-Term Performance Award agreement. The terms of such awards need not be the
same with respect to each participant.

At the beginning of each Performance Period, the
Administrator may determine for each Long-Term Performance Award subject to such
Performance Period the range of dollar values or number of shares of Common
Stock to be awarded to the participant at the end of the Performance Period if
and to the extent that the relevant measures of performance for such Long-Term
Performance Award are met. Such dollar values or number of shares of Common
Stock may be fixed or may vary in accordance with such performance or other
criteria as may be determined by the Administrator.

(b) Adjustment of Awards. The Administrator may adjust the
performance factors applicable to the Long-Term Performance Awards to take into
account changes in legal, accounting and tax rules and to make such adjustments
as the Administrator deems necessary or appropriate to reflect the inclusion or
exclusion of the impact of extraordinary or unusual items, events or
circumstances in order to avoid windfalls or hardships.

8. Administration.

(a) Composition of Administrator.

(i) Multiple Administrative Bodies. If permitted
by Rule 16b-3 and Applicable Laws, the Plan may (but need not) be administered
by different administrative bodies with respect to (A) Directors who are
employees, (B) Officers who are not Directors and (C) Employees who are neither
Directors nor Officers.

(ii) Administration with respect to Directors
and Officers. With respect to grants of Options and Rights to eligible
participants who are 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 grant or award plan, or (B) a Committee designated
by the Board to administer the Plan, which Committee shall be constituted (1) 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 grant or award plan and
(2) in such a manner as to satisfy the Applicable Laws.

(iii) Administration with respect to Other
Persons. With respect to grants of Options to eligible participants 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.

(iv) General. Once a Committee has been
appointed pursuant to subsection (ii) or (iii) of this Section 8(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 grant or award plan.

(b) Powers of the Administrator. Subject to the provisions
of the Plan, and in the case of a Committee, subject to 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(n) of the Plan;

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

(iii) to determine whether and to what extent
Options and Rights or any combination thereof, are granted hereunder;

(iv) to determine the number of shares of Common
Stock to be covered by each Option and Right granted hereunder;

(v) to approve forms of agreement for use under
the Plan;
<PAGE> 9
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options or Rights may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Right or
the shares of Common Stock relating thereto, based in each case on such factors
as the Administrator, in its sole discretion, shall determine;

(vii) to construe and interpret the terms of the
Plan;

(viii) to prescribe, amend and rescind rules and
regulations relating to the Plan;

(ix) to determine whether and under what
circumstances an Option or Right may be settled in cash instead of Common Stock
or Common Stock instead of cash;

(x) to reduce the exercise price of any Option
or Right;

(xi) to modify or amend each Option or Right
(subject to Section 16 of the Plan);

(xii) to authorize any person to execute on
behalf of the Company any instrument required to effect the grant of an Option
or Right previously granted by the Administrator;

(xiii) to institute an Option Exchange Program;

(xiv) to determine the terms and restrictions
applicable to Options and Rights and any Restricted Stock; and

(xv) to make all other determinations deemed
necessary or advisable for administering the Plan.

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

9. Non-Transferability. Options and Rights 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 the Optionee, only by the Optionee.

10. Adjustments Upon Changes in Capitalization, Dissolution, Merger
or Asset Sale.

(a) Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option and Right, and the number of shares of Common
Stock which have been authorized for issuance under the Plan but as to which no
Options or Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Right, as well as the price per
share of Common Stock covered by each such outstanding Option or Right, 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 Board, 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 or Right.

(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, to the extent that an Option
or Right has not been previously exercised, it will terminate immediately prior
to the consummation of such proposed action. The Board may, in the exercise of
its sole discretion in such instances, declare that any Option or Right shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his or her Option or Right as to all or any part of
<PAGE> 10
the Optioned Stock, including Shares as to which the Option or Right would not
otherwise be exercisable.

(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option and Right shall be assumed or
an equivalent Option or Right substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. In the event that the
successor corporation does not agree to assume the Options and Rights or to
substitute equivalent options and rights, the Administrator shall, in lieu of
such assumption or substitution, provide for the Optionee to have the right to
exercise the Option or Right as to all or a portion of the Optioned Stock,
including Shares as to which it would not otherwise be exercisable. If the
Administrator makes an Option or Right 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 or Right shall be exercisable for a period
of fifteen (15) days from the date of such notice, and the Option or Right will
terminate upon the expiration of such period. For the purposes of this
paragraph, the Option or Right shall be considered assumed if, immediately
following the merger or sale of assets, the Option or Right confers the right to
purchase, for each Share of Optioned Stock subject to the Option or Right
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation and the
participant, provide for the consideration to be received upon the exercise of
the Option or Right, for each Share of Optioned Stock subject to the Option or
Right, to be solely common stock of the successor corporation or its Parent
equal in Fair Market Value to the per share consideration received by holders of
Common Stock in the merger or sale of assets.

11. Date of Grant. The date of grant of an Option or Right shall be,
for all purposes, the date on which the Administrator makes the determination
granting such Option or Right, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each Optionee
within a reasonable time after the date of such grant.

12. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares shall not be issued pursuant
to the exercise of an Option or Right unless the exercise of such Option or
Right and the issuance and delivery of such Shares 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, Applicable Laws, and the requirements of any stock exchange or
quotation system upon which the Shares may then be listed or quoted, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance.

(b) Investment Representations. As a condition to the
exercise of an Option or Right, the Company may require the person exercising
such Option or Right 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.

13. Liability of Company.

(a) Inability to Obtain Authority. 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.

(b) Grants Exceeding Allotted Shares. If the Optioned Stock
covered by an Option or Right exceeds, as of the date of grant, the number of
Shares which may be issued under the Plan without additional shareholder
approval, such Option or Right shall be void with respect to such excess
Optioned Stock, unless shareholder approval of an amendment sufficiently
increasing the number of Shares subject to the Plan is timely obtained in
accordance with Section 16(b) of the Plan.
<PAGE> 11
14. 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.

15. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.

16. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.

(b) Shareholder Approval. The Company shall obtain
shareholder approval of any Plan amendment to the extent necessary and desirable
to comply with Rule 16b-3 or with Section 422 of the Code (or any successor rule
or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock is
listed or quoted). Such shareholder approval, if required, shall be obtained in
such a manner and to such a degree as is required by the applicable law, rule or
regulation.

(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company.

17. Taxation Upon Exercise of Option or Right. At the discretion of
the Administrator, Optionees may satisfy withholding obligations as provided in
this Section 17. When an Optionee incurs tax liability in connection with an
Option or Right, which tax liability is subject to withholding under applicable
tax laws, the Optionee may satisfy the tax withholding obligation by one or some
combination of the following methods: (a) by cash payment, or (b) out of
Optionee's current compensation, or (c) by surrendering to the Company Shares
which (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 or Right 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").

If the Optionee is an Insider, any surrender 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.

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;

(d) if the Optionee is an Insider, 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.
<PAGE> 12
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.

18. Effective Date. The effective date of the Plan shall be the
earlier of the date the Plan is adopted by the Board or the date the Plan is
approved by the shareholders of the Company.

19. Term of the Plan. The Plan shall expire, and no further Options
shall be granted pursuant to the Plan, on the date that is ten years after the
effective date determined under Section 18 of this Plan.

<PAGE> 1
EXHIBIT 4.2
XIRCOM, INC.
1992 DIRECTOR STOCK OPTION PLAN

As amended and restated on January 17, 1997

1. Purpose of the Plan. The purpose of this 1992 Director Stock
Option Plan is to attract and retain the best available personnel to serve as
Outside Directors of the Company.

All options granted hereunder shall be "non-statutory stock
options".

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

(a) "Board" means the Board of Directors of the Company.

(b) "Code" means the Internal Revenue Code of 1986, as
amended.

(d) "Company" means Xircom, Inc., a California corporation.

(e) "Continuous Status as a Director" means the absence of
any interruption or termination of service as a Director.

(f) "Director" means a member of the Board.

(g) "Employee" means 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 in and of
itself to constitute "employment" by the Company.

(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended.

(i) "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, the Fair Market Value of a
Share of Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such system or exchange (or
the exchange with the greatest volume of trading in Common Stock) on the last
market trading day prior to the day of determination, as reported in the Wall
Street Journal or such other source as the Board 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, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Board deems reliable; 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 Board.
<PAGE> 2
(j) "Option" means a stock option granted pursuant to the
Plan.

(k) "Optioned Stock" means the Common Stock subject to an
Option.

(l) "Optionee" means an Outside Director who receives an
Option.

(m) "Outside Director" means a Director who is not an
Employee.

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

(o) "Plan" means this 1992 Director Stock Option Plan.

(p) "Share" means a share of the Common Stock, as adjusted
in accordance with Section 10 of the Plan.

(q) "Subsidiary" means 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 10
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 425,000 Shares (the "Pool") 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, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan.

4. Administration of and Grants of Options under the Plan.

(a) Administrator. Except as otherwise required herein, the
Plan shall be administered by the Board.

(b) Procedure for Grants. The provisions set forth in this
Section 4(b) shall not be amended more than once every six months, other than to
comply with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder. All grants of Options hereunder shall
be automatic and non-discretionary and shall be made strictly in accordance with
the following provisions:

(i) No person shall have any discretion to
select which Outside Directors shall be granted Options or to determine the
number of Shares to be covered by Options granted to Outside Directors.

(ii) On July 1, 1992 and on each July 1
thereafter during the term of this Plan, each Outside Director who shall have
been an Outside Director for at least six (6) months as of such date shall
automatically receive an Option to purchase 7,500 Shares (an "Annual Grant"). In
addition, each new Outside Director who shall first join the Board on or after
May 1, 1992 shall automatically be granted an Option to purchase 30,000 Shares
upon the date on which such person first becomes an Outside Director, whether
through election by the shareholders of the Company, appointment by the Board to
fill a vacancy, or termination of employment by the Company while remaining as a
Director (a "One-Time Grant").

(iii) The terms of each Option granted hereunder
shall be as follows:

(A) the term of the Option shall be
five (5) years;

(B) the Option shall be exercisable
only while the Outside Director remains a Director of the Company, except as set
forth in Section 8 hereof;

(D) each One-Time Grant shall become
exercisable in installments cumulatively as to 25% of the Optioned Stock on each
anniversary of the date of grant, so that 100% of the Optioned Stock granted
under any One-Time Grant shall be exercisable four years after the date of grant
of the Option, assuming Continuous Status
<PAGE> 3
as a Director; and,

(E) each Annual Grant shall become
exercisable in its entirety on the fourth anniversary of the date of grant of
the Option, assuming Continuous Status as a Director.

(iv) In the event that any Option granted under
the Plan would cause the number of Shares subject to outstanding Options plus
the number of Shares previously purchased upon exercise of Options to exceed the
Pool, then each such automatic grant shall be for that number of Shares
determined by dividing the total number of Shares remaining available for grant
by the number of Outside Directors entitled to receive Options on the grant
date. No further grants shall be made until such time, if any, as additional
Shares become available for grant under the Plan through action of the
shareholders to increase the number of Shares which may be issued under the Plan
or through cancellation or expiration of Options previously granted hereunder.

(c) Powers of the Board. Subject to the provisions and
restrictions of the Plan, the Board shall have the authority, in its discretion:
(i) to determine, upon review of relevant information and in accordance with
Section 2(i) of the Plan, the Fair Market Value of the Common Stock; (ii) to
interpret the Plan; (iii) to prescribe, amend and rescind rules and regulations
relating to the Plan; (iv) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option previously
granted hereunder; and (v) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

(d) Effect of Board's Decision. All decisions,
determinations and interpretations of the Board shall be final.

5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.

The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or
nomination to serve as a Director, nor shall it interfere in any way with any
rights which the Director or the Company may have to terminate his or her
directorship at any time.

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 stockholders of the
Company as described in Section 16 of the Plan. It shall continue in effect
until December 31, 2002, unless sooner terminated under Section 11 of the Plan.

7. Consideration. 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 Board and may consist entirely of (i) cash, (ii) check, (iii)
promissory note, (iv) other shares which 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 and which, in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than 12 months
on the date of surrender, (v) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds required to pay the exercise price,
(vi) delivery of an irrevocable subscription agreement for the Shares which
irrevocably obligates the Optionee to take and pay for the Shares not more than
12 months after the date of delivery of the subscription agreement, (vii) any
combination of the foregoing methods of payment, or (viii) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under applicable law.

8. Exercise of Option.

(a) Procedure for Exercise; Rights as a Stockholder. Any
Option granted hereunder shall be exercisable at such times as are set forth in
Section 4(b) hereof; provided, however, that no Options shall be exercisable
until stockholder approval of the Plan in accordance with Section 16 hereof has
been obtained.

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
<PAGE> 4
which the Option is exercised has been received by the Company. Full payment may
consist of any consideration and method of payment allowable under Section 7 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 stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. A share certificate for the
number of Shares so acquired shall be issued to the Optionee as soon as
practicable after 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 10 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 Continuous Status as a Director. In the
event an Optionee's Continuous Status as a Director terminates (other than upon
the Optionee's death or total and permanent disability (as defined in Section
22(e)(3) of the Code)), the Optionee may exercise his or her Option, but only
within 90 days from the date of such termination, and only to the extent that
the Optionee was entitled to exercise it at the date of such termination (but in
no event later than the expiration of its five-year term). To the extent that
the Optionee was not entitled to exercise an Option at the date of such
termination, and to the extent that the Optionee does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.

(c) Disability of Optionee. In the event Optionee's
Continuous Status as a Director terminates as a result of total and permanent
disability (as defined in Section 22(e)(3) of the Code), the Optionee may
exercise his or her Option, but only within six months from the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration of
its five-year term). To the extent that the Optionee was not entitled to
exercise an Option at the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.

(d) Death of Optionee. In the event of an Optionee's death
while a Director or within 90 days after ceasing to be a Director, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within one year
following the date of death, and only to the extent that the Optionee was
entitled to exercise it at the date of death (but in no event later than the
expiration of its five-year term). To the extent that the Optionee was not
entitled to exercise an Option at the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.

9. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will, by the laws of descent or distribution or pursuant to a qualified
domestic relations order, and may be exercised, during the lifetime of the
Optionee, only by the Optionee or a permitted transferee.

10. Adjustments.

(a) Changes in Capitalization. In the event that the stock
of the Company is changed by reason of any stock split, reverse stock split,
recapitalization, or other change in the capital structure of the Company, or
converted into or exchanged for other securities as a result of any merger,
consolidation or reorganization, or in the event that the outstanding number of
shares of stock of the Company is increased through payment of a stock dividend,
appropriate proportionate adjustments shall be made in the number and class of
shares of stock subject to the Plan, the number and class of shares subject to
any Option outstanding under the Plan, and the exercise price of any such
outstanding Option; provided, however, that the Company shall not be required to
issue fractional shares as a result of any such adjustment. Any such adjustment
shall be made upon approval by the Board, whose determination shall be
conclusive. If there is any other change in the number or type of the
outstanding shares of stock of the Company, or of any other security into which
such stock shall have been changed or for which it shall have been exchanged,
and if the Board in its sole discretion determines that such change equitably
requires an adjustment in the Options then outstanding under the Plan, such
adjustment shall be made in accordance with the determination of the Board. No
<PAGE> 5
adjustments shall be required by reason of the issuance or sale by the Company
for cash or other consideration of additional shares of its stock or securities
convertible into or exchangeable for shares of its stock.

(b) Corporate Transactions. New Options (substantially
equivalent to the Options) may be substituted for the Options granted under the
Plan, or the Company's duties as to Options outstanding under the Plan may be
assumed, by an employer corporation other than the Company or by a parent or
subsidiary of such employer corporation, in connection with any merger,
consolidation, acquisition of assets or stock, separation, reorganization,
liquidation or like occurrence in which the Company is involved; provided,
however, in the event such employer corporation or parent or subsidiary of such
employer corporation does not assume the Options granted hereunder or substitute
for such Options substantially equivalent options, or if the Board determines,
in its sole discretion, that Options outstanding under the Plan should not then
continue to be outstanding, the Options granted hereunder shall terminate and
thereupon become null and void (i) upon dissolution or liquidation of the
Company, acquisition, separation, or similar occurrence, or (ii) upon any
merger, consolidation or similar occurrence, where the Company will not be a
surviving corporation, provided, however, that each Optionee shall be given
notice of such dissolution, liquidation, merger, consolidation, acquisition,
separation or similar occurrence and shall have the right, at any time prior to,
but contingent upon the consummation of such transaction, to exercise (x) any
unexpired Options granted hereunder to the extent they are then exercisable, and
(y) in the case of a merger, consolidation or similar occurrence where the
Company is not the surviving corporation, those Options which are not then
otherwise exercisable; provided, further, that such exercise right shall not in
any event expire less than 30 days after the date notice of such transaction is
sent to the Optionee.

11. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of any
Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act (or any other applicable law or regulation), the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.

(b) 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.

12. Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.

13. 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, state securities laws and the requirements of any stock exchange or
market system 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, 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.

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.

14. 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.
<PAGE> 6
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

16. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the first granting of an Option
hereunder. Such stockholder approval shall be obtained in the degree and manner
required under applicable state and federal law.

<PAGE> 1
EXHIBIT 4.3
XIRCOM, INC.
1994 EMPLOYEE STOCK PURCHASE PLAN

As Amended and restated as of January 17, 1997

The following constitute the provisions of the 1994 Employee Stock
Purchase Plan of Xircom, Inc.

1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

2. Definitions.

(a) "Board" shall mean the Board of Directors of the
company.

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

(d) "Company" shall mean Xircom, Inc.

(e) "Compensation" shall mean wages, salaries, and fees for
professional services and any other amounts received (without regard to whether
or not an amount is paid in cash) for personal services actually rendered in the
course of employment with the Company to the extent that such amounts are
included in gross income (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of profits,
bonuses, fringe benefits, reimbursements and expense allowances), and excluding
the following:

(1) Company contributions to a plan of deferred
compensation which are not included in the Employee's gross income for the
taxable year in which contributed, or Company contributions under a simplified
employee pension plan to the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred compensation;

(2) Amounts realized from the exercise of a
non-qualified stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture; and

(3) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option.

(f) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.

(g) "Employee" shall mean any individual who is an employee
of the Company or any Designated Subsidiary for purposes of tax withholding
under the Code whose customary employment with the Company or any Designated
Subsidiary is at least twenty (20)
<PAGE> 2
hours per week and more than five (5) months in any calendar year. For purposes
of the Plan, the employment relationship shall be treated as continuing intact
while the individual is on sick leave or other leave of absence approved by the
Company. Where the period of leave exceeds 90 days and the individual's right to
reemployment is not guaranteed either by statute or by contract, the employment
relationship will be deemed to have terminated on the 91st day of such leave.

(h) "Enrollment Date" shall mean the first day of each
Offering Period or Extended Offering Period.

(i) "Exercise Date" shall mean the last day of each
Offering Period, or with respect to an Extended Offering Period, the last day of
each Purchase Period.

(j) "Extended Offering Period" shall mean a period of
approximately twelve (12), eighteen (18) or twenty-four (24) months, commencing
on the date or dates so specified by the Board, during which options granted
pursuant to the Plan may be exercised. The duration, commencement and
termination of Extended Offering Periods may be changed pursuant to Section 4 of
this Plan.

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

(1) 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 closing sale price for the Common Stock (or the mean of the closing bid
and asked prices, if no sales were reported), as quoted on such exchange (or the
exchange with the greatest volume of trading in Common Stock) or system on the
date of such determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable, or;

(2) If the Common Stock is quoted on the NASDAQ
system (but not on the National Market System thereof) or is regularly quoted by
a recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;

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

(l) "Offering Period" shall mean a period of approximately
six (6) months, commencing on a date determined by the Board, during which an
option granted pursuant to the Plan may be exercised. The duration, commencement
and termination of Offering Periods may be changed pursuant to Section 4 of this
Plan.

(m) "Plan" shall mean this 1994 Employee Stock Purchase
Plan.

(n) "Purchase Price" shall mean an amount equal to 85% of
the Fair Market Value of a share of Common Stock on the Enrollment Date or on
the Exercise Date, whichever is lower.

(o) "Purchase Period" shall mean, with respect to an
Extended Offering Period, the approximately six (6) month period commencing
after one Exercise Date and ending with the next Exercise Date, except that the
first Purchase Period of any Extended Offering Period shall commence on the
Enrollment Date and end with the next Exercise Date. The duration, commencement
and termination of Purchase Periods may be changed pursuant to Section 4 of this
Plan.

(p) "Reserves" shall mean the number of shares of Common
Stock covered by each option under the Plan which have not yet been exercised
and the number of shares of Common Stock which have been authorized for issuance
under the Plan but not yet placed under option.

(q) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
<PAGE> 3
3. Eligibility.

(a) Any Employee who shall be employed by the Company on a
given Enrollment Date shall be eligible to participate in the Plan.

(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent his or her rights to
purchase stock under all "employee stock purchase plans" qualified under Section
423 of the Code of the Company and its subsidiaries to accrue at a rate which
exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the
fair market value of the shares at the time such option is granted) for each
calendar year in which such option is outstanding at any time.

4. Offering Periods and Extended Offering Periods. The Plan shall be
implemented by Offering Periods and/or Extended Offering Periods which may be
consecutive and/or overlapping, as determined by the Board, commencing on such
dates as the Board shall determine, and continuing thereafter until terminated
in accordance with Section 19 hereof. The Board shall have the power to change
the duration, commencement and termination of Offering Periods, Extended
Offering Periods and/or Purchase Periods with respect to future offerings
without shareholder approval if such change is announced at least five (5) days
prior to the scheduled beginning of the first Offering Period, Extended Offering
Period or Purchase Period to be affected thereafter. Unless otherwise provided
by the Board, the first Offering Period under the Plan shall commence on the
first business day on or after April 1, 1994 and terminate on the last business
day in the period ending September 30, and shall continue with successive
Offering Periods thereafter.

5. Participation.

(a) An eligible Employee may become a participant in the
Plan by completing a subscription agreement authorizing payroll deductions in
the form of Exhibit A to this Plan and filing it with the Company's Stock Plan
Administrator prior to the applicable Enrollment Date.

(b) Payroll deductions for a participant shall commence on
the first payroll following the Enrollment Date and shall end on the last
payroll in the Offering Period to which such authorization is applicable, unless
sooner terminated by the participant as provided in Section 10 hereof.

6. Payroll Deductions.

(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made in an amount
not exceeding ten percent (10%) of the Compensation which he or she receives
during the Offering Period or Extended Offering Period, (or such lesser
percentage as may be determined by the Board at least five days prior to the
beginning of an Offering Period or Extended Offering Period). Deductions shall
be made in the applicable percentage on each pay day, and on any other payment
date for Compensation paid to the participant, during the Offering Period or
Extended Offering Period.

(b) All payroll deductions made for a participant shall be
credited to his
<PAGE> 4
or her account under the Plan and will be withheld in whole percentages only. A
participant may not make any additional payments into such account.

(c) A participant may discontinue his or her participation
in the Plan as provided in Section 10 hereof, or may increase or decrease the
rate of his or her payroll deductions during the Offering Period or Extended
Offering Period by completing or filing with the Company a new subscription
agreement authorizing a change in payroll deduction rate. The Board may, in its
discretion, limit the number of participation rate changes during any Offering
Period or Extended Offering Period. The change in rate shall be effective with
the first full payroll period following five (5) business days after the
Company's receipt of the new subscription agreement unless the Company elects to
process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods or
Extended Offering Periods unless terminated as provided in Section 10 hereof.

(d) Notwithstanding the foregoing, to the extent necessary
to comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to 0% at such time during any
Offering Period or Extended Offering Period which is scheduled to end during the
current calendar year (the "Current Offering Period or Extended Offering
Period") that the aggregate of all payroll deductions which were previously used
to purchase stock under the Plan in a prior Offering Period or Extended Offering
Period which ended during that calendar year plus all payroll deductions
accumulated with respect to the Current Offering Period or Extended Offering
Period equal $21,250. Payroll deductions shall recommence at the rate provided
in such participant' s subscription agreement at the beginning of the first
Offering Period or Extended Offering Period which is scheduled to end in the
following calendar year, unless terminated by the participant as provided in
Section 10 hereof.

(e) At the time the option is exercised, in whole or in
part, or at the time some or all of the Company's Common Stock issued under the
Plan is disposed of, the participant must make adequate provision for the
Company's federal, state, or other tax withholding obligations, if any, which
arise upon the exercise of the option or the disposition of the Common Stock. At
any time, the Company may, but will not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Employee.

7. Grant of Option. On the Enrollment Date of each Offering Period or
Extended Offering Period, each eligible Employee participating in such Offering
Period or Extended Offering Period shall be granted an option to purchase on the
Exercise Date(s) of such Offering Period or Extended Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during any Offering Period or Extended
Offering an amount in excess of the amount then permitted under Code Section
423(b)(8). Exercise of the option shall occur as provided in Section 8 hereof,
unless the participant has withdrawn pursuant to Section 10 hereof, and shall
expire on the last day of the Offering Period or Extended Offering Period.

8. Exercise of Option. Unless a participant withdraws from the Plan
as provided in Section 10 hereof, his or her option for the purchase of shares
will be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant' s account for the subsequent
Offering Period or Extended Offering Period, subject to earlier withdrawal by
the participant as provided in Section 10 hereof. Any other moneys left over in
a participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.

9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.

10. Withdrawal; Termination of Employment.
<PAGE> 5
(a) A participant may withdraw all but not less than all
the payroll deductions credited to his or her account and not yet used to
exercise his or her option under the Plan at any time by giving written notice
to the Company in the form of Exhibit B to this Plan. All of the participant's
payroll deductions credited to his or her account will be paid to such
participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period or Extended Offering Period will be
automatically terminated, and no further payroll deductions for the purchase of
shares will be made during the Offering Period or Extended Offering Period or
Extended Offering Period. If a participant withdraws from an Offering Period or
Extended Offering Period, payroll deductions will not resume at the beginning of
the succeeding Offering Period or Extended Offering Period unless the
participant delivers to the Company a new subscription agreement.

(b) Upon a participant's ceasing to be an Employee (as
defined in Section 2(g) hereof ), for any reason, including by virtue of him or
her having failed to remain an Employee of the Company for at least twenty (20)
hours per week during an Offering Period or Extended Offering Period in which
the Employee is a participant, he or she will be deemed to have elected to
withdraw from the Plan and the payroll deductions credited to such participant'
s account during the Offering Period or Extended Offering Period but not yet
used to exercise the option will be returned to such participant or, in the case
of his or her death, to the person or persons entitled thereto under Section 14
hereof, and such participant's option will be automatically terminated.

(c) A participant's withdrawal from an Offering Period or
Extended Offering Period will not have any effect upon his or her eligibility to
participate in any similar plan which may hereafter be adopted by the Company or
in succeeding Offering Periods or Extended Offering Periods which commence after
the termination of the Offering Period or Extended Offering Period from which
the participant withdraws.

11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.

12. Stock.

(a) The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan shall be four
hundred thousand (400,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Section 18 hereof. If on a given
Exercise Date the number of shares with respect to which options are to be
exercised exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.

(b) The participant will have no interest or voting right
in shares covered by his option until such option has been exercised.

(c) Shares to be delivered to a participant under the Plan
will be registered in the name of the participant or in the name of the
participant and his or her spouse.

13. Administration.

(a) Administrative Body. The Plan shall be administered by
the Board or a committee of members of the Board appointed by the Board. The
Board or its committee shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding,
decision and determination made by the Board or its committee shall, to the full
extent permitted by law, be final and binding upon all parties.

(b) Rule 16b-3 Limitations. Notwithstanding the provisions
of Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
any successor provision ("Rule 16b-3") provides specific requirements for the
administrators of plans of this type, the Plan shall be only administered by
such a body and in such a manner as shall comply with the applicable
requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no discretion
concerning decisions regarding the Plan shall be afforded to any committee or
person that is not "disinterested" as that term is used in Rule 16b-3.

14. Designation of Beneficiary.
<PAGE> 6
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.

(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.

15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period or Extended Offering Period in accordance with
Section 10 hereof.

16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.

17. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees at least annually, which statements will set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.

18. Adjustments Upon Changes in Capitalization.

(a) Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the Reserves as well as the price per
share of Common Stock covered by each option under the Plan which has not yet
been exercised 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 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 Board, 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.

(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Offering Period or
Extended Offering Period will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board.
<PAGE> 7
(c) Merger or Asset Sale. 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, each option under the Plan 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
Board determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Period(s) or Extended
Offering Period(s) then in progress by setting a new Exercise Date (the "New
Exercise Date") or to cancel each outstanding right to purchase and refund all
sums collected from participants during the Offering Period(s) or Extended
Offering Period(s) then in progress. If the Board shortens the Offering
Period(s) or Extended Offering Period(s) then in progress in lieu of assumption
or substitution in the event of a merger or sale of assets, the Board shall
notify each participant in writing, at least ten (10) business days prior to the
New Exercise Date, that the Exercise Date for his option has been changed to the
New Exercise Date and that his option will be exercised automatically on the New
Exercise Date, unless prior to such date he has withdrawn from the Offering
Period(s) or Extended Offering Period(s) as provided in Section 10 hereof. For
purposes of this paragraph, an option granted under the Plan shall be deemed to
be assumed if, following the sale of assets or merger, the option confers the
right to purchase, for each share of option stock subject to the option
immediately prior to the sale of assets or merger, the consideration (whether
stock, cash or other securities or property) received in the sale of assets or
merger by holders of Common Stock for each share of Common Stock held on the
effective date of the transaction (and if such holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares of Common Stock); provided, however, that if such
consideration received in the sale of assets or merger was not solely common
stock of the successor corporation or its parent (as defined in Section 424(e)
of the Code), the Board may, with the consent of the successor corporation,
provide for the consideration to be received upon exercise of the option to be
solely common stock of the successor corporation or its parent equal in fair
market value to the per share consideration received by holders of Common Stock
and the sale of assets or merger.

The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event the
Company effects one or more reorganizations, recapitalization, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.

19. Amendment or Termination.

(a) The Board of Directors of the Company may at any time
and for any reason terminate or amend the Plan. Except as provided in Section 18
hereof, no such termination can affect options previously granted, provided that
an Offering Period or Extended Offering Period may be terminated by the Board of
Directors on any Exercise Date if the Board determines that the termination of
the Plan is in the best interests of the Company and its shareholders. Except as
provided in Section 18 hereof, no amendment may make any change in any option
there to fore granted which adversely affects the rights of any participant. To
the extent necessary to comply with Rule 16b-3 or under Section 423 of the Code
(or any successor rule or provision or any other applicable law or regulation),
the Company shall obtain shareholder approval in such a manner and to such a
degree as required.

(b) Without shareholder consent and without regard to
whether any participant rights may be considered to have been "adversely
affected," the Board (or its committee) shall be entitled to change the Offering
Periods or Extended Offering Periods, limit the frequency and/or number of
changes in the amount withheld during an Offering Period or Extended Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.

20. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
<PAGE> 8
21. Conditions Upon Issuance of Shares. Shares shall not be issued
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, 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, 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 applicable provisions of law.

22. 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
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof.
<PAGE> 9
Exhibit A

XIRCOM, INC.
1994 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

_____ Original Application Enrollment Date: ________________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)

1. ____________________________________________ hereby elects to
participate in the Xircom, Inc. 1994 Employee Stock Purchase Plan
(the "Employee Stock Purchase Plan") and subscribes to purchase
shares of the Company's Common Stock in accordance with this
Subscription Agreement and the Employee Stock Purchase Plan.

2. I hereby authorize payroll deductions from each paycheck in the
amount of ____% of my Compensation on each payday (not to exceed 10%)
during the Offering Period or Extended Offering Period in accordance
with the Employee Stock Purchase Plan. (Please note that no
fractional percentages are permitted.)

3. I understand that said payroll deductions shall be accumulated for
the purchase of shares of Common Stock at the applicable Purchase
Price determined in accordance with the Employee Stock Purchase Plan.
I understand that if I do not withdraw from an Offering Period or
Extended Offering Period, any accumulated payroll deductions will be
used to automatically exercise my option.

4. I have received a copy of the complete "Employee Stock Purchase
Plan." I understand that my participation in the Employee Stock
Purchase Plan is in all respects subject to the terms of the Plan. I
understand that the purchase of shares under this Subscription
Agreement is subject to obtaining shareholder approval of the
Employee Stock Purchase Plan.

5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and Spouse as Joint
Tenants with Rights of Survivorship only):

__________________________________________________.

6. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Enrollment Date (the first day
of the Offering Period or Extended Offering Period during which I
purchased such shares), or one year from the Exercise Date, I 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 purchased by me over the price which I paid for the shares. I
hereby agree to notify the Company in writing within 30 days after
the date of any disposition of shares and I will make adequate
provision for Federal, state or other tax withholding obligations, if
any, which arise upon the disposition of the Common Stock. The
Company may, but will not be obligated to, withhold from my
compensation the amount necessary to meet any applicable withholding
obligation including any withholding necessary to make available to
the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by me. If I dispose of such shares
at any time after the expiration of the 2-year and 1-year holding
periods, I understand that I will be treated for federal income tax
purposes as having received income only at the time of such
disposition, and that such income will be taxed as ordinary income
only to the extent of an amount equal to the lesser of (1) the excess
of the fair market value of the shares at the time of such
disposition over the purchase price which I paid for the shares, or
(2) 15% of the fair market value of the shares on the first day of
the Offering Period or Extended Offering Period. The remainder of the
gain, if any, recognized on such disposition will be taxed as capital
gain.

7. I hereby agree to be bound by the terms of the Employee Stock
Purchase Plan. The effectiveness of this Subscription Agreement is
dependent upon my eligibility to participate in the Employee Stock
Purchase Plan.

8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
<PAGE> 10
Beneficiary name/address: _________________________________________

_______________________________ _________________________________________
Relationship
_________________________________________

Beneficiary name/address: _________________________________________

_______________________________ _________________________________________
Relationship
_________________________________________

Employee's Social
Security Number: _________________________________________

Employee's Address: _________________________________________

_________________________________________

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS OR EXTENDED OFFERING PERIODS UNLESS TERMINATED BY
ME.

Dated:_________________________ _________________________________________
Print Employee's Name (Last, First)

_________________________________________
Signature of Employee

_________________________________________
Spouse's Signature (If beneficiary
other than spouse)
<PAGE> 11
Exhibit B

XIRCOM, INC.
1994 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

The undersigned participant in the Offering Period or Extended
Offering Period of the Xircom, Inc. 1994 Employee Stock Purchase Plan which
began on __________________ 199___ (the "Enrollment Date") hereby notifies the
Company that he or she hereby withdraws from the Offering Period or Extended
Offering Period. He or she hereby directs the Company to pay to the undersigned
as promptly as practicable all the payroll deductions credited to his or her
account with respect to such Offering Period or Extended Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period or Extended Offering Period will be automatically terminated. The
undersigned understands further that no further payroll deductions will be made
for the purchase of shares in the current Offering Period or Extended Offering
Period and the undersigned shall be eligible to participate in succeeding
Offering Periods or Extended Offering Periods only by delivering to the Company
a new Subscription Agreement.

Name and Address of Participant:

_________________________________________

Signature: _________________________________________

Date: _________________________________________

<PAGE> 1
EXHIBIT 5.1

September 17, 1997

Xircom, Inc.
2300 Corporate Center Drive
Thousand Oaks, California 91320

RE: REGISTRATION STATEMENT ON FORM S-8

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about April 17, 1997 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of 600,000 shares of your Common
Stock issuable under your 1992 Stock Option Plan, 200,000 shares of your Common
Stock issuable under your 1992 Director Stock Option Plan and 150,000 shares of
your Common Stock issuable under your 1994 Employee Stock Purchase Plan. Such
shares of Common Stock are referred to herein as the "Shares" and the 1992 Stock
Option Plan, the 1992 Director Stock Option Plan and 1994 Employee Stock
Purchase Plan are collectively referred to herein as the "Plans". As your
counsel in connection with this transaction, we have examined the proceedings
taken and are familiar with the proceedings proposed to be taken by you in
connection with the issuance and sale of the Shares pursuant to the Plans.

It is our opinion that, upon completion of the actions being taken, or
contemplated by us as your counsel to be taken by you prior to the issuance of
the Shares pursuant to the Registration Statement and the Plans and upon
completion of the actions being taken in order to permit such transactions to be
carried out in accordance with the securities laws of the various states where
required, the Shares will be legally and validly issued, fully-paid and
non-assessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement and any amendments thereto.

Very truly yours,

WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

<PAGE> 1
EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the 1992 Stock Option Plan, the 1992
Directors Stock Option Plan and the 1994 Employee Stock Purchase Plan of Xircom,
Inc. of our report dated October 21, 1996, with respect to the consolidated
financial statements and schedule of Xircom, Inc. included in its Annual Report
(Form 10-K) for the year ended September 30, 1996, filed with the Securities and
Exchange Commission.

ERNST & YOUNG LLP

Woodland Hills, California
April 17, 1997