CISCO SYSTEMS, INC.

MANAGEMENT BONUS PLAN---LEVELS A - D
FY 1995

I. INTRODUCTION

A. THE OBJECTIVE OF THE MANAGEMENT BONUS PLAN is to financially reward
Senior Managers for their contributions to the success of Cisco
Systems, Inc.

B. PARTICIPANTS: This plan applies to Cisco Systems, Inc. senior
management staff in the following positions with the respective
levels:

LEVEL POSITION
----- --------
A President
B Vice Presidents
C All Directors
D Managers, Grade 12 and above

Any exceptions to the above will need to be approved by the
President. Participation requires that the manager be employed on or
before the first day of the last fiscal quarter. Participants in the
Plan with less than one year of service will be eligible for a
prorated bonus amount. Participants in this Plan are not eligible for
Company Performance Awards.

C. EFFECTIVE DATE: The Plan is effective for the Fiscal Year 1995,
beginning August 1, 1994 through July 30, 1995.

D. CHANGES IN PLAN: The Company presently has no plan to change the
Management Bonus Plan during the fiscal year. The Company reserves
the right to modify the Management Bonus Plan in total or in part, at
any time. Any such change must be in writing and signed by the
President.

E. ENTIRE AGREEMENT: This Plan and attachments are the entire agreement
between Cisco Systems, Inc. and the employee regarding the subject
matter of this Plan and supersede all prior compensation or incentive
plans or any written or verbal representations regarding the subject
matter of this Plan.

II. BONUS PLAN ELEMENTS

A. BASE SALARY is determined by the participant's manager. The annual
Base Salary in effect at the end of the fiscal year represents the
basis for the bonus calculation.

B. BONUS BASIS PERCENTAGE is a percentage level of Base Salary
determined by the position.

LEVEL POSITION BONUS %
----- -------- -------

A President 45%
B Vice President 40%
C All Directors 35%
D Managers, Grade 12 and above 30%

CISCO CONFIDENTIAL

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C. COMPANY PERFORMANCE FACTOR consists of two elements: 50% based upon
achieving an established Revenue target and 50% based upon achieving
a Profit Before Interest and Tax (PBIT) target per the current plan.
80% of each objective must be achieved for any bonus to be paid.

COMPANY PERFORMANCE FACTOR

REVENUE PBIT
------- ----

Less than 80% 0 Less than 80%
80 - 100% 80 - 100% 80 - 100%
Greater than 100% 2% for each 1% Greater than 100
above 100%

COMPANY PERFORMANCE FACTOR = (REVENUE + PBIT ) / 2

Example:
Actual Revenue Performance is 110% of goal
Actual PBIT Performance is 120% of goal

REVENUE PBIT
------- ----
100% 100%
+20% +40%
120% 140%

COMPANY PERFORMANCE FACTOR: (120 + 140) / 2 = 130%

D. INDIVIDUAL PERFORMANCE FACTOR is based upon individual goal
achievement for the fiscal year and is determined by the
participant's manager. This factor may range from 1.00-1.20 with the
following guidelines used:

FISCAL YEAR '95 INDIVIDUAL
PERFORMANCE EVALUATION PERFORMANCE FACTOR

5 1.16 - 1.20
4 1.11 - 1.15
3 1.00 - 1.10

Employees who are on a Written Warning and/or are performing at a
level of 1 or 2 at the end of the fiscal year are not eligible to
receive a bonus. Any exceptions to this must be in writing and
approved by the President.

E. CUSTOMER SATISFACTION FACTOR is based upon a comparison of the
current fiscal year customer satisfaction survey rating to last
fiscal year's rating. This factor may range from 1.00 -1.10.

COMPARISON FACTOR
---------- ------

Current rating as compared Decrease 1.00
to last year's rating No Change 1.05
Increase 1.10

CISCO CONFIDENTIAL
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F. PRORATION FACTOR accounts for the number of calendar days during the
fiscal year that the employee was in the bonus-eligible position. For
example, the Proration Factor for an employee who has been on the
Plan the entire year will be "1.00". For an employee who has been on
the plan for 6 months, this factor will be ".50". Employees in the
following situations will have a Proration Factor of less than
"1.00":

- Participants in the Plan who transferred to a new position not
governed by any incentive plan.

- Employees who transferred from one bonus-eligible position to
another bonus-eligible position. Employees in this situation
will have their bonus prorated based on length of time in each
position.

- Employees who have been on the Plan less than 12 months (such as
a new hire).

- Employees who have been on a leave of absence greater than 14
calendar days.

- Employees who have been on the Plan, terminated their
employment, and returned to a bonus-eligible position all in the
same fiscal year.

G. BONUS FORMULA AND CALCULATION EXAMPLE: Assume a level C participant
with a Base Salary of $105,000 at the 35% level, a Company
Performance Factor of 1.30, an Individual Performance Factor of 1.15,
a Customer Satisfaction Factor of 1.10 and a Proration Factor of
1.00.

SAMPLE CALCULATION:

BONUS COMPANY INDIVIDUAL CUSTOMER
BASE BASIS PERFORMANCE PERFORMANCE SATISFACTION PRORATION TOTAL
SALARY PERCENTAGE FACTOR FACTOR FACTOR FACTOR BONUS
------ ---------- ------ ------ ------ ------ -----

$105,000 x .35 x 1.30 x 1.15 x 1.10 x 1.00 = $60,435.38

In this example, the Total Bonus equals approximately 58% of Base
Salary.

III. PROCEDURES AND PRACTICES

A. PROCEDURE:

1. A list of eligible employees will be sent by Human Resources to
the Executive Staff for review at the beginning of the fiscal
year. Additions, deletions or other changes to the list will be
made and the approved list will be returned to Human Resources.

2. Once the list is confirmed, a copy of the Plan will be sent to
each participant.

3. Each eligible new hire and employees promoted into eligible
positions will receive a copy of the plan during the fiscal
year.

4. A month before fiscal year end, a list of eligible employees
with all changes made during the year will again be sent to the
Executive Staff for final review and approval.

CISCO CONFIDENTIAL
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5. Following year-end, Human Resources will distribute bonus
worksheets to management and the Executive Staff will review and
approve the final bonus amounts.

6. Human Resources will review bonus recommendations and transfer
relevant information to Payroll to process the bonus checks. The
checks will be sent to the appropriate Vice President for
distribution, generally within 30 days following the end of the
fiscal year.

B. BUSINESS CONDUCT: It is the established policy of Cisco Systems, Inc.
to conduct business with the highest standards of business ethics.
Cisco employees may not offer, give, solicit or receive any payment
that could appear to be a bribe, kickback or other irregular type of
payment from anyone involved in any way with an actual or potential
business transaction. Gifts, favors and entertainment are allowed
such that they are consistent with our business practice, do not
violate any applicable laws, are of limited value ($50.00 or less)
and would not embarrass Cisco if publicly disclosed.

C. TRANSFERS AND TERMINATIONS: Employees who are participants in the
Management Bonus Plan and who transfer to a new position not governed
by this Plan will be eligible on a pro-rata basis for the applicable
period and paid as defined by the Plan. Any exceptions to the Plan
must be designated in writing and approved by the President.

A participant must be employed as of the last day of the fiscal year
to be eligible for the bonus. If an employee terminates during the
fiscal year, the employee is not eligible for the bonus.

D. EMPLOYMENT AT WILL: The employment of all Plan participants at Cisco
Systems, Inc. is for an indefinite period of time and is terminable
at any time, with or without cause being shown or advance notice by
either party. This Plan shall not be construed to create a contract
of employment for a specified period of time between Cisco Systems,
Inc. and any Plan participant.