<PAGE>   1
                                                                EXHIBIT 10.17

                             1992 STOCK OPTION PLAN
                                       OF
                           CALIFORNIA MICROWAVE, INC.
                       (as amended through July 11, 1997)


1.      PURPOSE

               The purpose of the 1992 Stock Option Plan (the "Plan") is to
enable California Microwave, Inc. (the "Company") and its subsidiaries to
attract and retain officers and other key employees, directors, and consultants
and to provide them with additional incentive to advance the interests of the
Company. Options qualifying as incentive stock options under Section 422 of the
Internal Revenue Code of 1954, as amended, and non-qualified options may be
granted under the Plan.

2.      ADMINISTRATION

               (a) The Plan shall be administered by the Board of Directors of
the Company, or by a committee (the "Committee") of two or more directors
selected by the Board.

               (b) The Board of Directors or the Committee shall have the power,
subject to the express provisions of the Plan:

                      (1) To determine the recipients of options under the Plan,
the time of grant of the options, and the number of shares covered by the grant.

                      (2) To prescribe the terms and provisions of each option
granted (which need not be identical).

                      (3) To construe and interpret the Plan and options, to
establish, amend, and revoke rules and regulations for the Plan's
administration, and to make all other determinations necessary or advisable for
the administration of the Plan.

3.      SHARES SUBJECT TO THE PLAN

               Subject to the provisions of Paragraph 7 (relating to the
adjustment upon changes in stock), the number of shares which may be sold
pursuant to options granted under the Plan shall not exceed in the aggregate
3,100,000 shares of Common Stock of the Company. Shares sold pursuant to options
granted under the Plan may be unissued shares or reacquired shares.


                                       -1-

<PAGE>   2

If any options granted under the Plan shall for any reason terminate or expire
without having been exercised in full, the shares not purchased under such
options shall be available again for the purposes of the Plan.

4.      ELIGIBILITY

               (a) Options under this Plan may be granted to officers and other
key employees and consultants of the Company and/or of its subsidiaries,
provided that incentive stock options may be granted hereunder only to officers
and other key employees (including directors who are also officers or
employees). No officer or key employee may receive options under this Plan
covering in excess of 100,000 shares in any fiscal year of the Company (subject
to adjustment in accordance with the provisions of paragraph 7 of the Plan),
except that such limit is 200,000 shares with respect to options granted in
connection with inducing an individual to become an employee of the Company.

               (b) Each director of the Company who is not an employee of the
Company shall receive a non-qualified stock option under the Plan immediately
following each annual meeting of shareholders of the Company. The first option
received by a director under this paragraph 4(b) shall cover 10,000 shares of
common stock of the Company and each option received by a director under this
Plan thereafter shall cover 5,000 shares of common stock in the case of a
director who is a chair of a committee of the Board of Directors and 3,000
shares in the case of a director who is not. Each such option shall have an
exercise price equal to the fair market value of the common stock of the Company
on the date of the annual meeting of shareholders to which it relates,
determined in accordance with the provisions of paragraph 5(a)(2) of this Plan.
The number of options that directors may receive pursuant to this paragraph 4(b)
shall be appropriately adjusted in accordance with the provisions of paragraph 7
of this Plan. This paragraph 4(b) shall not be amended more than once every six
months, other than to comply with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act or the rules or regulations thereunder.

               (c) Persons to whom options to purchase shares are granted are
hereinafter referred to as "optionee(s)."

5.      TERMS OF OPTION AGREEMENTS

               (a) All Option Agreements. Options granted pursuant to the Plan
shall be evidenced by agreements specifying the number of shares covered
thereby, in such form as the Board of Directors or Committee shall from
time to time establish, which agreements may incorporate all or any of



                                       -2-

<PAGE>   3

the terms hereof by reference and shall comply with and be subject to the
following terms and conditions:

                      (1) The Board of Directors or Committee shall have the
power to set the time or times within which each option shall be exercisable and
to at any time accelerate the time or times of exercise (notwithstanding the
terms of the option). Unless the stock option agreement executed by the optionee
expressly otherwise provides, (i) an option granted to an officer or other key
employees or consultant shall become exercisable on a cumulative basis as to
one-quarter of the total number of shares covered thereby on each of the first,
second, third, and fourth anniversary dates of the date of grant of the option,
(ii) an option granted to a director who is not an employee of the Company shall
vest fully on the date of grant, and (iii) an option shall not be exercisable
after the expiration of ten years from the date of grant. Any option granted to
an executive officer or director of the Company shall in no event be exercisable
until the elapse of six months from the date of its grant.

                      (2) Except as provided in Paragraph 5(b) below, the
exercise price of any stock option granted under this Plan shall not be less
than 100% of the fair market value of the shares of common stock of the Company
on the date of the granting of the option. The fair market value per share shall
be the last sale price on the day the option is granted as reported on the
National Market System, or, if such stock is not then reported on the National
Market System but quotations are reported on the National Association of
Securities Dealers Automated Quotations System, the average of the bid and asked
prices on the day the option is granted, in either event as such price quotes
are listed in The Wall Street Journal, Western Edition (or if not so reported in
The Wall Street Journal, any other listing service or publication known to the
Board of Directors). If the stock is listed upon an established stock exchange
or exchanges, such fair market value shall be deemed to be the closing price of
the common stock on the largest such stock exchange upon which such stock is
listed on the day the option is granted.

                      (3) To the extent that the right to purchase shares has
accrued hereunder, options may be exercised from time to time by written notice
to the Company, stating the number of shares being purchased and accompanied by
the payment in full of the option price for such shares. Such payment shall be
made in cash or in shares of the outstanding common stock of the Company which
have been held by the optionee for at least six months or in a combination of
cash and such stock, except that the Board of Directors or the Committee in its
sole discretion may authorize payment by any optionee (for all or part of his or
her purchase price) by a promissory note or such other from of legal
consideration that may be acceptable to the Board or Committee.



                                      -3-

<PAGE>   4

               If shares of common stock are used in part or full payment for
the shares to be acquired upon exercise of the option, such shares shall be
valued for the purpose of such exchange as of the date of exercise of the option
in accordance with the provisions of Subparagraph (2) above. Any certificates
for shares of outstanding common stock used to pay the option price shall be
accompanied by stock powers duly endorsed in blank by the registered holder of
the certificate (with the signature thereon guaranteed). In the event the
certificates tendered by the optionee in such payment cover more shares than are
required for such payment, the certificates shall also be accompanied by
instructions from the optionee to the Company's transfer agent with regard to
disposition of the balance of the shares covered thereby.

               If payment by promissory note is authorized, the interest rate,
term, repayment schedule and other provisions of such note shall be as specified
by the Board of Directors or the Committee; provided, however, that such note
shall bear interest at a rate not less than the applicable test rate of interest
prescribed by Regulation 1.483-1(d)(1) of the Income Tax Regulations, as in
effect at the time the stock is purchased. The Board of Directors or Committee
may require that the optionee pledge his or her stock to the Company for the
purpose of securing the payment of such note, and the Company may hold the
certificate(s) representing such stock in order to perfect its security
interest.

               An option may be exercised by a securities broker acting on
behalf of an optionee pursuant to authorization instructions approved by the
Company, provided that the notice of exercise of such option shall be delivered,
and the exercise price of such option shall be paid in full, as specified above.

                      (4) The Company at all times shall keep available the
number of shares of stock required to satisfy options granted under the Plan.

                      (5) The Company may require any person to whom an option
is granted, his or her legal representative, heir, legatee, or distributee, as a
condition of exercising any option granted hereunder, to give written assurance
satisfactory to the Company to the effect that such person is acquiring the
shares subject to the option for his or her own account for investment and not
with any present intention of selling or otherwise distributing the same. The
Company reserves the right to place a legend on any share certificate issued
pursuant to this Plan to assure compliance with this paragraph. No shares of
common stock of the Company shall be required to be distributed until the
Company shall have taken such action, if any, as is then required to comply with
the provisions of the Securities Act of 1933 or any other then applicable
securities law.



                                      -4-

<PAGE>   5

                      (6) Neither a person to whom an option is granted, nor
such person's legal representative, heir, legatee, or distributee, shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such option unless and until such person has
exercised his or her option pursuant to the terms thereof.

                      (7) No stock option shall be transferrable by the optionee
otherwise than by will, or if the optionee dies intestate, by the laws of
descent and distribution of the state of domicile of the optionee at the time of
death, provided that a non-qualified stock option may be transferred by the
optionee to a trust or other entity established by the optionee for estate
planning purposes. Except for exercises of non-qualified stock options by trusts
or entities established by the optionee for estate planning purposes, all stock
options shall be exercisable during the lifetime of the optionee only by the
optionee.

                      (8) An option granted to an employee or director shall
terminate and may not be exercised if the person to whom it is granted ceases to
be employed by the Company or by a subsidiary of the Company, or ceases to be a
director (unless such person continues as an employee), with the following
exceptions:

                             (i) If the employment or directorship is terminated
for any reason other than the person's death or disability, he or she may at any
time within not more than three months after such termination exercise the
option, but only to the extent that it was exercisable by such person on the
date of such termination, or

                             (ii) If such person dies or becomes disabled while
in the employ of the Company or of a subsidiary, or while a director, his or her
option may be exercised by his or her personal representatives, heirs or
legatees at any time within not more than twelve (12) months following the date
of death or disability, but only to the extent such option was exercisable by
such person on the date of death or disability.

               An option granted to a consultant shall terminate in accordance
with the terms specified in the option.

                      (9) In no event may an option be exercised by anyone after
the expiration of the term of the option established pursuant to Subparagraph
5(a)(1) hereof.

                      (10) Each option granted pursuant to this Plan shall
specify whether it is a non-qualified or an incentive stock option, provided
that 



                                      -5-

<PAGE>   6

the Board of Directors or Committee may give the optionee the right to elect to
receive either an incentive or a non-qualified stock option.

                      (11) An option granted pursuant to this Plan may have such
other terms as the Board of Directors or Committee in its discretion may deem
necessary or appropriate and shares issued upon exercise of any option hereunder
may be subject to such restrictions as the Board of Directors or Committee deems
appropriate.

               (b) Incentive Stock Options. In addition to the terms and
conditions specified above, incentive stock options granted under this Plan
shall be subject to the following terms and conditions:

                      (1) The aggregate fair market value (determined as of the
time the option is granted) of the stock with respect to which incentive stock
options are exercisable for the first time by any optionee during any calendar
year (under all option plans of the Company or its parent and subsidiary
corporations) shall not exceed $100,000.

                      (2) As to individuals otherwise eligible under this Plan
who own more than 10 percent of the total combined voting power of all classes
of stock of the Company and its parent and subsidiary corporations, an incentive
option can be granted under this Plan to any such individual only if at the time
such option is granted the option price is at least 110 percent of the fair
market value of the stock subject to the option and such option by its terms is
not exercisable after the expiration of five years from the date such option is
granted.

6.      USE OF PROCEEDS FROM SHARES

               Proceeds from the sale of shares pursuant to options granted
under the Plan shall be used for general corporate purposes.

7.      ADJUSTMENT UPON CHANGES IN SHARES

               (a) If any change is made in the shares subject to the Plan, or
subject to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), appropriate adjustments
shall be made by the Board of Directors or Committee in the maximum number of
shares subject to the Plan and the number of shares and price per share of stock
subject to outstanding options.



                                       -6-

<PAGE>   7

               (b) Other than in the case of a reincorporation of the Company in
another state, in the event of (i) dissolution or liquidation of the Company,
(ii) a transaction in which more than 50 percent of the shares of the Company
that are entitled to vote are exchanged, or (iii) any merger or consolidation or
other reorganization in which the Company is not the surviving corporation (or
in which the Company becomes a subsidiary of another corporation), outstanding
options under this Plan shall become fully exercisable immediately prior to any
such event.

8.      RIGHTS AS AN EMPLOYEE.

               Nothing in this Plan or in any options awarded hereunder shall
confer upon any employee any right to continue in the employ of the Company or
of any of its subsidiaries or interfere in any way with the right of the Company
or any such subsidiary to terminate such employee's employment at any time.

9.      WITHHOLDING TAX

               There shall be deducted from the compensation of any employee
holding options under this Plan the amount of any tax required by any
governmental authority to be withheld and paid over by the Company to such
governmental authority for the account of the person with respect to such
options.

10.     TERMINATION AND AMENDMENT OF PLAN

               The Board of Directors may at any time terminate this Plan or
make such modifications of the Plan as it shall deem advisable. Any modification
which increases the number of shares which may be issued under the Plan (other
than pursuant to Paragraph 7 hereof ), or changes the requirements as to
eligibility for participation in the Plan, and any repricing of outstanding
options (other than pursuant to Paragraph 7 hereof), shall become effective only
upon approval of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting duly held in
accordance with the laws of the State of Delaware.

11.     INDEMNIFICATION

               In addition to such other rights of indemnification as they may
have as directors, the members of the Board of Directors or Committee
administering the Plan shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in



                                       -7-

<PAGE>   8

connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such member is liable
for negligence or misconduct in the performance of his duties; provided that
within 60 days after institution of any such action, suit or proceeding, the
member shall in writing offer the Company the opportunity, at its own expense,
to handle and defend the same.

12.     EFFECTIVE DATE AND DURATION OF THE PLAN

               The 1992 Stock Option Plan shall become effective on July 23,
1992. Any rights granted under this Plan must be granted within ten (10) years
of such effective date.





                                      -8-