CISCO SYSTEMS INC, S-8, 2000-02-08

CISCO SYSTEMS INC
S-8, 2000-02-08
COMPUTER COMMUNICATIONS EQUIPMENT

Previous: READERS DIGEST ASSOCIATION INC, SC 13G/A, 2000-02-08

Next: COMPUWARE CORPORATION, SC 13G/A, 2000-02-08

<PAGE> 1

As filed with the Securities and Exchange Commission February 8, 2000
Registration No. 333-_____

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933

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

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

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

170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Address of principal executive offices) (Zip Code)

INTERNET ENGINEERING GROUP, L.L.C.

1999 EQUITY OPTION/EQUITY ISSUANCE PLAN

---------------------------------
(Full title of the Plan)

JOHN T. CHAMBERS
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
CISCO SYSTEMS, INC.
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Name and address of agent for service)
(408) 526-4000
(Telephone number, including area code, of agent for service)

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

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==============================================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Internet Engineering Group, L.L.C. 599,126 Shares $28.61 $17,140,994.86 4,525.23
1999 Equity Option/Equity
Issuance Plan
Common Stock (par value $0.01)
==============================================================================================================================
</TABLE>

(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the Internet
Engineering Group, L.L.C. 1999 Equity Option/Equity Issuance Plan by
reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the Registrant's receipt of
consideration which results in an increase in the number of the
Registrant's outstanding shares of Common Stock.

(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the weighted
average exercise price of the outstanding options.

<PAGE> 2

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference

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

(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended July 31, 1999, filed with the Commission on
September 28, 1999, as amended on Form 10-K405/A filed with
the Commission on February 3, 2000, pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended (the " 1934
Act");

(b) The Registrant's Current Reports on Form 8-K filed with the
Commission on August 13, 1999, as amended on Form 8-K/A filed
with the Commission on August 13, 1999, August 26, 1999,
September 27, 1999, October 20, 1999, November 4, 1999,
November 17, 1999, December 15, 1999, as amended on Form 8-K/A
filed with the Commission on February 3, 2000, and December
22, 1999;

(c) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended October 30, 1999, filed with the Commission on
December 14, 1999, as amended on Form 10-Q/A filed with the
Commission on February 3, 2000;

(d) The Registrant's Registration Statement No. 000-18225 on Form
8-A filed with the Commission on January 11, 1990, together
with Amendment No. 1 on Form 8-A/A filed with the Commission
on February 15, 1990, and including any other amendments or
reports filed for the purpose of updating such description, in
which there is described the terms, rights and provisions
applicable to the Registrant's Common Stock, and;

(e) The Registrant's Registration Statement No. 000-18225 on Form
8-A filed with the Commission on June 11, 1998, including any
amendments or reports filed for the purpose of updating such
description, in which there is described the terms, rights and
provisions applicable to the Registrant's Preferred Stock
Purchase Rights.

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

Item 4. Description of Securities

Not Applicable.

Item 5. Interests of Named Experts and Counsel

Not Applicable.

Item 6. Indemnification of Directors and Officers

Section 317 of the California Corporations Code authorizes a court to
award, or a corporation's Board of Directors to grant indemnity to directors and
officers in terms sufficiently broad to permit indemnification (including
reimbursement of expenses incurred) under certain circumstances for liabilities
arising under the Securities Act of 1933, as amended, (the "1933 Act"). The
Registrant's Restated Articles of Incorporation, as

II-1
<PAGE> 3

amended, and Amended and Restated Bylaws provide for indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by the California Corporations Code. In addition, the Registrant has entered
into Indemnification Agreements with each of its directors and officers.

Item 7. Exemption from Registration Claimed

Not Applicable.

Item 8. Exhibits

<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference
is made to Registrant's Registration Statements No.
000-18225 on Form 8-A, together with the amendments and
exhibits thereto, which are incorporated herein by reference
pursuant to Items 3(d) and 3(e).
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-3 of this
Registration Statement.
99.1 Internet Engineering Group, L.L.C. 1999 Equity Option/Equity
Issuance Plan.
99.2 Internet Engineering Group, L.L.C.- Form of Equity Option
Agreement.
99.3 Form of Option Assumption Agreement.
</TABLE>

Item 9. Undertakings

A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement: (i) to include any prospectus required by
Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or
events arising after the effective date of this Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the Internet
Engineering Group, L.L.C. 1999 Equity Option/Equity Issuance Plan.

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

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

II-2
<PAGE> 4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8, and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Jose, State of California on this
8th day of February, 2000.

CISCO SYSTEMS, INC.

By: /s/ John T. Chambers
_______________________________________________
John T. Chambers
President, Chief Executive Officer and Director

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John T. Chambers and Larry R. Carter, and
each of them, as such person's true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as such person might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue thereof.

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

<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ John T. Chambers President, Chief Executive February 8, 2000
- --------------------------------- Officer and Director
John T. Chambers (Principal Executive Officer)

/s/ Larry R. Carter Senior Vice President, Finance February 8, 2000
- --------------------------------- and Administration, Chief Financial
Larry R. Carter Officer and Secretary
(Principal Financial and Accounting
Officer)

/s/ John P. Morgridge Chairman of the Board and February 8, 2000
- --------------------------------- Director
John P. Morgridge

/s/ Donald T. Valentine Vice Chairman of the Board and February 8, 2000
- --------------------------------- Director
Donald T. Valentine
</TABLE>

II-3
<PAGE> 5

<TABLE>
<S> <C> <C>
/s/ James F. Gibbons Director February 8, 2000
- ---------------------------------
James F. Gibbons

/s/ Steven M. West Director February 8, 2000
- ---------------------------------
Steven M. West

/s/ Edward R. Kozel Director February 8, 2000
- ---------------------------------
Edward R. Kozel

/s/ Carol A. Bartz Director February 8, 2000
- ---------------------------------
Carol A. Bartz

/s/ James C. Morgan Director February 8, 2000
- ---------------------------------
James C. Morgan

/s/ Mary Cirillo Director February 8, 2000
- ---------------------------------
Mary Cirillo

/s/ Arun Sarin Director February 8, 2000
- ---------------------------------
Arun Sarin
</TABLE>

II-4
<PAGE> 6

EXHIBIT INDEX

<PAGE> 1

EXHIBIT 5

OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP

February 8, 2000

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

Re: Cisco Systems, Inc. - Registration Statement for Offering of
an Aggregate of 599,126 Shares of Common Stock

Dear Ladies and Gentlemen:

We have acted as counsel to Cisco Systems, Inc., a California
corporation (the "Company"), in connection with the registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended, of
an aggregate of 599,126 shares of common stock (the "Shares") and related stock
options under the Internet Engineering Group, L.L.C. 1999 Equity Option/Equity
Issuance Plan (the "Plan"). This opinion is being furnished in accordance
with the requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation
S-K.

We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the assumption of the Plan
and the options outstanding thereunder. Based on such review, we are of the
opinion that if, as and when the Shares are issued and sold (and the
consideration therefor received) pursuant to the provisions of option agreements
duly authorized under the Plan and in accordance with the Registration
Statement, such Shares will be duly authorized, legally issued, fully paid and
nonassessable.

We consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.

This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Plan or the Shares.

Very truly yours,

/s/ BROBECK, PHLEGER & HARRISON LLP

BROBECK, PHLEGER & HARRISON LLP

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Cisco Systems, Inc. of our report dated August 10, 1999
relating to the consolidated financial statements, which appears in Cisco
Systems, Inc.'s 1999 Annual Report to Shareholders, which is incorporated by
reference in its Annual Report on Form 10-K/A for the year ended July 31, 1999.
We also consent to the incorporation by reference of our report dated August 10,
1999 relating to the financial statement schedule, which appears in such Annual
Report on Form 10-K/A. We also consent to the incorporation by reference of our
report dated August 10, 1999, except as to the pooling of interest transactions
as described in Note 3b which is as of November 24, 1999, relating to the
supplementary consolidated financial statements of Cisco Systems, Inc. which
appears in the Current Report on Form 8-K/A dated February 3, 2000.

/s/ PricewaterhouseCoopers LLP

San Jose, California
February 3, 2000

<PAGE> 1
EXHIBIT 99.1

INTERNET ENGINEERING GROUP, L.L.C.
1999 EQUITY OPTION/EQUITY ISSUANCE PLAN

ARTICLE ONE

GENERAL PROVISIONS

I. PURPOSE OF THE PLAN

This 1999 Equity Option/Equity Issuance Plan is intended to promote the
interests of Internet Engineering Group, L.L.C., a Michigan limited liability
company, by providing eligible persons in the Company's employ or service with
the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Company as an incentive for them to continue in
such employ or service.

Capitalized terms herein shall have the meanings assigned to such terms
in the attached Appendix.

II. STRUCTURE OF THE PLAN

A. The Plan shall be divided into two (2) separate equity programs:

(i) the Option Grant Program under which eligible persons may,
at the discretion of the Plan Administrator, be granted options to
purchase shares of Common Stock, and

(ii) the Stock Issuance Program under which eligible persons
may, at the discretion of the Plan Administrator, be issued shares of
Common Stock directly, either through the immediate purchase of such
shares or as a bonus for services rendered the Company (or any Parent
or Subsidiary).

B. The provisions of Articles One and Four shall apply to both equity
programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.

III. ADMINISTRATION OF THE PLAN

A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. Members of the Committee shall serve for such period of time as
the Board may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.

<PAGE> 2

B. The Plan Administrator shall have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the Plan and any
outstanding options or stock issuances thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator shall be final and binding on all
parties who have an interest in the Plan or any option grant or stock issuance
thereunder.

IV. ELIGIBILITY

A. The persons eligible to participate in the Plan are Employees.

B. The Plan Administrator shall have full authority to determine, (i)
with respect to the grants made under the Option Grant Program, which eligible
persons are to receive such grants, the time or times when those grants are to
be made, the number of shares to be covered by each such grant, the status of
the granted option as either an Incentive Option or a Non-Statutory Option, the
time or times when each option is to become exercisable, the vesting schedule
(if any) applicable to the option shares and the maximum term for which the
option is to remain outstanding, and (ii) with respect to stock issuances made
under the Stock Issuance Program, which eligible persons are to receive such
issuances, the time or times when those issuances are to be made, the number of
shares to be issued to each Participant, the vesting schedule (if any)
applicable to the issued shares and the consideration to be paid by the
Participant for such shares.

C. The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.

V. STOCK SUBJECT TO THE PLAN

A. The equity issuable under the Plan shall be Class A Units of the
Company. The maximum number of Class A Units which may be issued over the term
of the Plan shall not exceed three million one hundred seven thousand one
hundred (3,107,100) Class A Units.

B. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently repurchased by the
Company, at the option exercise or direct issue price paid per share, pursuant
to the Company's repurchase rights under the Plan shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants or direct stock issuances under the Plan.

C. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Company's receipt of

2
<PAGE> 3

consideration, appropriate adjustments shall be made to (i) the maximum number
and/or class of securities issuable under the Plan and (ii) the number and/or
class of securities and the exercise price per share in effect under each
outstanding option in order to prevent the dilution or enlargement of benefits
thereunder. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive. In no event shall any such adjustments be made in
connection with the conversion of one or more outstanding shares of the
Company's preferred stock into shares of Common Stock.

ARTICLE TWO

OPTION GRANT PROGRAM

I. OPTION TERMS

Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

A. EXERCISE PRICE.

1. The exercise price per share shall be fixed by the Plan
Administrator and may be less than, equal to or greater than the Fair Market
Value per share of Common Stock on the option grant date.

2. The exercise price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section I of Article Four and
the documents evidencing the option, be payable in cash or check made payable to
the Company. Should the Common Stock be registered under Section 12 of the 1934
Act at the time the option is exercised, then the exercise price may also be
paid as follows:

(i) in shares of Common Stock held for the requisite period
necessary to avoid a charge to the Company's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise
Date, or

(ii) to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions (A) to a
Company-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the Company by reason of such

3
<PAGE> 4

exercise and (B) to the Company to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete
the sale.

Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant. However, no option shall have a term in excess of ten (10)
years measured from the option grant date.

C. EFFECT OF TERMINATION OF SERVICE.

1. The following provisions shall govern the exercise of any options
held by the Optionee at the time of cessation of Service or death:

(i) Should the Optionee cease to remain in Service for any
reason other than death, Disability or Misconduct, then the Optionee
shall have a period of three (3) months following the date of such
cessation of Service during which to exercise each outstanding option
held by such Optionee.

(ii) Should Optionee's Service terminate by reason of
Disability, then the Optionee shall have a period of twelve (12) months
following the date of such cessation of Service during which to
exercise each outstanding option held by such Optionee.

(iii) If the Optionee dies while holding an outstanding
option, then the personal representative of his or her estate or the
person or persons to whom the option is transferred pursuant to the
Optionee's will or the laws of inheritance shall have a twelve
(12)-month period following the date of the Optionee's death to
exercise such option.

(iv) Under no circumstances, however, shall any such option be
exercisable after the specified expiration of the option term.

(v) During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number
of vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term,
the option shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Service, terminate
and cease to be outstanding with respect to any and all option shares
for which the option is not otherwise at the time exercisable or in
which the Optionee is not otherwise at that time vested.

4
<PAGE> 5

(vi) Should Optionee's Service be terminated for Misconduct,
then all outstanding options held by the Optionee shall terminate
immediately and cease to remain outstanding.

2. The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding, to:

(i) extend the period of time for which the option is to
remain exercisable following Optionee's cessation of Service or death
from the limited period otherwise in effect for that option to such
greater period of time as the Plan Administrator shall deem
appropriate, but in no event beyond the expiration of the option term,
and/or

(ii) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of
vested shares of Common Stock for which such option is exercisable at
the time of the Optionee's cessation of Service but also with respect
to one or more additional installments in which the Optionee would have
vested under the option had the Optionee continued in Service.

D. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become the
recordholder of the purchased shares.

E. UNVESTED SHARES. The Plan Administrator shall have the discretion to
grant options which are exercisable for unvested shares of Common Stock. Should
the Optionee cease Service while holding such unvested shares, the Company shall
have the right to repurchase, at the exercise price paid per share, any or all
of those unvested shares. The terms upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.

F. FIRST REFUSAL RIGHTS. Until such time as the Common Stock is first
registered under Section 12 of the 1934 Act, the Company shall have the right of
first refusal with respect to any proposed disposition by the Optionee (or any
successor in interest) of any shares of Common Stock issued under the Plan. Such
right of first refusal shall be exercisable in accordance with the terms
established by the Plan Administrator and set forth in the document evidencing
such right.

G. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death.

5
<PAGE> 6

II. INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
Articles One, Two and Four shall be applicable to Incentive Options. Options
which are specifically designated as Non-Statutory Options shall not be subject
to the terms of this Section II.

A. ELIGIBILITY. Incentive Options may only be granted to Employees.

B. EXERCISE PRICE. The exercise price per share shall not be less than
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date.

C. DOLLAR LIMITATION. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Company or any Parent or Subsidiary) may for the first time become
exercisable as Incentive Options during any one (1) calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

D. 10% STOCKHOLDER. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the option term shall not exceed five (5)
years measured from the option grant date.

III. CORPORATE TRANSACTION

A. The shares subject to each option outstanding under the Plan at the
time of a Corporate Transaction shall automatically vest in full so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, the shares subject to an
outstanding option shall not vest on such an accelerated basis if and to the
extent: (i) such option is assumed by the successor Company (or parent thereof)
in the Corporate Transaction and any repurchase rights of the Company with
respect to the unvested option shares are concurrently to be assigned to such
successor Company (or parent thereof) or (ii) such option is to be replaced with
a cash incentive program of the successor Company which preserves the spread
existing on the unvested option shares at the time of the Corporate Transaction
and provides for subsequent payout in accordance with the same vesting schedule
applicable to those unvested option shares or (iii) the acceleration of such
option is subject to other limitations imposed by the Plan Administrator at the
time of the option grant.

6
<PAGE> 7

B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are assigned to the successor
Company (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.

C. Immediately following the consummation of the Corporate Transaction,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor Company (or parent thereof).

D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction, had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same.

E. The Plan Administrator shall have the discretion, exercisable either
at the time the option is granted or at any time while the option remains
outstanding, to structure one or more options so that those options shall
automatically accelerate and vest in full (and any repurchase rights of the
Company with respect to the unvested shares subject to those options shall
immediately terminate) upon the occurrence of a Corporate Transaction, whether
or not those options are to be assumed in the Corporate Transaction.

F. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.

G. The grant of options under the Plan shall in no way affect the right
of the Company to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

IV. CANCELLATION AND REGRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new option grant date.

7
<PAGE> 8

ARTICLE THREE

STOCK ISSUANCE PROGRAM

I. STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below.

A. PURCHASE PRICE.

1. If any stock issuance agreement is assumed by a corporation, then
the purchase price per share shall be fixed by the Plan Administrator but shall
not be less than eighty-five percent (85%) of the Fair Market Value per share of
Common Stock on the issue date, however, the purchase price per share of Common
Stock issued to a 10% Stockholder shall not be less than one hundred and ten
percent (110%) of such Fair Market Value.

2. Subject to the provisions of Section I of Article Four, shares of
Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:

(i) cash or check made payable to the Company, or

(ii) past services rendered to the Company (or any Parent or
Subsidiary).

B. VESTING PROVISIONS.

Shares of Common Stock issued under the Stock Issuance Program may, in
the discretion of the Plan Administrator, be fully and immediately vested upon
issuance or may vest in one or more installments over the Participant's period
of Service or upon attainment of specified performance objectives.

Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Company's receipt
of consideration shall be issued subject to (i) the same vesting requirements
applicable to the Participant's unvested shares of Common Stock and (ii) such
escrow arrangements as the Plan Administrator shall deem appropriate.

1. The Participant shall have full stockholder rights with respect
to any shares of Common Stock issued to the Participant under the Stock Issuance
Program,

8
<PAGE> 9

whether or not the Participant's interest in those shares is vested.
Accordingly, the Participant shall have the right to vote such shares and to
receive any regular cash dividends paid on such shares.

2. Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock issued under the Stock Issuance
Program or should the performance objectives not be attained with respect to one
or more such unvested shares of Common Stock, then those shares shall be
immediately surrendered to the Company for cancellation, and the Participant
shall have no further stockholder rights with respect to those shares. To the
extent the surrendered shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the Participant's
purchase-money indebtedness), the Company shall repay to the Participant the
cash consideration paid for the surrendered shares and shall cancel the unpaid
principal balance of any outstanding purchase-money note of the Participant
attributable to such surrendered shares.

3. The Plan Administrator may in its discretion waive the surrender
and cancellation of one or more unvested shares of Common Stock (or other assets
attributable thereto) which would otherwise occur upon the non-completion of the
vesting schedule applicable to those shares. Such waiver shall result in the
immediate vesting of the Participant's interest in the shares of Common Stock as
to which the waiver applies. Such waiver may be effected at any time, whether
before or after the Participant's cessation of Service or the attainment or
non-attainment of the applicable performance objectives.

4. FIRST REFUSAL RIGHTS. Until such time as the Common Stock is
first registered under Section 12 of the 1934 Act, the Company shall have the
right of first refusal with respect to any proposed disposition by the
Participant (or any successor in interest) of any shares of Common Stock issued
under the Stock Issuance Program. Such right of first refusal shall be
exercisable in accordance with the terms established by the Plan Administrator
and set forth in the document evidencing such right.

II. CORPORATE TRANSACTION

A. Upon the occurrence of a Corporate Transaction, all outstanding
repurchase rights under the Stock Issuance Program shall terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, except to the extent: (i) those repurchase
rights are assigned to the successor Company (or parent thereof) in connection
with such Corporate Transaction or (ii) such accelerated vesting is precluded by
other limitations imposed by the Plan Administrator at the time the repurchase
right is issued.

III. SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Company until the Participant's interest in such shares vests or
may be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.

9
<PAGE> 10

ARTICLE FOUR

MISCELLANEOUS

I. FINANCING

The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Option Grant Program or the purchase price
for shares issued under the Stock Issuance Program by delivering a
full-recourse, interest bearing promissory note payable in one or more
installments and secured by the purchased shares. The terms of any such
promissory note (including the interest rate and the terms of repayment) shall
be established by the Plan Administrator in its sole discretion. In no event may
the maximum credit available to the Optionee or Participant exceed the sum of
(i) the aggregate option exercise price or purchase price payable for the
purchased shares (less the par value of those shares) plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.

II. EFFECTIVE DATE AND TERM OF PLAN

A. The Plan shall become effective when adopted by the Board, but no
option granted under the Plan may be exercised, and no shares shall be issued
under the Plan, until the Plan is approved by the Company's stockholders. If
such stockholder approval is not obtained within twelve (12) months after the
date of the Board's adoption of the Plan, then all options previously granted
under the Plan shall terminate and cease to be outstanding, and no further
options shall be granted and no shares shall be issued under the Plan. Subject
to such limitation, the Plan Administrator may grant options and issue shares
under the Plan at any time after the effective date of the Plan and before the
date fixed herein for termination of the Plan.

B. The Plan shall terminate upon the earliest of (i) the expiration of
the ten (10)-year period measured from the date the Plan is adopted by the
Board, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. All options and
unvested stock issuances outstanding at the time of a clause (i) termination
event shall continue to have full force and effect in accordance with the
provisions of the documents evidencing those options or issuances.

III. AMENDMENT OF THE PLAN

A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws and regulations.

10
<PAGE> 11

B. Options may be granted under the Option Grant Program and shares may
be issued under the Stock Issuance Program which are in each instance in excess
of the number of shares of Common Stock then available for issuance under the
Plan, provided any excess shares actually issued under those programs shall be
held in escrow until there is obtained stockholder approval of an amendment
sufficiently increasing the number of shares of Common Stock available for
issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess grants or issuances are
made, then (i) any unexercised options granted on the basis of such excess
shares shall terminate and cease to be outstanding and (ii) the Company shall
promptly refund to the Optionees and the Participants the exercise or purchase
price paid for any excess shares issued under the Plan and held in escrow,
together with interest (at the applicable Short Term Federal Rate) for the
period the shares were held in escrow, and such shares shall thereupon be
automatically cancelled and cease to be outstanding.

IV. USE OF PROCEEDS

Any cash proceeds received by the Company from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.

V. WITHHOLDING

The Company's obligation to deliver shares of Common Stock upon the
exercise of any options granted under the Plan or upon the issuance or vesting
of any shares issued under the Plan shall be subject to the satisfaction of all
applicable Federal, state and local income and employment tax withholding
requirements.

VI. REGULATORY APPROVALS

The implementation of the Plan, the granting of any options under the
Plan and the issuance of any shares of Common Stock (i) upon the exercise of any
option or (ii) under the Stock Issuance Program shall be subject to the
Company's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the shares of Common Stock issued pursuant to it.

VII. NO EMPLOYMENT OR SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company (or
any Parent or Subsidiary employing or retaining such person) or of the Optionee
or the Participant, which rights are hereby expressly reserved by each, to
terminate such person's Service at any time for any reason, with or without
cause.

11
<PAGE> 12

APPENDIX

The following definitions shall be in effect under the Plan:

A. BOARD shall mean the members of the Company, or if this option is
assumed by a corporation, then such corporation's Board of Directors.

B. CODE shall mean the Internal Revenue Code of 1986, as amended.

C. COMMITTEE shall mean a committee of two (2) or more Board members
appointed by the Board to exercise one or more administrative functions under
the Plan.

D. COMMON STOCK shall mean the Class A Units of the Company, or if this
Option is assumed by a corporation, then such corporation's common stock.

E. COMPANY shall mean Internet Engineering Group, L.L.C., a Michigan
limited liability company, and any successor corporation to all or substantially
all of the assets or voting stock of Internet Engineering Group, L.L.C. which
shall by appropriate action adopt the Plan.

F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Company is a party:

(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior
to such transaction, or

(ii) the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete liquidation or
dissolution of the Company.

G. DISABILITY shall mean the inability of the Optionee or the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment and shall be determined by
the Plan Administrator on the basis of such medical evidence as the Plan
Administrator deems warranted under the circumstances.

H. EMPLOYEE shall mean an individual who is in the employ of the
Company (or any Parent or Subsidiary), subject to the control and direction of
the employer entity as to both the work to be performed and the manner and
method of performance.

I. EXERCISE DATE shall mean the date on which the Company shall have
received written notice of the option exercise.

A-1
<PAGE> 13

J. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers on the Nasdaq National Market. If there is no closing selling
price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.

(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.

(iii) If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market, then the Fair
Market Value shall be determined by the Plan Administrator after taking
into account such factors as the Plan Administrator shall deem
appropriate.

K. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

L. INVOLUNTARY TERMINATION shall mean the termination of the Service of
any individual which occurs by reason of:

(i) such individual's involuntary dismissal or discharge by
the Company for reasons other than Misconduct, or

(ii) such individual's voluntary resignation following (A) a
reduction in his or her level of compensation (including base salary,
fringe benefits and target bonuses under any corporate-performance
based bonus or incentive programs) by more than fifteen percent (15%)
or (B) a relocation of such individual's place of employment by more
than fifty (50) miles, provided and only if such reduction or
relocation is effected without the individual's consent.

A-2
<PAGE> 14

M. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Company (or any Parent or Subsidiary), or any other intentional misconduct by
such person adversely affecting the business or affairs of the Company (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Company (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
any Optionee, Participant or other person in the Service of the Company (or any
Parent or Subsidiary).

N. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.

O. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.

P. OPTION GRANT PROGRAM shall mean the option grant program in effect
under the Plan.

Q. OPTIONEE shall mean any person to whom an option is granted under
the Plan.

R. PARENT shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, provided each
corporation in the unbroken chain (other than the Company) owns, at the time of
the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

S. PARTICIPANT shall mean any person who is issued shares of Common
Stock under the Stock Issuance Program.

T. PLAN shall mean the Company's 1999 Equity Option/Equity Issuance
Plan, as set forth in this document.

U. PLAN ADMINISTRATOR shall mean either the Board or the Committee
acting in its capacity as administrator of the Plan.

V. SERVICE shall mean the provision of services to the Company (or any
Parent or Subsidiary) by a person in the capacity of an Employee.

W. SHARE OR SHARES whether or not used in all lower case letters, shall
mean Class A Units of the Company, unless any Option Grant Program or Stock
Issuance Program is assumed by a corporation, then the terms shall mean a share
or shares of the capital stock of such corporation.

X. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.

A-3
<PAGE> 15

Y. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by
the Company and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

Z. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in
effect under the Plan.

AA. SUBSIDIARY shall mean any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

BB. 10% STOCKHOLDER shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company (or any Parent or
Subsidiary).

A-4

<PAGE> 1
EXHIBIT 99.2

INTERNET ENGINEERING GROUP, L.L.C.
EQUITY OPTION AGREEMENT

RECITALS

A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees of the Company (or any Parent or Subsidiary).

B. Optionee is to render valuable services to the Company (or a Parent
or Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Company's grant of an
option to Optionee.

C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.

NOW, THEREFORE, it is hereby agreed as follows:

1. GRANT OF OPTION. The Company hereby grants to Optionee, as of the
Grant Date, an option to purchase up to the number of Option Shares specified in
the Grant Notice. The Option Shares shall be purchasable from time to time
during the option term specified in Paragraph 2 at the Exercise Price.

2. OPTION TERM. This option shall have a term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.

3. LIMITED TRANSFERABILITY. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee.

4. EXERCISABILITY. This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.

5. CESSATION OF SERVICE. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:

(i) Should Optionee cease to remain in Service for any reason
(other than death, Permanent Disability or Misconduct) while this
option is outstanding, then the period for exercising this option shall
be limited to a three (3)-month period measured from the date of such
cessation of Service but in no event shall this option be exercisable
at any time after the Expiration Date.

<PAGE> 2

(ii) Should Optionee die while holding this option, then the
personal representative of Optionee's estate or the person or persons
to whom the option is transferred pursuant to Optionee's will or in
accordance with the laws of descent and distribution shall have the
right to exercise this option. Such right shall lapse, and this option
shall cease to be outstanding, upon the earlier of the expiration of
the twelve (12)-month period measured from the date of Optionee's death
or the Expiration Date.

(iii) Should Optionee cease Service by reason of Permanent
Disability while this option is outstanding, then the period for
exercising this option shall be limited to a twelve (12)-month period
measured from the date of such cessation of Service. In no event shall
this option be exercisable at any time after the Expiration Date.

(iv) Should Optionee's Service be terminated for Misconduct,
then this option shall terminate immediately and cease to remain
outstanding.

(v) During the limited period of post-Service exercisability,
this option may not be exercised in the aggregate for more than the
number of Option Shares for which this option is, at the time of
Optionee's cessation of Service, exercisable in accordance with the
Exercise Schedule specified in the Grant Notice or the special
acceleration provisions of Paragraph 6. Upon the expiration of such
limited exercise period or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding for any Option
Shares for which the option has not been exercised. To the extent this
option is not exercisable at the time of Optionee's cessation of
Service, this option shall immediately terminate and cease to be
outstanding.

(vi) In the event of a Corporate Transaction, the provisions
of Paragraph 6 shall govern the period for which this option is to
remain exercisable following Optionee's cessation of Service and shall
supersede any provisions to the contrary in this Paragraph.

(vii) Failure on or before December 31, 1999, of the Company
to consummate the transactions contemplated by the Agreement and Plan
of Reorganization, between Cisco Systems, Inc., a California
corporation, and the Company, dated as of December ___, 1999.

6. SPECIAL ACCELERATION AND TERMINATION OF OPTION.

(a) Immediately prior to the effective date of a Corporate
Transaction, the exercisability of this option shall automatically accelerate so
that this option shall become exercisable for all of the Option Shares as
fully-vested shares of Common Stock and may be exercised for any or all of those
Option Shares. No such accelerated exercisability of this option, however, shall
occur if and to the extent: (i) this option is, in connection with the Corporate
Transaction, either to be assumed by the successor Company (or parent thereof)
in the Corporate

2
<PAGE> 3

Transaction or (ii) this option is to be replaced with a cash incentive program
of the successor Company which preserves the spread existing on the Option
Shares for which this option is exercisable at the time of the Corporate
Transaction (the excess of the Fair Market Value of those Option Shares over the
Exercise Price payable for such shares) and provides for subsequent payout in
accordance with the Exercise Schedule.

(b) Immediately following the Corporate Transaction, this option
shall terminate and cease to be outstanding, except to the extent assumed by the
successor Company (or parent thereof) in connection with the Corporate
Transaction.

(c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.

(d) This Agreement shall not in any way affect the right of the
Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the Common
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Company's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.

8. STOCKHOLDER RIGHTS. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become the record holder
of the purchased shares.

9. MANNER OF EXERCISING OPTION.

(a) In order to exercise this option with respect to all or any part
of the Option Shares for which this option is at the time exercisable, Optionee
(or any other person or persons exercising the option) must take the following
actions:

(i) Execute and deliver to the Company a Purchase Agreement
for the Option Shares for which the option is exercised, to the extent
required by the Board.

(ii) Pay the aggregate Exercise Price for the purchased shares
in one or more of the following forms:

(A) cash or check made payable to the Company; or

3
<PAGE> 4

Should the Common Stock be registered under Section
12 of the 1934 Act at the time the option is exercised, then
the Exercise Price may also be paid as follows:

(B) in shares of Common Stock held by Optionee (or
any other person or persons exercising the option) for the
requisite period necessary to avoid a charge to the Company's
earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or

(C) through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons
exercising the option) shall concurrently provide irrevocable
instructions to a Company-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the
Company, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate Exercise Price
payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be
withheld by the Company by reason of such exercise and to the
Company to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale.

Except to the extent the sale and remittance
procedure is utilized in connection with the option exercise,
payment of the Exercise Price must accompany the Purchase
Agreement delivered to the Company in connection with the
option exercise.

(iii) Furnish to the Company appropriate
documentation that the person or persons exercising the option (if
other than Optionee) have the right to exercise this option.

(iv) Execute and deliver to the Company such
written representations as may be requested by the Company in order for
it to comply with the applicable requirements of Federal and state
securities laws.

(v) Make appropriate arrangements with the
Company (or Parent or Subsidiary employing or retaining Optionee) for
the satisfaction of all Federal, state and local income and employment
tax withholding requirements applicable to the option exercise.

(b) As soon as practical after the Exercise Date, the Company
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto.

10. TRANSFER RESTRICTIONS. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE
OF THIS OPTION SHALL BE SUBJECT TO CERTAIN

4
<PAGE> 5

RESTRICTIONS ON TRANSFER IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE
AGREEMENT, IF REQUIRED.

11. COMPLIANCE WITH LAWS AND REGULATIONS.

(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Company and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.

(b) The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Company of any liability with respect to the non-issuance or sale of
the Common Stock as to which such approval shall not have been obtained. The
Company, however, shall use its best efforts to obtain all such approvals.

12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Company and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.

13. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Company at its principal corporate offices. Any notice required to be given
or delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.

14. CONSTRUCTION. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.

15. GOVERNING LAW. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of Michigan without
resort to that State's conflict-of-laws rules.

16. STOCKHOLDER APPROVAL. This Section 16 shall only apply if this
option is assumed by a corporation. If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may without stockholder approval be issued under the Plan, then this
option shall be void with respect to such excess shares, unless stockholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.

5
<PAGE> 6

APPENDIX

The following definitions shall be in effect under the Agreement:

A. AGREEMENT shall mean this Stock Option Agreement.

B. BOARD shall mean the members of the Company, or if this option is
assumed by a corporation, then such corporation's Board of Directors.

C. CODE shall mean the Internal Revenue Code of 1986, as amended.

D. COMMON STOCK shall mean the Class A Units of the Company, or if this
Option is assumed by a corporation, then such corporation's common stock.

E. COMPANY shall mean Internet Engineering Group, L.L.C., a Michigan
limited liability company, and any successor corporation to all or substantially
all of the assets or voting equity of Internet Engineering Group, L.L.C. which
shall by appropriate action adopt the Plan.

F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Company is a party:

(ii) the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete liquidation or
dissolution of the Company.

G. EMPLOYEE shall mean an individual who is in the employ of the
Company (or any Parent or Subsidiary), subject to the control and direction of
the employer entity as to both the work to be performed and the manner and
method of performance.

H. EXERCISE DATE shall mean the date on which the option shall have
been exercised in accordance with Paragraph 9 of the Agreement.

I. EXERCISE PRICE shall mean the exercise price payable per Option
Share as specified in the Grant Notice.

J. EXERCISE SCHEDULE shall mean the exercise schedule specified in the
Grant Notice pursuant to which this option is to become exercisable in a series
of installments over Optionee's period of Service.

K. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.

A-1
<PAGE> 7

L. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as the
price is reported by the National Association of Securities Dealers on
the Nasdaq National Market. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which
such quotation exists.

M. GRANT DATE shall mean the date of grant of the option as specified
in the Grant Notice.

N. GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.

O. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Company (or any
Parent or Subsidiary), or any other intentional misconduct by Optionee adversely
affecting the business or affairs of the Company (or any Parent or Subsidiary)
in a material manner. The foregoing definition shall not be deemed to be
inclusive of all the acts or omissions which the Company (or any Parent or
Subsidiary) may consider as grounds for the dismissal or discharge of Optionee
or any other individual in the Service of the Company (or any Parent or
Subsidiary).

P. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.

Q. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.

R. OPTION SHARES shall mean Class A Units of the Company subject to the
option as specified in the Grant Notice, unless this option is assumed by a
corporation, then such term shall

A-2
<PAGE> 8

mean the number of shares of Common Stock to which the option is converted under
Paragraph 6.

S. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.

T. PARENT shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, provided each
corporation in the unbroken chain (other than the Company) owns, at the time of
the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

U. PERMANENT DISABILITY shall mean the inability of Optionee to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.

V. PLAN shall mean the Company's 1999 Equity Option/Equity Issuance
Plan.

W. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.

X. PURCHASE AGREEMENT shall mean a stock purchase agreement that must
be signed by Optionee if the Option Shares are not registered on a Form S-8
under the Securities Act of 1933 at the time of purchase.

Y. SERVICE shall mean Optionee's performance of services for the
Company (or any Parent or Subsidiary) in the capacity of an Employee.

AA. STOCK EXCHANGE shall mean the American Stock Exchange or the New
York Stock Exchange.

AB. SUBSIDIARY shall mean any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

A-3

<PAGE> 1

EXHIBIT 99.3

FORM OF OPTION ASSUMPTION AGREEMENT

<PAGE> 2
EXHIBIT 99.3

CISCO SYSTEMS, INC.

STOCK OPTION ASSUMPTION AGREEMENT
INTERNET ENGINEERING GROUP, L.L.C.
1999 EQUITY OPTION/EQUITY ISSUANCE PLAN

OPTIONEE: __________,

STOCK OPTION ASSUMPTION AGREEMENT effective as of the 17th day of December,
1999 by Cisco Systems, Inc., a California corporation ("Cisco").

WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of Internet
Engineering Group, L.L.C., a Michigan limited liability company ("Internet
Engineering Group, L.L.C."), which were granted to Optionee under the Internet
Engineering Group, L.L.C. 1999 Equity Option/Equity Issuance Plan (the "Plan")
and are each evidenced by a Notice of Grant of Equity Option and a Equity Option
Award Agreement (collectively, the "Option Agreement").

WHEREAS, Internet Engineering Group, L.L.C. has been acquired by Cisco
through the merger of Internet Engineering Group, L.L.C. with and into Cisco
(the "Acquisition") pursuant to the Agreement and Plan of Reorganization, by and
between Cisco and Internet Engineering Group, L.L.C. (the "Acquisition
Agreement").

WHEREAS, the provisions of the Acquisition Agreement require Cisco to
assume all obligations of Internet Engineering Group, L.L.C. under all
outstanding options under the Plan at the consummation of the Acquisition and to
issue to the holder of each outstanding option an agreement evidencing the
assumption of such option.

WHEREAS, pursuant to the provisions of the Acquisition Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the options assumed in the
Acquisition is 0.2097 of a share of Cisco common stock ("Cisco Stock") for each
Class A Unit subject to outstanding option of Internet Engineering Group, L.L.C.
("Internet Engineering Group, L.L.C. Units").

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

NOW, THEREFORE, it is hereby agreed as follows:

1. The number of units of Internet Engineering Group, L.L.C. Units
subject to the options held by Optionee immediately prior to the Effective Time
(the "Internet Engineering Group, L.L.C. Options") and the exercise price
payable per share are set forth below. Cisco hereby assumes, as of the Effective
Time, all the duties and obligations of Internet Engineering Group, L.L.C. under
each of the Internet Engineering Group, L.L.C. Options. In

<PAGE> 3

connection with such assumption, the number of shares of Cisco Stock purchasable
under each Internet Engineering Group, L.L.C. Option hereby assumed and the
exercise price payable thereunder have been adjusted to reflect the Exchange
Ratio. Accordingly, the number of shares of Cisco Stock subject to each Internet
Engineering Group, L.L.C. Option hereby assumed shall be as specified for that
option below, and the adjusted exercise price payable per share of Cisco Stock
under the assumed Internet Engineering Group, L.L.C. Option shall also be as
indicated for that option below.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
INTERNET ENGINEERING GROUP, L.L.C. CISCO ASSUMED OPTIONS
STOCK OPTIONS
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
# of Shares of Internet # of Shares
Engineering Group, L.L.C. Exercise Price of Cisco Adjusted Exercise
Common Stock per Share Common Stock Price per Share
- ----------------------------------------------------------------------------------------------
</TABLE>

2. The intent of the foregoing adjustments to each assumed Internet
Engineering Group, L.L.C. Option is to assure that the spread between the
aggregate fair market value of the shares of Cisco Stock purchasable under each
such option and the aggregate exercise price as adjusted pursuant to this
Agreement will, immediately after the consummation of the Aquisition, be not
less than the spread which existed, immediately prior to the Acquisition,
between the then aggregate fair market value of the Internet Engineering Group,
L.L.C. Units subject to the Internet Engineering Group, L.L.C. Option and the
aggregate exercise price in effect at such time under the Option Agreement. Such
adjustments are also intended to preserve, immediately after the Aquisition, on
a per share basis, the same ratio of exercise price per option share to fair
market value per share which existed under the Internet Engineering Group,
L.L.C. Option immediately prior to the Aquisition.

3. The following provisions shall govern each Internet Engineering Group,
L.L.C. Option hereby assumed by Cisco:

(a) Unless the context otherwise requires, all references in each
Option Agreement and in the Plan (i) to the "Company" shall mean Cisco,
(ii) to "Units," "Class A Units" "Common Stock", "Stock" or "Share" shall
mean shares of Cisco Stock, (iii) to the "Board" shall mean the Board of
Directors of Cisco and (iv) to the "Committee" shall mean the Compensation
Committee of the Cisco Board of Directors and (v) to the "Administrator"
shall mean the Cisco Board of Directors or the Cisco Compensation
Committee, as appropriate.

(b) The award date and the expiration date of each assumed Internet
Engineering Group, L.L.C. Option and all other provisions which govern
either the exercise or the termination of the assumed Internet Engineering
Group, L.L.C. Option shall remain the same as set forth in the Option
Agreement applicable to that option, and the provisions of the Option
Agreement shall

<PAGE> 4

accordingly govern and control Optionee's rights under this Agreement to
purchase Cisco Stock.

(c) Pursuant to your Option Agreement, none of your options assumed
by Cisco in connection with the transaction will vest and become
exercisable on an accelerated basis upon the consummation of the
Aquisition. Each Internet Engineering Group, L.L.C. Option shall be assumed
by Cisco as of the Effective Time. Each such assumed Internet Engineering
Group, L.L.C. Option shall thereafter continue to vest for any remaining
unvested shares of Cisco Stock subject to that option in accordance with
the same installment vesting schedule and service requirements in effect
under the applicable Option Agreement immediately prior to the Effective
Time; provided, however, that the number of shares subject to each such
installment shall be adjusted to reflect the Exchange Ratio.

(d) For purposes of applying any and all provisions of the Option
Agreement and/or the Plan relating to Optionee's status as an employee or a
consultant of Internet Engineering Group, L.L.C., Optionee shall be deemed
to continue in such status as an employee or a consultant for so long as
Optionee renders services as an employee or a consultant to Cisco or any
present or future Cisco subsidiary. Accordingly, the provisions of the
Option Agreement governing the termination of the assumed Internet
Engineering Group, L.L.C. Options upon Optionee's cessation of service as
an employee or a consultant of Internet Engineering Group, L.L.C. shall
hereafter be applied on the basis of Optionee's cessation of employee or
consultant status with Cisco and its subsidiaries, and each assumed
Internet Engineering Group, L.L.C. Option shall accordingly terminate three
(3) months following such cessation of service as an employee or a
consultant of Cisco and its subsidiaries.

(e) The adjusted exercise price payable for the Cisco Stock subject
to each assumed Internet Engineering Group, L.L.C. Option shall be payable
in any of the forms authorized under the Option Agreement applicable to
that option. For purposes of determining the holding period of any shares
of Cisco Stock delivered in payment of such adjusted exercise price, the
period for which such shares were held as Internet Engineering Group,
L.L.C. Units prior to the Aquisition shall be taken into account.

(f) In order to exercise each assumed Internet Engineering Group,
L.L.C. Option, Optionee must deliver to Cisco a written notice of exercise
in which the number of shares of Cisco Stock to be purchased thereunder
must be indicated. The exercise notice must be accompanied by payment of
the adjusted exercise price payable for the purchased shares of Cisco Stock
and should be delivered to Cisco at the following address:

3
<PAGE> 5

Cisco Systems, Inc.
170 West Tasman Drive
MS 11-3
San Jose, CA 95134
Attention: Stock Administration

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

IN WITNESS WHEREOF, Cisco Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the 17th day of December, 1999.

CISCO SYSTEMS, INC.

By: /s/ LARRY R. CARTER
--------------------
Larry R. Carter
Corporate Secretary

ACKNOWLEDGMENT

The undersigned acknowledges receipt of the foregoing Stock Option
Assumption Agreement and understands that all rights and liabilities with
respect to each of his or her Internet Engineering Group, L.L.C. Options hereby
assumed by Cisco are as set forth in the Option Agreement, the Plan, as
applicable, and such Stock Option Assumption Agreement.

_______________________________________

_______________, OPTIONEE

DATED: __________________, _____