
<PAGE>   1
                                                                    EXHIBIT 99.3



                               CISCO SYSTEMS, INC.

                        STOCK OPTION ASSUMPTION AGREEMENT
                               CERENT CORPORATION
                                 1997 STOCK PLAN


OPTIONEE:  <First_Name> <Last_Name>,

         STOCK OPTION ASSUMPTION AGREEMENT effective as of the 1st day of
November, 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 Cerent
Corporation, a Delaware corporation ("Cerent"), which were granted to Optionee
under the Cerent 1997 Stock Plan (the "Plan") and are each evidenced by a Stock
Option Agreement (the "Option Agreement").

         WHEREAS, Cerent has been acquired by Cisco through the merger of Cerent
with and into Cisco (the "Merger") pursuant to the Agreement and Plan of
Reorganization, by and between Cisco and Cerent (the "Merger Agreement").

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

         WHEREAS, pursuant to the provisions of the Merger Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Merger is 1.439084475
shares of Cisco common stock ("Cisco Stock") for each outstanding share of
Cerent common stock ("Cerent Stock").

         WHEREAS, this Agreement became effective immediately upon the
consummation of the Merger (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
Merger.

         NOW, THEREFORE, it is hereby agreed as follows:

         1. The number of shares of Cerent Stock subject to the options held by
Optionee immediately prior to the Effective Time (the "Cerent 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 Cerent under each of
the Cerent Options. In connection with such assumption, the number of shares of
Cisco Stock purchasable under each Cerent 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 Cerent 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 Cerent Option
shall also be as indicated for that option below.

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<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
              CERENT STOCK OPTIONS                               CISCO ASSUMED OPTIONS
-----------------------------------------------------------------------------------------------
# of Shares of Cerent    Exercise Price per Share    # of Shares of Cisco     Adjusted Exercise
     Common Stock                                        Common Stock          Price per Share
-----------------------------------------------------------------------------------------------
<S>                      <C>                         <C>                      <C>
   <Cerent_Shares>          $<<Cerent_Price>>           <Cisco_Shares>          $<Cisco_Price>
-----------------------------------------------------------------------------------------------
</TABLE>


         2. The intent of the foregoing adjustments to each assumed Cerent
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 Merger, be not less than the spread which existed,
immediately prior to the Merger, between the then aggregate fair market value of
the Cerent Stock subject to the Cerent 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 Merger, on a per share basis, the
same ratio of exercise price per option share to fair market value per share
which existed under the Cerent Option immediately prior to the Merger.

         3. The following provisions shall govern each Cerent Option hereby
assumed by Cisco:

                  (a) Unless the context otherwise requires, all references in
         each Option Agreement and, if applicable, in the Plan (as incorporated
         into such Option Agreement) (i) to the "Company" shall mean Cisco, (ii)
         to "Share" shall mean share 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.

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

                  (c) Pursuant to the terms of the 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 Merger. Each Cerent Option shall be assumed by
         Cisco as of the Effective Time. Each such assumed Cerent 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 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.



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                  (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 Cerent, 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 Cerent
         Options upon Optionee's cessation of service as an employee or a
         consultant of Cerent shall hereafter be applied on the basis of
         Optionee's cessation of employee or consultant status with Cisco and
         its subsidiaries, and each assumed Cerent Option shall accordingly
         terminate, within the designated time period in effect under the Option
         Agreement for that option, generally a three (3) month period,
         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 Cerent 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 Cerent Stock prior to the Merger
         shall be taken into account.

                  (f) In order to exercise each assumed Cerent 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:

                              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 Merger shall continue in full force and effect and
shall not in any way be amended, revised or otherwise affected by this Stock
Option Assumption Agreement.





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         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 1st day of November, 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 Cerent Options hereby assumed by Cisco are as set
forth in the Option Agreement, the Plan, as applicable, and such Stock Option
Assumption Agreement.



                                       -----------------------------------------
                                       <First_Name> <Last_Name>, OPTIONEE



DATED:                   , 1999
       ------------------

