
<PAGE>   1
                              CISCO SYSTEMS, INC.

                        STOCK OPTION ASSUMPTION AGREEMENT
                                  V-BITS, INC.
                             1997 STOCK OPTION PLAN


OPTIONEE:  [First_Name] [Last_Name],

               STOCK OPTION ASSUMPTION AGREEMENT effective as of the 6th 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 V-Bits, Inc.,
a California corporation ("V-Bits"), which were granted to Optionee under the
V-Bits 1997 Stock Option Plan (the "Plan") and are each evidenced by a Stock
Option Agreement (the "Option Agreement").

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

               WHEREAS, the provisions of the Merger Agreement require Cisco to
assume all obligations of V-Bits 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 0.106033318 of
a share of Cisco common stock ("Cisco Stock") for each outstanding share of
V-Bits common stock ("V-Bits 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 that 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 V-Bits Stock subject to the options
held by Optionee immediately prior to the Effective Time (the "V-Bits 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 V-Bits
under each of the V-Bits Options. In connection with such assumption, the number
of shares of Cisco Stock purchasable under each V-Bits 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 V-Bits
Option hereby assumed shall be as specified for that option below, and the
adjusted exercise price payable per

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share of Cisco Stock under the assumed V-Bits Option shall also be as indicated
or that option below.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
              V-BITS STOCK OPTIONS                            CISCO ASSUMED OPTIONS
-------------------------------------------------------------------------------------------------
                                                      # of Shares
  # of Shares of V-Bits       Exercise Price            of Cisco           Adjusted Exercise
      Common Stock               per Share            Common Stock         Price per Share
-------------------------------------------------------------------------------------------------
<S>                          <C>                     <C>                   <C>
      V-Bits_Shares            $V-Bits_Price         [Cisco_Shares]        [$Cisco_Price]
-------------------------------------------------------------------------------------------------
</TABLE>

               2. The intent of the foregoing adjustments to each assumed V-Bits
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 that existed,
immediately prior to the Merger, between the then aggregate fair market value of
the V-Bits Stock subject to the V-Bits 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
that existed under the V-Bits Option immediately prior to the Merger.

               3. Your V-Bits Option may have been incorrectly documented with a
date of grant and/or an initial vesting date different from what was approved by
the Board of Directors and reflected in the Board minutes. To comply with the
terms of the Board grant, your option is hereby corrected. Your date of grant is
Grant_Date. Your initial vesting date is Vest_Date

               4. The following provisions shall govern each V-Bits 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 "Common Stock" or "Stock"
               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) Except as modified by paragraph 3, the grant
               date and the expiration date of each assumed V-Bits Option and
               all other provisions that govern either the exercise or the
               termination of the assumed V-Bits 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 Plan, 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 V-Bits Option shall be assumed by Cisco as of
               the Effective Time. Each such assumed V-Bits Option shall
               thereafter continue to vest for any remaining unvested shares of


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               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. If
               your option was originally designated on your Option Agreement as
               an Incentive Stock Option, your option as assumed by Cisco shall
               remain an Incentive Stock Option to the maximum extent allowed by
               law.

                             (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, consultant, or director of V-Bits,
               Optionee shall be deemed to continue in such status as an
               employee, consultant, or director for so long as Optionee renders
               services as an employee, consultant, or director to Cisco or any
               present or future Cisco subsidiary. Accordingly, the provisions
               of the Option Agreement governing the termination of the assumed
               V-Bits Options upon Optionee's cessation of service as an
               employee, consultant, or director of V-Bits shall hereafter be
               applied on the basis of Optionee's cessation of employee,
               consultant, or director status with Cisco and its subsidiaries,
               and each assumed V-Bits Option shall accordingly terminate,
               within the designated time period in effect under the Option
               Agreement for that option, generally a one (1)-month period,
               following such cessation of service as an employee, consultant,
               or director of Cisco and its subsidiaries.

                             (e) The adjusted exercise price payable for the
               Cisco Stock subject to each assumed V-Bits 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 V-Bits Stock prior to the Merger shall be taken into
               account.

                             (f) In order to exercise each assumed V-Bits
               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

               5. 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 6th 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 V-Bits 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



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