<SUBMISSION>
<ACCESSION-NUMBER>0001095811-01-001553
<TYPE>S-8
<PUBLIC-DOCUMENT-COUNT>4
<FILING-DATE>20010226
<EFFECTIVENESS-DATE>20010226
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CISCO SYSTEMS INC
<CIK>0000858877
<ASSIGNED-SIC>3576
<IRS-NUMBER>770059951
<STATE-OF-INCORPORATION>CA
<FISCAL-YEAR-END>0731
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-8
<ACT>33
<FILE-NUMBER>333-56224
<FILM-NUMBER>1554677
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>170 W TASMAN DR
<CITY>SAN JOSE
<STATE>CA
<ZIP>95134-1706
<PHONE>4085264000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>225 WEST TASMAN DR
<CITY>SAN JOSE
<STATE>CA
<ZIP>95134-1706
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-8
<SEQUENCE>1
<FILENAME>f69165ors-8.txt
<DESCRIPTION>FORM S-8
<TEXT>

<PAGE>   1

   As filed with the Securities and Exchange Commission on February 26, 2001
                                                   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)


<TABLE>
<S>                                            <C>
           CALIFORNIA                                     77-0059951
  (State or other jurisdiction                 (IRS Employer Identification No.)
of incorporation or organization)
</TABLE>

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

                  CISCO SYSTEMS, INC. 1996 STOCK INCENTIVE PLAN
                            (Full title of the Plans)

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

                                JOHN T. CHAMBERS
                 PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
                               CISCO SYSTEMS, INC.
                              300 EAST 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
===================================================================================================================================
                                           Amount to be          Proposed Maximum           Proposed Maximum          Amount of
Title of Securities to be Registered      Registered(1)      Offering Price per Share   Aggregate Offering Price   Registration Fee
<S>                                     <C>                          <C>                    <C>                      <C>
Cisco Systems, Inc. 1996 Stock
Incentive Plan
Common Stock, $0.001 par value          341,864,605 shares           $25.84375              $8,835,063,385.47        $2,208,765.85
===================================================================================================================================
</TABLE>

(1)   This Registration Statement shall also cover any additional shares of
      Common Stock which become issuable under the Cisco Systems, Inc. 1996
      Stock Incentive 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 outstanding shares of Registrant's 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 average of the
      high and low selling prices per share of Common Stock of Cisco Systems,
      Inc. on February 21, 2001, as reported by the Nasdaq National Market.

<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 29, 2000 filed with the Commission on September 29, 2000,
          pursuant to Section 13 of the Securities Exchange Act of 1934, as
          amended (the "1934 Act");

     (b)  The Registrant's Quarterly Report on Form 10-Q for the quarter ended
          October 28, 2000, filed with the Commission on December 12, 2000;

     (c)  The Registrant's Current Reports on Form 8-K filed with the Commission
          on December 15, 1999 (as amended on Form 8-K/A filed with the
          Commission on February 3, 2000 and August 4, 2000), August 15, 2000,
          September 7, 2000, September 15, 2000, September 26, 2000, September
          28, 2000, September 29, 2000, November 6, 2000, November 7, 2000,
          November 13, 2000, November 15, 2000, November 15, 2000, December 19,
          2000, December 21, 2000, December 27, 2000, February 7, 2001, February
          8, 2001, and February 20, 2001;

     (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.

     With respect to securities to be offered to employees of the Registrant's
or Registrant's Israeli subsidiary, Cisco Systems Israel Limited, which are
subject to the securities laws of the State of Israel, the following legend
shall apply:


                                      II-1

<PAGE>   3

"THE SECURITIES AUTHORITY OF THE STATE OF ISRAEL HAS EXEMPTED CISCO SYSTEMS,
INC. FROM THE REQUIREMENT UNDER ISRAELI LAW TO OBTAIN A PERMIT WITH REGARD TO
THIS FORM S-8. NOTHING IN THE EXEMPTION GRANTED SHALL BE CONSTRUED AS
AUTHENTICATING THE MATTERS CONTAINED IN THIS FORM S-8 OR AN APPROVAL OF THEIR
RELIABILITY OR ACCURACY OR AN EXPRESSION OF AN OPINION AS TO THE QUALITY OF THE
SECURITIES OFFERED HEREBY."

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 1933 Act. The Registrant's Restated Articles of Incorporation,
as 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 Statement 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-4 of this
                    Registration Statement.

     99.1           Cisco Systems, Inc. 1996 Stock Incentive Plan.
</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


                                      II-2

<PAGE>   4

from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the Cisco Systems,
Inc. 1996 Stock Incentive 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-3

<PAGE>   5

                                   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 26th day
of February, 2001.

                                        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 Officer and     February 26, 2001
-----------------------------   Director (Principal Executive Officer)
John T. Chambers


/s/ Larry R. Carter             Senior Vice President, Finance and         February 26, 2001
-----------------------------   Administration, Chief Financial Officer,
Larry R. Carter                 Secretary and Director (Principal
                                Financial and Accounting Officer)


/s/ John P. Morgridge           Chairman of the Board and Director         February 26, 2001
-----------------------------
John P. Morgridge
</TABLE>


                                      II-4

<PAGE>   6

<TABLE>
<CAPTION>
         SIGNATURE                              TITLE                            DATE
-----------------------------   ---------------------------------------    ------------------
<S>                             <C>                                        <C>
/s/ Donald T. Valentine         Vice Chairman of the Board and Director    February 26, 2001
-----------------------------
Donald T. Valentine

/s/ James F. Gibbons            Director                                   February 26, 2001
-----------------------------
James F. Gibbons

/s/ Steven M. West              Director                                   February 26, 2001
-----------------------------
Steven M. West

/s/ Edward R. Kozel             Director                                   February 26, 2001
-----------------------------
Edward R. Kozel

/s/ Carol A. Bartz              Director                                   February 26, 2001
-----------------------------
Carol A. Bartz

/s/ James C. Morgan             Director                                   February 26, 2001
-----------------------------
James C. Morgan

/s/ Mary Cirillo                Director                                   February 26, 2001
-----------------------------
Mary Cirillo

/s/ Arun Sarin                  Director                                   February 26, 2001
-----------------------------
Arun Sarin

/s/ Jerry Yang                  Director                                   February 26, 2001
-----------------------------
Jerry Yang

/s/ Carly Fiorina               Director                                   February 26, 2001
-----------------------------
Carly Fiorina
</TABLE>


                                      II-5

<PAGE>   7

                       SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C.


                                    EXHIBITS

                                       TO

                                    FORM S-8

                                      UNDER

                             SECURITIES ACT OF 1933


                               CISCO SYSTEMS, INC.


<PAGE>   8

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Number      Exhibit
--------------      -------
<S>                 <C>
      4             Instruments Defining the Rights of Stockholders. Reference
                    is made to Registrant's Registration Statement 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-4 of this
                    Registration Statement.

     99.1           Cisco Systems, Inc. 1996 Stock Incentive Plan.
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>2
<FILENAME>f69165orex5.txt
<DESCRIPTION>EXHIBIT 5
<TEXT>

<PAGE>   1

                                                                       EXHIBIT 5

             OPINION AND CONSENT OF BROBECK, PHLEGER & HARRISON LLP

                                February 23, 2001

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

Re:  Cisco Systems, Inc. - Registration Statement for Offering of
     341,864,605 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
additional 341,864,605 shares of the Company's common stock reserved for
issuance under the Company's 1996 Stock Incentive Plan (the "Incentive 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 with respect to the establishment and amendment
of the Incentive Plan. Based on such review, we are of the opinion that, if, as
and when the shares of the Company's common stock are issued and sold (and the
consideration therefor received) pursuant to the provisions of stock option
agreements duly authorized under the Incentive 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
Incentive Plan, or the shares of the Company's common stock issuable under such
plan.

                                        Very truly yours,

                                        /s/ Brobeck, Phleger & Harrison LLP

                                        BROBECK, PHLEGER & HARRISON LLP

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>3
<FILENAME>f69165orex23-1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>

<PAGE>   1

                                                                    EXHIBIT 23.1

         CONSENT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our reports dated August 8, 2000 relating to the
consolidated financial statements and financial statement schedule, which appear
in Cisco Systems, Inc.'s Annual Report on Form 10-K for the year ended July 29,
2000.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

San Jose, California
February 21, 2001

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>f69165orex99-1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>

<PAGE>   1

                                                                    EXHIBIT 99.1

                               CISCO SYSTEMS, INC.
                            1996 STOCK INCENTIVE PLAN

                AS AMENDED AND RESTATED EFFECTIVE JANUARY 9, 2001

                                  ARTICLE ONE

                               GENERAL PROVISIONS

I.   PURPOSE OF THE PLAN

     This 1996 Stock Incentive Plan is intended to promote the interests of
Cisco Systems, Inc., a California corporation, by providing eligible persons
with the opportunity to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation as an incentive for them to
remain in the service of the Corporation.

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

     All share numbers in this January 9, 2001 restatement reflect all splits of
the Common Stock effected through March 22, 2000, including (i) the three
(3)-for-two (2) split of Common Stock effected on December 16, 1997, (ii) the
three (3)-for-two (2) split of Common Stock effected on September 15, 1998,
(iii) the two (2)-for-one (1) spilt of Common Stock effected on June 21, 1999,
and (iv) the two (2)-for-one (1) split of Common Stock effected on March 22,
2000.

II.  STRUCTURE OF THE PLAN

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

          (i)  the Discretionary 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 Automatic Option Grant Program under which eligible
non-employee Board members shall automatically receive option grants at periodic
intervals to purchase shares of Common Stock.

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

<PAGE>   2

III. ADMINISTRATION OF THE PLAN

     A.   The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant Program with respect to Section 16
Insiders.

     B.   Administration of the Discretionary Option Grant Program with respect
to all other persons eligible to participate in that program may, at the Board's
discretion, be vested in the Primary Committee or a Secondary Committee, or the
Board may retain the power to administer that program with respect to all such
persons. The members of the Secondary Committee may be Board members who are
Employees eligible to receive discretionary option grants under the Plan or any
other stock option, stock appreciation, stock bonus or other stock plan of the
Corporation (or any Parent or Subsidiary).

     C.   Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.

     D.   Each Plan Administrator shall, within the scope of its administrative
functions under the Plan, 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 Discretionary Option Grant Program
and to make such determinations under, and issue such interpretations of, the
provisions of such programs and any outstanding options thereunder as it may
deem necessary or advisable. Decisions of the Plan Administrator within the
scope of its administrative functions under the Plan shall be final and binding
on all parties who have an interest in the Discretionary Option Grant Program
under its jurisdiction or any option or stock issuance thereunder.

     E.   Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants under the Plan.

     F.   Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the terms of that program, and no Plan
Administrator shall exercise any discretionary functions with respect to any
option grants made under that program.

IV.  ELIGIBILITY

     A.   The persons eligible to participate in the Discretionary Option Grant
Program are as follows:

          (i)   Employees,


                                       2.

<PAGE>   3

          (ii)  non-employee members of the Board or the board of directors of
any Parent or Subsidiary, and

          (iii) consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary).

     B.   Each Plan Administrator shall, within the scope of its administrative
jurisdiction under the Plan, have full authority to determine which eligible
persons are to receive option grants under the Discretionary Option Grant
Program, the time or times when such option 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.

     C.   The individuals who shall be eligible to participate in the Automatic
Option Grant Program shall be limited to (i) those individuals serving as
non-employee Board members on the Plan Effective Date, (ii) those individuals
who first become non-employee Board members on or after the Plan Effective Date,
whether through appointment by the Board or election by the Corporation's
shareholders, and (iii) those individuals who continue to serve as non-employee
Board members at one or more Annual Shareholders Meetings held after the Plan
Effective Date. A non-employee Board member who has previously been in the
employ of the Corporation (or any Parent or Subsidiary) shall not be eligible to
receive an option grant under the Automatic Option Grant Program at the time he
or she first becomes a non-employee Board member, but shall be eligible to
receive periodic option grants under the Automatic Option Grant Program while he
or she continues to serve as a non-employee Board member.

V.   STOCK SUBJECT TO THE PLAN

     A.   The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
reserved for issuance over the term of the Plan shall not exceed 1,975,486,965
shares, subject to the automatic share increases described in Paragraph V.B.
below. Such share reserve consists of the number of shares of Common Stock
transferred from the Predecessor Plan, as of the Plan Effective Date
(619,524,900), plus the number of shares added to the reserve pursuant to the
automatic share increases effected in December 1996, December 1997, December
1998, December 1999 and December 2000 (1,355,962,065 shares in the aggregate).

     B.   The number of shares of Common Stock available for issuance under the
Plan shall automatically increase on the first trading day of fiscal December
each calendar year, beginning with fiscal December in calendar year 1996 and
continuing through fiscal December in calendar year 2001, by a number of shares
equal to four and three-quarters percent (4.75%) of the total number of shares
of Common Stock outstanding on the last trading day in the immediately preceding
fiscal November, but in no event shall any such annual increase exceed
480,000,000 shares.


                                       3.

<PAGE>   4

     C.   No one person participating in the Plan may receive stock options or
separately exercisable stock appreciation rights for more than 18,000,000 shares
of Common Stock in the aggregate per calendar year.

     D.   Shares of Common Stock subject to outstanding options (including
options incorporated into this Plan from the Predecessor Plan) shall be
available for subsequent issuance under the Plan to the extent those options
expire or terminate for any reason prior to exercise in full. Unvested shares
issued under the Plan and subsequently cancelled or repurchased by the
Corporation, at the original issue price paid per share, pursuant to the
Corporation'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 under the Plan. However, should the exercise price of an option under the
Plan be paid with shares of Common Stock or should shares of Common Stock
otherwise issuable under the Plan be withheld by the Corporation in satisfaction
of the withholding taxes incurred in connection with the exercise of an option
or the vesting of a stock issuance under the Plan, then the number of shares of
Common Stock available for issuance under the Plan shall be reduced by the gross
number of shares for which the option is exercised or which vest under the stock
issuance, and not by the net number of shares of Common Stock issued to the
holder of such option or stock issuance. Shares of Common Stock underlying one
or more stock appreciation rights exercised under Section IV of Article Two of
the Plan shall NOT be available for subsequent issuance under the Plan.

     E.   If any change is 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 Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the maximum number and/or class of securities for which any one
person may be granted stock options or separately exercisable stock appreciation
rights in the aggregate under the Plan per calendar year, (iii) the number
and/or class of securities for which grants are subsequently to be made under
the Automatic Option Grant Program to new and continuing non-employee Board
members, unless the Plan Administrator determines otherwise, (iv) the number
and/or class of securities and the exercise price per share in effect under each
outstanding option under the Plan and (v) the number and/or class of securities
and price per share in effect under each outstanding option incorporated into
this Plan from the Predecessor Plan. Such adjustments to the outstanding options
are to be effected in a manner which shall preclude the enlargement or dilution
of rights and benefits under such options. The adjustments determined by the
Plan Administrator shall be final, binding and conclusive.


                                       4.

<PAGE>   5

                                  ARTICLE TWO

                       DISCRETIONARY 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 but shall not be less than one hundred percent (100%) of 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 one or more of the forms
specified below:

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

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

               (iii) 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 to (a) a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, 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
Corporation by reason of such exercise and (b) the Corporation 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.


                                       5.

<PAGE>   6

     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. However, no option shall have a term in excess of nine (9) 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)   Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for such period of
time thereafter as shall be determined by the Plan Administrator and set forth
in the documents evidencing the option, but no such option shall be exercisable
after the expiration of the option term.

               (ii)  Any option exercisable in whole or in part by the Optionee
at the time of death may be subsequently exercised by the personal
representative of the Optionee's estate or by the person or persons to whom the
option is transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution.

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

               (iv)  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 to the extent the
option is not otherwise at that time exercisable for vested shares.

     D.   The Plan Administrator shall have complete 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 the Optionee's cessation of Service from
               the limited exercise 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


                                       6.

<PAGE>   7

          (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 had the Optionee continued
in Service.

     E.   SHAREHOLDER RIGHTS. The holder of an option shall have no shareholder
rights with respect to the shares subject to the option until such person shall
have exercised the option, paid the exercise price and become a holder of record
of the purchased shares.

     F.   REPURCHASE RIGHTS. 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 Corporation
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.

     G.   LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of
inheritance following the Optionee's death. However, a Non-Statutory Option may
be assigned in whole or in part during the Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust established exclusively
for one or more such family members or to one or more individuals, to the extent
such assignment is in connection with the Optionee's estate plan or pursuant to
a domestic relations order. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.

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
designated as Non-Statutory Options when issued under the Plan shall not be
subject to the terms of this Section II.

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


                                       7.

<PAGE>   8

     B.   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 Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one 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.

     C.   10% SHAREHOLDER. If any Employee to whom an Incentive Option is
granted is a 10% Shareholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL

     A.   In the event of any Corporate Transaction, each outstanding option
shall automatically accelerate so that each such option shall, immediately prior
to the effective date of the Corporate Transaction, become exercisable for all
of the shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
However, an outstanding option shall not so accelerate if and to the extent: (i)
such option is, in connection with the Corporate Transaction, either to be
assumed by the successor corporation (or parent thereof) or to be replaced with
a comparable option to purchase shares of the capital stock of the successor
corporation (or parent thereof), (ii) such option is to be replaced with a cash
incentive program of the successor corporation 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 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. The determination of option comparability under clause (i)
above shall be made by the Plan Administrator, and its determination shall be
final, binding and conclusive.

     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 to be assigned to the successor
corporation (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 corporation (or parent thereof).


                                       8.

<PAGE>   9

     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 to reflect such Corporate Transaction shall also be made
to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same, (ii) the maximum number and/or class of securities available for
issuance over the remaining term of the Plan and (iii) the maximum number and/or
class of securities for which any one person may be granted stock options or
separately exercisable stock appreciation rights under the Plan per calendar
year.

     E.   The Plan Administrator shall have full power and authority to grant
options under the Discretionary Option Grant Program which will automatically
accelerate in the event the Optionee's Service subsequently terminates by reason
of an Involuntary Termination within a designated period (not to exceed eighteen
(18) months) following the effective date of any Corporate Transaction in which
those options are assumed or replaced and do not otherwise accelerate. Any
options so accelerated shall remain exercisable for fully-vested shares until
the expiration or sooner termination of the option term. In addition, the Plan
Administrator may provide that one or more of the Corporation's outstanding
repurchase rights with respect to shares held by the Optionee at the time of
such Involuntary Termination shall immediately terminate, and the shares subject
to those terminated repurchase rights shall accordingly vest in full.

     F.   The Plan Administrator shall have full power and authority to grant
options under the Discretionary Option Grant Program which will automatically
accelerate in the event the Optionee's Service subsequently terminates by reason
of an Involuntary Termination within a designated period (not to exceed eighteen
(18) months) following the effective date of any Change in Control. Each option
so accelerated shall remain exercisable for fully-vested shares until the
expiration or sooner termination of the option term. In addition, the Plan
Administrator may provide that one or more of the Corporation's outstanding
repurchase rights with respect to shares held by the Optionee at the time of
such Involuntary Termination shall immediately terminate, and the shares subject
to those terminated repurchase rights shall accordingly vest in full.

     G.   The portion of any Incentive Option accelerated in connection with a
Corporate Transaction or Change in Control 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.


                                       9.

<PAGE>   10

     H.   The outstanding options shall in no way affect the right of the
Corporation 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.  STOCK APPRECIATION RIGHTS

     A.   The Plan Administrator shall have full power and authority,
exercisable in its sole discretion, to grant to selected Optionees or other
individuals eligible to receive option grants under the Discretionary Option
Grant Program stock appreciation rights.

     B.   Three types of stock appreciation rights shall be authorized for
issuance under the Plan: (i) tandem stock appreciation rights ("Tandem Rights"),
(ii) stand-alone stock appreciation rights ("Stand-alone Rights") and (iii)
limited stock appreciation rights ("Limited Rights").

     C.   The following terms and conditions shall govern the grant and exercise
of Tandem Rights under this Article Two.

          1.   One or more Optionees may be granted a Tandem Right, exercisable
upon such terms and conditions as the Plan Administrator may establish, to elect
between the exercise of the underlying Article Two stock option for shares of
Common Stock or the surrender of that option in exchange for a distribution from
the Corporation in an amount equal to the excess of (i) the Fair Market Value
(on the option surrender date) of the number of shares in which the Optionee is
at the time vested under the surrendered option (or surrendered portion thereof)
over (ii) the aggregate exercise price payable for such vested shares.

          2.   No such option surrender shall be effective unless it is approved
by the Plan Administrator, either at the time of the actual option surrender or
at any earlier time. If the surrender is so approved, then the distribution to
which the Optionee shall accordingly become entitled under this Section V may be
made in shares of Common Stock valued at Fair Market Value on the option
surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.

          3.   If the surrender of an option is not approved by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than nine (9) years after the date of the option grant.

     D.   The following terms and conditions shall govern the grant and exercise
of Stand-alone Rights under this Article Two:


                                      10.

<PAGE>   11

          1.   One or more individuals eligible to participate in the
Discretionary Option Grant Program may be granted a Stand-alone Right not tied
to any underlying option under this Discretionary Option Grant Program. The
Stand-alone Right shall cover a specified number of underlying shares of Common
Stock and shall be exercisable upon such terms and conditions as the Plan
Administrator may establish. Upon exercise of the Stand-alone Right, the holder
shall be entitled to receive a distribution from the Corporation in an amount
equal to the excess of (i) the aggregate Fair Market Value (on the exercise
date) of the shares of Common Stock underlying the exercised right over (ii) the
aggregate base price in effect for those shares.

          2.   The number of shares of Common Stock underlying each Stand-alone
Right and the base price in effect for those shares shall be determined by the
Plan Administrator in its sole discretion at the time the Stand-alone Right is
granted. In no event, however, may the base price per share be less than the
Fair Market Value per underlying share of Common Stock on the grant date.

          3.   The distribution with respect to an exercised Stand-alone Right
may be made in shares of Common Stock valued at Fair Market Value on the
exercise date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.

     E.   The following terms and conditions shall govern the grant and exercise
of Limited Rights under this Article Two:

          1.   One or more Section 16 Insiders may, in the Plan Administrator's
sole discretion, be granted Limited Rights with respect to their outstanding
options under this Article Two.

          2.   Upon the occurrence of a Hostile Take-Over, the Section 16
Insider shall have the unconditional right (exercisable for a thirty (30)-day
period following such Hostile Take-Over) to surrender each option with such a
Limited Right to the Corporation, to the extent the option is at the time
exercisable for fully vested shares of Common Stock. The Section 16 Insider
shall in return be entitled to a cash distribution from the Corporation in an
amount equal to the excess of (i) the Take-Over Price of the vested shares of
Common Stock at the time subject to each surrendered option (or surrendered
portion of such option) over (ii) the aggregate exercise price payable for such
vested shares. Such cash distribution shall be made within five (5) days
following the option surrender date.

          3.   The Plan Administrator shall pre-approve, at the time such
Limited Right is granted, the subsequent exercise of that right in accordance
with the terms of the grant and the provisions of this Section IV. No additional
approval of the Plan Administrator or the Board shall be required at the time of
the actual option surrender and cash distribution. Any unsurrendered portion of
the option shall continue to remain outstanding and become exercisable in
accordance with the terms of the instrument evidencing such grant.

     F.   The shares of Common Stock underlying any stock appreciation rights
exercised under this Section IV shall NOT be available for subsequent issuance
under the Plan.


                                      11.

<PAGE>   12

                                 ARTICLE THREE

                         AUTOMATIC OPTION GRANT PROGRAM

     The following terms and provisions reflect the amendment to the Automatic
Option Grant Program authorized by the Board on July 8, 1999 and approved by the
shareholders at the 1999 Annual Shareholder Meeting on November 10, 1999.

I.   OPTION TERMS

     A.   GRANT DATES. Option grants under this Article Three shall be made on
the dates specified below:

          1.   Each individual who is first elected or appointed as a
non-employee Board member on or after November 10, 1999 shall automatically be
granted, on the date of such initial election or appointment, a Non-Statutory
Option to purchase 30,000 shares of Common Stock,1 provided that individual has
not previously been in the employ of the Corporation or any Parent or
Subsidiary.

          2.   On the date of each Annual Shareholders Meeting, beginning with
the 1999 Annual Shareholders Meeting, each individual who is re-elected to serve
as an Eligible Director shall automatically be granted a Non-Statutory Option to
purchase 15,000 shares of Common Stock2, provided such individual has served as
a non-employee Board member for at least six (6) months. There shall be no limit
on the number of such 15,000-share option grants any one Eligible Director may
receive over his or her period of Board service, and non-employee Board members
who have previously been in the employ of the Corporation (or any Parent or
Subsidiary) shall be eligible to receive one or more such annual option grants
over their period of continued Board service.

     B.   EXERCISE PRICE.

          1.   The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.



--------
1    Prior to the July 8, 1999 restatement, the number of shares of Common Stock
     for which an initial option grant was to be made to each newly elected or
     appointed non-employee Board member was set at 20,000 shares (before taking
     into account any splits of the Common Stock effected after that date).

2    Prior to the July 8, 1999 restatement, the number of shares of Common Stock
     for which a continuing non-employee Board member was to be granted an
     option at each annual shareholders meeting at which he or she was
     re-elected to the Board was set at 10,000 shares (before taking into
     account any splits of the Common Stock effected after that date).


                                      12.

<PAGE>   13

          2.   The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

     C.   OPTION TERM. Each option shall have a maximum term equal to the lesser
of (i) nine (9) years measured from the option grant date or (ii) twelve (12)
months following termination of Board service.

     D.   EXERCISE AND VESTING OF OPTIONS. Each option shall be immediately
exercisable for any or all of the option shares. However, any shares purchased
under the option shall be subject to repurchase by the Corporation, at the
exercise price paid per share, upon the Optionee's cessation of Board service
prior to vesting in those shares. Each initial 30,000-share grant shall vest,
and the Corporation's repurchase right with respect to those shares shall lapse,
in four (4) successive equal annual installments over the Optionee's period of
Board service, with the first such installment to vest upon the completion of
one (1) year of Board service measured from the automatic grant date. Each
annual 15,000-share grant shall vest, and the Corporation's repurchase right
with respect to those shares shall lapse, in two (2) successive equal annual
installments over the optionee's period of Board service measured from the
automatic grant date.

     E.   TERMINATION OF BOARD SERVICE. The following provisions shall govern
the exercise of any options held by the Optionee upon his or her cessation of
Board service:

          (i)   The Optionee (or, in the event of Optionee's death, the personal
representative of the Optionee's 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 such
cessation of Board service in which to exercise each such option.

          (ii)  During the twelve (12)-month exercise period, the option may not
be exercised in the aggregate for more than the number of vested shares of
Common Stock for which the option is exercisable at the time of the Optionee's
cessation of Board service.

          (iii) Should the Optionee cease to serve as a Board member by reason
of death or Permanent Disability, then all shares at the time subject to the
option shall immediately vest so that such option may, during the twelve
(12)-month exercise period following such cessation of Board service, be
exercised for all or any portion of those shares as fully-vested shares of
Common Stock.

          (iv)  In no event shall the option remain exercisable after the
expiration of the option term. Upon the expiration of the twelve (12)-month
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


                                      13.

<PAGE>   14

Optionee's cessation of Board service for any reason other than death or
Permanent Disability, terminate and cease to be outstanding to the extent the
option is not otherwise at that time exercisable for vested shares.

II.  CORPORATE TRANSACTION/CHANGE IN CONTROL/ HOSTILE TAKE-OVER

     A.   In the event of any Corporate Transaction, the shares of Common Stock
at the time subject to each outstanding option but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to
the effective date of the Corporate Transaction, become exercisable for all of
the shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
Immediately following the consummation of the Corporate Transaction, each
automatic option grant shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).

     B.   In connection with any Change in Control, the shares of Common Stock
at the time subject to each outstanding option but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to
the effective date of the Change in Control, become exercisable for all of the
shares of Common Stock at the time subject to such option and may be exercised
for any or all of those shares as fully-vested shares of Common Stock. Each such
option shall remain exercisable for such fully-vested option shares until the
expiration or sooner termination of the option term or the surrender of the
option in connection with a Hostile Take-Over.

     C.   Upon the occurrence of a Hostile Take-Over, the Optionee shall have a
thirty (30)-day period in which to surrender to the Corporation each of his or
her outstanding automatic option grants. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is otherwise at
the time vested in those shares) over (ii) the aggregate exercise price payable
for such shares. Such cash distribution shall be paid within five (5) days
following the surrender of the option to the Corporation. At the 1999 Annual
Meeting on November 10, 1999, shareholder approval of a proposal amending the
1996 Stock Incentive Plan created an automatic pre-approval of each option grant
with such a cash surrender right made under the Automatic Option Grant Program
on or after this date and the subsequent exercise of that right in accordance
with the provisions of this Section II.C, and no additional approval of the
Board or any Plan Administrator shall accordingly be required at the time of the
actual option surrender and cash distribution.

     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


                                      13.

<PAGE>   15

of such Corporate Transaction had the option been exercised immediately prior to
such Corporate Transaction. Appropriate adjustments shall also be made to 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 grant of options under the Automatic Option Grant Program shall in
no way affect the right of the Corporation 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.

III. REMAINING TERMS

     The remaining terms of each option granted under the Automatic Option Grant
Program shall be the same as the terms in effect for option grants made under
the Discretionary Option Grant Program.


                                      15.

<PAGE>   16

                                  ARTICLE FOUR

                                  MISCELLANEOUS

I.   FINANCING

     The Plan Administrator may permit any Optionee to pay the option exercise
price under the Discretionary Option Grant Program by delivering a
full-recourse, interest bearing promissory note payable in one or more
installments. 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 exceed the sum of (i) the aggregate option exercise price payable for
the purchased shares plus (ii) any Federal, state and local income and
employment tax liability incurred by the Optionee in connection with the option
exercise or share purchase.

II.  TAX WITHHOLDING

     A.   The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options under the Plan shall be subject to the satisfaction of
all applicable Federal, state and local income and employment tax withholding
requirements.

     B.   The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options under the Discretionary Option Grant Program
with the right to use shares of Common Stock in satisfaction of all or part of
the Withholding Taxes to which such holders may become subject in connection
with the exercise of their options. Such right may be provided to any such
holder in either or both of the following formats:

          Stock Withholding: The election to have the Corporation withhold, from
     the shares of Common Stock otherwise issuable upon the exercise of such
     Non-Statutory Option, a portion of those shares with an aggregate Fair
     Market Value equal to the percentage of the Withholding Taxes (not to
     exceed one hundred percent (100%)) designated by the holder.

          Stock Delivery: The election to deliver to the Corporation, at the
     time the Non-Statutory Option is exercised, one or more shares of Common
     Stock previously acquired by such holder (other than in connection with the
     option exercise triggering the Withholding Taxes) with an aggregate Fair
     Market Value equal to the percentage of the Withholding Taxes (not to
     exceed one hundred percent (100%)) designated by the holder.


                                      16.

<PAGE>   17

III. EFFECTIVE DATE AND TERM OF THE PLAN

     A.   The Plan and each of the equity incentive programs thereunder shall
become effective immediately upon the approval of the Corporation's shareholders
at the 1996 Annual Meeting. Options may be granted under the Plan at any time on
or after the date of such shareholder approval. If such shareholder approval is
not obtained, then this Plan shall not become effective, and no options shall be
granted and no shares shall be issued under the Plan.

     B.   The Plan shall serve as the successor to the Predecessor Plan, and no
further option grants shall be made under the Predecessor Plan after this Plan
is approved by the shareholders at the 1996 Annual Meeting. All options
outstanding under the Predecessor Plan at the time of such shareholder approval
shall be incorporated into the Plan at that time and shall be treated as
outstanding options under the Plan. However, each outstanding option so
incorporated shall continue to be governed solely by the terms of the documents
evidencing such option, and no provision of the Plan shall be deemed to affect
or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of Common
Stock.

     C.   One or more provisions of the Plan, including (without limitation) the
option/vesting acceleration provisions of Article Two relating to Corporate
Transactions and Changes in Control, may, in the Plan Administrator's
discretion, be extended to one or more options incorporated from the Predecessor
Plan which do not otherwise contain such provisions.

     D.   The Plan shall terminate upon the earliest of (i) December 31, 2006,
(ii) the date on which all shares available for issuance under the Plan shall
have been issued as fully-vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. Upon such plan
termination, all outstanding option grants shall thereafter continue to have
force and effect in accordance with the provisions of the documents evidencing
such grants.

IV.  AMENDMENT OF THE PLAN

     A.   The Board shall have complete power and authority to amend or modify
the Plan in any or all respects but may delegate such authority in whole or in
part to the Primary Committee, as the Board deems appropriate. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to stock options at the time outstanding under the Plan unless the
Optionee consents to such amendment or modification. In addition, certain
amendments may require shareholder approval in accordance with applicable laws
and regulations.

     B.   The Plan was amended by the Board on July 29, 1998 and approved by the
Shareholders at the 1998 Annual Shareholders Meeting, in order to extend the
automatic share increase provisions of the Plan for an additional three (3)-year
through fiscal December in calendar year 2001. The Automatic Option Grant
Program in effect under the Plan was amended by the Board on July 8, 1999 and
approved by the shareholders at the 1999 Annual Shareholder Meeting, in order to
increase the number of shares of Common Stock for which newly elected or


                                      17.

<PAGE>   18

appointed non-employee Board members and continuing non-employee Board members
may be granted stock options under such program. The Plan was amended on January
9, 2001 to allow the Board to delegate, in whole or in part, its authority to
amend the Plan to the Primary Committee as it deems appropriate.

     C.   Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant Program that are in excess of the number of shares
then available for issuance under the Plan, provided any excess shares actually
issued under that program shall be held in escrow until there is obtained
shareholder approval of an amendment sufficiently increasing the number of
shares of Common Stock available for issuance under the Plan. If such
shareholder approval is not obtained within twelve (12) months after the date
the first such excess 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 Corporation shall promptly refund to the Optionees 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.

V.   USE OF PROCEEDS

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

VI.  REGULATORY APPROVALS

     A.   The implementation of the Plan, the granting of any stock option under
the Plan and the issuance of any shares of Common Stock upon the exercise of any
granted option shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the stock options granted under it and the shares of Common Stock
issued pursuant to it.

     B.   No shares of Common Stock or other assets shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.

VII. NO EMPLOYMENT/SERVICE RIGHTS

     Nothing in the Plan shall confer upon the Optionee 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 Corporation (or any Parent or Subsidiary
employing or retaining such person) or of the Optionee, which rights are hereby
expressly reserved by each, to terminate such person's Service at any time for
any reason, with or without cause.


                                      18.

<PAGE>   19

                                    APPENDIX

     The following definitions shall be in effect under the Plan:

     A.   AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic option grant
program in effect under Article Three of the Plan.

     B.   BOARD shall mean the Corporation's Board of Directors.

     C.   CHANGE IN CONTROL shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:

          (i)  the acquisition, directly or indirectly by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than thirty-five percent (35%) of the
total combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's shareholders
which the Board does not recommend such shareholders to accept, or

          (ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time the Board approved such election or nomination.

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

     E.   COMMON STOCK shall mean the Corporation's common stock.

     F.   CORPORATE TRANSACTION shall mean either of the following
shareholder-approved transactions to which the Corporation 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 Corporation'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 Corporation's assets in complete liquidation or dissolution of the
Corporation.


                                      A-1.

<PAGE>   20

     G.   CORPORATION shall mean Cisco Systems, Inc., a California corporation,
and its successors.

     H.   DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary option
grant program in effect under Article Two of the Plan.

     I.   ELIGIBLE DIRECTOR shall mean a non-employee Board member eligible to
participate in the Automatic Option Grant Program in accordance with the
eligibility provisions of Article One.

     J.   EMPLOYEE shall mean an individual who is in the employ of the
Corporation (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.

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

     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 deemed equal to the closing selling
price per share of Common Stock on the date in question, as such price is
reported 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 deemed equal to 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.

     M.   HOSTILE TAKE-OVER shall mean the acquisition, directly or indirectly,
by any person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than
thirty-five percent (35%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's shareholders which the Board does not recommend
such shareholders to accept.


                                      A-2.

<PAGE>   21

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

     O.   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
Corporation for reasons other than Misconduct, or

          (ii) such individual's voluntary resignation following (A) a change in
his or her position with the Corporation which materially reduces his or her
level of responsibility, (B) 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 (C) a relocation of such individual's place of employment by
more than fifty (50) miles, provided and only if such change, reduction or
relocation is effected without the individual's consent.

     P.   MISCONDUCT shall mean the commission of any act of fraud, embezzlement
or dishonesty by the Optionee, any unauthorized use or disclosure by such person
of confidential information or trade secrets of the Corporation (or any Parent
or Subsidiary), or any other intentional misconduct by such person adversely
affecting the business or affairs of the Corporation (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 Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
any Optionee or other person in the Service of the Corporation (or any Parent or
Subsidiary).

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

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

     S.   OPTIONEE shall mean any person to whom an option is granted under the
Discretionary Option Grant or Automatic Option Grant Program.

     T.   PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) 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>   22

     U.   PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the inability
of the Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more. However, solely
for purposes of the Automatic Option Grant Program, Permanent Disability or
Permanently Disabled shall mean the inability of the non-employee Board member
to perform his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.

     V.   PLAN shall mean the Corporation's 1996 Stock Incentive Plan, as set
forth in this document.

     W.   PLAN ADMINISTRATOR shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant Program with respect to one or more
classes of eligible persons, to the extent such entity is carrying out its
administrative functions under those programs with respect to the persons under
its jurisdiction.

     X.   PREDECESSOR PLAN shall mean the Corporation's pre-existing 1987 Stock
Option Plan in effect immediately prior to the Plan Effective Date hereunder.

     Y.   PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant Program with respect to Section 16 Insiders.

     Z.   SECONDARY COMMITTEE shall mean a committee of two (2) or more Board
members appointed by the Board to administer the Discretionary Option Grant
Program with respect to eligible persons other than Section 16 Insiders.

     AA.  SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

     BB.  SERVICE shall mean the performance of services for the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.

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

     DD.  SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, 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-4.

<PAGE>   23

     EE.  TAKE-OVER PRICE shall mean the greater of (i) the Fair Market Value
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.

     FF.  10% SHAREHOLDER 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 Corporation (or any Parent
or Subsidiary).

     GG.  WITHHOLDING TAXES shall mean the Federal, state and local income and
employment withholding taxes to which the holder of Non-Statutory Options or
unvested shares of Common Stock may become subject in connection with the
exercise of those options or the vesting of those shares.


                                      A-5.
</TEXT>
</DOCUMENT>
</SUBMISSION>
