<PAGE>

                                                                    EXHIBIT 4.03

                              HYBRID NETWORKS, INC.

                             1999 STOCK OPTION PLAN

         AS ADOPTED AS OF MAY 5, 1999 AND AMENDED AS OF AUGUST 10, 1999
                               AND OCTOBER 7, 1999

         1.   PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company by offering them an
opportunity to participate in the Company's future performance through awards of
Options. CAPITALIZED TERMS NOT DEFINED IN THE TEXT ARE DEFINED IN SECTION 20
HEREOF.

         2.   SHARES SUBJECT TO THE PLAN.

                  2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and 15
hereof, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 4,000,000 Shares. Subject to Sections 2.2 and 15
hereof, Shares will again be available for grant and issuance in connection with
future Awards under this Plan to the extent such Shares: (a) cease to be subject
to issuance upon exercise of an Option, other than due to exercise of such
Option; or (b) are subject to an Award that otherwise terminates without Shares
being issued. At all times the Company will reserve and keep available a
sufficient number of Shares as will be required to satisfy the requirements of
all Awards granted under this Plan.

                  2.2 ADJUSTMENT OF SHARES. In the event that the number of
outstanding shares of the Company's Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company
without consideration, then (a) the number of Shares reserved for issuance under
this Plan and (b) the Exercise Prices of and number of Shares subject to
outstanding Options will be proportionately adjusted, subject to any required
action by the Board or the stockholders of the Company and compliance with
applicable securities laws; provided, however, that fractions of a Share will
not be issued but will either be paid in cash at Fair Market Value of such
fraction of a Share or will be rounded down to the nearest whole Share, as
determined by the Committee.

         3.   ELIGIBILITY. Awards may be granted only to employees (including
officers and directors who are also employees) or consultants of the Company or
of a Parent or Subsidiary of the Company who meet the suitability standards set
forth below in this Section 3. A person may be granted more than one Award under
this Plan. To be eligible to receive options under this Plan, a person must meet
the following suitability standards: Such person must either (a) be an officer
or director of the Company, (b) have a pre-existing personal or business
relationship with the Company or any of its officers, directors or controlling
persons or (c) by reason of such person's business or financial experience or
the business or financial experience of such person's professional advisor who
is unaffiliated with and who is not compensated by the Company or any affiliate
or selling agent of the Company, directly or indirectly, could be reasonably
assumed to protect such person's own interests in connection with the Options.
The foregoing suitability standards are intended to comply, and shall be
interpreted in a manner consistent with, the excemption from qualification under
the California securities laws provided by Section 25102(f) of the California
Corporations Code and the regulations thereunder.

<PAGE>

         4.   ADMINISTRATION.

                  4.1 COMMITTEE AUTHORITY. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:

                  (a)      construe and interpret this Plan, any Stock Option
                           Agreement and any other agreement or document
                           executed pursuant to this Plan;

                  (b)      prescribe, amend and rescind rules and regulations
                           relating to this Plan or any Award;

                  (c)      select persons to receive Awards;

                  (d)      determine the form and terms of Awards;

                  (e)      determine the number of Shares or other consideration
                           subject to Awards;

                  (f)      determine whether Awards will be granted singly, in
                           combination with, in tandem with, in replacement of,
                           or as alternatives to, other Awards under this Plan
                           or awards under any other incentive or compensation
                           plan of the Company or any Parent or Subsidiary of
                           the Company;

                  (g)      grant waivers of Plan or Award conditions;

                  (h)      determine the vesting, exercisability and payment of
                           Awards;

                  (i)      correct any defect, supply any omission, or reconcile
                           any inconsistency in this Plan, any Award, any Stock
                           Option Agreement or any Exercise Agreement; and

                  (j)      make all other determinations necessary or advisable
                           for the administration of this Plan.

                  4.2 COMMITTEE DISCRETION. Any determination made by the
Committee with respect to any Award will be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
this Plan or Award, and subject to Section 5.8 hereof, at any later time, and
such determination will be final and binding on the Company and on all persons
having an interest in any Award under this Plan. The Committee may delegate to
one or more officers of the Company the authority to grant an Award under this
Plan.

         5. OPTIONS. The Committee may grant Options to eligible persons and
will determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised and all other terms and conditions of
the Option, subject to the following:

                  5.1 FORM OF OPTION GRANT. Each Option granted under this Plan
will be evidenced by a Stock Option Agreement which will expressly identify the
Option as an ISO or an NQSO and will be in such form and contain such provisions
(which need not be the same for each Participant) as the Committee may from time
to time approve, and which will comply with and be subject to the terms and
conditions of this Plan.

                  5.2 DATE OF GRANT. The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee.


                                      -2-

<PAGE>

The Stock Option Agreement and a copy of this Plan will be delivered to the
Participant within a reasonable time after the granting of the Option.

                  5.3 EXERCISE PERIOD. Options may be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option will
be exercisable after the expiration of ten years from the date the Option is
granted and provided further that no ISO granted to a person who directly or by
attribution owns more than 10% of the total combined voting power of all classes
of stock of the Company or any Parent or Subsidiary of the Company ("TEN PERCENT
STOCKHOLDER") will be exercisable after the expiration of five years from the
date the ISO is granted. The Committee also may provide for Options to become
exercisable at one time or from time to time, periodically or otherwise, in such
number of Shares or percentage of Shares as the Committee determines.
Notwithstanding the foregoing, Options to Participants who are not officers,
directors or consultants of the Company, or of any Parent or Subsidiary of the
Company, must become exercisable at a rate of at least 20% per year over five
years from the date the Option is granted, subject to earlier termination of the
Option pursuant to Sections 5.6 and 15.

                  5.4 EXERCISE PRICE. The Exercise Price of an Option will be
determined by the Committee when the Option is granted, provided that: (i) the
Exercise Price of an ISO will not be less than 100% of the Fair Market Value of
the Shares on the date of grant; and (ii) the Exercise Price of any Option
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased must be made in accordance with Section 6 hereof.

                  5.5 METHOD OF EXERCISE. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price, and any applicable taxes, for the
number of Shares being purchased.

                  5.6 TERMINATION. Subject to earlier termination pursuant to
Section 15 hereof and notwithstanding the exercise periods set forth in the
Stock Option Agreement, exercise of an Option will always be subject to the
following:

                  (a)      If the Participant is Terminated for any reason
                           except death, Disability or for Cause, then the
                           Participant may exercise such Participant's Options
                           only to the extent that such Options are exercisable
                           upon the Termination Date and such Options must be
                           exercised by the Participant, if at all, as to all or
                           some of the Vested Shares calculated as of the
                           Termination Date, within three months after the
                           Termination Date (or within such shorter time period,
                           not less than 30 days, or within such longer time
                           period, not exceeding five years, as may be
                           determined by the Committee, with any exercise beyond
                           three months after the Termination Date deemed to be
                           an ISO), but in any event no later than the
                           expiration date of the Options.

                  (b)      If the Participant is Terminated because of
                           Participant's death or Disability (or the Participant
                           dies within three months after a Termination other
                           than because of Participant's death or Disability),
                           then Participant's Options may be exercised only to
                           the extent that such Options would have been
                           exercisable by Participant on the Termination Date
                           and must be exercised by Participant (or
                           Participant's legal representative or authorized
                           assignee), no later than 12 months after the
                           Termination Date (or within such shorter time period,
                           not less than six months, or within such longer time
                           period, not exceeding five years, as may be
                           determined by the Committee, with any such exercise
                           beyond (i) three months


                                      -3-

<PAGE>

                           after the Termination Date when the Termination is
                           for any reason other than the Participant's death or
                           Disability or (ii) 12 months after the Termination
                           Date when the Termination is for the Participant's
                           death or Disability, deemed to be an NQSO), but in
                           any event no later than the expiration date of the
                           Options.

                  (c)      Notwithstanding the provisions in paragraph 5.6(a)
                           above, if a Participant is terminated for Cause,
                           neither the Participant, the Participant's estate nor
                           such other person who may then hold the Option shall
                           be entitled to exercise any Option with respect to
                           any Shares whatsoever, after termination of service,
                           whether or not after termination of service the
                           Participant may receive payment from the Company or
                           Subsidiary for vacation pay, for services rendered
                           prior to termination, for services rendered for the
                           day on which termination occurs, for salary in lieu
                           of notice, or for any other benefits. In making such
                           determination, the Board shall give the Participant
                           an opportunity to present to the Board evidence on
                           his behalf. For the purpose of this paragraph,
                           termination of service shall be deemed to occur on
                           the date when the Company dispatches notice or advice
                           to the Participant that his service is terminated.

                  5.7 LIMITATIONS ON EXERCISE. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.

                  5.8 LIMITATIONS ON ISOs. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company, Parent
or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value
of Shares on the date of grant with respect to which ISOs are exercisable for
the first time by a Participant during any calendar year exceeds $100,000, then
the Options for the first $100,000 worth of Shares to become exercisable in such
calendar year will be ISOs and the Options for the amount in excess of $100,000
that become exercisable in that calendar year will be NQSOs. In the event that
the Code or the regulations promulgated thereunder are amended after the
Effective Date of this Plan to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to ISOs, such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.

                  5.9 MODIFICATION, EXTENSION OR RENEWAL. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
below the minimum Exercise Price that would be permitted under Section 5.4
hereof for Options granted on the date the action is taken to reduce the
Exercise Price.

                  5.10 NO DISQUALIFICATION. Notwithstanding any other provision
in this Plan, no term of this Plan relating to an ISO will be interpreted,
amended or altered, nor will any discretion or authority granted under this Plan
be exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.

         6.   PAYMENT FOR SHARE PURCHASES.

                  6.1 PAYMENT. Payment for Shares purchased pursuant to this
Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and, where permitted by law, by any of the means
set forth below:


                                      -4-

<PAGE>

                  (a)      by cancellation of indebtedness of the Company to the
                           Participant;

                  (b)      by surrender of shares that: (i) either (A) have been
                           owned by Participant for more than six months and
                           have been paid for within the meaning of SEC Rule 144
                           (and, if such shares were purchased from the Company
                           by use of a promissory note, such note has been fully
                           paid with respect to such shares) or (B) were
                           obtained by Participant in the public market and (ii)
                           are clear of all liens, claims, encumbrances or
                           security interests;

                  (c)      by tender of a full recourse promissory note having
                           such terms as may be approved by the Committee and
                           bearing interest at a rate sufficient to avoid
                           imputation of income under Sections 483 and 1274 of
                           the Code; provided, however, that the portion of the
                           Exercise Price equal to the par value of the Shares
                           must be paid in cash or other legal consideration
                           permitted by Delaware General Corporation Law
                           (Participants who are not employees or directors of
                           the Company will not be entitled to purchase Shares
                           with a promissory note unless the note is adequately
                           secured by collateral other than the Shares);

                  (d)      by waiver of compensation due or accrued to the
                           Participant for services rendered;

                  (e)      with respect only to purchases upon exercise of an
                           Option, and provided that a public market for the
                           Company's stock exists:

                           (1)      through a "same day sale" commitment from
                                    the Participant and a broker-dealer that is
                                    a member of the National Association of
                                    Securities Dealers (an "NASD DEALER")
                                    whereby the Participant irrevocably elects
                                    to exercise the Option and to sell a portion
                                    of the Shares so purchased to pay for the
                                    Exercise Price, and whereby the NASD Dealer
                                    irrevocably commits upon receipt of such
                                    Shares to forward the Exercise Price
                                    directly to the Company; or

                           (2)      through a "margin" commitment from the
                                    Participant and an NASD Dealer whereby the
                                    Participant irrevocably elects to exercise
                                    the Option and to pledge the Shares so
                                    purchased to the NASD Dealer in a margin
                                    account as security for a loan from the NASD
                                    Dealer in the amount of the Exercise Price,
                                    and whereby the NASD Dealer irrevocably
                                    commits upon receipt of such Shares to
                                    forward the Exercise Price directly to the
                                    Company; or

                  (f)      by any combination of the foregoing.

                  6.2 LOAN GUARANTEES. The Committee may help the Participant
pay for Shares purchased under this Plan by authorizing a guarantee by the
Company of a third-party loan to the Participant.

         7.   WITHHOLDING TAXES.

                  7.1 WITHHOLDING GENERALLY. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.


                                      -5-

<PAGE>

                  7.2 STOCK WITHHOLDING. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee for such elections and be in writing in a form
acceptable to the Committee.

         8.   PRIVILEGES OF STOCK OWNERSHIP.

                  8.1 VOTING AND DIVIDENDS. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares. The Company will comply
with Section 260.140.1 of Title 10 of the California Code of Regulations with
respect to the voting rights of Common Stock.

                  8.2 FINANCIAL STATEMENTS. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Options outstanding, or as otherwise required under Section
260.140.46 of Title 10 of the California Code of Regulations. Notwithstanding
the foregoing, the Company will not be required to provide such financial
statements to Participants when issuance is limited to Participants whose
services in connection with the Company assure them access to equivalent
information.

         9.   TRANSFERABILITY. Options granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as determined by the Committee and
set forth in the Stock Option Agreement with respect to Options that are not
ISOs. During the lifetime of the Participant an Option will be exercisable only
by the Participant or Participant's legal representative, and any elections with
respect to an Option may be made only by the Participant or Participant's legal
representative unless otherwise determined by the Committee and set forth in the
Stock Option Agreement with respect to Options that are not ISOs.

         10.  CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.

         11.  ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the


                                      -6-

<PAGE>

Committee will from time to time approve. The Shares purchased with the
promissory note may be released from the pledge on a pro rata basis as the
promissory note is paid.

         12.  EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, shares of Common
Stock of the Company or other consideration, based on such terms and conditions
as the Committee and the Participant may agree.

         13.  SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not
be effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable, and/or (b) compliance with any exemption, completion of any
registration or other qualification of such Shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company will be under no obligation to register the
Shares with the SEC or to effect compliance with the exemption, registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company will have no liability
for any inability or failure to do so.

         14.  NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
Cause.

         15.  CORPORATE TRANSACTIONS.

                  15.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR OR
ACQUIRING CORPORATION. In the event of (a) a dissolution or liquidation of the
Company, (b) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the Awards granted under this
Plan are assumed, converted or replaced by the successor or acquiring
corporation, which assumption, conversion or replacement will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder which merges with the Company in such merger, or
which owns or controls another corporation which merges, with the Company in
such merger) cease to own their shares or other equity interests in the Company,
(d) the sale of all or substantially all of the assets of the Company or (e) the
acquisition, sale or transfer of more than 50% of the outstanding shares of the
Company by tender offer or similar transaction, any or all outstanding Awards
may be assumed, converted or replaced by the successor or acquiring corporation
(if any), which assumption, conversion or replacement will be binding on all
Participants. In the alternative, the successor or acquiring corporation may
substitute equivalent Awards or provide substantially similar consideration to
Participants as was provided to stockholders (after taking into account the
existing provisions of the Awards). The successor or acquiring corporation may
also issue, in place of outstanding Shares of the Company held by the
Participant, substantially similar shares or other property subject to
repurchase restrictions and other provisions no less favorable to the
Participant than those which applied to such outstanding Shares immediately
prior to such transaction described in this Section 15.1. In the event such
successor or acquiring corporation (if any) refuses to assume or substitute
Awards, as provided above, pursuant to a


                                      -7-

<PAGE>

transaction described in this Section 15.1, then notwithstanding any other
provision in this Plan to the contrary, such Awards will expire on such
transaction at such time and on such conditions as the Board will determine;
provided, however, that the Committee may, in its sole discretion, provide that
the vesting of any or all Awards granted pursuant to this Plan will accelerate.
If the Committee exercises such discretion with respect to Options, such Options
will become exercisable in full prior to the consummation of such event at such
time and on such conditions as the Committee determines, and if such Options are
not exercised prior to the consummation of the corporate transaction, they shall
terminate at such time as determined by the Committee.

                  15.2 OTHER TREATMENT OF AWARDS. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 15, in
the event of the occurrence of any transaction described in Section 15.1 hereof,
any outstanding Awards will be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation or sale of assets.

                  15.3 ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either (a) granting an Award under this Plan in substitution of
such other company's award or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.

         16.  ADOPTION OF PLAN. This Plan will become effective on the date that
it is adopted by the Board (the "EFFECTIVE DATE"). If any Options are ISOs, this
Plan will be approved by the stockholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within 12 months
after the Plan is adopted by the Board (if such approval is not obtained, the
Options will be NQSOs). Upon the Effective Date, the Committee may grant Options
pursuant to this Plan; provided, however, that the following requirements will
be met for any Option that is an ISO (otherwise the Option will be an NQSO): (a)
the Option may not be exercised prior to initial stockholder approval of this
Plan, and (b) any Option granted pursuant to an increase in the number of Shares
subject to this Plan approved by the Board may not be exercised prior to
approval of such increase by the stockholders of the Company.

         17.  TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten years from the Effective Date or, if
earlier, the date of stockholder approval. This Plan and all agreements
hereunder shall be governed by and construed in accordance with the laws of the
State of California excluding that body of law pertaining to conflict of laws.

         18.  AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Stock Option Agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Board will not, without the
approval of the stockholders of the Company, amend this Plan in any manner that
requires such stockholder approval.

         19.  NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by
the Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and other equity awards otherwise than under this
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.


                                      -8-

<PAGE>

         20.  DEFINITIONS. As used in this Plan, the following terms will have
the following meanings:

                  "AWARD" means any award of Options under this Plan.

                  "BOARD" means the Board of Directors of the Company.

                  "CAUSE" means Termination because of (a) any willful material
violation by the Participant of any law or regulation applicable to the business
of the Company or a Parent or Subsidiary of the Company, the Participant's
conviction for, or guilty plea to, a felony or a crime involving moral
turpitude, any willful perpetration by the Participant of a common law fraud,
(b) the Participant's commission of an act of personal dishonesty which involves
personal profit in connection with the Company or any other entity having a
business relationship with the Company, (c) any material breach by the
Participant of any provision of any agreement or understanding between the
Company or any Parent or Subsidiary of the Company and the Participant regarding
the terms of the Participant's service as an employee, director or consultant to
the Company or a Parent or Subsidiary of the Company, including without
limitation, the willful and continued failure or refusal of the Participant to
perform the material duties required of such Participant as an employee,
director or consultant of the Company or a Parent or Subsidiary of the Company,
other than as a result of having a Disability, or a breach of any applicable
invention assignment and confidentiality agreement or similar agreement between
the Company and the Participant, (d) Participant's disregard of the policies of
the Company or any Parent or Subsidiary of the Company so as to cause loss,
damage or injury to the property, reputation or employees of the Company or a
Parent or Subsidiary of the Company or (e) any other misconduct by the
Participant which is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company or a Parent
or Subsidiary of the Company.

                  "CODE" means the Internal Revenue Code of 1986, as amended.

                  "COMMITTEE" means the committee appointed by the Board to
administer this Plan, or if no committee is appointed, the Board.

                  "COMPANY" means Hybrid Networks, Inc., or any successor
corporation.

                  "DISABILITY" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee.

                  "EXERCISE PRICE" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.

                  "FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:

                  (a)      if such Common Stock is then quoted on the Nasdaq
                           National Market, its closing price on the Nasdaq
                           National Market on the date of determination as
                           reported in THE WALL STREET JOURNAL;

                  (b)      if such Common Stock is publicly traded and is then
                           listed on a national securities exchange, its closing
                           price on the date of determination on the principal
                           national securities exchange on which the Common
                           Stock is listed or admitted to trading as reported in
                           THE WALL STREET JOURNAL;

                  (c)      if such Common Stock is publicly traded but is not
                           quoted on the Nasdaq National Market nor listed or
                           admitted to trading on a national securities
                           exchange, and if current information about the
                           Company is publicly available so as to comply with
                           SEC Rule 144(c), the average of the closing bid and
                           asked prices on the date of determination as reported
                           by THE WALL STREET JOURNAL (or, if


                                      -9-

<PAGE>

                           not so reported, as otherwise reported by any
                           newspaper or other source as the Board may
                           determine); or

                  (d)      if none of the foregoing is applicable, by the
                           Committee in good faith.

                  "OPTION" means an award of an option to purchase Shares
pursuant to Section 5 hereof.

                  "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain

                  "PARTICIPANT" means a person who receives an Award under this
Plan

                  "PLAN" means this Hybrid Networks, Inc. 1999 Stock Option
Plan, as amended from time to time.

                  "SEC" means the Securities and Exchange Commission.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "SHARES" means shares of the Company's Common Stock reserved
for issuance under this Plan, as adjusted pursuant to Sections 2 and 15 hereof,
and any successor security.

                  "STOCK OPTION AGREEMENT" means, with respect to each Option,
the signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.

                  "SUBSIDIARY" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

                  "TERMINATION" or "TERMINATED" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide substantial services as (a) an employee, officer, director, consultant
or independent contractor to the Company or a Parent or Subsidiary or affiliate
of the Company, or (b) as a consultant, independent contractor or advisor to the
Board of Directors of the Company. A Participant will not be deemed to have
ceased to provide services in the case of (i) sick leave, (ii) military leave,
or (iii) any other leave of absence approved by the Committee, provided that
such leave is for a period of not more than 90 days unless reinstatement upon
the expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to formal policy adopted from time to time by the
Company and issued and promulgated in writing. In the case of any Participant on
(i) sick leave, (ii) military leave or (iii) an approved leave of absence, the
Committee may make such provisions respecting suspension of vesting of the Award
while on leave from the Company or a Parent or Subsidiary of the Company as it
may deem appropriate, except that in no event may an Option be exercised after
the expiration of the term set forth in the Stock Option Agreement. The
Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "TERMINATION DATE").


                                      -10-