Document:

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Exhibit 4.10

                               CYRAS SYSTEMS, INC.

            4 1/2% Convertible Subordinated Notes Due August 15, 2005

                          THIRD SUPPLEMENTAL INDENTURE
                           Dated as of March 29, 2000

                                       to

                                    INDENTURE
                           Dated as of August 18, 2000

             STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.

<PAGE>   2

                          THIRD SUPPLEMENTAL INDENTURE

            THIRD SUPPLEMENTAL INDENTURE (the "Third Supplemental Indenture")
dated as of March 29, 2001, between Cyras Systems, Inc., a Delaware corporation
(the "Company"), CIENA Corporation, a Delaware corporation ("CIENA"), and State
Street Bank and Trust Company of California, N.A., a national banking
association organized and existing under the laws of the United States (the
"Trustee").

                                   WITNESSETH:

            WHEREAS, there has previously been executed and delivered to the
Trustee an indenture dated as of August 18, 2000 (as amended and supplemented to
date, the "Indenture"), providing for the issuance of $150,000,000 in aggregate
principal amount of the Company's 4 1/2% Convertible Subordinated Notes due
August 15, 2005 (the "Notes"); and

            WHEREAS, the Company, CIENA and CO Acquisition Corp. have entered
into an Agreement and Plan of Merger, dated as of December 18, 2000, pursuant to
which the Company will, substantially concurrently with the execution and
delivery of this Third Supplemental Indenture, be a party to a merger with CO
Acquisition Corp. (the "Merger"), and will thereby become a wholly-owned
subsidiary of CIENA; and

            WHEREAS, pursuant to the Merger, each outstanding share of Common
Stock of the Company is being converted into shares of common stock of CIENA;
and

            WHEREAS, Section 4.11 of the Indenture requires that, as a condition
precedent to a transaction such as the one contemplated by the Merger, a
supplemental indenture be executed and delivered by the successor providing that
the Holders of the Notes shall have the right to convert the Notes into the kind
and amount of shares of CIENA common stock receivable in the Merger by holders
of the number of shares of Common Stock of the Company deliverable upon
conversion of the Notes immediately prior to the Merger; and

            WHEREAS, Section 4.11 of the Indenture requires that the
supplemental indenture shall further provide for adjustments of the Conversion
Price that are as nearly equivalent as practicable to the adjustments of the
Conversion Price provided in Article 4 of the Indenture, and shall contain such
additional provisions as the Board of Directors shall reasonably consider
necessary to protect the interests of the Holders of the Securities; and

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            WHEREAS, Section 4.11 of the Indenture requires that in the event of
a transaction such as the one contemplated by the Merger, the Conversion Price
is set at $55.40, subject to adjustment upon certain events pursuant to Section
4.6, including a stock split; and

            WHEREAS, on November 28, 2000, the Company effected a three-for-one
split of its outstanding Common Stock, requiring adjustment pursuant to Section
4.6; and

            WHEREAS, in accordance with Sections 11.1 and 12.4 of the Indenture,
the Company is concurrently delivering to the Trustee an Officers' Certificate
and an Opinion of Counsel; and

            WHEREAS, all acts and proceedings required by law, under the
Indenture and by the respective Certificates of Incorporation of the Company and
CIENA to constitute this Third Supplemental Indenture a valid and binding
agreement for the uses and purposes set forth herein, in accordance with its
terms, have been done and taken, and the execution and delivery of this Third
Supplemental Indenture have been in all respects duly authorized by each of the
Company and CIENA.

            NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Company, CIENA and Trustee hereby agree as follows:

      1.    For the purposes of this Third Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires:
(i) the capitalized terms and expressions used herein shall have the same
meaning as corresponding terms and expressions used in the Indenture; and (ii)
the words, "herein," "hereof," and hereby" and other words of similar import
used in this Third Supplemental Indenture refer to this Third Supplemental
Indenture as a whole and not to any particular section hereof.

      2.    Pursuant to the provisions of Section 4.11 of the Indenture, from
and after the effective time of the Merger, a Holder of any Note may, at any
time prior to the Final Maturity Date, convert the principal amount of such Note
(or any portion thereof equal to $1,000 or an integral multiple of $1,000) into
shares of CIENA common stock $0.01 par value, at a Conversion Price of $144.64,
subject to earlier termination of such right if the Note is called for
redemption under Article 3 of the Indenture.

      3.    From and after the effective time of the Merger, a Change of Control
of CIENA shall have the same effect as a Change of Control of the Company under
the Indenture, and a Change of Control of CIENA shall mean the same as "Change
of Control," as defined in Section 3.8 of the Indenture, substituting CIENA for
the Company in that definition.

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      4.    In accordance with Section 4.11 of the Indenture, from and after the
Effective Time of the Merger adjustments to the Conversion Price as established
by Section 2 of this Supplemental Indenture are to be as nearly equivalent as
practicable to the adjustments provided for in Sections 4.6, 4.7, and 4.8 of the
Indenture, as if CIENA had been named in those sections as the Company. In the
event of an adjustment to the Conversion Price under Sections 4.6, 4.7 and 4.8
of the Indenture, CIENA will provide to the Trustee an Officers' Certificate of
CIENA equivalent to and with the same effect as the Officers' Certificate
contemplated by Section 4.9.

      5.    Conversion of the Notes into CIENA common stock shall take place in
the manner and under the terms provided for conversion by Sections 4.2, 4.3, and
4.4 of the Indenture.

      6.    From and after the effective date of the Merger, and from time to
time as may be necessary thereafter, CIENA shall reserve, out of its authorized
but unissued CIENA common stock, a sufficient number of shares of CIENA common
stock to permit the conversion of all outstanding Notes into shares of CIENA
common stock. Such shares of CIENA common stock shall be newly issued shares,
shall be duly authorized, validly issued, fully paid and nonassessable and shall
be free from preemptive rights and free of any lien or adverse claim. CIENA will
endeavor to promptly comply with all federal and state securities laws
regulating the offer and delivery of shares of common stock upon conversion of
Notes, if any, and will list or cause to have quoted such shares of CIENA Common
Stock on each national securities exchange or on the NASDAQ National Market or
other over-the-counter market or such other market on which the CIENA Common
Stock is then listed or quoted.

      7.    From and after the effective date of the Merger, CIENA will comply
with the notice requirement of Section 4.10 as if CIENA had been named as the
Company for purposes of that section.

      8.    With the exception of the last two sentences of the first paragraph
of Section 4.11, from and after the effective date of the Merger, CIENA will
comply with the first paragraph of Section 4.11 as if CIENA had been named as
the Company in that portion of Section 4.11.

      9.    From and after the effective date of the Merger, CIENA may from time
to time reduce the Conversion Price in the manner and within the limitations
contemplated by Section 4.13.

      10.   From and after the effective date of the Merger, CIENA will comply
with the terms of Article 7 of the Indenture as if CIENA was named as the
Company in Article 7 of the Indenture.

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      11.   From and after the effective date of the Merger, failure of CIENA to
comply with any of its agreements contained in this Third Supplemental Indenture
shall constitute an Event of Default for purposes of Article 8 of the Indenture.
Notwithstanding the previous sentence, failure of CIENA to comply with any of
its agreements contained in this Third Supplemental Indenture shall not be an
Event of Default until the Trustee notifies CIENA and the Company, or the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding notify CIENA, the Company and the Trustee, of the default, and CIENA
does not cure the default within 60 days after receipt of such notice. The
notice given pursuant to this paragraph must specify the default, demand that it
be remedied and state that the notice is a "Notice of Default." When any default
under this paragraph is cured, it ceases. The Trustee shall not be charged with
knowledge of an Event of Default unless written notice thereof shall have been
given to a Trust Officer at the Corporate Trust Office of the Trustee by CIENA,
the Company, a Paying Agent, any Holder or any agent of any Holder.

      12.   Upon request of the trustee, CIENA will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Third Supplemental
Indenture.

      13.   The Trustee accepts the amendment of the Indenture effected by this
Third Supplemental Indenture and agrees to execute the trust created by the
Indenture, as hereby amended, including the terms and conditions as set forth in
the Indenture, as hereby amended, including the terms and provisions defining
and limiting the liabilities and responsibilities of the Trustee, which terms
and provisions shall in like manner define and limit its liabilities in the
performance of the trust created by the Indenture, as hereby amended, and
without limiting the generality of the foregoing, the Trustee has no
responsibility for the correctness of the recitals of fact herein contained
which shall be taken as the statements of the Company and CIENA and makes no
representations as to the validity or sufficiency of this Third Supplemental and
shall incur no liability or responsibility in respect of the validity thereof.

      14.   Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed by the Company and Trustee, and all the terms conditions
and provisions shall remain in full force and effect.

      15.   This Third Supplemental Indenture shall form a part of the Indenture
for all purposes, and every holder of Notes heretofore or hereafter
authenticated shall be bound hereby.

      16.   This Third Supplemental Indenture may be executed in any number of
counterparts each of which when so executed shall be deemed to be an original,
and all of such counterparts shall together constitute one and the same
instrument.

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      17.   This Third Supplemental Indenture shall be deemed to be a contract
made under the laws of the State of New York and for all purposes shall be
governed by and construed in accordance with such laws.

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      IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental
Indenture to be executed all as of the day and year first above written

                                 CIENA CORPORATION

                                 By:   /s/ MICHAEL O. MCCARTHY III
                                      ----------------------------
                                 Its:  Senior Vice President and General
                                       Counsel

                                 CYRAS SYSTEMS, INC.

                                 By:   /s/ SHEKHAR MANDAL
                                      ----------------------------------------
                                 Its:  Vice President for Finance and
                                       Administration, and Chief Financial
                                       Officer

                                 STATE STREET BANK AND TRUST COMPANY OF
                                 CALIFORNIA, N.A., as Trustee

                                 By:   /s/ STEPHEN RIVERO
                                      ----------------------------------------
                                 Its:  Vice President

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EXHIBIT 10.24

                               CYRAS SYSTEMS, INC.
                                 1998 STOCK PLAN

                      (AS AMENDED THROUGH AUGUST 23, 2000)

                                  ARTICLE ONE

                               GENERAL PROVISIONS

      I.    PURPOSE OF THE PLAN

            This 1998 Stock Plan is intended to promote the interests of Cyras
Systems, Inc., a Delaware corporation, by providing eligible persons in the
Corporation's employ or service with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to continue in such employ or service.

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

      II.   STRUCTURE OF THE PLAN

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

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

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

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

      III.  ADMINISTRATION OF THE PLAN

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

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

      IV.   ELIGIBILITY

            A.    The persons eligible to participate in the Plan are as
follows:

                        (i)   Employees,

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

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

      V.    STOCK SUBJECT TO THE PLAN

            A.    The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. The maximum number of shares
of Common Stock which may be issued over the term of the Plan shall not exceed
65,400,000 (post split) shares.

            B.    Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the option exercise or direct issue price paid

                                       2.
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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 or direct stock issuances under the Plan.

            C.    Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan and (ii) the number and/or class of securities and the exercise
price per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive. In no event shall
any such adjustments be made in connection with the conversion of one or more
outstanding shares of the Corporation's preferred stock into shares of Common
Stock.

                                       3.
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                                  ARTICLE TWO

                              OPTION GRANT PROGRAM

      I.    OPTION TERMS

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

            A.    EXERCISE PRICE.

                  1.    The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:

                        (i)   The exercise price per share shall not be less
      than eighty-five percent (85%) of the Fair Market Value per share of
      Common Stock on the option grant date.

                        (ii)  If the person to whom the 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.

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

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

                        (ii)  to the extent the option is exercised for vested
      shares, through a special sale and remittance procedure pursuant to which
      the Optionee shall concurrently provide irrevocable instructions (A) to a
      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

                                       4.
<PAGE>   5

      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) to 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.

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

            C.    EFFECT OF TERMINATION OF SERVICE.

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

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

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

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

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

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

                                       5.
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      of Service, terminate and cease to be outstanding with respect to any and
      all option shares for which the option is not otherwise at the time
      exercisable or in which the Optionee is not otherwise at that time vested.

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

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

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

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

            D.    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 the
recordholder of the purchased shares.

            E.    UNVESTED SHARES. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
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. The Plan Administrator may not impose a vesting schedule upon
any option grant or the shares of Common Stock subject to that option which is
more restrictive than twenty percent (20%) per year vesting, with the initial
vesting to occur not later than one (1) year after the option grant date.
However, such limitation shall not be applicable to any option grants made to
individuals who are officers of the Corporation, non-employee Board members or
independent consultants.

                                       6.
<PAGE>   7

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

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

      II.   INCENTIVE OPTIONS

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

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

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

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

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

      III.  CORPORATE TRANSACTION

            A.    The shares subject to each option outstanding under the Plan
at the time of a Corporate Transaction shall automatically vest in full so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, the shares subject to an
outstanding option shall NOT vest on such an accelerated basis if and to the
extent:

                                       7.
<PAGE>   8

(i) such option is to be assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and any repurchase rights of the
Corporation with respect to the unvested option shares are concurrently to be
assigned to such successor corporation (or parent thereof) or (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 unvested option shares or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant.

            B.    All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are assigned to the successor
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).

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

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

            F.    The Plan Administrator shall also have full power and
authority, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to structure such option so that the
shares subject to that option will automatically vest on an accelerated basis
should the Optionee's Service terminate by reason of an Involuntary Termination
within a designated period (not to exceed twenty-four (24) months) following the
effective date of any Corporate Transaction in which the option is assumed and
the repurchase

                                       8.
<PAGE>   9

rights applicable to those shares do not otherwise terminate. Any option so
accelerated shall remain exercisable for the fully-vested option 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 on an accelerated
basis, and the shares subject to those terminated rights shall accordingly vest
at that time.

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

            H.    The grant of options under the Plan 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.   CANCELLATION AND REGRANT OF OPTIONS

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

                                       9.
<PAGE>   10

                                 ARTICLE THREE

                             STOCK ISSUANCE PROGRAM

      I.    STOCK ISSUANCE TERMS

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

            A.    PURCHASE PRICE.

                  1.    The purchase price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the issue date. However, the purchase
price per share of Common Stock issued to a 10% Shareholder shall not be less
than one hundred and ten percent (110%) of such Fair Market Value.

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

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

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

            B.    VESTING PROVISIONS.

                  1.    Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. However, the Plan Administrator may not impose a vesting schedule
upon any stock issuance effected under the Stock Issuance Program which is more
restrictive than twenty percent (20%) per year vesting, with initial vesting to
occur not later than one (1) year after the issuance date. Such limitation shall
not apply to any Common Stock issuances made to the officers of the Corporation,
non-employee Board members or independent consultants.

                  2.    Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's

                                      10.
<PAGE>   11

receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

                  3.    The Participant shall have full shareholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.

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

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

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

      II.   CORPORATE TRANSACTION

            A.    Upon the occurrence of a Corporate Transaction, all
outstanding repurchase rights under the Stock Issuance Program shall terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, except to the extent: (i) those repurchase
rights are assigned to the successor 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.

                                       11.
<PAGE>   12

            B.    The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase rights with respect to those shares remain
outstanding, to provide that those rights shall automatically terminate on an
accelerated basis, and the shares of Common Stock subject to those terminated
rights shall immediately vest, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed twenty-four (24) months) following the
effective date of any Corporate Transaction in which those repurchase rights are
assigned to the successor corporation (or parent thereof).

      III.  SHARE ESCROW/LEGENDS

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

                                      12.
<PAGE>   13

                                  ARTICLE FOUR

                                  MISCELLANEOUS

      I.    FINANCING

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

      II.   EFFECTIVE DATE AND TERM OF PLAN

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

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

                                      13.
<PAGE>   14

      III.  AMENDMENT OF THE PLAN

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

            B.    Options may be granted under the Option Grant Program and
shares may be issued under the Stock Issuance Program which are in each instance
in excess of the number of shares of Common Stock then available for issuance
under the Plan, provided any excess shares actually issued under those programs
shall be held in escrow until there is obtained 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 grants or issuances are
made, then (i) any unexercised options granted on the basis of such excess
shares shall terminate and cease to be outstanding and (ii) the Corporation
shall promptly refund to the Optionees and the Participants the exercise or
purchase price paid for any excess shares issued under the Plan and held in
escrow, together with interest (at the applicable Short Term Federal Rate) for
the period the shares were held in escrow, and such shares shall thereupon be
automatically cancelled and cease to be outstanding.

      IV.   USE OF PROCEEDS

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

      V.    WITHHOLDING

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

      VI.   REGULATORY APPROVALS

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

                                      14.
<PAGE>   15

      VII.  NO EMPLOYMENT OR SERVICE RIGHTS

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

      VIII. FINANCIAL REPORTS

            The Corporation shall deliver a balance sheet and an income
statement at least annually to each individual holding an outstanding option
under the Plan, unless such individual is a key Employee whose duties in
connection with the Corporation (or any Parent or Subsidiary) assure such
individual access to equivalent information.

                                    APPENDIX

            The following definitions shall be in effect under the Plan:

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

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

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

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

            E.    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.

            F.    CORPORATION shall mean Cyras Systems, Inc., a Delaware
corporation, and any successor corporation to all or substantially all of the
assets or voting stock of Cyras Systems, Inc., which shall by appropriate action
adopt the Plan.

                                      15.
<PAGE>   16

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

            H.    EMPLOYEE shall mean an individual who is in the employ of the
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.

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

                                        2
<PAGE>   17

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

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

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

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

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

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

                        (i)   such individual's involuntary dismissal or
      discharge by the 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 duties and responsibilities or the level of management
      to which he or she reports, (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.

                                        3
<PAGE>   18

            M.    MISCONDUCT shall mean the commission of any act of fraud,
      embezzlement or dishonesty by the Optionee or Participant, any
      unauthorized use or disclosure by such person of confidential information
      or trade secrets of the 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, Participant or other person in the Service of
      the Corporation (or any Parent or Subsidiary).

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

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

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

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

            R.    PARENT shall mean any corporation (other than the 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.

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

            T.    PLAN shall mean the Corporation's 1998 Stock Plan, as set
forth in this document.

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

            V.    SERVICE shall mean the provision of services to the
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.

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

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

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

                                       4
<PAGE>   19

            Z.    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.

            AA.   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).

                               CYRAS SYSTEMS, INC.
                             STOCK OPTION AGREEMENT

RECITALS

                                       5
<PAGE>   20

ARTICLE FIVE The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or the board
of directors of any Parent or Subsidiary and consultants and other independent
   advisors in the service of the Corporation (or any Parent or Subsidiary).

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

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

            NOW, THEREFORE, it is hereby agreed as follows:

      I.    Grant of Option. THE CORPORATION HEREBY GRANTS TO OPTIONEE, AS OF
            THE GRANT DATE, AN OPTION TO PURCHASE UP TO THE NUMBER OF OPTION
            SHARES SPECIFIED IN THE GRANT NOTICE. THE OPTION SHARES SHALL BE
            PURCHASABLE FROM TIME TO TIME DURING THE OPTION TERM SPECIFIED IN
            PARAGRAPH 2 AT THE EXERCISE PRICE.

      II.   Option Term. THIS OPTION SHALL HAVE A TERM OF TEN (10) YEARS
            MEASURED FROM THE GRANT DATE AND SHALL ACCORDINGLY EXPIRE AT THE
            CLOSE OF BUSINESS ON THE EXPIRATION DATE, UNLESS SOONER TERMINATED
            IN ACCORDANCE WITH PARAGRAPH 5 OR 6.

      III.  Limited Transferability. DURING OPTIONEE'S LIFETIME, THIS OPTION
            SHALL BE EXERCISABLE ONLY BY OPTIONEE AND SHALL NOT BE ASSIGNABLE OR
            TRANSFERABLE OTHER THAN BY WILL OR BY THE LAWS OF DESCENT AND
            DISTRIBUTION FOLLOWING OPTIONEE'S DEATH.

      IV.   Dates of Exercise. THIS OPTION SHALL BECOME EXERCISABLE FOR THE
            OPTION SHARES IN ONE OR MORE INSTALLMENTS AS SPECIFIED IN THE GRANT
            NOTICE. AS THE OPTION BECOMES EXERCISABLE FOR SUCH INSTALLMENTS,
            THOSE INSTALLMENTS SHALL ACCUMULATE, AND THE OPTION SHALL REMAIN
            EXERCISABLE FOR THE ACCUMULATED INSTALLMENTS UNTIL THE EXPIRATION
            DATE OR SOONER TERMINATION OF THE OPTION TERM UNDER PARAGRAPH 5 OR
            6.

      V.    Cessation of Service. THE OPTION TERM SPECIFIED IN PARAGRAPH 2 SHALL
            TERMINATE (AND THIS OPTION SHALL CEASE TO BE OUTSTANDING) PRIOR TO
            THE EXPIRATION DATE SHOULD ANY OF THE FOLLOWING PROVISIONS BECOME
            APPLICABLE:

            A. hould Optionee cease to remain in Service for any reason (other
than death, Disability or Misconduct) while this option is outstanding, then
Optionee shall have a period of three (3) months (commencing with the date of
such cessation of Service) during which to

                                       6
<PAGE>   21

exercise this option, but in no event shall this option be exercisable at any
time after the Expiration Date.

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

      C.    Should Optionee cease Service by reason of Disability while this
option is outstanding, then Optionee shall have a period of twelve (12) months
(commencing with the date of such cessation of Service) during which to exercise
this option. In no event shall this option be exercisable at any time after the
Expiration Date.

            Note: Exercise of this option on a date later than three (3) months
            following cessation of Service due to Disability will result in loss
            of favorable Incentive Option treatment, unless such Disability
            constitutes Permanent Disability. In the event that Incentive Option
            treatment is not available, this option will be taxed as a
            Non-Statutory Option upon exercise.

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

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

      VI.   Accelerated Vesting.

            A. In the event of any Corporate Transaction, the Option Shares at
the time subject to this option but not otherwise vested shall automatically
vest in full so that this option shall, immediately prior to the effective date
of the Corporate Transaction, become exercisable for all of the Option Shares as
fully-vested shares and may be exercised for any or all of those Option Shares
as vested shares. However, the Option Shares shall NOT vest on such an
accelerated basis if and to the extent: (i) this option is assumed by the
successor corporation (or parent thereof) in the Corporate Transaction and the
Corporation's repurchase rights with respect to the unvested Option Shares are
assigned to such successor corporation (or parent thereof) or (ii) this 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 (the excess of the Fair Market Value of those Option
Shares over the Exercise Price payable for such shares) and provides for
subsequent payout in accordance with the same Vesting Schedule applicable to
those unvested Option Shares as set forth in the Grant Notice.

                                       7
<PAGE>   22

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

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

            D. The Option Shares may also vest upon an accelerated basis in
accordance with the terms and conditions of any special addendum attached to
this Agreement.

            E. This Agreement shall not in any 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.

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

      VII.  Shareholder Rights. THE HOLDER OF THIS OPTION SHALL NOT HAVE ANY
            SHAREHOLDER RIGHTS WITH RESPECT TO THE OPTION SHARES UNTIL SUCH
            PERSON SHALL HAVE EXERCISED THE OPTION, PAID THE EXERCISE PRICE AND
            BECOME THE RECORD HOLDER OF THE PURCHASED SHARES.

      VIII. Manner of Exercising Option.

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

                  1.    Execute and deliver to the Corporation a Purchase
Agreement for the Option Shares for which the option is exercised.

                  2.    Pay the aggregate Exercise Price for the purchased
                        shares in one or more of the following forms:

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

                        (ii)  a promissory note payable to the Corporation, but
      only to the extent authorized by the Plan Administrator in accordance with
      Paragraph 14.

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

                                       8
<PAGE>   23

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

                        (iv)  to the extent the option is exercised for vested
      Option Shares, through a special sale and remittance procedure pursuant to
      which Optionee (or any other person or persons exercising the option)
      shall concurrently provide irrevocable instructions (a) to 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) to 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 the sale and remittance procedure is
            utilized in connection with the option exercise, payment of the
            Exercise Price must accompany the Purchase Agreement delivered to
            the Corporation in connection with the option exercise.

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

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

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

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

            C. In no event may this option be exercised for any fractional
shares.

      IX.   REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF
            THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION
            AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE
            TERMS SPECIFIED IN THE PURCHASE AGREEMENT.

      X.    Compliance with Laws and Regulations.

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

                                       9
<PAGE>   24

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

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

      XI.   Notices. ANY NOTICE REQUIRED TO BE GIVEN OR DELIVERED TO THE
            CORPORATION UNDER THE TERMS OF THIS AGREEMENT SHALL BE IN WRITING
            AND ADDRESSED TO THE CORPORATION AT ITS PRINCIPAL CORPORATE OFFICES.
            ANY NOTICE REQUIRED TO BE GIVEN OR DELIVERED TO OPTIONEE SHALL BE IN
            WRITING AND ADDRESSED TO OPTIONEE AT THE ADDRESS INDICATED BELOW
            OPTIONEE'S SIGNATURE LINE ON THE GRANT NOTICE. ALL NOTICES SHALL BE
            DEEMED EFFECTIVE UPON PERSONAL DELIVERY OR UPON DEPOSIT IN THE U.S.
            MAIL, POSTAGE PREPAID AND PROPERLY ADDRESSED TO THE PARTY TO BE
            NOTIFIED.

      XII.  Financing. THE PLAN ADMINISTRATOR MAY, IN ITS ABSOLUTE DISCRETION
            AND WITHOUT ANY OBLIGATION TO DO SO, PERMIT OPTIONEE TO PAY THE
            EXERCISE PRICE FOR THE PURCHASED OPTION SHARES BY DELIVERING A
            FULL-RECOURSE, INTEREST-BEARING PROMISSORY NOTE SECURED BY THOSE
            OPTION SHARES. THE PAYMENT SCHEDULE IN EFFECT FOR ANY SUCH
            PROMISSORY NOTE SHALL BE ESTABLISHED BY THE PLAN ADMINISTRATOR IN
            ITS SOLE DISCRETION.

      XIII. Construction. THIS AGREEMENT AND THE OPTION EVIDENCED HEREBY ARE
            MADE AND GRANTED PURSUANT TO THE PLAN AND ARE IN ALL RESPECTS
            LIMITED BY AND SUBJECT TO THE TERMS OF THE PLAN. ALL DECISIONS OF
            THE PLAN ADMINISTRATOR WITH RESPECT TO ANY QUESTION OR ISSUE ARISING
            UNDER THE PLAN OR THIS AGREEMENT SHALL BE CONCLUSIVE AND BINDING ON
            ALL PERSONS HAVING AN INTEREST IN THIS OPTION.

      XIV.  Governing Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF
            THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
            CALIFORNIA WITHOUT RESORT TO THAT STATE'S CONFLICT-OF-LAWS RULES.

      XV.   Shareholder Approval. IF THE OPTION SHARES COVERED BY THIS AGREEMENT
            EXCEED, AS OF THE GRANT DATE, THE NUMBER OF SHARES OF COMMON STOCK
            WHICH MAY BE ISSUED UNDER THE PLAN AS LAST APPROVED BY THE
            SHAREHOLDERS, THEN THIS OPTION SHALL BE VOID WITH RESPECT TO SUCH
            EXCESS SHARES, UNLESS SHAREHOLDER APPROVAL OF AN AMENDMENT
            SUFFICIENTLY INCREASING THE NUMBER OF SHARES OF COMMON STOCK
            ISSUABLE UNDER THE PLAN IS OBTAINED IN ACCORDANCE WITH THE
            PROVISIONS OF THE PLAN.

      XVI.  Additional Terms Applicable to an Incentive Option. IN THE EVENT
            THIS OPTION IS DESIGNATED AN INCENTIVE OPTION IN THE GRANT NOTICE,
            THE FOLLOWING TERMS AND CONDITIONS SHALL ALSO APPLY TO THE GRANT:

            A. This option shall cease to qualify for favorable tax treatment as
an Incentive Option if (and to the extent) this option is exercised for one or
more Option Shares: (i) more

                                       10
<PAGE>   25

than three (3) months after the date Optionee ceases to be an Employee for any
reason other than death or Permanent Disability or (ii) more than twelve (12)
months after the date Optionee ceases to be an Employee by reason of Permanent
Disability.

            B. This option shall not become exercisable in the calendar year in
which granted if (and to the extent) the aggregate Fair Market Value (determined
at the Grant Date) of the Common Stock for which this option would otherwise
first become exercisable in such calendar year would, when added to the
aggregate value (determined as of the respective date or dates of grant) of the
Common Stock and any other securities for which one or more other Incentive
Options granted to Optionee prior to the Grant Date (whether under the Plan or
any other option plan of the Corporation or any Parent or Subsidiary) first
become exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. To the extent the exercisability of this
option is deferred by reason of the foregoing limitation, the deferred portion
shall become exercisable in the first calendar year or years thereafter in which
the One Hundred Thousand Dollar ($100,000) limitation of this Paragraph 18(b)
would not be contravened, but such deferral shall in all events end immediately
prior to the effective date of a Corporate Transaction in which this option is
not to be assumed, whereupon the option shall become immediately exercisable as
a Non-Statutory Option for the deferred portion of the Option Shares.

            C. Should Optionee hold, in addition to this option, one or more
other options to purchase Common Stock which become exercisable for the first
time in the same calendar year as this option, then the foregoing limitations on
the exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

                                       11
<PAGE>   26

                                    APPENDIX

            The following definitions shall be in effect under the Agreement:

AGREEMENT shall mean this Stock Option Agreement.

BOARD shall mean the Corporation's Board of Directors.

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

COMMON STOCK shall mean the Corporation's common stock.

CORPORATE TRANSACTION shall mean either of the following shareholder-approved
transactions to which the Corporation is a party:

            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

            the sale, transfer or other disposition of all or substantially all
of the Corporation's assets in complete liquidation or dissolution of the
Corporation.

CORPORATION shall mean Cyras Systems, Inc., a Delaware corporation

DISABILITY shall mean the inability of Optionee to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment and shall be determined by the Plan Administrator on the basis of
such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute PERMANENT DISABILITY in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.

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.

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

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

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

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

                                      A-1.
<PAGE>   27

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

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

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

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

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

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

MISCONDUCT shall mean the commission of any act of fraud, embezzlement or
dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee 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 Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).

                                      A-2.
<PAGE>   28

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

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

OPTION SHARES shall mean the number of shares of Common Stock subject to the
option.

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

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.

PLAN shall mean the Corporation's 1998 Stock Plan.

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

PURCHASE AGREEMENT shall mean the stock purchase agreement in substantially the
form of Exhibit B to the Grant Notice.

SERVICE shall mean the Optionee's performance of services for the Corporation
(or any Parent or Subsidiary) in the capacity of an Employee, a non-employee
member of the board of directors or an independent consultant.

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

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.

VESTING SCHEDULE shall mean the vesting schedule specified in the Grant Notice
pursuant to which the Optionee is to vest in the Option Shares in a series of
installments over his or her period of Service.

                                      A-3.
<PAGE>   29

                                    ADDENDUM
                                       TO
                             STOCK OPTION AGREEMENT

            The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Stock Option Agreement (the "Option
Agreement") by and between Cyras Systems, Inc. (the "Corporation") and
{{Optionee}} ("Optionee") evidencing the stock option (the "Option") granted on
this date to Optionee under the terms of the Corporation's 1998 Stock
Option/Stock Issuance Plan, and such provisions shall be effective immediately.
All capitalized terms in this Addendum, to the extent not otherwise defined
herein, shall have the meanings assigned to them in the Option Agreement.

                        INVOLUNTARY TERMINATION FOLLOWING
                              CORPORATE TRANSACTION

   ARTICLE EIGHT To the extent the Option is, in connection with a Corporate
    Transaction, to be assumed in accordance with Paragraph 6 of the Option
Agreement, none of the Option Shares shall vest on an accelerated basis upon the
    occurrence of that Corporate Transaction, and Optionee shall accordingly
continue, over his or her period of Service following the Corporate Transaction,
to vest in the Option Shares in one or more installments in accordance with the
provisions of the Option Agreement. However, upon an Involuntary Termination of
   Optionee's Service within twenty-four (24) months following such Corporate
   Transaction, all the Option Shares at the time subject to the Option shall
  automatically vest in full on an accelerated basis so that the Option shall
immediately become exercisable for all the Option Shares as fully-vested shares
and may be exercised for any or all of those Option Shares as vested shares. The
Option shall remain so exercisable until the earlier of (i) the Expiration Date
or (ii) the expiration of the one (1)-year period measured from the date of the
                            Involuntary Termination.

  ARTICLE NINE For purposes of this Addendum, an INVOLUNTARY TERMINATION shall
            mean the termination of Optionee's Service by reason of:

                                      A-4.
<PAGE>   30

      I.    OPTIONEE'S INVOLUNTARY DISMISSAL OR DISCHARGE BY THE CORPORATION FOR
            REASONS OTHER THAN FOR MISCONDUCT, OR

      II.   OPTIONEE'S VOLUNTARY RESIGNATION FOLLOWING (A) A CHANGE IN
            OPTIONEE'S POSITION WITH THE CORPORATION (OR PARENT OR SUBSIDIARY
            EMPLOYING OPTIONEE) WHICH MATERIALLY REDUCES OPTIONEE'S DUTIES AND
            RESPONSIBILITIES OR THE LEVEL OF MANAGEMENT TO WHICH HE OR SHE
            REPORTS, (B) A REDUCTION IN OPTIONEE'S LEVEL OF COMPENSATION
            (INCLUDING BASE SALARY, FRINGE BENEFITS AND TARGET BONUSES UNDER ANY
            CORPORATE-PERFORMANCE BASED INCENTIVE PROGRAMS) BY MORE THAN FIFTEEN
            PERCENT (15%) OR (C) A RELOCATION OF OPTIONEE'S PLACE OF EMPLOYMENT
            BY MORE THAN FIFTY (50) MILES, PROVIDED AND ONLY IF SUCH CHANGE,
            REDUCTION OR RELOCATION IS EFFECTED BY THE CORPORATION WITHOUT
            OPTIONEE'S CONSENT.

  ARTICLE TEN The provisions of Paragraph 1 of this Addendum shall govern the
 period for which the Option is to remain exercisable following the Involuntary
   Termination of Optionee's Service within twenty-four (24) months after the
  Corporate Transaction and shall supersede any provisions to the contrary in
Paragraph 5 of the Option Agreement. The provisions of this Addendum shall also
supersede any provisions to the contrary in Paragraph 18 of the Option Agreement
             concerning the deferred exercisability of the Option.

            IN WITNESS WHEREOF, Cyras Systems, Inc. has caused this Addendum to
be executed by its duly-authorized officer as of the Option Grant Date specified
below.

                                    CYRAS SYSTEMS, INC.

                                    By:
                                       ---------------------------------------

                                    Title:
                                          ------------------------------------

OPTION GRANT DATE: {{GRANTDATE}}

                                      A-5.
<PAGE>   31

                                    ADDENDUM
                                       TO
                            STOCK PURCHASE AGREEMENT

            The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Stock Purchase Agreement (the "Purchase
Agreement") by and between Cyras Systems, Inc. (the "Corporation") and
{{Optionee}} ("Optionee") evidencing the shares of Common Stock purchased on
this date by Optionee pursuant to the option granted to him or her under the
Corporation's 1998 Stock Option/Stock Issuance Plan, and such provisions shall
be effective immediately. All capitalized terms in this Addendum, to the extent
not otherwise defined herein, shall have the meanings assigned to such terms in
the Purchase Agreement.

                        INVOLUNTARY TERMINATION FOLLOWING
                              CORPORATE TRANSACTION

 ARTICLE ELEVEN To the extent the Repurchase Right is assigned to the successor
 corporation (or parent thereof) in connection with a Corporate Transaction, no
  accelerated vesting of the Purchased Shares shall occur upon such Corporate
Transaction, and the Repurchase Right shall continue to remain in full force and
  effect in accordance with the provisions of the Purchase Agreement. Optionee
 shall, over his or her period of Service following the Corporate Transaction,
    continue to vest in the Purchased Shares in one or more installments in
   accordance with the provisions of the Purchase Agreement. However, upon an
  Involuntary Termination of Optionee's Service within twenty-four (24) months
   following the Corporate Transaction, the Repurchase Right shall terminate
 automatically, and all the Purchased Shares shall immediately vest in full at
                                   that time.

ARTICLE TWELVE For purposes of this Addendum, the following definitions shall be
                                   in effect:

            An INVOLUNTARY TERMINATION shall mean the termination of Optionee's
Service by reason of:

                                      A-6.
<PAGE>   32

            A. Optionee's involuntary dismissal or discharge by the Corporation
for reasons other than for Misconduct, or

            B. Optionee's voluntary resignation following (A) a change in his or
her position with the Corporation (or Parent or Subsidiary employing Optionee)
which materially reduces Optionee's duties and responsibilities or the level of
management to which he or she reports, (B) a reduction in Optionee's level of
compensation (including base salary, fringe benefits and target bonuses under
any corporate-performance based incentive programs) by more than fifteen percent
(15%) or (C) a relocation of Optionee's place of employment by more than fifty
(50) miles, provided and only if such change, reduction or relocation is
effected by the Corporation without Optionee's consent.

            MISCONDUCT shall mean the termination of Optionee's Service by
reason of Optionee's commission of any act of fraud, embezzlement or dishonesty,
any unauthorized use or disclosure by Optionee of confidential information or
trade secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by Optionee 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 Optionee or any other individual in
the Service of the Corporation (or any Parent or Subsidiary).

            IN WITNESS WHEREOF, Cyras Systems, Inc. has caused this Addendum
to be executed by its duly-authorized officer.

                                          CYRAS SYSTEMS, INC.

                                          By:
                                             -----------------------------------

                                          Title:
                                                --------------------------------

                                      A-7.
<PAGE>   33

                               CYRAS SYSTEMS, INC.

                                 1998 STOCK PLAN

                                 PLAN AMENDMENT

      The Cyras Systems, Inc. 1998 Stock Plan is hereby amended, effective
December 18, 2000 as follows:

      1.    Section III of Article Two Section III is hereby amended in its
entirety to read as follows:

            III.  CORPORATE TRANSACTION

            C. The shares subject to each option outstanding under the Plan at
the time of a Corporate Transaction shall automatically vest 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 that option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock. However, the shares subject to an
outstanding option shall NOT vest on such an accelerated basis if and to the
extent: (i) such option is to be assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and any repurchase rights of the
Corporation with respect to the unvested option shares are concurrently to be
assigned to such successor corporation (or parent thereof) or (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 unvested option shares or (iii)
the acceleration of such option is subject to other terms or limitations imposed
by the Plan Administrator at the time of the option grant. Notwithstanding the
foregoing, if an outstanding option is assumed in accordance with clause (i)
above or replaced with a cash incentive program in accordance with clause (ii)
above in a Corporate Transaction, other than a Corporate Transaction by which
the Corporation is acquired by CIENA Corporation, then the optionee holding that
option shall immediately be credited with an additional twelve (12) months of
Service for purposes of applying the vesting schedule in effect for the shares
subject to the option, and the option shares which vest on the basis of such
Service credit shall be deemed to be the option shares which would have
otherwise last vested under that vesting schedule. The remaining option shares
shall continue to vest in accordance with the installment provisions of the
vesting schedule in effect for the option immediately prior to the Corporate
Transaction. Such twelve (12)-month service credit, while not applicable to any
Corporate Transaction by which the Corporation is acquired by CIENA Corporation,
shall be in effect for any Corporate Transaction by which CIENA Corporation is
acquired following its acquisition of the Corporation.

                                      A-8.
<PAGE>   34

            D. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other terms or limitations imposed
by the Plan Administrator at the time the repurchase right is issued.
Notwithstanding the foregoing, if the Corporation's repurchase rights are to be
assigned to the successor entity in such Corporate Transaction, other than the
assignment of the repurchase rights to CIENA Corporation in connection with a
Corporate Transaction by which the Corporation is acquired by CIENA Corporation,
each holder of the shares subject to the assigned repurchase rights shall
immediately be credited with an additional twelve (12) months of Service under
the vesting schedule in effect for those shares. The unvested shares which vest
on the basis of such Service credit shall be deemed to be the shares which would
have otherwise last vested under that vesting schedule, and the remaining
unvested shares shall continue to vest in accordance with installment provisions
of the vesting schedule in effect for those shares immediately prior to the
Corporate Transaction. Such twelve (12)-month service credit, while not
applicable to any Corporate Transaction by which the Corporation is acquired by
CIENA Corporation, shall be in effect for any Corporate Transaction by which
CIENA Corporation is acquired following its acquisition of the Corporation.

            E. 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).

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

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

            H. The Plan Administrator shall also have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to structure such option so that the shares subject
to that option will automatically vest on an accelerated basis should the
Optionee's Service terminate by reason of an Involuntary Termination within a
designated period (not to exceed twenty-four (24) months) following the
effective date of any Corporate Transaction in which the option is assumed and
the repurchase

                                      A-9.
<PAGE>   35

rights applicable to those shares do not otherwise terminate. Any option so
accelerated shall remain exercisable for the fully-vested option 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 on an accelerated
basis, and the shares subject to those terminated rights shall accordingly vest
at that time.

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

            J. The grant of options under the Plan 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.

      2.    Article Three Section II is hereby amended in its entirety to
read as follows:

            II.   CORPORATE TRANSACTION

            A. Upon the occurrence of a Corporate Transaction, all outstanding
repurchase rights under the Stock Issuance Program shall terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, except to the extent: (i) those repurchase
rights are assigned to the successor 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. Notwithstanding the foregoing, if the repurchase
rights are to be assigned to the successor entity in such Corporate Transaction,
other than the assignment of the repurchase rights to CIENA Corporation in
connection with a Corporate Transaction by which the Corporation is acquired by
CIENA Corporation, each holder of the shares subject to the assigned repurchase
rights shall immediately be credited with an additional twelve (12) months of
Service under the vesting schedule in effect for those shares. The unvested
shares which vest on the basis of such Service credit shall be deemed to be the
shares which would have otherwise last vested under that vesting schedule, and
the remaining unvested shares shall continue to vest in accordance with
installment provisions of the vesting schedule in effect for those shares
immediately prior to the Corporate Transaction. Such twelve (12)-month service
credit, while not applicable to any Corporate Transaction by which the
Corporation is acquired by CIENA Corporation, shall be in effect for any
Corporate Transaction by which CIENA Corporation is acquired following its
acquisition of the Corporation.

            B.    The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase rights with respect to those shares remain
outstanding, to provide that those rights shall automatically terminate on an
accelerated basis, and the shares of Common Stock subject to

                                      A-10.
<PAGE>   36

those terminated rights shall immediately vest, in the event the Participant's
Service should subsequently terminate by reason of an Involuntary Termination
within a designated period (not to exceed twenty-four (24) months) following the
effective date of any Corporate Transaction in which those repurchase rights are
assigned to the successor corporation (or parent thereof).

      3.    Except as amended hereby, the 1998 Stock Option Plan shall
continue in full force and effect.

      IN WITNESS WHEREOF, Cyras Systems, Inc. has caused this Plan Amendment to
be executed on its behalf by its duly authorized officer on this _________ day
of ____________, 2001.

                                          Cyras Systems, Inc.

                                          By
                                            ---------------------------------

                                          Title
                                               ------------------------------

                                     A-11.

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