1995 Stock Option Plan


                                                                                
                          EXODUS COMMUNICATIONS, INC.

                            1995 STOCK OPTION PLAN

                            As Adopted May 19, 1995

     1.   PURPOSE.  This 1995 Stock Option Plan ('Plan') is established as a
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compensatory plan to attract, retain and provide equity incentives to selected
persons to promote the financial success of Exodus Communications, Inc., a
California corporation (the 'Company').  Capitalized terms not previously
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defined herein are defined in Section 17 of this Plan.

     2.   TYPES OF OPTIONS AND SHARES.  Options granted under this Plan (the
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'Options') may be either (a) incentive stock options ('ISOs') within the meaning
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of Section 422 of the Internal Revenue Code of 1986, as amended (the 'Revenue
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Code'), or (b) nonqualified stock options ('NQSOs'), as designated at the time
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of grant.  The shares of stock that may be purchased upon exercise of Options
granted under this Plan are shares of the common stock of the Company (the
                                                                          
'Shares').
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     3.   NUMBER OF SHARES.  The aggregate number of Shares that may be issued
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pursuant to Options granted under this Plan is 900,000 Shares, subject to
adjustment as provided in this Plan.  If any Option expires or is terminated
without being exercised in whole or in part, the unexercised or released Shares
from such Option shall be available for future grant and purchase under this
Plan.  At all times during the term of this Plan, the Company shall reserve and
keep available such number of Shares as shall be required to satisfy the
requirements of outstanding Options under this Plan.

     4.   ELIGIBILITY. Options may be granted to employees, officers, directors,
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consultants and advisers (provided such consultants and advisers render bona
fide services not in connection with the offer and sale of securities in a
capital-raising transaction) of the Company or any Parent, Subsidiary or
Affiliate of the Company. ISOs may be granted only to employees (including
officers and directors who are also employees) of the Company or a Parent or
Subsidiary of the Company. The Committee (as defined in Section 14) in its sole
discretion shall select the recipients of Options ('Optionees'). An Optionee may
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be granted more than one Option under this Plan. The Company may also, from time
to time, substitute or assume outstanding options granted by another company,
whether in connection with an acquisition of such other company or otherwise, by
either (a) granting an Option under this Plan in replacement of the option
assumed by the Company, or (b) treating the assumed option as if it had been
granted under this Plan if the terms of such assumed option could be applied to
an Option granted under this Plan. Such substitution or assumption shall be
permissible if the holder of the substituted or assumed option would have been
eligible to be granted an Option hereunder if the other company had applied the
rules of this Plan to such grant.

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     5.   TERMS AND CONDITIONS OF OPTIONS. The Committee shall determine whether
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each Option is to be an ISO or an NQSO, the number of Shares subject to the
Option, the exercise price of the Option, the period during which the Option may
be exercised, and all other terms and conditions of the Option, subject to the
following:

          5.1  Form of Option Grant.  Each Option granted under this Plan shall
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be evidenced by a written Stock Option Grant (the 'Grant') in such form (which
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need not be the same for each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.

          5.2  Date of Grant.  The date of grant of an Option shall be the date
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on which the Committee makes the determination to grant such Option unless
otherwise specified by the Committee.  The Grant representing the Option will be
delivered to Optionee with a copy of this Plan within a reasonable time after
the granting of the Option.

          5.3  Exercise Price.  The exercise price of an Option shall be
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determined by the Committee when the Option is granted and may not be less than
100% of the Fair Market Value of the Shares on the date the Option is granted.
The exercise price of any Option granted to a person owning more than 10% of the
total combined voting power of all classes of stock of the Company or any Parent
or Subsidiary of the Company ('Ten Percent Shareholder') shall not be less than
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110% of the Fair Market Value of the Shares on the date the Option is granted.

          5.4  Exercise Period. Options shall be exercisable within the times or
               ---------------
upon the events determined by the Committee as set forth in the Grant; provided,
however, that no Option shall be exercisable after the expiration of ten (10)
years from the date the Option is granted, and provided further that no ISO
granted to a Ten Percent Shareholder shall be exercisable after the expiration
of five (5) years from the date the Option is granted.

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

          5.6  Options Non-Transferable.  Options granted under this Plan, and
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any interest therein, shall not be transferable or assignable by Optionee, and
may not be made subject to execution, attachment or similar process, otherwise
than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I 

                                       2

 
of the Employee Retirement Income Security Act, or the rules thereunder, and
shall be exercisable during the lifetime of Optionee only by Optionee.

          5.7  Assumed Options.  In the event the Company assumes an option
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granted by another company, the terms and conditions of such option shall remain
unchanged (except the exercise price and the number and nature of shares
issuable upon exercise, which will be adjusted appropriately pursuant to Section
424(c) of the Revenue Code).  In the event the Company elects to grant a new
option rather than assuming an existing option (as specified in Section 4), such
new option need not be granted at Fair Market Value on the date of grant and may
instead be granted with a similarly adjusted exercise price.

     6.   EXERCISE OF OPTIONS.
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          6.1  Notice.  Options may be exercised only by delivery to the Company
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of a written stock option exercise agreement (the 'Exercise Agreement') in a
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form approved by the Committee (which need not be the same for each Optionee),
stating the number of Shares being purchased, the restrictions imposed on the
Shares, if any, and such representations and agreements regarding Optionee's
investment intent and access to information, if any, as may be required by the
Company to comply with applicable securities laws, together with payment in full
of the exercise price for the number of Shares being purchased.

          6.2  Payment.  Payment for the Shares may be made in cash (by check)
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or, where approved by the Committee in its sole discretion and where permitted
by law:  (a) by cancellation of indebtedness of the Company to the Optionee; (b)
by surrender of shares of common stock of the Company, free and clear of all
liens, claims, encumbrances and security interests, having a Fair Market Value
equal to the applicable exercise price of the Options that have been owned by
Optionee for more than six (6) months (and which have been paid for within the
meaning of the Securities and Exchange Commission ('SEC') Rule 144 and, if such
                                                    ---                        
Shares were purchased from the Company by use of a promissory note, such note
has been fully paid with respect to such shares), or were obtained by Optionee
in the open public market; (c) by waiver of compensation due or accrued to
Optionee for services rendered; (d) provided that a public market for the
Company's stock exists, through a 'same day sale' commitment from Optionee and a
broker-dealer that is a member of the National Association of Securities Dealers
(a 'NASD Dealer') whereby Optionee irrevocably elects to exercise the Option and
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to sell a portion of the Shares so purchased to pay for the exercise price and
whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company; (e) provided that a public
market for the Company's stock exists, through a 'margin' commitment from
Optionee and a NASD Dealer whereby Optionee irrevocably elects to exercise the
Option and to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of the
exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the exercise price directly to the Company; or (f) by any
combination of the foregoing.

          6.3  Withholding Taxes.  Prior to issuance of the Shares upon exercise
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of an Option, Optionee shall pay or make adequate provision for any federal or
state withholding obligations of the Company, if applicable.  Where approved by
the Committee in its sole

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discretion, Optionee may provide for payment of withholding taxes upon exercise
of the Option by requesting that the Company retain Shares with a Fair Market
Value equal to the minimum amount of taxes required to be withheld.  In such
case, the Company shall issue the net number of Shares to Optionee by deducting
the Shares retained from the Shares exercised.  The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined in accordance with Section 83 of the Revenue
Code (the 'Tax Date').  All elections by Optionees to have Shares withheld for
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this purpose shall be made in writing in a form acceptable to the Committee and
shall be subject to the following restrictions:

(a)  the election must be made on or prior to the applicable Tax Date and, once
     made, the election shall be irrevocable as to the particular Shares as to
     which the election is made; and

(b)  all elections shall be subject to the consent or disapproval of the
     Committee.

In addition, if Optionee is an Insider, and if the Company is subject to Section
16(b) of the Exchange Act, the following shall apply:

(c)  the election may not be made within six (6) months after the date of grant
     of the Option, except as otherwise permitted by Rule 16b-3(e) promulgated
     under Section 16 of the Exchange Act;

(d)  the election must be made either six (6) months prior to the Tax Date or in
     the 10-day period beginning on the third day following the public release
     of the Company's quarterly or annual summary statement of operations; and

(e)  if the Option is exercised within six (6) months after the date of grant
     and the Tax Date is deferred until six (6) months after the date of grant
     of the Option because no election is filed under Section 83(b) of the
     Revenue Code, Optionee shall receive the full number of Shares with respect
     to which the Option is exercised, but Optionee shall be unconditionally
     obligated to tender back to the Company the proper number of Shares on the
     Tax Date.

          6.4  Limitations on Exercise. Notwithstanding the exercise periods set
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forth in the Grant, exercise of an Option shall always be subject to the
following:

               6.4.1  If Optionee ceases to be employed by the Company or any
Parent, Subsidiary or Affiliate of the Company for any reason except death or
Disability, Optionee may exercise such Optionee's Options to the extent (and
only to the extent) that they would have been exercisable upon the date of
termination, within ninety (90) days after the date of termination (or such
shorter time period as may be specified in the Grant);

               6.4.2  If Optionee is an Insider and the Company is subject to
Section 16(b) of the Exchange Act and Optionee ceases to be employed by the
Company, Optionee's Option will remain exercisable, to the extent (and only to
the extent) that it was exercisable on the date of termination, until the later
of (a) the last date such Option would be exercisable under Section 6.4.1 or
6.4.3, as applicable, or (b) the end of the thirty (30) day period commencing on
the date

                                       4

 
six (6) months after the grant of such Option, with any extension beyond ninety
(90) days after termination of employment deemed to be as an NQSO, and provided
further that in no event may an Option be exercisable later than the expiration
date of the Option;

               6.4.3  If Optionee's employment with the Company or any Parent,
Subsidiary or Affiliate of the Company is terminated because of the death or
Disability of Optionee, Optionee's Options may be exercised to the extent (and
only to the extent) that they would have been exercisable by Optionee on the
date of termination, by Optionee (or Optionee's legal representative) within
twelve (12) months after the date of termination (or such shorter time period of
no less than six (6) months as may be specified in the Grant), but in any event
no later than the expiration date of the Options.

               6.4.4  The Committee shall have discretion to determine whether
Optionee has ceased to be employed by the Company or any Parent, Subsidiary or
Affiliate of the Company, whether or not such cessation was due to Disability,
and the effective date on which such employment terminated.

               6.4.5  In the case of an Optionee who is a director, consultant
or adviser, the Committee will have the discretion to determine whether Optionee
is 'employed by the Company or any Parent, Subsidiary or Affiliate of the
Company' pursuant to the foregoing Sections.

               6.4.6  The Committee may specify a reasonable minimum number of
Shares that may be purchased on any exercise of an Option, provided that such
minimum number will not prevent Optionee from exercising the full number of
Shares as to which the Option is then exercisable.

               6.4.7  An Option shall not be exercisable unless such exercise is
in compliance with all applicable federal and state securities laws, rules and
regulations of any governmental body and the requirements of any stock exchange
or national market system upon which the Shares may then be listed, as they are
in effect on the date of exercise. The Company shall be under no obligation to
register the Shares with the SEC or to effect compliance with the registration,
qualification or listing requirements of any other securities laws, stock
exchange or national market system, and the Company shall have no liability for
any inability or failure to do so.

     7.   RESTRICTIONS ON SHARES.  At the discretion of the Committee, the
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Company may reserve to itself and/or its assignee(s) in the Grant (a) a right of
first refusal to purchase all Shares that an Optionee (or a subsequent
transferee) may propose to transfer to a third party and/or (b) a right to
repurchase a portion of or all Shares held by an Optionee upon Optionee's
termination of employment or service with the Company or a Parent, Subsidiary or
Affiliate of the Company, for any reason within a specified time as determined
by the Committee at the time of grant at Optionee's original purchase price, the
Fair Market Value of such Shares or a price determined by a formula or other
provision set forth in the Grant.

     8.   MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS.  The Committee shall
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have the power to modify, extend or renew outstanding Options and to authorize
the grant of new Options 

                                       5

 
in substitution therefor, provided that any such action may not, without the
written consent of Optionee, impair any rights under any Option previously
granted. Any outstanding ISO that is modified, extended, renewed or otherwise
altered shall be treated in accordance with Section 424(h) of the Revenue Code.
The Committee shall have the power to reduce the exercise price of outstanding
Options without the consent of Optionees by a written notice to the Optionees
affected; provided, however, that the exercise price per Share may not be
reduced below the minimum exercise price that would be permitted under Section
5.3 of this Plan for Options granted on the date the action is taken to reduce
the exercise price; and provided further that the exercise price may not be
reduced below the par value of the Shares.

     9.   STOCK OWNERSHIP; FINANCIAL STATEMENTS.  No Optionee shall have any of
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the rights of a shareholder with respect to any Shares subject to an Option
until such Option is properly exercised.  No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
such date, except as provided in this Plan.  However, the Company shall provide
to each Optionee, annually during the period for which he has one or more
Options outstanding, copies of the financial statements of the Company,
consisting of, at a minimum, a balance sheet and an income statement, at such
time after the close of each fiscal year of the Company as such statements are
released by the Company to its shareholders.  The Company shall not be required
to provide such information to key employees whose duties in connection with the
Company assume their access to equivalent information.

     10.  NO OBLIGATION TO EMPLOY.  Nothing in this Plan or any Option granted
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under this Plan shall confer on any Optionee any right to continue in the employ
of, or other relationship with, the Company or any Parent, Subsidiary or
Affiliate of the Company or limit in any way the right of the Company or any
Parent, Subsidiary or Affiliate of the Company to terminate Optionee's
employment or other relationship at any time, with or without cause.

     11.  ADJUSTMENT OF OPTION SHARES.  In the event that the number of
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outstanding shares of common stock of the Company is changed by a stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company
without consideration, or if a substantial portion of the assets of the Company
are distributed, without consideration in a spin-off or similar transaction, to
the share holders of the Company, the number of Shares available under this Plan
and the number of Shares subject to outstanding Options and the exercise price
per Share of such Options shall be proportionately adjusted, subject to any
required action by the Board of Directors (the 'Board') or shareholders of the
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Company and compliance with applicable securities laws; provided, however, that
a fractional share shall not be issued upon exercise of any Option and any
fractions of a Share that would have resulted shall either be cashed out at Fair
Market Value or the number of Shares issuable under the Option shall be rounded
up to the nearest whole number, as determined by the Committee; and provided
further that the exercise price may not be decreased to below the par value, if
any, for the Shares.

     12.  ASSUMPTION OF OPTIONS BY SUCCESSORS.
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          12.1  Assumption or Substitution.  In the event of (a) a merger or
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consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a 

                                       6

 
wholly owned subsidiary, a reincorporation, or other transaction in which there
is no substantial change in the shareholders of the corporation and the Options
granted under this Plan are assumed or replaced by the successor corporation,
which assumption shall be binding on all Optionees), (b) a dissolution or
liquidation of the Company, (c) the sale of substantially all of the assets of
the Company, or (d) any other transaction which qualifies as a 'corporate
transaction' under Section 424(a) of the Revenue Code wherein the shareholders
of the Company give up all of their equity interest in the Company (except for
the acquisition, sale or transfer of all or substantially all of the outstanding
shares of the Company), any or all outstanding Options may be assumed or
replaced by the successor corporation, which assumption shall be binding on all
Optionees. In the alternative, the successor corporation may substitute an
equivalent option or provide substantially similar consideration to Optionees as
was provided to shareholders (after taking into account the existing provisions
of Optionee's options, such as the exercise price and the vesting schedule). The
successor corporation may also issue, in place of outstanding shares of the
Company held by Optionee as a result of the exercise of an Option that is
subject to repurchase, substantially similar shares or other property subject to
similar repurchase restrictions no less favorable to Optionee.

          12.2  Expiration.  In the event such successor corporation, if any,
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refuses to assume or substitute Options, as provided above, pursuant to a
transaction described in Sections 12.1 above, or there is no successor
corporation, and if the Company is ceasing to exist as a separate corporate
entity, the Options shall, notwithstanding any contrary terms in the Grant,
expire on (and, in the case of a merger or consolidation described in Subsection
12.1(a) above, if the Company has reserved to itself a right to repurchase
Shares issued on exercise of Options at the original purchase price of such
Shares, such right shall terminate on), a date at least 20 days after the Board
gives written notice to Optionees specifying the terms and conditions of such
termination.

          12.3  Additional Provisions.  Subject to the foregoing provisions of
                ---------------------                                         
this Section 12, in the event of the occurrence of any transaction described in
Section 12.1, any outstanding Option shall be treated as provided in the
applicable agreement or plan of merger, consolidation, dissolution, liquidation,
sale of assets or other 'corporate transaction'.

     13.  ADOPTION AND SHAREHOLDER APPROVAL. This Plan shall become effective on
          ---------------------------------
the date that it is adopted by the Board of the Company. This Plan shall be
approved by the shareholders of the Company, in any manner permitted by
applicable corporate law, within twelve months before or after the date this
Plan is adopted by the Board. Upon the effective date of the Plan, the Board may
grant Options pursuant to this Plan; provided that, in the event that
shareholder approval is not obtained within the time period provided herein, all
Options granted hereunder shall terminate. No Option that is issued as a result
of any increase in the number of shares authorized to be issued under this Plan
shall be exercised prior to the time such increase has been approved by the
shareholders of the Company and all such Options granted pursuant to such
increase shall similarly terminate if such shareholder approval is not obtained.
After the Company becomes subject to Section 16(b) of the Exchange Act, the
Company will comply with the requirements of Rule 16b-3 with respect to
shareholder approval.

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     14.  ADMINISTRATION.  This Plan may be administered by the Board or a
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committee appointed by the Board (the 'Committee').  As used in this Plan,
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references to the 'Committee' shall mean either the committee appointed by the
Board to administer this Plan or the Board if no committee has been established.

          14.1  Composition of the Committee.  If, after the Company registers
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under the Exchange Act, two or more members of the Board are Outside Directors,
the Committee will be comprised of at least two members of the Board, all of
whom are Outside Directors and Disinterested Persons.  The Company will take
appropriate steps to comply with the disinterested administration by the Board
of a Committee consisting of not less than two members of the Board, each of
whom is a Disinterested Person.

          14.2  Committee Authority.  the Committee is authorized, without
                -------------------                                       
limitation, to:

(a)  construe and interpret the Plan, any Grant and any other agreement or
     document executed pursuant to the Plan;

(b)  prescribe, amend and rescind rules and regulations relating to the Plan;

(c)  select persons to receive Options;

(d)  determine the form and term of Options;

(e)  determine the number of Shares subject to Options;

(f)  grant waivers of Plan or Option conditions;

(g)  determine the vesting and exercisability of Options;

(h)  correct any defect, supply any omission, or reconcile any inconsistency in
     the Plan or any other agreement or document executed or distributed in
     connection with the Plan;

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

          14.3  Committee Interpretation Binding.  Any interpretation or
                --------------------------------                        
determination made by the Committee with respect to any of the provisions of
this Plan or any Option granted under this Plan shall be made in its sole
discretion and shall be final and binding upon the Company and all persons
having an interest in any Option or any Shares purchased pursuant to an Option.

     15.  TERM OF PLAN.  Options may be granted pursuant to this Plan from time
          ------------                                                         
to time within a period of ten (10) years after the date on which this Plan is
adopted by the Board.

     16.  AMENDMENT OR TERMINATION OF PLAN.  The Committee may at any time
          --------------------------------                                
terminate or amend this Plan in any respect including (but not limited to)
amendment of any form of grant, exercise agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Committee shall not, without
the approval of the shareholders of the Company, amend this Plan in any manner
that requires such shareholder approval pursuant to the Revenue Code or the

                                       8

 
regulations promulgated thereunder as such provisions apply to ISO plans or
pursuant to the Exchange Act or Rule 16b-3 (or its successor) promulgated
thereunder.

     17.  CERTAIN DEFINITIONS.  As used in this Plan, the following terms shall
          -------------------                                                  
have the following meanings:

          17.1  'Affiliate' means any corporation that directly, or indirectly
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through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where 'control' (including the terms
'controlled by' and 'under common control with') means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.

          17.2  'Disability' shall mean the inability of the Optionee to engage
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in employment with the Company by reason of any medically determinable physical
or mental impairment.

          17.3  'Disinterested Person' shall have the meaning set forth in Rule
                 --------------------                                          
16b-3(c)(2) as promulgated by the SEC under Section 16(b) of the Exchange Act,
as such rule is amended from time to time and as interpreted by the SEC.

          17.4  'Fair Market Value' shall mean the fair market value of the
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Shares as determined by the Committee from time to time in good faith.  If a
public market exists for the Shares, the Fair Market Value shall be the average
of the last reported bid and asked prices for common stock of the Company on the
last trading day prior to the date of determination (or the average closing
price over the number of consecutive working days preceding the date of
determination as the Committee shall deem appropriate) or, in the event the
common stock of the Company is listed on a stock exchange or on the NASDAQ
National Market System, the Fair Market Value shall be the closing price on such
exchange or quotation system on the last trading day prior to the date of
determination (or the average closing price over the number of consecutive
working days preceding the date of determination as the Committee shall deem
appropriate).

          17.5  'Insider' shall mean an Optionee who is not an officer or
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director of the Company or other person whose transactions in the Company or
other person whose transactions in the Company's Common Stock are subject to
Section 16(b) of the Exchange Act.

          17.6  'Outside Director' shall mean any director who is not (a) a
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current employee of the Company or any Parent, Subsidiary or Affiliate of the
Company, (b) a former employee of the Company or any Parent, Subsidiary or
Affiliate of the Company who is receiving compensation for prior services (other
than benefits under a tax-qualified pension plan), (c) a current or former
officer of the Company or any Parent, Subsidiary or Affiliate of the Company or
(d) a person currently receiving compensation for personal services in any
capacity, other than as a director, from the Company or any Parent, Subsidiary
or Affiliate of the Company; provided, however, that at such time as the term
'Outside Director,' as used in Section 162(m) of the Revenue Code is defined in
regulations promulgated under such Section, 'Outside Director' shall 

                                       9

 
have the meaning set forth in such regulations, as amended from time to time and
as interpreted by the Internal Revenue Service.

          17.7  'Parent' means any corporation (other than the Company) in an
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unbroken chain of corporations ending with the Company if, at the time of the
granting of the Option, each of such corporations other than the Company owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.

          17.8  'Subsidiary' means any corporation (other than the Company) in
                 ----------   
an unbroken chain of corporations beginning with the Company if, at the time of
granting of the Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

                        ______________________________

                                 (END OF PLAN)

                                       10

 
                          EXODUS COMMUNICATIONS, INC.
                                        
                              STOCK OPTION GRANT

                                        
Optionee:                          ______________________________________

Address:                           ______________________________________

                                   ______________________________________

Total Shares Subject to Option:    ______________________________________

Exercise Price per Share:          ______________________________________

Date of Grant:                     ______________________________________

Vesting Commencement Date:         ______________________________________

Expiration Date:                   ______________________________________

Type of Option:                         [_]  Incentive Stock Option
                                        [_] Nonqualified Stock Option

     1.  GRANT OF OPTION.  Exodus Communications, Inc., a California corporation
         ---------------                                                        
(the 'Company'), hereby grants to the optionee named above ('Optionee') an
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option (this 'Option') to purchase the total number of shares of common stock of
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the Company, no par value, set forth above (the 'Shares') at the exercise price
                                                 ------                        
per share set forth above (the 'Exercise Price'), subject to all of the terms
                                --------------                               
and conditions of this Stock Option Grant (this 'Grant') and the Company's 1995
                                                 -----                         
Stock Option Plan, as amended to the date hereof (the 'Plan').  If designated as
                                                       ----                     
an Incentive Stock Option above, this Option is intended to qualify as an
'incentive stock option' ('ISO') within the meaning of Section 422 of the
                           ---                                           
Internal Revenue Code of 1986, as amended (the 'Revenue Code').  Unless
                                                ------------           
otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to them in the Plan.

     2.  EXERCISE PERIOD OF OPTION.  Subject to the terms and conditions of the
         -------------------------                                             
Plan and this Grant, this Option shall become exercisable as to portions of the
Shares as follows:  (a) This Option shall not be exercisable with respect to any
of the Shares until the expiration of six (6) months from the Vesting
Commencement Date or ____________________, 199____ (the 'First Vesting Date');
                                                         ------------------   
(b) if Optionee has been continuously employed by the Company within the meaning
of Section 4 below at all times during the time period beginning on the Vesting
Commencement Date set forth above and ending on the First Vesting Date, then on
the First Vesting Date this Option shall become exercisable as to Twelve percent
(12%) of the Shares; and (c) thereafter this Option shall become exercisable as
to an additional Two percent (2%) of the Shares upon the 

                                       1

 
                                                     Exodus Communications, Inc.
                                                              Stock Option Grant


expiration of each full calendar month for the next succeeding Forty-four (44)
months provided that Optionee has remained continuously employed by the Company
at all times during the relevant month; provided that Optionee shall in no event
                                        --------
be entitled under this Option to purchase a number of shares of the Company's
common stock greater than the 'Total Shares Subject to Option' indicated above.
Notwithstanding anything herein to the contrary, this Option shall expire on the
Expiration Date set forth above and must be exercised, if at all, on or before
the Expiration Date; and provided further that this Option must become
exercisable as to at least 20% of the Shares for each full year since the Date
of Grant.

     3.  RESTRICTION ON EXERCISE.  This Option may not be exercised unless such
         -----------------------                                               
exercise is in compliance with the Securities Act and all applicable state
securities laws as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's common stock may be listed at the time of exercise.  Optionee
understands that the Company is under no obligation to register, qualify or list
the Shares with the SEC, any state securities commission or any stock exchange
to effect such compliance.

     4.  TERMINATION OF OPTION.  Except as provided below in this Section, this
         ---------------------                                                 
Option shall terminate and may not be exercised if Optionee ceases to be
employed by the Company or any Parent or Subsidiary of the Company (or, in the
case of a nonqualified stock option, an Affiliate of the Company).  Optionee
shall be considered to be employed by the Company for all purposes under Section
2 and this Section 4 if Optionee is an officer, director or full-time employee
of the Company or any Parent or Subsidiary (or, if applicable, Affiliate) of the
Company or if the Committee determines that Optionee is rendering substantial
services as a part-time employee, consultant or adviser to the Company or any
Parent or Subsidiary (or Affiliate) of the Company.  The Committee shall have
discretion to determine whether Optionee has ceased to be employed by the
Company or any Parent, Subsidiary (or Affiliate) of the Company and the
effective date on which such employment terminated (the 'Termination Date').
                                                         ----------------   

          4.1  Termination Generally.  If Optionee ceases to be employed by the
               ---------------------                                           
Company or any Parent, Subsidiary or Affiliate of the Company for any reason
except death or Disability, this Option, to the extent (and only to the extent)
that it would have been exercisable by Optionee on the Termination Date, may be
exercised by Optionee within ninety (90) days after the Termination Date, but in
no event later than the Expiration Date.

          4.2  Death or Disability.  If Optionee's employment with the Company
               -------------------                                            
or any Parent, Subsidiary or Affiliate of the Company is terminated because of
the death or the Disability of Optionee, this Option, to the extent (and only to
the extent) that it would have been exercisable by Optionee on the Termination
Date, may be exercised by Optionee (or Optionee's legal representative) within
twelve (12) months after the Termination Date, but in no event later than the
Expiration Date.

          4.3  No Right to Employment.  Nothing in the Plan or this Grant shall
               ----------------------                                          
confer on Optionee any right to continue in the employ of, or other relationship
with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit
in any way the right of the Company 

                                       2

 
                                                     Exodus Communications, Inc.
                                                              Stock Option Grant


or any Parent, Subsidiary or Affiliate of the Company to terminate Optionee's
employment or other relationship at any time, with or without cause.

     5.   MANNER OF EXERCISE.
          ------------------ 

          5.1  Exercise Agreement.  This Option shall be exercisable by delivery
               ------------------                                               
to the Company of an executed written Stock Option Exercise Agreement in the
form attached hereto as Exhibit A, or in such other form as may be approved by
                        ---------                                             
the Company, which shall set forth Optionee's election to exercise some or all
of this Option, the number of Shares being purchased, any restrictions imposed
on the Shares and such other representations and agreements as may be required
by the Company to comply with applicable securities laws.

          5.2  Exercise Price.  Such Exercise Agreement shall be accompanied by
               --------------                                                  
full payment of the Exercise Price for the Shares being purchased.  Payment for
the Shares may be made in cash (by check).

          5.3  Withholding Taxes.  Prior to the issuance of the Shares upon
               -----------------                                           
exercise of this Option, Optionee must pay or make adequate provision for any
applicable federal or state withholding obligations of the Company.  Optionee
may provide for payment of Optionee's minimum statutory withholding taxes upon
exercise of the Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld, all
as set forth in Section 6(c) of the Plan.  In such case, the Company shall issue
the net number of Shares to Optionee by deducting the Shares retained from the
Shares exercised.

          5.4  Issuance of Shares.  Provided that such notice and payment are in
               ------------------                                               
form and substance satisfactory to counsel for the Company, the Company shall
cause the Shares to be issued in the name of Optionee, Optionee's legal
representative or Optionee's donee.

     6.   NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES.  If the Option
          -------------------------------------------------                
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO within (a) the date
two years after the Date of Grant, or (b) the date one year after exercise of
the ISO with respect to the Shares to be sold or disposed, Optionee shall
immediately notify the Company in writing of such disposition.  Optionee
acknowledges and agrees that Optionee may be subject to income tax withholding
by the Company on the compensation income recognized by Optionee from any such
early disposition by payment in cash (or in Shares, to the extent permissible
under Section 5.3) or out of the current wages or other earnings payable to
Optionee.

     7.   NONTRANSFERABILITY OF OPTION.  If this Option is an ISO, then this
          ----------------------------                                      
Option may not be transferred in any manner other than by will or by the law of
descent and distribution and may be exercised during the lifetime of Optionee
only by Optionee.  Otherwise, this Option may only be transferred pursuant to a
qualified domestic relations order as defined by the Revenue Code or Title I of
the Employee Retirement Income Security Act, or the rules thereunder.  The terms
of this Option shall be binding upon the executors, administrators, successors
and assigns of Optionee.

                                       3

 
                                                     Exodus Communications, Inc.
                                                              Stock Option Grant


     8.   TAX CONSEQUENCES.  Set forth below is a brief summary as of the date
          ----------------                                                    
this form of Grant was adopted of some of the federal and California tax
consequences of exercise of this Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.

          8.1  Exercise of ISO.  If this Option qualifies as an ISO, there will
               ---------------                                                 
be no regular federal income tax liability or California income tax liability
upon the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal
income tax purposes and may subject Optionee to an alternative minimum tax
liability in the year of exercise.

          8.2  Exercise of ISO on Disability.  If this Option qualifies as an
               -----------------------------                                 
ISO and has been exercised at any time following three (3) months after a
Termination Date that occurred due to the Disability of the Optionee not meeting
the requirements for total and permanent disability set forth in Section
22(e)(3) of the Revenue Code, then the exercise of this Option will be treated
as the exercise of a nonqualified option ('NQSO') described in Section 8.3
                                           ----                           
below.

          8.3  Exercise of Nonqualified Stock Option.  If this Option does not
               -------------------------------------                          
qualify as an ISO, there may be a regular federal income tax liability and a
California income tax liability upon the exercise of the Option.  Optionee will
be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price.  The Company will be required
to withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.

          8.4  Disposition of Shares.  In the case of an NQSO, if Shares are
               ---------------------                                        
held for more than one year before disposition, any gain on disposition of the
Shares will be treated as long- term capital gain for federal and California
income tax purposes.  In the case of an ISO, if Shares are held for more than
one year after the date of exercise and more than two years after the Date of
Grant, any gain on disposition on the Shares will be treated as long-term
capital gain for federal and California income tax purposes.  If Shares acquired
pursuant to an ISO are disposed of within such one year or two year periods (a
'disqualifying disposition'), gain on such disqualifying disposition will be
--------------------------                                                  
treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the fair market value of the Shares on the date of
exercise over the Exercise Price (the 'Spread'), or, if less, the difference
                                       ------                               
between the amount realized on the sale of such Shares and the Exercise Price.
Any gain in excess of the Spread shall be treated as capital gain.

                                       4

 
                                                     Exodus Communications, Inc.
                                                              Stock Option Grant


     9.   INTERPRETATION. Any dispute regarding the interpretation of this Grant
          --------------
shall be submitted by Optionee or the Company to the Committee for review. The
resolution of such a dispute by the Board or Committee shall be final and
binding on the Company and on Optionee.

     10.  PRIVILEGES OF STOCK OWNERSHIP.  Optionee shall not have any of the
          -----------------------------                                     
rights of a shareholder with respect to any Shares until Optionee exercises the
Option and pays the Exercise Price.

     11.  NOTICES.  Any notice required to be given or delivered to the Company
          -------                                                              
under the terms of this Grant shall be in writing and addressed to the Corporate
Secretary of the Company 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 above or to such other address as such
party may hereafter designate in writing from time to time to the Company.  All
notices shall be deemed to have been given or delivered upon personal delivery,
three days after deposit in the United States mail by certified or registered
mail (return receipt requested), one business day after deposit with any return
receipt express courier (prepaid), or one business day after transmission by
rapifax or telecopier.

     12.  SUCCESSORS AND ASSIGNS.  The Company may assign any of its rights
          ----------------------                                           
under this Grant.  This Grant shall be binding upon and inure to the benefit of
the successors and assigns of the Company.  Subject to the restrictions on
transfer set forth herein, this Grant shall be binding upon Optionee and
Optionee's heirs, executors, administrators, legal representatives, successors
and assigns.

     13.  ENTIRE AGREEMENT.  The Plan and the Stock Option Exercise Agreement
          ----------------                                                   
attached as Exhibit A are incorporated herein by this reference.  This Grant,
            ---------                                                        
the Plan and the Stock Option Exercise Agreement constitute the entire agreement
of the parties hereto and supersede all prior undertakings and agreements with
respect to the subject matter hereof.


                                        EXODUS COMMUNICATIONS, INC.

                                        By:____________________________

                                        Name:__________________________
 
                                        Title:_________________________


                                  ACCEPTANCE
                                  ----------
                                        
     Optionee hereby acknowledges receipt of a copy of the Plan and this Stock
Option Grant, represents that Optionee has read and understands the terms and
provisions thereof, and accepts this Option subject to all the terms and
conditions of the Plan and this Stock Option Grant.  Optionee acknowledges that
there may be adverse tax consequences upon exercise of this Option 

                                       5

 
                                                     Exodus Communications, Inc.
                                                              Stock Option Grant


or disposition of the Shares and that Optionee should consult a tax adviser
prior to such exercise or disposition.

                                        _______________________________
                                        OPTIONEE

                                       6

 
                                                     Exodus Communications, Inc.
                                                              Stock Option Grant


                                   EXHIBIT A
                                        
                    Form of Stock Option Exercise Agreement

                                       7

 

                                   Exhibit A
                                   ---------

                          EXODUS COMMUNICATIONS, INC.

                        STOCK OPTION EXERCISE AGREEMENT

     This Exercise Agreement is made this __________ day of
____________________, 19____ between Exodus Communications, Inc., a California
corporation (the 'Company'), and the optionee named below ('Optionee') pursuant
                  -------                                   --------           
to the Company's 1995 Stock Option Plan (the 'Plan').  Unless otherwise defined
                                              ----                             
herein capitalized terms used herein shall have the meanings ascribed to them in
the Plan.

Optionee:                     _________________________________________________

Social Security Number:       _________________________________________________

Address:                      _________________________________________________

                              _________________________________________________

Number of Shares Purchased:   _________________________________________________

Purchase Price per Share:     _________________________________________________

Aggregate Purchase Price:     _________________________________________________

Date of Option Grant:         _________________________________________________

Type of Option:                    [  ]  Incentive Stock Option
                                   [  ]  Nonqualified Stock Option

     Optionee hereby delivers to the Company the Aggregate Purchase Price in
cash (by check) in the amount of $_______________, receipt of which is
acknowledged by the Company.

     The Company and Optionee hereby agree as follows:

     1.   PURCHASE OF SHARES.  On this date and subject to the terms and
          ------------------                                            
conditions of this Exercise Agreement, Optionee hereby exercises the Option
Grant between the Company and Optionee dated as of the Date of Grant set forth
above, with respect to the Number of Shares Purchased set forth above of the
Company's common stock (the 'Shares') at an aggregate purchase price equal to
                             ------                                          
the Aggregate Purchase Price set forth above (the 'Aggregate Purchase Price')
                                                   ------------------------  
and the Price per Share set forth above (the 'Purchase Price Per Share').  The
                                              ------------------------        
term 'Shares' refers to the Shares purchased under this Exercise Agreement and
includes all securities received (a) in replacement of the Shares, and (b) as a
result of stock dividends or stock splits with respect to the Shares.

                                                                        STOCKOPT

                                       11

 
                                                     Exodus Communications, Inc.
                                                 Stock Option Exercise Agreement


     2.   REPRESENTATIONS AND WARRANTIES OF OPTIONEE.  Optionee represents and
          ------------------------------------------                          
warrants to the Company as follows:

(a)  Optionee has received, read and understood the Plan and the Grant and
     agrees to abide by and be bound by their terms and conditions.

(b)  Optionee is purchasing the Shares for Optionee's own account for investment
     purposes only and not with a view to, or for sale in connection with, a
     distribution of the Shares within the meaning of the Securities Act.

(c)  Optionee has no present intention of selling or otherwise disposing of all
     or any portion of the Shares.

(d)  Optionee is fully aware of the highly speculative nature of the investment
     in the Shares; the financial hazards involved; and the lack of liquidity of
     the Shares and the restrictions on transferability of the Shares (e.g.,
                                                                       ---- 
     that Optionee may not be able to sell or dispose of the Shares or use them
     as collateral for loans).

(e)  Optionee is capable of evaluating the merits and risks of this investment,
     has the ability to protect Optionee's own interests in this transaction and
     is financially capable of bearing a total loss of this investment.

     3.   COMPLIANCE WITH SECURITIES LAWS.  Optionee understands and
          -------------------------------
acknowledges that the Shares have not been registered under the Securities Act
and that, notwithstanding any other provision of the Grant to the contrary, the
exercise of any rights to purchase any Shares is expressly conditioned upon
compliance with the Securities Act and all applicable state securities laws.
Optionee agrees to cooperate with the Company to ensure compliance with such
laws. The Shares are being issued under the Securities Act pursuant to (the
Company will check the applicable box):

               [  ] the exemption provided by Rule 701;
               [  ] the exemption provided by Rule 504;
               [  ] Section 4(2) of the Securities Act;
               [  ] other:____________________________.

     4.   FEDERAL RESTRICTIONS ON TRANSFER.  Optionee understands that the
          --------------------------------
Shares must be held indefinitely unless they are registered under the Securities
Act or unless an exemption from such registration is available and that the
certificate(s) representing the Shares will bear a legend to that effect.
Optionee understands that the Company is under no obligation to register the
Shares and that an exemption may not be available or may not permit Optionee to
transfer Shares in the amounts or at the times proposed by Optionee.

          4.1  Rule 144.  Optionee has been advised that Rule 144 promulgated
               --------                                                      
under the Securities Act, which permits certain resales of unregistered
securities, is not presently available with respect to the Shares and, in any
event, requires that the Shares be paid for and then held for a minimum of two
years before they may be resold under Rule 144.  Prior to an initial public

                                                                        STOCKOPT

                                       12

 
                                                     Exodus Communications, Inc.
                                                 Stock Option Exercise Agreement


offering of the Company's stock, 'nonaffiliates' (i.e. persons other than
officers, directors and major shareholders of the Company) may resell only under
Rule 144(k), which requires that the Shares be paid for and held for a minimum
of three years.  Rule 144(k) is not available to affiliates.

          4.2  Rule 701.  If the exemption relied upon for exercise of the
               --------                                                   
Shares is Rule 701, the Shares will become freely transferable, subject to
limited conditions regarding the method of sale, by nonaffiliates ninety (90)
days after the first sale of common stock of the Company to the general public
pursuant to a registration statement filed with and declared effective by the
SEC, subject to any lengthier market standoff agreement contained in this
Exercise Agreement or entered into by Optionee.  Affiliates must comply with the
provisions (other than the holding period requirements) of Rule 144.

     5.   STATE LAW RESTRICTIONS ON TRANSFER.  Optionee understands that
          ----------------------------------
transfer of the Shares may be restricted by Section 260.141.11 of the Rules of
the California Commissioner of Corporations, a copy of which is attached hereto
as Attachment 1, and that the certificate(s) representing the Shares may bear a
   ------------  
legend to that effect.

     6.   MARKET STANDOFF AGREEMENT.  Optionee agrees in connection with any
          -------------------------                                         
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Optionee will not sell or otherwise dispose of any Shares or any other
securities of the Company without the prior written consent of the Company or
such underwriters, as the case may be, for such period of time (not to exceed
180 days) after the effective date of such registration as the Company or the
underwriters may specify for employee shareholders generally.

     7.   COMPANY'S RIGHT OF FIRST REFUSAL.  Before any Shares held by Optionee
          --------------------------------                                     
or any transferee (either being sometimes referred to herein as the 'Holder')
                                                                     ------  
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company shall have an assignable right of first refusal to purchase
the Shares on the terms and conditions set forth in this Section (the 'Right of
                                                                       --------
First Refusal').
-------------   

          7.1  Notice of Proposed Transfer.  The Holder of the Shares shall
               ---------------------------                                 
deliver to the Company a written notice (the 'Notice') stating:  (a) the
                                              ------                    
Holder's bona fide intention to sell or otherwise transfer such Shares; (b) the
name of each proposed purchaser or other transferee ('Proposed Transferee'); (c)
                                                      -------------------       
the number of Shares to be transferred to each Proposed Transferee; and (d) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the Shares (the 'Offered Price'); and the Holder shall offer to sell
                          -------------                                      
the Shares at the Offered Price to the Company.

          7.2  Exercise of Right of First Refusal.  At any time within thirty
               ----------------------------------                            
(30) days after receipt of the Notice, the Company and its assignee may, by
giving written notice to the Holder, elect to purchase all (but not less than
all) of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection 7.3
below.

                                                                        STOCKOPT

                                       13

 
                                                     Exodus Communications, Inc.
                                                 Stock Option Exercise Agreement


          7.3  Purchase Price.  The purchase price for the Shares purchased
               --------------                                              
under this Section shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the non-cash
consideration shall be determined by the Board of Directors of the Company in
good faith.

          7.4  Payment.  Payment of the purchase price shall be made, at the
               -------                                                      
option of the Company or its assignee, either (a) in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company or such assignee, or by any combination thereof within thirty
(30) days after receipt of the Notice or (b) in the manner and at the time(s)
set forth in the Notice.

          7.5  Holder's Right to Transfer.  If all of the Shares proposed in the
               --------------------------                                       
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within one hundred twenty (120) days after the date of the Notice
and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section shall continue to apply to
the Shares in the hands of such Proposed Transferee.  If the Shares described in
the Notice are not transferred to the Proposed Transferee within such period, a
new Notice shall be given to the Company, and the Company shall again be offered
the Right of First Refusal, before any Shares held by the Holder may be sold or
otherwise transferred.

          7.6  Exception for Certain Family Transfers.  Anything to the contrary
               --------------------------------------                           
contained in this Section notwithstanding, the transfer of any or all of the
Shares during Optionee's lifetime or on Optionee's death by will or intestacy to
Optionee's immediate family or a trust for the benefit of Optionee or Optionee's
immediate family shall be exempt from the provisions of this Section; provided
that, as a condition to receiving the Shares, the transferee or other recipient
shall agree in writing to receive and hold the Shares so transferred subject to
the provisions of this Exercise Agreement, and to transfer such Shares no
further except in accordance with the terms of this Exercise Agreement.  As used
herein, 'immediate family' shall mean spouse, lineal descendant or antecedent,
         ----------------                                                     
brother or sister.

          7.7  Termination of Right of First Refusal.  The Right of First
               -------------------------------------                     
Refusal shall terminate as to any Shares upon the first sale of common stock of
the Company to the general public pursuant to a registration statement filed
with and declared effective by the SEC (other than a registration statement
solely covering an employee benefit plan or corporate reorganization).

     8.   COMPLIANCE WITH STATE SECURITIES LAWS.  THE SALE OF THE SECURITIES
          -------------------------------------
THAT ARE THE SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED WITH THE
CALIFORNIA COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH QUALIFICATION,
IS SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH SECURITIES, AND THE
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS
UNLAWFUL UNLESS THE SALE IS

                                                                        STOCKOPT

                                       14

 
                                                     Exodus Communications, Inc.
                                                 Stock Option Exercise Agreement


EXEMPT.  THE RIGHTS OF THE PARTIES TO THIS EXERCISE AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING
AVAILABLE.

     9.   COMPANY'S REPURCHASE OPTION.  The Company, and/or its assignees, shall
          ---------------------------                                           
have the option to repurchase no less than all of the Shares on the terms and
conditions set forth in this Section (the 'Repurchase Option') if Optionee
                                           -----------------              
should cease to be employed by the Company for any reason, or no reason,
including, without limitation, Optionee's death, disability, voluntary
resignation or termination by the Company with or without cause.

          9.1  Right of Termination Unaffected.  Nothing in this Exercise
               -------------------------------                           
Agreement shall be construed to limit or otherwise affect in any manner
whatsoever the right or power of the Company to terminate Optionee's employment
at any time, for any reason or no reason, with or without cause.  For purposes
of this Exercise Agreement, Optionee shall be considered to be 'employed by the
Company' if Optionee is an officer, director or full-time employee of the
Company or any Parent, Subsidiary or Affiliate of the Company or if the
Committee determines that Optionee is rendering substantial services as a part-
time employee, consultant or adviser to the Company or any Parent, Subsidiary or
Affiliate of the Company.  The Committee shall have discretion to determine
whether Optionee has ceased to be employed by the Company or any Parent,
Subsidiary or Affiliate of the Company, whether or not such cessation was due to
a Disability, and determine the Termination Date.

          9.2  Exercise of Repurchase Option.  At any time within ninety (90)
               -----------------------------                                 
days after the later of the Termination Date or the date the Optionee purchased
the Shares, the Company, and/or its assignees, may elect to repurchase no less
than all of the Shares by giving Optionee written notice of exercise of the
Repurchase Option.

          9.3  Calculation of Repurchase Price.  The Company and/or its
               -------------------------------                         
assignees shall have the option to repurchase from Optionee (or from Optionee's
personal representative as the case may be) no less than all of the Shares at
the higher of Fair Market Value of such Shares on the Termination Date or the
Purchase Price per Share.  If the Repurchase Option of the Shares is assigned,
the assignee must pay the Company upon assignment cash equal to the difference
between the Purchase Price per Share and the Fair Market Value of the Shares
where the original Purchase Price is less than the Fair Market Value.

          9.4  Payment of Repurchase Price.  The repurchase price shall be
               ---------------------------                                
payable, at the option of the Company or its assignees, by check or by
cancellation of all or a portion of any outstanding indebtedness of Optionee to
the Company or such assignee, or by any combination thereof.  The repurchase
price shall be paid without interest within thirty (30) days after exercise of
the Repurchase Option.

          9.5  Termination of Repurchase Option.  The Repurchase Option shall
               --------------------------------                              
terminate as to any Shares upon the first sale of common stock of the Company to
the general public pursuant to a registration statement filed with and declared
effective by the SEC (other

                                                                        STOCKOPT

                                       15

 
                                                     Exodus Communications, Inc.
                                                 Stock Option Exercise Agreement


than a registration statement solely covering an employee benefit plan or
corporate reorganization).

     10.  ESCROW.  As security for the faithful performance of this Exercise
          ------                                                            
Agreement, Optionee agrees, immediately upon receipt of the certificate(s)
evidencing the Shares, to deliver such certificate(s), together with a stock
power in the form of Attachment 2 attached hereto, executed by Optionee and by
                     ------------                                             
Optionee's spouse, if any (with the transferee, certificate number, date and
number of Shares left blank), to the Secretary of the Company or its designee
                                                                             
('Escrow Holder'), who is hereby appointed to hold such certificate(s) and stock
---------------                                                                 
power in escrow and to take all such actions and to effectuate all such
transfers and/or releases of such Shares as are in accordance with the terms of
this Exercise Agreement.  Optionee and the Company agree that Escrow Holder
shall not be liable to any party to this Exercise Agreement (or to any other
party) for any actions or omissions unless Escrow Holder is grossly negligent
relative thereto.  The Escrow Holder may rely upon any letter, notice or other
document executed by any signature purported to be genuine and may rely on
advice of counsel and obey any order of any court with respect to the
transactions contemplated herein.  The Shares shall be released from escrow upon
termination of both the Repurchase Option and the Right of First Refusal;
provided, however, that such release shall not affect the rights of the Company
with respect to any pledge of Shares to the Company.

     11.  LEGENDS.  Optionee understands and agrees that the Shares are subject
          -------                                                              
to a Right of First Refusal and a Repurchase Option held by the Company (or its
assignee) as set forth herein and that the certificate(s) representing the
Shares will bear legends in substantially the following forms:

     'THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
     RESTRICTIONS ON PUBLIC RESALE AND TRANSFER AND RIGHT OF FIRST
     REFUSAL AND REPURCHASE OPTIONS HELD BY THE ISSUER AND/OR ITS
     ASSIGNEE(S) AND MAY NOT BE TRANSFERRED EXCEPT AS SET FORTH IN AN
     AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
     SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF
     THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHTS OF FIRST REFUSAL
     AND REPURCHASE ARE BINDING ON TRANSFEREES OF THESE SHARES.'

     'THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
     THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT'), OR UNDER THE
     SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
     RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
     TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
     APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
     EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
     REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
     INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
     REQUIRE AN OPINION

                                                                        STOCKOPT

                                       16

 
                                                     Exodus Communications, Inc.
                                                 Stock Option Exercise Agreement


     OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
     EFFECT THAT THE PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH
     THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.'

     The California Commissioner of Corporations may require that the following
legend also be placed upon the share certificate(s) evidencing ownership of the
Shares:

     'IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY,
     OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
     WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF
     CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE
     COMMISSIONER'S RULES.'

     If the foregoing legend is required, Optionee acknowledges receipt of a
copy of Section 260.141.11 of the Rules of the California Corporations
Commissioner, attached as Attachment 1.
                          ------------ 

     12.  STOP-TRANSFER NOTICES.  Optionee understands and agrees that, in order
          ---------------------                                                 
to ensure compliance with the restrictions referred to herein, the Company may
issue appropriate 'stop-transfer' instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

     13.  TAX CONSEQUENCES.  OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER
          ----------------                                                
ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF
THE SHARES.  OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR
ANY TAX ADVICE.  IN PARTICULAR, IF THE SHARES ARE SUBJECT TO REPURCHASE BY THE
COMPANY OR IF OPTIONEE IS AN INSIDER SUBJECT TO SECTION 16(b) OF THE EXCHANGE
ACT, OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH OPTIONEE'S TAX
ADVISERS CONCERNING THE ADVISABILITY OF FILING AN 83(b) ELECTION WITH THE
INTERNAL REVENUE SERVICE.

                                                                        STOCKOPT

                                       17

 
                                                     Exodus Communications, Inc.
                                                 Stock Option Exercise Agreement


     14.  ENTIRE AGREEMENT.  The Plan and Grant are incorporated herein by
          ----------------                                                
reference.  This Exercise Agreement, the Plan and the Grant constitute the
entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and is governed by California law except for that body of
law pertaining to conflict of laws.

Submitted by:                           Accepted by:

OPTIONEE: ________________________      EXODUS COMMUNICATIONS, INC.
               (print name)

__________________________________      By:________________________________
           (signature)
                                        Its:_______________________________

Dated: ___________________________      Dated:_____________________________

                                                                        STOCKOPT

                                       18

 
                                 ATTACHMENT 1
                                 ------------

                    CALIFORNIA COMMISSIONER RULE 260.141.11
                    ---------------------------------------

(a)  The issuer of any security upon which a restriction on transfer has been
     imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall cause a
     copy of this section to be delivered to each issuee or transferee of such
     security at the time the certificate evidencing the security is delivered
     to the issuee or transferee.

(b)  It is unlawful for the holder of any such security to consummate a sale or
     transfer of such security, or any interest therein, without the prior
     written consent of the Commissioner (until this condition is removed
     pursuant to Section 260.141.12 of these rules), except:

(1)  to the issuer;
(2)  pursuant to the order or process of any court;
(3)  to any person described in Subdivision (i) of Section 25102 of the Code or
     Section 260.105.14 of these rules:
(4)  to the transferor's ancestors, descendants or spouse, or any custodian or
     trustee for the account of the transferor or the transferor's ancestors,
     descendants, or spouse; or to a transferee by a trustee or custodian for
     the account of the transferee or the transferee's ancestors, descendants or
     spouse;
(5)  to holders of securities of the same class of the same issuer;
(6)  by way of gift or donation intervivos or on death;
(7)  by or through a broker-dealer licensed under the Code (either acting as
     such or as a finder) to a resident of a foreign state, territory or country
     who is neither domiciled in this state to the knowledge of the broker-
     dealer, nor actually present in this state if the sale of such securities
     is not in violation of any securities law of the foreign state, territory
     or country concerned;
(8)  to a broker-dealer licensed under the Code in a principal transaction, or
     as an underwriter or member of an underwriting syndicate or selling group;
(9)  if the interest sold or transferred is a pledge or other lien given by the
     purchaser to the seller upon a sale of the security for which the
     Commissioner's written consent is obtained or under this rule not required;
(10) by way of a sale qualified under Section 25111, 25112, 25113, or 25121 of
     the Code, of the securities to be transferred, provided that no order under
     Section 25140 or subdivision (a) of Section 25143 is in effect with respect
     to such qualification;
(11) by a corporation to a wholly owned subsidiary of such corporation, or by a
     wholly owned subsidiary of a corporation to such corporation;
(12) by way of an exchange qualified under Section 25111, 25112 or 25113 of the
     Code, provided that no order under Section 25140 or subdivision (a) of
     Section 25143 is in effect with respect to such qualification;
(13) between residents of foreign states, territories or countries who are
     neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property Law or the
     administrator of the unclaimed property law of another state; or

                                                                        
                                       1                             STOCKOPT

 
                                                     Exodus Communications, Inc.
                                                 Stock Option Exercise Agreement


(15) by the State Controller pursuant to the Unclaimed Property Law or by the
     administrator of the unclaimed property law of another state if, in either
     such case, such person (i) discloses to potential purchasers at the sale
     that transfer of the securities is restricted under this rule, (ii)
     delivers to each purchaser a copy of this rule, and (iii) advises the
     Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does not involve a
     change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in an issuer
     transaction that is subject to the qualification requirements of Section
     25110 of the Code but exempt from that qualification requirement by
     subdivision (f) of Section 25102;

provided that any such transfer is on the condition that any certificate
evidencing the security issued to such transferee shall contain the legend
required by this section.

(c)  The certificates representing all such securities subject to such a
     restriction on transfer, whether upon initial issuance or upon any transfer
     thereof, shall bear on their face a legend, prominently stamped or printed
     thereon in capital letters of not less than 10-point size, reading as
     follows:

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFORE, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.

                                       2                              STOCKOPT

 
                                                     Exodus Communications, Inc.
                                                 Stock Option Exercise Agreement


                                 ATTACHMENT 2
                                 ------------

                          STOCK POWER AND ASSIGNMENT

                           SEPARATE FROM CERTIFICATE


     FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise
Agreement dated as of __________________, 19___, the undersigned hereby sells,
assigns and transfers unto _________________________, _______________________
shares of the common stock of _______________________, a California corporation,
standing in the undersigned's name on the books of said corporation represented
by Certificate No. _____ delivered herewith, and does hereby irrevocably
constitute the Secretary of said corporation as attorney-in-fact, with full
power of substitution, to transfer said stock on the books of said corporation.

Dated: ________________, 19___

 
                                        _______________________________________
                                        (Signature)


                                        _______________________________________
                                        (Please Print Name)


                                        _______________________________________
                                        (Spouse's Signature, if any)


                                        ______________________________________
                                        (Please Print Name)

                                       1                              STOCKOPT