Notice of Stock Option Grant – Redback Networks Inc. and Kevin DeNuccio

                      REDBACK NETWORKS INC. 2001 NON PLAN

                          NOTICE OF STOCK OPTION GRANT

     Kevin DeNuccio ("Optionee") has been granted the following option to
purchase Common Stock of Redback Networks Inc. (the "Company"):

Total Number of Shares Granted: 6,500,000

Type of Option: Nonstatutory Stock Option

Exercise Price Per Share: $ 4.17

Date of Grant: August 29, 2001

Date Exercisable: This option may be exercised, in whole or in part, for
1,625,000 of the Shares subject to this option at any
time after the Date of Grant.

Vesting Commencement Date: August 29, 2001

Vesting Schedule: The Pro Rata Return Portion of the 1,625,000 shares will be
subject to the Right of Repurchase by the company at the
exercise price if, before you complete 12 months continuous
employment with the Company, your employment ends due to the
occurrence of a Pay-back event (as defined in your employment
agreement).

This option becomes exercisable with respect to the remaining
4,875,000 of the Shares subject to this option in equal monthly
installments of 2.777% over your first 36 months of continuous
employment from the Vesting Commencement Date. If you are subject to
an Involuntary Termination, then the exercisable portion of the
remaining 4,875,000 shares will be determined by adding 12 months to
the actual period of employment that you have completed with the
Company.

Expiration Date: August 29, 2011

In the event a Change in Control occurs (as defined in the attached Stock Option
Agreement) before your employment terminates then your stock option granted
hereunder will immediately be fully vested and exercisable with respect to all
shares and the Company’s right to repurchase shares hereunder will lapse in
full.

By your signature and the signature of the Company’s representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the attached Stock Option Agreement, which is attached
to and made a part of this document.

OPTIONEE: REDBACK NETWORKS INC.

/s/ Kevin A. DeNuccio By: /s/ Dennis P. Wolf
———————————— ————————————–

REDBACK NETWORKS INC. 2001 NON-PLAN

STOCK OPTION AGREEMENT

Tax Treatment This option is intended to be a nonstatutory option, as provided in the Notice of
Stock Option Grant.

Vesting This option becomes exercisable in installments, as shown in the
Notice of Stock Option Grant.

In addition, this option becomes exercisable in full if your service
as an employee, consultant or director of the Company or a
subsidiary of the Company terminates because of death. If your
service as an employee, consultant or director of the Company
(or a subsidiary of the Company) terminates because of total and permanent
disability, then the exercisable portion of this option will be
determined by adding 12 months to your actual period of service.

Except for the acceleration provisions specified in the grant, no
additional shares become exercisable after your service as an
employee, consultant or director of the Company or a subsidiary of the
Company has terminated for any reason.

Term This option expires in any event at the close of business at Company
headquarters on the day before the 10th anniversary of the Date of Grant,
as shown in the Notice of Stock Option Grant. (It will expire earlier if
your service terminates, as described below.)

Regular If your service as an employee, consultant or director of
Termination the Company or a subsidiary of the Company terminates for any reason except
death or total and permanent disability, then this option will expire at
the close of business at Company headquarters on the date three months
after your termination date. The Company determines when your service
terminates for this purpose.

Death If you die as an employee, consultant or director of the Company or a
subsidiary of the Company, then this option will expire at the close
of business at Company headquarters on the date 12 months after
the date of death.

Disability If your service as an employee, consultant or director of the Company
or a subsidiary of the Company terminates because of your total and
permanent disability, then this option will expire at the close of business
at Company headquarters on the date six months after your termination date.

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For all purposes under this Agreement, “total and permanent disability” means
that you are unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted, or can be expected to
last, for a continuous period of not less than one year.

Leaves of Absence For purposes of this option, your service does not terminate
when you go on a military leave, a sick leave or another bona fide leave of
absence, if the leave was approved by the Company in writing and if
continued crediting of service is required by the terms of the leave or by
applicable law. But your service terminates when the approved leave ends,
unless you immediately return to active work.

Restrictions on Exercise The Company will not permit you to exercise this option if the issuance of shares at
that time would violate any law or regulation.

Notice of Exercise When you wish to exercise this option, you must notify the Company by filing the
proper “Notice of Exercise” form at the address given on the form. Your notice must
specify how many shares you wish to purchase. Your notice must also specify how your
shares should be registered (in your name only or in your and your spouse’s names as
community property or as joint tenants with right of survivorship). The notice will
be effective when it is received by the Company.

If someone else wants to exercise this option after your death, that person
must prove to the Company’s satisfaction that he or she is entitled to do so.

Form of Payment When you submit your notice of exercise, you must include payment of the
option exercise price for the shares you are purchasing. Payment may be made
in one (or a combination of two or more) of the following forms:

. Your personal check, a cashier’s check or a money order

. Certificates for shares of Company stock that you own, along with
any forms needed to effect a transfer of those shares to the
Company. The value of the shares, determined as of the effective
date of the option exercise, will be applied to the option
exercise price. Instead of surrendering shares of Company stock,
you may attest to the ownership of those shares on a form
provided by the Company and have the same number of shares
subtracted from the option shares issued to you. However, you may
not surrender, or attest to the ownership of, shares of Company
stock in payment of the exercise price if your action would cause
the Company to recognize compensation expense (or additional
compensation expense) with respect to this option for financial
reporting purposes.

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. Irrevocable directions to a securities broker
approved by the Company to sell all or part of
your option shares and to deliver to the
Company from the sale proceeds an amount
sufficient to pay the option exercise price
and any withholding taxes. (The balance of the
sale proceeds, if any, will be delivered to
you.) The directions must be given by signing
a special “Notice of Exercise” form provided
by the Company.

. Irrevocable directions to a securities broker
or lender approved by the Company to pledge
option shares as security for a loan and to
deliver to the Company from the loan proceeds
an amount sufficient to pay the option
exercise price and any withholding taxes. The
directions must be given by signing a special
“Notice of Exercise” form provided by the
Company.

Withholding Taxes and You will not be allowed to exercise this option
Stock Withholding unless you make arrangements acceptable to the
Company to pay any withholding taxes that may be
due as a result of the option exercise. These
arrangements may include withholding shares of
Company stock that otherwise would be issued to you
when you exercise this option. The value of these
shares, determined as of the effective date of the
option exercise, will be applied to the withholding
taxes.

Restrictions on Resale By signing this Agreement, you agree not to sell
any option shares at a time when applicable laws,
Company policies or an agreement between the
Company and its underwriters prohibit a sale. This
restriction will apply as long as you are an
employee, consultant or director of the Company or
a subsidiary of the Company.

Transfer of Option Prior to your death, only you may exercise this
option. You cannot transfer or assign this option.
For instance, you may not sell this option or use
it as security for a loan. If you attempt to do any
of these things, this option will immediately
become invalid. You may, however, dispose of this
option in your will or a beneficiary designation.

Regardless of any marital property settlement
agreement, the Company is not obligated to honor a
notice of exercise from your former spouse, nor is
the Company obligated to recognize your former
spouse’s interest in your option in any other way.

Retention Rights Neither your option nor this Agreement give you the
right to be retained by the Company or a subsidiary
of the Company in any capacity. The Company and its
subsidiaries reserve the right to terminate your
service at any time, with or without cause.

Committee This Agreement shall be administered by the
Committee. The Committee shall consist exclusively
of two or more directors of the Company, who shall
be appointed by the Board. In addition, the
composition of the Committee shall satisfy:

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(a) Such requirements as the Securities and Exchange
Commission may establish for administrators acting under
plans intended to qualify for exemption under Rule 16b-3 (or
its successor) under the Exchange Act; and

(b) Such requirements as the Internal Revenue Service
may establish for outside directors acting under plans
intended to qualify for exemption under section 162(m)(4)(C)
of the Code.

The Committee’s determinations under the Plan shall be final
and binding on all persons.

Stockholder You, or your estate or heirs, have no rights as a
Rights stockholder of the Company until you have exercised this
option by giving the required notice to the Company and
paying the exercise price. No adjustments are made for
dividends or other rights if the applicable record date
occurs before you exercise this option, except as described
below.

Adjustments In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common
Shares, a declaration of a dividend payable in a form other
than Common Shares in an amount that has a material effect
on the price of Common Shares, a combination or
consolidation of the outstanding Common Shares (by
reclassification or otherwise) into a lesser number of
Common Shares, a recapitalization, a spin-off or a similar
occurrence, the Committee shall make such adjustments as it,
in its sole discretion, deems appropriate in one or more of
(a) the number of Common Shares covered by each outstanding
Option or (b) the Exercise Price under each outstanding
Option. Except as provided in this paragraph, an Optionee
shall have no rights by reason of any issue by the Company
of stock of any class or securities convertible into stock
of any class, any subdivision or consolidation of shares of
stock of any class, the payment of any stock dividend or any
other increase or decrease in the number of shares of stock
of any class. To the extent not previously exercised,
Options shall terminate immediately prior to the dissolution
or liquidation of the Company.

In the event that the Company is a party to a merger or
other reorganization, outstanding Options and Restricted
Shares shall be subject to the agreement of merger or
reorganization. Such agreement shall provide for (a) the
continuation of the outstanding Awards by the Company, if
the Company is a surviving corporation, (b) the assumption
of the outstanding Awards by the surviving corporation or
its parent or subsidiary, (c) the substitution by the
surviving corporation or its parent or subsidiary of its own
awards for the outstanding Awards, (d) full

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exercisability or vesting and accelerated expiration of the
outstanding Awards or (e) settlement of the full value of
the outstanding Awards in cash or cash equivalents followed
by cancellation of such Awards.

Modification Within the limitations of this Agreement, the Committee may
or Assumption modify, extend or assume outstanding options or may accept
of Options the cancellation of outstanding options (whether granted by
the Company or by another issuer) in return for the grant of
new options for the same or a different number of shares and
at the same or a different exercise price. The foregoing
notwithstanding, no modification of an Option shall, without
the consent of the Optionee, alter or impair his or her
rights or obligations under such Option. The Committee may
at any time (a) offer to buy out for a payment in cash or
cash equivalents an Option previously granted or (b)
authorize an Optionee to elect to cash out an Option
previously granted, in either case at such time and based
upon such terms and conditions as the Committee shall
establish.

Deferral of The Committee (in its sole discretion) may permit or require
Delivery of an Optionee to have Common Shares that otherwise would be
Shares delivered to such Optionee as a result of the exercise of an
Option converted into amounts credited to a deferred
compensation account established for such Optionee by the
Committee as an entry on the Company’s books. Such amounts
shall be determined by reference to the Fair Market Value of
such Common Shares as of the date when they otherwise would
have been delivered to such Optionee. A deferred
compensation account established under this paragraph may be
credited with interest or other forms of investment return,
as determined by the Committee. An Optionee for whom such an
account is established shall have no rights other than those
of a general creditor of the Company. Such an account shall
represent an unfunded and unsecured obligation of the
Company and shall be subject to the terms and conditions of
the applicable agreement between such Optionee and the
Company. If the conversion of Options is permitted or
required, the Committee (in its sole discretion) may
establish rules, procedures and forms pertaining to such
conversion, including (without limitation) the settlement of
deferred compensation accounts established under this
paragraph.

Definitions . Affiliate” means any entity other than a Subsidiary, if
the Company and/or one or more Subsidiaries own not
less than 50% of such entity.

. “Award” means any award of an Option or a Restricted
Share under the Plan.

. “Board” means the Company’s Board of Directors, as
constituted from time to time.

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. “Change in Control” shall mean:

(a) The consummation of a merger or consolidation of
the Company with or into another entity or any other
corporate reorganization, if persons who were not
stockholders of the Company immediately prior to such
merger, consolidation or other reorganization own
immediately after such merger, consolidation or other
reorganization 50% or more of the voting power of the
outstanding securities of each of (i) the continuing or
surviving entity and (ii) any direct or indirect parent
corporation of such continuing or surviving entity;

(b) The sale, transfer or other disposition of all or
substantially all of the Company’s assets;

(c) A change in the composition of the Board, as a
result of which 50% or fewer of the incumbent directors are
directors who either (i) had been directors of the Company
on the date 24 months prior to the date of the event that
may constitute a Change in Control (the “original
directors”) or (ii) were elected, or nominated for election,
to the Board with the affirmative votes of at least a
majority of the aggregate of the original directors who were
still in office at the time of the election or nomination
and the directors whose election or nomination was
previously so approved; or

(d) Any transaction as a result of which any person is
the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing at least 50% of the total voting power
represented by the Company’s then outstanding voting
securities. For purposes of this Subsection (d), the term
“person” shall have the same meaning as when used in
sections 13(d) and 14(d) of the Exchange Act but shall
exclude (i) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or of a Parent
or Subsidiary and (ii) a corporation owned directly or
indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the
common stock of the Company.

A transaction shall not constitute a Change in Control if its
sole purpose is to change the state of the Company’s
incorporation or to create a holding company that will be owned
in substantially the same

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proportions by the persons who held the Company’s securities
immediately before such transaction.

o “Code” means the Internal Revenue Code of 1986, as amended.

o “Committee” means a committee of the Board, as described in
Article 2.

o “Common Share” means one share of the common stock of the
Company.

o “Company” means Redback Networks Inc., a Delaware
corporation.

o “Consultant” means a consultant or adviser who provides bona
fide services to the Company, a Parent, a Subsidiary or an
Affiliate as an independent contractor. Service as a
Consultant shall be considered employment for all purposes
of this Agreement.

o “Employee” means a common-law employee of the Company, a
Parent, a Subsidiary or an Affiliate.

o “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

o “Exercise Price” means the amount for which one Common Share
may be purchased upon exercise of such Option, as specified
in the applicable Stock Option Agreement.

o “Fair Market Value” means the market price of Common Shares,
determined by the Committee in good faith on such basis as
it deems appropriate. Whenever possible, the determination
of Fair Market Value by the Committee shall be based on the
prices reported in The Wall Street Journal. Such
———————–
determination shall be conclusive and binding on all
persons.

o “NSO” means a stock option not described in sections 422 or
423 of the Code.

o “Option” means an NSO granted under this Agreement and
entitling the holder to purchase Common Shares.

o “Optionee” means an individual or estate who holds an
Option.

o “Outside Director” shall mean a member of the Board who is
not an Employee. Service as an Outside Director shall be

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considered employment for all purposes of this
Agreement.

o “Parent” means any corporation (other than the Company)
in an unbroken chain of corporations ending with the
Company, if each of the 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. A corporation
that attains the status of a Parent on a date after the
adoption of this Agreement shall be considered a Parent
commencing as of such date.

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

Applicable Law This Agreement will be interpreted and enforced under the
laws of the State of Delaware (without regard to their
choice-of-law provisions).

The Plan This Agreement constitutes the entire understanding between
and Other you and the Company regarding this option. Any prior
Agreements agreements, commitments or negotiations concerning this
option are superseded. This agreement, signed by both
parties.

BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

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