REDBACK NETWORKS INC. 2001 NON PLAN
NOTICE OF STOCK OPTION GRANT
You have been granted the following option to purchase Common Stock
of Redback Networks Inc. (the "Company"):
Name of Optionee: Georges Antoun
Total Number of Shares Granted: 1,000,000
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 accordance with the
Vesting Commencement Date: August 29, 2001
This option shall become exercisable with respect to
options to purchase the first 25% the Shares when
you complete 12 months of continuous service with
the Company or a subsidiary of the Company from
the vesting commencement date and with respect to
an additional 2.0833% of the Shares subject to this
option when you complete each month of continuous
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 and (1) your service with the
Company or a subsidiary of the Company is terminated by the Company or its
successor without Cause or (2) your scope of responsibilities are materially
reduced or (3) you're your salary is reduced (other than in a Company wide
reduction in salary) then your stock option granted hereunder will immediately
be fully vested and exercisable with respect to all shares. For purposes of the
forgoing, Cause shall mean: (1) any breach of the Proprietary Information and
Inventions Agreement between you and the Company or any other written agreement
between you and the Company if such breach causes material harm to the Company;
(2) any willful misconduct that causes material harm to the Company, including
without limitation repeated failure to follow the directions of the person to
whom you report; (3) conviction of, or plea of guilty or no contest to a felony
under the laws of the US or any state thereof; (4) misappropriation of any
assets of the Company or any other acts of Fraud or embezzlement; or the abuse
of alcohol or controlled substances that has a detrimental effect upon your
performance of duties for the Company.
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 Stock Option Agreement, which is attached to and
made a part of this document.
OPTIONEE: REDBACK NETWORKS INC.
/s/ Georges Antoun By: /s/ Kevin A DeNuccio
Title: Chief Executive Officer and President
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
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
Regular If your service as an employee,
Termination consultant or director of 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
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.
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
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 The Company will not permit you to exercise this option
Exercise 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
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.
. 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.
Taxes and You will not be allowed to exercise this option unless you
Stock Withholding 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 By signing this Agreement, you agree not to sell any option
Resale 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
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:
(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 shall interpret the Agreement. The Committee's
determinations under this Agreement made in good faith shall be
final and binding on all persons.
Stockholder You, or your estate or heirs, have no rights as a stockholder of
Rights 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 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 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.
Within the limitations of this Agreement, the Committee may
modify, extend or assume outstanding options or may accept
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
Deferral of The Committee (in its sole discretion) may permit or require
Delivery of Shares an Optionee to have Common Shares that otherwise would be
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
. "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.
. "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 Definitions 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
proportions by the persons who held the Company's securities
immediately before such transaction.
. "Code" means the Internal Revenue Code of 1986, as amended.
. "Committee" means a committee of the Board, as described in
. "Common Share" means one share of the common stock of the
. "Company" means Redback Networks Inc., a Delaware corporation.
. "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 Stock Option
. "Employee" means a common-law employee of the Company, a Parent,
a Subsidiary or an Affiliate.
. "Exchange Act" means the Securities Exchange Act of 1934, as
. "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.
. "Fair Market Value" means the market price of Common Shares,
determined by the Committee in good faith on such asis 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.
. "NSO" means a stock option not described in sections 422 or 423
of the Code.
. "Option" means an NSO granted under this Agreement and entitling
the holder to purchase Common Shares.
. "Optionee" means an individual or estate who holds an Option.
. "Outside Director" shall mean a member of the Board
who is not an Employee.
. "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 the Plan shall be considered a Parent commencing
as of such date agreement between the Company and an Optionee
that contains the terms, conditions and restrictions pertaining
to his or her Option.
. "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 This Agreement will be interpreted and enforced under the
Law laws of the State of Delaware (without regard to their
The Plan and
Agreements This Agreement constitutes the entire understanding between you
and the Company regarding this option. Any prior agreements,
commitments or negotiations concerning this option are
superseded. This Agreement may be amended only by another written
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.