<\/p>\n exercisability or vesting and accelerated expiration of the
\n outstanding Awards or (e) settlement of the full value of
\n the outstanding Awards in cash or cash equivalents followed
\n by cancellation of such Awards.<\/p>\n
Modification Within the limitations of this Agreement, the Committee may
\n or Assumption modify, extend or assume outstanding options or may accept
\n of Options the cancellation of outstanding options (whether granted by
\n the Company or by another issuer) in return for the grant of
\n new options for the same or a different number of shares and
\n at the same or a different exercise price. The foregoing
\n notwithstanding, no modification of an Option shall, without
\n the consent of the Optionee, alter or impair his or her
\n rights or obligations under such Option. The Committee may
\n at any time (a) offer to buy out for a payment in cash or
\n cash equivalents an Option previously granted or (b)
\n authorize an Optionee to elect to cash out an Option
\n previously granted, in either case at such time and based
\n upon such terms and conditions as the Committee shall
\n establish.<\/p>\n
Deferral of The Committee (in its sole discretion) may permit or require
\nDelivery of an Optionee to have Common Shares that otherwise would be
\nShares delivered to such Optionee as a result of the exercise of an
\n Option converted into amounts credited to a deferred
\n compensation account established for such Optionee by the
\n Committee as an entry on the Company’s books. Such amounts
\n shall be determined by reference to the Fair Market Value of
\n such Common Shares as of the date when they otherwise would
\n have been delivered to such Optionee. A deferred
\n compensation account established under this paragraph may be
\n credited with interest or other forms of investment return,
\n as determined by the Committee. An Optionee for whom such an
\n account is established shall have no rights other than those
\n of a general creditor of the Company. Such an account shall
\n represent an unfunded and unsecured obligation of the
\n Company and shall be subject to the terms and conditions of
\n the applicable agreement between such Optionee and the
\n Company. If the conversion of Options is permitted or
\n required, the Committee (in its sole discretion) may
\n establish rules, procedures and forms pertaining to such
\n conversion, including (without limitation) the settlement of
\n deferred compensation accounts established under this
\n paragraph.<\/p>\n
Definitions . Affiliate” means any entity other than a Subsidiary, if
\n the Company and\/or one or more Subsidiaries own not
\n less than 50% of such entity.<\/p>\n
. “Award” means any award of an Option or a Restricted
\n Share under the Plan.<\/p>\n
. “Board” means the Company’s Board of Directors, as
\n constituted from time to time.<\/p>\n
<\/c><\/s><\/table>\n
6<\/p>\n
. “Change in Control” shall mean:<\/p>\n
(a) The consummation of a merger or consolidation of
\n the Company with or into another entity or any other
\n corporate reorganization, if persons who were not
\n stockholders of the Company immediately prior to such
\n merger, consolidation or other reorganization own
\n immediately after such merger, consolidation or other
\n reorganization 50% or more of the voting power of the
\n outstanding securities of each of (i) the continuing or
\n surviving entity and (ii) any direct or indirect parent
\n corporation of such continuing or surviving entity;<\/p>\n
(b) The sale, transfer or other disposition of all or
\n substantially all of the Company’s assets;<\/p>\n
(c) A change in the composition of the Board, as a
\n result of which 50% or fewer of the incumbent directors are
\n directors who either (i) had been directors of the Company
\n on the date 24 months prior to the date of the event that
\n may constitute a Change in Control (the “original
\n directors”) or (ii) were elected, or nominated for election,
\n to the Board with the affirmative votes of at least a
\n majority of the aggregate of the original directors who were
\n still in office at the time of the election or nomination
\n and the directors whose election or nomination was
\n previously so approved; or<\/p>\n
(d) Any transaction as a result of which any person is
\n the “beneficial owner” (as defined in Rule 13d-3 under the
\n Exchange Act), directly or indirectly, of securities of the
\n Company representing at least 50% of the total voting power
\n represented by the Company’s then outstanding voting
\n securities. For purposes of this Subsection (d), the term
\n “person” shall have the same meaning as when used in
\n sections 13(d) and 14(d) of the Exchange Act but shall
\n exclude (i) a trustee or other fiduciary holding securities
\n under an employee benefit plan of the Company or of a Parent
\n or Subsidiary and (ii) a corporation owned directly or
\n indirectly by the stockholders of the Company in
\n substantially the same proportions as their ownership of the
\n common stock of the Company.<\/p>\n
A transaction shall not constitute a Change in Control if its
\n sole purpose is to change the state of the Company’s
\n incorporation or to create a holding company that will be owned
\n in substantially the same<\/p>\n
7<\/p>\n
proportions by the persons who held the Company’s securities
\n immediately before such transaction.<\/p>\n
o “Code” means the Internal Revenue Code of 1986, as amended.<\/p>\n
o “Committee” means a committee of the Board, as described in
\n Article 2.<\/p>\n
o “Common Share” means one share of the common stock of the
\n Company.<\/p>\n
o “Company” means Redback Networks Inc., a Delaware
\n corporation.<\/p>\n
o “Consultant” means a consultant or adviser who provides bona
\n fide services to the Company, a Parent, a Subsidiary or an
\n Affiliate as an independent contractor. Service as a
\n Consultant shall be considered employment for all purposes
\n of this Agreement.<\/p>\n
o “Employee” means a common-law employee of the Company, a
\n Parent, a Subsidiary or an Affiliate.<\/p>\n
o “Exchange Act” means the Securities Exchange Act of 1934, as
\n amended.<\/p>\n
o “Exercise Price” means the amount for which one Common Share
\n may be purchased upon exercise of such Option, as specified
\n in the applicable Stock Option Agreement.<\/p>\n
o “Fair Market Value” means the market price of Common Shares,
\n determined by the Committee in good faith on such basis as
\n it deems appropriate. Whenever possible, the determination
\n of Fair Market Value by the Committee shall be based on the
\n prices reported in The Wall Street Journal. Such
\n ———————–
\n determination shall be conclusive and binding on all
\n persons.<\/p>\n
o “NSO” means a stock option not described in sections 422 or
\n 423 of the Code.<\/p>\n
o “Option” means an NSO granted under this Agreement and
\n entitling the holder to purchase Common Shares.<\/p>\n
o “Optionee” means an individual or estate who holds an
\n Option.<\/p>\n
o “Outside Director” shall mean a member of the Board who is
\n not an Employee. Service as an Outside Director shall be<\/p>\n
8<\/p>\n
considered employment for all purposes of this
\n Agreement.<\/p>\n
o “Parent” means any corporation (other than the Company)
\n in an unbroken chain of corporations ending with the
\n Company, if each of the corporations other than the
\n Company owns stock possessing 50% or more of the total
\n combined voting power of all classes of stock in one of
\n the other corporations in such chain. A corporation
\n that attains the status of a Parent on a date after the
\n adoption of this Agreement shall be considered a Parent
\n commencing as of such date.<\/p>\n
o “Subsidiary” means any corporation (other than the
\n Company) in an unbroken chain of corporations beginning
\n with the Company, if each of the corporations other
\n than the last corporation in the unbroken chain owns
\n stock possessing 50% or more of the total combined
\n voting power of all classes of stock in one of the
\n other corporations in such chain.<\/p>\n
Applicable Law This Agreement will be interpreted and enforced under the
\n laws of the State of Delaware (without regard to their
\n choice-of-law provisions).<\/p>\n
The Plan This Agreement constitutes the entire understanding between
\nand Other you and the Company regarding this option. Any prior
\nAgreements agreements, commitments or negotiations concerning this
\n option are superseded. This agreement, signed by both
\n parties.<\/p>\n
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
\n TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.<\/p>\n
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