Exhibit 99.3
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FORM OF WRITTEN COMPENSATORY AGREEMENT
REDBACK NETWORKS INC.
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: [OPTIONEE]
Total Number of Shares Granted: [NUMBER OF SHARES]
Type of Option: Nonstatutory Stock Option
Exercise Price Per Share: [$ _______]
Date of Grant: [__________________]
Vesting Commencement Date: [__________________]
Vesting Schedule: This option becomes exercisable with
respect to 1/84th of the Shares
subject to this option when you
complete each month of continuous
service after the Vesting
Commencement Date until fully vested.
The vesting will be accelerated upon
achievement of the milestones set
forth in Attachment A in accordance
with the schedule set forth in
Attachment A.
Expiration Date: [__________________]
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.
By:
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Title:
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REDBACK NETWORKS INC.
STOCK OPTION AGREEMENT
Tax Treatment This option is intended to be a nonstatutory 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.
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.) To the
extent not previously exercised, Options shall terminate
immediately prior to the dissolution or liquidation of
the Company.
Regular Termination If your service as an employee, 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
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.
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 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.
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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.
. 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.
Withholding Taxes You will not be allowed to exercise this option
and 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.
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.
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Retention Rights Your option or this Agreement does not 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.
Stockholder Rights You, or your estate or heirs, have no rights as a
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 set forth below.
Adjustments In the event of a stock split, a stock dividend or a
similar change in Company stock, the number of shares
covered by this option and the exercise price per
share may be adjusted as follows:
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, an adjustment
shall be made in the number of Common Shares covered
by each outstanding Option and the Exercise Price
under each outstanding Option.
Effect of Merger or In the event that the Company is a party to a merger
Other Reorganization or other reorganization, outstanding Options 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.
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).
Entire Agreement 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.
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