REDBACK NETWORKS INC. 1999 STOCK INCENTIVEPLAN STOCKOPTION AGREEMENT KEVIN DENUCCIO, PRESIDENT AND CEO

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.

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.

In the event a Change in Control (as defined under the Plan) occurs, you shall have accelerated vesting of all then unvested shares under this option other than unvested shares subject to the final twelve months of vesting (or such lesser amount if less than twelve months of vesting remains on the shares subject to this option) which shall not accelerate and shall remain subject to the normal vesting schedule per the terms of the applicable stock option or other applicable agreement.

In the event a Change in Control occurs and if within 12 months following such Change in Control, your service with the Company is “Involuntarily Terminated” other than for “Cause” (as such terms are defined in your existing employment agreement with the Company dated August 17, 2001, as amended (the “Agreement”)), all then outstanding unvested shares under this option will vest; provided, however, that the following circumstances shall not in and of themselves constitute “Good Reason” under the terms of the Agreement: 1) you not being appointed Chief Executive Officer of the acquiring entity; or 2) you remaining as the chief executive officer of the subsidiary or division substantially containing the Company’s business following the Change of Control.

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.

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. 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.

You agree that the shares purchased upon exercise of the Option will not be delivered to you, but will directly and immediately be sold by the Company through a stockbroker.

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.

The text of the Plan is incorporated in this Agreement by reference.

This Agreement and the Plan constitute 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.