REDBACK NETWORKS INC. 1999 STOCK INCENTIVE PLAN STOCK OPTION AGREEMENT KEVIN DENUCCIO, PRESIDENT AND CEO

Exhibit 10.46

REDBACK NETWORKS INC. 1999 STOCK INCENTIVE PLAN

STOCK OPTION AGREEMENT

XXXXX XXXXXXXX, PRESIDENT AND CEO

General		This Stock Option Agreement is applicable to the stock option grant indicated on the Notice of Stock Option Grant to which it is attached.
Tax Treatment		This option is intended to be an incentive stock option under section 422 of the Internal Revenue Code or 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. 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.
Change in Control		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.
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 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.

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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 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. 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.
Irrevocable Power of Attorney		By signing this agreement you grant the Company an irrevocable power of attorney to effectuate, on your behalf, any sale and transfer of the shares purchased upon exercise of the Option. This power of attorney shall survive, to the fullest extent permitted by law, the death, bankruptcy or any other event affecting you.
Exercise Price and Withholding Taxes		The Exercise Price, taxes and any costs due in connection with the exercise of the Option will directly and to the full extent be withheld from the purchase price received upon the sale of the shares, as described above.
Restrictions on Resale		By signing this Agreement, you agree not to sell any option shares (i.e. you agree not to exercise any option) 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.

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Retention Rights		Your option or this Agreement do 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.
No Stockholder Rights		You, or your estate or heirs, have no rights as a stockholder of the Company by giving the required notice of exercise to the Company and paying the exercise price. No adjustments are made for dividends or other rights.
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 pursuant to the Plan.
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 and Other Agreements		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.

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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