Document:

First Amendment to The Home Depot FutureBuilder for Puerto Rico

 Exhibit 10.3 
  
 FIRST AMENDMENT TO 
 THE HOME DEPOT FUTUREBUILDER FOR PUERTO RICO 
 (As Amended and Restated Effective January 1, 2003) 
  
 THIS AMENDMENT to The Home Depot FutureBuilder For Puerto Rico (the
“Plan”) is effective July 5, 2004, by the Administrative Committee of the Plan. 
  
 WITNESSETH : 
  
 WHEREAS, Section
13.1 of the Plan provides that the Administrative Committee has the authority to amend the Plan; and 
  
 WHEREAS, Section 13.3(a) of the Plan provides that the Administrative Committee has the authority to designate an affiliate of Home Depot Puerto Rico,
Inc. as a participating company; and 
  
 WHEREAS, the
Administrative Committee desires to designate Economy Maintenance Supply Company as a participating company as to its employees living and working in Puerto Rico. 
  
 NOW, THEREFORE, the Plan is hereby amended, effective July 5, 2004, as follows: 
  
 1. Section 1.19 is amended by adding the following new subsection (d) to the
end: 
  
 (d) an Employee who is not a bona fide
resident of Puerto Rico and who does not perform labor or services for a Participating Company primarily in Puerto Rico. 
  
 2. Schedule A is amended as attached hereto. 
  
 IN WITNESS WHEREOF, this Amendment has been executed by a duly authorized member of the Administrative Committee on the date first above written.

  

			
	 ADMINISTRATIVE COMMITTEE OF THE HOME DEPOT FUTUREBUILDER FOR
 PUERTO RICO

		
	By:	 	 /s/ Ileana L. Connally

	 	 	Ileana L. Connally
	 	 	Committee Member

 SCHEDULE A 
 PARTICIPATING COMPANIES AND EFFECTIVE DATES 
 [See Plan § 1.47 and § 13.3]

  

			
	 Name:

	 	 Effective Date:

	 The Home Depot Puerto Rico, Inc.
	 	June 15, 1998
		
	 Economy Maintenance Supply Company
	 	July 5, 2004
	 (with respect to associates living and working in Puerto Rico)
	 	 

  

 2Amended and Restated Incentive Stock Option Plan

 Exhibit 10.1 
  
 RESOLVED, that the number of authorized shares in the Amended and Restated Incentive Stock Option Plan shall be increased
from 450,000 shares of common stock to 500,000 shares of common stock.Amendment and Restated Employee Stock Purchase Plan

 Exhibit 10.2 
  
 RESOLVED, that the number of authorized shares in the Amended and Restated Employee Stock Purchase Plan shall be increased
from 30,000 shares of common stock to 45,000 shares of common stock.Redback Networks Inc. 1999 Stock Incentive Plan, as amended and restated

 Exhibit 10.1 
  
  
 REDBACK
NETWORKS INC. 
  
 1999
STOCK INCENTIVE PLAN 
  
 (AS AMENDED AND RESTATED AS OF MAY 6, 2005) 

 TABLE OF CONTENTS 
  

			
	 	  	Page

	 
ARTICLE 1. INTRODUCTION
	  	1
		
	 
ARTICLE 2. ADMINISTRATION
	  	1
	 
2.1 Committee Composition
	  	1
	 
2.2 Committee Responsibilities
	  	1
	 
2.3 Committee for Non-Officer Grants
	  	1
		
	 
ARTICLE 3. SHARES AVAILABLE FOR GRANTS
	  	1
	 
3.1 Basic Limitation
	  	1
	 
3.2 Annual Increase in Shares
	  	2
	 
3.3 Additional Shares
	  	2
		
	 
ARTICLE 4. ELIGIBILITY
	  	2
	 
4.1 Nonstatutory Stock Options and Restricted Shares
	  	2
	 
4.2 Incentive Stock Options
	  	2
		
	 
ARTICLE 5. OPTIONS
	  	2
	 
5.1 Stock Option Agreement
	  	2
	 
5.2 Number of Shares
	  	2
	 
5.3 Exercise Price
	  	2
	 
5.4 Exercisability and Term
	  	2
	 
5.5 Effect of Change in Control
	  	3
	 
5.6 Modification or Assumption of Options
	  	3
	 
5.7 Buyout Provisions
	  	3
	 
5.8 Salary Reduction Option Grants
	  	3
		
	 
ARTICLE 6. PAYMENT FOR OPTION SHARES
	  	3
	 
6.1 General Rule
	  	3
	 
6.2 Surrender of Stock
	  	4
	 
6.3 Exercise/Sale
	  	4
	 
6.4 Exercise/Pledge
	  	4
	 
6.5 Promissory Note
	  	4
	 
6.6 Other Forms of Payment
	  	4
		
	 
ARTICLE 7. RESTRICTED SHARES
	  	4
	 
7.1 Restricted Stock Agreement
	  	4
	 
7.2 Payment for Awards
	  	4
	 
7.3 Vesting Conditions
	  	4
	 
7.4 Voting and Dividend Rights
	  	5
		
	 
ARTICLE 8. PROTECTION AGAINST DILUTION
	  	5
	 
8.1 Adjustments
	  	5
	 
8.2 Dissolution or Liquidation
	  	5
	 
8.3 Reorganizations
	  	5
		
	 
ARTICLE 9. DEFERRAL OF DELIVERY OF SHARES
	  	5
		
	 
ARTICLE 10. AWARDS UNDER OTHER PLANS
	  	6
		
	 
ARTICLE 11. LIMITATION ON RIGHTS
	  	6
	 
11.1 Retention Rights
	  	6
	 
11.2 Stockholders’ Rights
	  	6
	 
11.3 Regulatory Requirements
	  	6

  

 i 

			
	 	  	Page

	 
ARTICLE 12. WITHHOLDING TAXES
	  	6
	 
12.1 General
	  	6
	 
12.2 Share Withholding
	  	6
		
	 
ARTICLE 13. LIMITATION ON PAYMENTS
	  	6
	 
13.1 Scope of Limitation
	  	6
	 
13.2 Basic Rule
	  	7
	 
13.3 Reduction of Payments
	  	7
	 
13.4 Overpayments and Underpayments
	  	7
	 
13.5 Related Corporations
	  	7
		
	 
ARTICLE 14. FUTURE OF THE PLAN
	  	7
	 
14.1 Term of the Plan
	  	7
	 
14.2 Amendment or Termination
	  	8
		
	 
ARTICLE 15. DEFINITIONS
	  	8

  

 ii 

 REDBACK NETWORKS INC. 
 1999 STOCK INCENTIVE PLAN 
  
 
ARTICLE 1. INTRODUCTION. 
  
 The
Plan was adopted by the Board effective as of the date of the Company’s initial public offering. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees,
Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors
and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of Restricted Shares or Options (which may constitute incentive stock options or
nonstatutory stock options). 
  
 The Plan shall be governed by,
and construed in accordance with, the laws of the State of Delaware (except their choice-of-law provisions). 
  
 
ARTICLE 2. ADMINISTRATION. 
  
 
2.1 Committee Composition.    The Plan 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. 
  
 
2.2 Committee Responsibilities.    The Committee shall (a) select the Employees, Outside Directors and Consultants who are to receive Awards under the Plan, (b) determine the type, number,
vesting requirements and other features and conditions of such Awards, (c) interpret the Plan and (d) make all other decisions relating to the operation of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan. The Committee’s determinations under the Plan shall be final and binding on all persons. 
  
 
2.3 Committee for Non-Officer Grants.    The Board may also appoint a secondary committee of the Board, which shall be composed of one or more directors of the Company who need not satisfy the
requirements of Section 2.1. Such secondary committee may administer the Plan with respect to Employees and Consultants who are not considered officers or directors of the Company under section 16 of the Exchange Act, may grant Awards under the Plan
to such Employees and Consultants and may determine all features and conditions of such Awards. Within the limitations of this Section 2.3, any reference in the Plan to the Committee shall include such secondary committee. 
  
 
ARTICLE 3. SHARES AVAILABLE FOR GRANTS. 
  
 
3.1 Basic Limitation.    Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares. Subject to Section 3.2, the aggregate number of Options and
Restricted Shares awarded under the Plan shall not exceed 11,111,864 except for the permitted increases provided for in Section 3.2 below. The limitations of this Section 3.1 and Section 3.2 shall be subject to adjustment pursuant to Article 8.

  

 1 

 
3.2 Increase in Shares.    On May 6, 2005 and May 6, 2006, the aggregate number of Options and Restricted Shares that may be awarded under the Plan shall automatically increase by 3,099,196
shares and 1,611,582 shares respectively, resulting in an aggregate number of 15,822,642 shares available under the Plan. 
  
 
3.3 Additional Shares.    If Options granted under this Plan are forfeited or terminate for any other reason before being exercised, then the corresponding Common Shares shall again become
available for the grant of Options or Restricted Shares under this Plan. If Common Shares issued upon the exercise of Options granted under this Plan are forfeited, then such Common Shares shall again become available for the grant of NSOs and
Restricted Shares under this Plan. If Restricted Shares issued under this Plan are forfeited, then the corresponding Common Shares shall again become available for the grant of NSOs and Restricted Shares under this Plan. The aggregate number of
Common Shares that may be issued under the Plan upon the exercise of ISOs shall not be increased when Restricted Shares or other Common Shares are forfeited. 
  
 
ARTICLE 4. ELIGIBILITY. 
  
 
4.1 Nonstatutory Stock Options and Restricted Shares.    Only Employees, Outside Directors and Consultants shall be eligible for the grant of NSOs and Restricted Shares. 
  
 
4.2 Incentive Stock Options.    Only Employees who are common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In addition, an Employee who owns
more than 10% of the total combined voting power of all classes of outstanding stock of the Company or any of its Parents or Subsidiaries shall not be eligible for the grant of an ISO unless the requirements set forth in section 422(c)(6) of the
Code are satisfied. 
  
 
ARTICLE 5. OPTIONS. 
  
 
5.1 Stock Option Agreement.    Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all
applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. A Stock Option Agreement may provide
that a new Option will be granted automatically to the Optionee when he or she exercises a prior Option and pays the Exercise Price in the form described in Section 6.2. 
  
 
5.2 Number of Shares.    Each Stock Option Agreement shall specify the number of Common Shares subject to the Option and shall provide for the adjustment of such number in accordance with
Article 8. Options granted to any Optionee in a single fiscal year of the Company shall not cover more than three million Common Shares, except that Options granted to a new Employee in the fiscal year of the Company in which his or her service as
an Employee first commences shall not cover more than six million Common Shares. The limitations set forth in the preceding sentence shall be subject to adjustment in accordance with Article 8. 
  
 
5.3 Exercise Price.    Each Stock Option Agreement shall specify the Exercise Price; provided that the Exercise Price under an ISO shall in no event be less than 100% of the Fair Market Value
of a Common Share on the date of grant and the Exercise Price under an NSO shall in no event be less than 30% of the Fair Market Value of a Common Share on the date of grant. In the case of an NSO, a Stock Option Agreement may specify an Exercise
Price that varies in accordance with a predetermined formula while the NSO is outstanding. 
  
 
5.4 Exercisability and Term.    Each Stock Option Agreement shall specify the date or event when all or any installment of the Option is to become exercisable. The Stock Option Agreement shall
also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant. A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability
or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service. 
  

 2 

 
5.5 Effect of Change in Control.    The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Common
Shares subject to such Option in the event that a Change in Control occurs with respect to the Company, subject to the following limitations: 
  
 (a) In the case of an ISO, the acceleration of exercisability shall not occur without the Optionee’s written consent. 
  
 (b) If the Company and the other party to the transaction
constituting a Change in Control agree that such transaction is to be treated as a “pooling of interests” for financial reporting purposes, and if such transaction in fact is so treated, then the acceleration of exercisability shall not
occur to the extent that the Company’s independent accountants and such other party’s independent accountants separately determine in good faith that such acceleration would preclude the use of “pooling of interests” accounting.

  
 In addition, acceleration of exercisability may be required under Section 8.3.

  
 
5.6 Modification or Assumption of Options.    Within the limitations of the Plan, 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. 
  
 
5.7 Buyout Provisions.    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 establish. 
  
 
5.8 Salary Reduction Option Grants.    The Committee, at its sole discretion, may offer one or more Employees, Outside Directors and Consultants an opportunity to receive NSOs in consideration
of a voluntary reduction in their cash compensation from the Company, a Parent or a Subsidiary. The Committee shall determine the maximum and minimum amounts of the reduction that an Employee, Outside Director or Consultant may elect. If an
Employee, Outside Director or Consultant designated by the Committee wishes to receive NSOs under this Section 5.8, then he or she shall file a written and irrevocable election with the Company prior to the close of a calendar year. Such election
shall specify the dollar amount by which the compensation of the Employee, Outside Director or Consultant shall be reduced during the next following calendar year (within the limitations prescribed by the Committee). On the first trading day of the
calendar year next following the receipt of an election by the Company, the Employee, Outside Director or Consultant who filed such election shall automatically receive an NSO. Such NSO shall cover a number of Common Shares equal to (a) the amount
of the compensation reduction elected by the Optionee divided by (b) two-thirds of the Fair Market Value of one Common Share on the date of grant. The Exercise Price of such NSO shall be equal to one-third of the Fair Market Value of one Common
Share on the date of grant. Such NSO shall become exercisable in 12 equal monthly installments over the calendar year in which the grant occurred, but no portion of such NSO shall become exercisable after the Optionee’s service has terminated
for any reason. The term of such NSO shall be 10 calendar years, commencing with the calendar year in which the grant occurred (regardless of whether the Optionee’s service has terminated). Except as provided in this Section 5.8, the NSOs
granted under this Section 5.8 shall be subject to the provisions applicable to other NSOs granted under the Plan. 
  
 
ARTICLE 6. PAYMENT FOR OPTION SHARES. 
  
 
6.1 General Rule.    The entire Exercise Price of Common Shares issued upon exercise of Options shall be payable in cash or cash equivalents at the time when such Common Shares are purchased,
except as follows: 
  
 (a) In the case of an ISO
granted under the Plan, payment shall be made only pursuant to the express provisions of the applicable Stock Option Agreement. The Stock Option Agreement may specify that payment may be made in any form(s) described in this Article 6. 

 

 3 

 (b) In the case of an NSO, the Committee may at any time accept payment in any form(s)
described in this Article 6. 
  
 
6.2 Surrender of Stock.    To the extent that this Section 6.2 is applicable, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Common Shares
that are already owned by the Optionee. Such Common Shares shall be valued at their Fair Market Value on the date when the new Common Shares are purchased under the Plan. The Optionee shall not surrender, or attest to the ownership of, Common Shares
in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes. 
  
 
6.3 Exercise/Sale.    To the extent that this Section 6.3 is applicable, all or any part of the Exercise Price and any withholding taxes may be paid by delivering (on a form prescribed by the
Company) an irrevocable direction to a securities broker approved by the Company to sell all or part of the Common Shares being purchased under the Plan and to deliver all or part of the sales proceeds to the Company. 
  
 
6.4 Exercise/Pledge.    To the extent that this Section 6.4 is applicable, all or any part of the Exercise Price and any withholding taxes may be paid by delivering (on a form prescribed by the
Company) an irrevocable direction to pledge all or part of the Common Shares being purchased under the Plan to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part of the loan proceeds to the
Company. 
  
 
6.5 Promissory Note.    To the extent that this Section 6.5 is applicable, all or any part of the Exercise Price and any withholding taxes may be paid by delivering (on a form prescribed by the
Company) a full-recourse promissory note. However, the par value of the Common Shares being purchased under the Plan, if newly issued, shall be paid in cash or cash equivalents. 
  
 
6.6 Other Forms of Payment.    To the extent that this Section 6.6 is applicable, all or any part of the Exercise Price and any withholding taxes may be paid in any other form that is
consistent with applicable laws, regulations and rules. 
  
 
ARTICLE 7. RESTRICTED SHARES. 
  
 
7.1 Restricted Stock Agreement.    Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted
Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical.

  
 
7.2 Payment for Awards.    Subject to the following sentence, Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without
limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services. To the extent that an Award consists of newly issued Restricted Shares, the consideration shall consist exclusively of cash, cash equivalents or
past services rendered to the Company (or a Parent or Subsidiary) or, for the amount in excess of the par value of such newly issued Restricted Shares, full-recourse promissory notes, as the Committee may determine. 
  
 
7.3 Vesting Conditions.    Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified
in the Restricted Stock Agreement. A Restricted Stock Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting
Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company, except as provided in the next following sentence. If the Company and the other
party to the transaction constituting a Change in Control agree that such transaction is to be treated 

  

 4 

 
as a “pooling of interests” for financial reporting purposes, and if such transaction in fact is so treated, then the acceleration of vesting shall
not occur to the extent that the Company’s independent accountants and such other party’s independent accountants separately determine in good faith that such acceleration would preclude the use of “pooling of interests”
accounting. 
  
 
7.4 Voting and Dividend Rights.    The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders. A
Restricted Stock Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as
the Award with respect to which the dividends were paid. 
  
 
ARTICLE 8. PROTECTION AGAINST DILUTION. 
  
 
8.1 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 Options and Restricted Shares available for future Awards under Article 3, (b) the
limitations set forth in Section 5.2, (c) the number of Common Shares covered by each outstanding Option or (d) the Exercise Price under each outstanding Option. Except as provided in this Article 8, a Participant shall have 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. 
  
 
8.2 Dissolution or Liquidation.    To the extent not previously exercised, Options shall terminate immediately prior to the dissolution or liquidation of the Company. 
  
 
8.3 Reorganizations.    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. 
  
 
ARTICLE 9. DEFERRAL OF DELIVERY OF SHARES. 
  
 The Committee (in its sole discretion) may permit or require 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 Article 9 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 Article 9. 
  

 5 

 
ARTICLE 10. AWARDS UNDER OTHER PLANS. 
  
 The Company may grant awards under other plans or programs. Such awards may be settled in the form of Common Shares issued under this Plan. Such Common Shares shall be treated for all purposes under the Plan like Restricted Shares and
shall, when issued, reduce the number of Common Shares available under Article 3. 
  
 
ARTICLE 11. LIMITATION ON RIGHTS. 
  
 
11.1 Retention Rights.    Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an Employee, Outside Director or Consultant. The Company
and its Parents, Subsidiaries and Affiliates reserve the right to terminate the service of any Employee, Outside Director or Consultant at any time, with or without cause, subject to applicable laws, the Company’s certificate of incorporation
and by-laws and a written employment agreement (if any). 
  
 
11.2 Stockholders’ Rights.    A Participant shall have no dividend rights, voting rights or other rights as a stockholder with respect to any Common Shares covered by his or her Award
prior to the time when a stock certificate for such Common Shares is issued or, in the case of an Option, the time when he or she becomes entitled to receive such Common Shares by filing a notice of exercise and paying the Exercise Price. No
adjustment shall be made for cash dividends or other rights for which the record date is prior to such time, except as expressly provided in the Plan. 
  
 
11.3 Regulatory Requirements.    Any other provision of the Plan notwithstanding, the obligation of the Company to issue Common Shares under the Plan shall be subject to all applicable laws,
rules and regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Common Shares pursuant to any Award prior to the satisfaction of all legal
requirements relating to the issuance of such Common Shares, to their registration, qualification or listing or to an exemption from registration, qualification or listing. 
  
 
ARTICLE 12. WITHHOLDING TAXES. 
  
 
12.1 General.    To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Common Shares or make any cash payment under the Plan until such obligations are satisfied. 
  
 
12.2 Share Withholding.    The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of
any Common Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Common Shares that he or she previously acquired. Such Common Shares shall be valued at their Fair Market Value on the date when they are
withheld or surrendered. 
  
 
ARTICLE 13. LIMITATION ON PAYMENTS. 
  
 
13.1 Scope of Limitation.    This Article 13 shall apply to an Award only if: 
  
 (a) The independent auditors most recently selected by the Board (the “Auditors”) determine that the after-tax value of such
Award to the Participant, taking into account the effect of all federal, state and local income taxes, employment taxes and excise taxes applicable to the Participant (including the excise tax under section 4999 of the Code), will be greater after
the application of this Article 13 than it was before the application of this Article 13; or 
  
 (b) The Committee, at the time of making an Award under the Plan or at any time thereafter, specifies in writing that such Award shall be
subject to this Article 13 (regardless of the after-tax value of such Award to the Participant). 
  

 6 

 If this Article 13 applies to an Award, it shall supersede any contrary provision of the Plan or of any Award granted
under the Plan. 
  
 
13.2 Basic Rule.    In the event that the Auditors determine that any payment or transfer by the Company under the Plan to or for the benefit of a Participant (a “Payment”) would be
nondeductible by the Company for federal income tax purposes because of the provisions concerning “excess parachute payments” in section 280G of the Code, then the aggregate present value of all Payments shall be reduced (but not below
zero) to the Reduced Amount. For purposes of this Article 13, the “Reduced Amount” shall be the amount, expressed as a present value, which maximizes the aggregate present value of the Payments without causing any Payment to be
nondeductible by the Company because of section 280G of the Code. 
  
 
13.3 Reduction of Payments.    If the Auditors determine that any Payment would be nondeductible by the Company because of section 280G of the Code, then the Company shall promptly give the
Participant notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and the Participant may then elect, in his or her sole discretion, which and how much of the Payments shall be eliminated or reduced (as long
as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall advise the Company in writing of his or her election within 10 days of receipt of notice. If no such election is made by the Participant within
such 10-day period, then the Company may elect which and how much of the Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall notify the Participant
promptly of such election. For purposes of this Article 13, present value shall be determined in accordance with section 280G(d)(4) of the Code. All determinations made by the Auditors under this Article 13 shall be binding upon the Company and the
Participant and shall be made within 60 days of the date when a Payment becomes payable or transferable. As promptly as practicable following such determination and the elections hereunder, the Company shall pay or transfer to or for the benefit of
the Participant such amounts as are then due to him or her under the Plan and shall promptly pay or transfer to or for the benefit of the Participant in the future such amounts as become due to him or her under the Plan. 
  
 
13.4 Overpayments and Underpayments.    As a result of uncertainty in the application of section 280G of the Code at the time of an initial determination by the Auditors hereunder, it is
possible that Payments will have been made by the Company which should not have been made (an “Overpayment”) or that additional Payments which will not have been made by the Company could have been made (an “Underpayment”),
consistent in each case with the calculation of the Reduced Amount hereunder. In the event that the Auditors, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Participant which the Auditors believe
has a high probability of success, determine that an Overpayment has been made, such Overpayment shall be treated for all purposes as a loan to the Participant which he or she shall repay to the Company, together with interest at the applicable
federal rate provided in section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Participant to the Company if and to the extent that such payment would not reduce the amount which is subject to taxation under
section 4999 of the Code. In the event that the Auditors determine that an Underpayment has occurred, such Underpayment shall promptly be paid or transferred by the Company to or for the benefit of the Participant, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code. 
  
 
13.5 Related Corporations.    For purposes of this Article 13, the term “Company” shall include affiliated corporations to the extent determined by the Auditors in accordance with
section 280G(d)(5) of the Code. 
  
 
ARTICLE 14. FUTURE OF THE PLAN. 
  
 
14.1 Term of the Plan.    The Plan shall become effective on the date of the Company’s initial public offering. The Plan shall remain in effect until it is terminated under Section 14.2,
except that no ISOs shall be granted on or after the 10th anniversary of the later of (a) the date when the Board
adopted the Plan or (b) the date when the Board adopted the most recent increase in the number of Common Shares available under Article 3 that was approved by the Company’s stockholders. 
  

 7 

 
14.2 Amendment or Termination.    The Board may, at any time and for any reason, amend or terminate the Plan. An amendment of the Plan shall be subject to the approval of the Company’s
stockholders only to the extent required by applicable laws, regulations or rules. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan, or any amendment thereof, shall not affect any Award previously
granted under the Plan. 
  
 
ARTICLE 15. DEFINITIONS. 
  
 15.1
“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. 
  
 15.2 “Award” means any award of an Option or a Restricted Share under the Plan. 
  
 15.3 “Board” means the Company’s Board of Directors, as
constituted from time to time. 
  
 15.4 “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 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. 
  
 15.5 “Code” means the Internal Revenue Code of 1986, as
amended. 
  
 15.6 “Committee” means a committee
of the Board, as described in Article 2. 
  
 15.7 “Common
Share” means one share of the common stock of the Company. 
  
 15.8 “Company” means Redback Networks Inc., a Delaware corporation. 
  

 8 

 15.9 “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 the Plan, except as provided in Section 4.2. 
  
 15.10 “Employee” means a common-law employee of the Company,
a Parent, a Subsidiary or an Affiliate. 
  
 15.11
“Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 15.12 “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. 
  
 15.13 “Fair Market Value” means the market price of Common
Shares, determined by the Committee in good faith on such basis 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. 
  
 15.14 “ISO” means an incentive stock option described in section 422(b) of the Code. 
  
 15.15 “NSO” means a stock option not described in sections 422 or 423 of the Code. 
  
 15.16 “Option” means an ISO or NSO granted under the Plan
and entitling the holder to purchase Common Shares. 
  
 15.17
“Optionee” means an individual or estate who holds an Option. 
  
 15.18 “Outside Director” shall mean a member of the Board who is not an Employee. Service as an Outside Director shall be considered employment for all purposes of the Plan, except as provided in
Section 4.2. 
  
 15.19 “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. 
  
 15.20 “Participant” means an individual or estate who holds
an Award. 
  
 15.21 “Plan” means this Redback
Networks Inc. 1999 Stock Incentive Plan, as amended from time to time. 
  
 15.22 “Restricted Share” means a Common Share awarded under the Plan. 
  
 15.23 “Restricted Stock Agreement” means the agreement between the Company and the recipient of a Restricted Share that contains the
terms, conditions and restrictions pertaining to such Restricted Share. 
  
 15.24 “Stock Option Agreement” means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her Option. 
  
 15.25 “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. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date. 
  

 9

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