Exhibit 10.1
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July 16, 2009                    
Hitesh Sheth
Aruba Networks, Inc. (the “Company”) is pleased to offer you employment on the
following terms:

  1.   Position: You will start in a full-time position as Chief Operating
Officer, reporting to the Chief Executive Officer, effective August 14, 2009. By
signing this letter, you confirm to the Company that you are under no
contractual or other legal obligations that would prohibit you from performing
your duties for the Company.     2.   Compensation: You will be paid an annual
salary of $325,000 payable in accordance with the Company’s standard payroll
schedule on a semi-monthly basis. This salary will be subject to adjustment
pursuant to the Company’s employee compensation policies in effect from time to
time.     3.   Employee Benefits: As an Executive Officer of the Company you
will be eligible to participate in those Company-sponsored benefits, as
described in the employee benefit summary enclosed with this letter, that are
generally applicable to executives of the Company.     4.   Equity: Subject to
the approval of the Company’s Board of Directors (the “Board”) or the
Compensation Committee of the Board of Directors (“the “Committee”), you will be
granted an option to purchase 900,000 shares of the Company’s Common Stock (the
“Option”). The exercise price per share will be determined in accordance with
the Company’s Equity Award Grant Policy. The Option will be subject to the terms
and conditions applicable to options granted under the Company’s 2007 Equity
Incentive Plan, as described in that Plan and the applicable stock option
agreement. As will be described in your stock option agreement, you will vest in
25% of the shares underlying the Option after 12 months of continuous service,
and the balance of the shares will vest in equal monthly installments over the
following 36 months of continuous service, such that the Option will be fully
vested on the fourth anniversary of continuous service.         We will also
recommend to the Board or the Committee that you be granted 50,000 Restricted
Stock Units (RSUs) that will be settled in shares of the Company’s Common Stock,
subject to the terms and conditions of the Plan, as may be modified from time to
time, and your RSU agreement. If approved, your RSUs will vest in their entirety
after 3 months of continuous service, subject to your continuous service to the
Company through such vesting date.         We will provide you with your stock
option agreement and RSU agreement as soon as practical after the grant date.

 

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  5.   Severance: If prior to or apart from a Change in Control (as defined
below), or after twelve (12) months following a Change in Control, the Company
terminates your employment with the Company other than for Cause (as defined
below), death or disability, then, subject to your signing and not revoking a
separation agreement and release of claims in a form reasonably satisfactory to
the Company and provided that such separation agreement and release of claims
becomes effective and irrevocable no later than sixty (60) days following the
termination date, you will be entitled to receive continuing payments of
severance pay at a rate equal to your Base Salary rate and Benefits, as then in
effect, for six (6) months from the date of such termination in accordance with
the Company’s normal payroll policies.         The receipt of any severance
benefits pursuant to this Section will be subject to your not violating the
provisions of the Company’s standard Proprietary Information and Inventions
Agreement. In the event you should breach the provisions of the Company’s
standard Proprietary Information and Inventions Agreement, all continuing
payments and benefits to which you may otherwise be entitled pursuant to this
Section will immediately cease.         If you voluntarily terminate your
employment with the Company, or if your employment is terminated for Cause by
the Company or due to or disability, then (i) all vesting will terminate
immediately with respect to any outstanding equity awards, (ii) all payments of
compensation by the Company hereunder will terminate immediately (except as to
amounts already earned), and (iii) you will not be eligible for severance
benefits.         For purposes of this Severance provision, “Cause” is defined
as (i) an act of dishonesty made by in connection with your responsibilities as
an employee, (ii) conviction of, or plea of nolo contendere to, a felony or any
crime involving fraud, embezzlement or any other act of moral turpitude,
(iii) gross misconduct, (iv) unauthorized use or disclosure of any proprietary
information or trade secrets of the Company or any other party to whom you owe
an obligation of nondisclosure as a result of your relationship with the
Company; (v) willful breach of any of your obligations under any written
agreement or covenant with the Company; or (vi) continued failure to perform
employment duties after receipt of a written demand of performance from the
Company with specifically sets forth the factual basis for the Company’s belief
that you have not substantially performed your duties and have failed to cure
such non-performance to the Company’s satisfaction within 10 business days after
receiving such notice.     6.   Change of Control: If there is a Change of
Control (as defined below) of the Company and your employment terminates as a
result of an Involuntary Termination (as defined below) without Cause (as
defined below) within 12 months following such Change of Control, then 50% of
the shares subject to the Option shall immediately vest and become exercisable
(for avoidance of doubt, no more than 100% of the shares subject to the
outstanding portion of the Option may vest and become exercisable pursuant to
this provision).         In addition, in the event of a Change of Control and
your employment terminates as a result of an Involuntary Termination without
Cause within 12 months following such Change of Control, subject to your signing
and not revoking a separation agreement and release of claims in favor of the
Company (the “Release”), you will receive a lump sum severance payment equal to
50% of your annual base salary as in effect immediately prior to your
termination date or (if greater)

 

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      $162,500. No severance will be paid or provided until the Release becomes
effective, which must occur within sixty (60) days following your termination of
employment. Subject to any payment delay necessary to comply with Section 409A
(as defined below), your severance payment will be paid by in cash and in full
on the 61st day following your termination of employment. If you die before all
amounts have been paid, such unpaid amounts will be paid to your designated
beneficiary, if living, or otherwise to your personal representative in a
lump-sum payment (less any withholding taxes) as soon as possible following your
death.         For purposes of this Change of Control provision, the following
terms shall have the following meanings:         “Change of Control” means the
occurrence of any of the following events:              A. Change in Ownership
of the Company. A change in the ownership of the Company which occurs on the
date that any one person, or more than one person acting as a group (“Person”),
acquires ownership of the stock of the Company that, together with the stock
held by such Person, constitutes more than fifty percent (50%) of the total
voting power of the stock of the Company; provided, however, that the
acquisition of additional stock by any one Person who is considered to own more
than fifty percent (50%) of the total voting power of the stock of the Company
will not be considered a Change of Control; or              B. Change in
Effective Control of the Company. If the Company has a class of securities
registered pursuant to Section 12 of the Exchange Act, a change in the effective
control of the Company which occurs on the date that a majority of members of
the Board is replaced during any 12 month period by directors whose appointment
or election is not endorsed by a majority of the members of the Board prior to
the date of the appointment or election. For purposes of this clause (B), if any
Person is considered to be in effective control of the Company, the acquisition
of additional control of the Company by the same Person will not be considered a
Change of Control; or              C. Change in Ownership of a Substantial
Portion of the Company’s Assets. A change in the ownership of a substantial
portion of the Company’s assets which occurs on the date that any Person
acquires (or has acquired during the 12 month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value equal to or more than 50% of the total
gross fair market value of all of the assets of the Company immediately prior to
such acquisition or acquisitions; provided, however, that for purposes of this
subsection, the following will not constitute a change in the ownership of a
substantial portion of the Company’s assets: (i) a transfer to an entity that is
controlled by the Company’s stockholders immediately after the transfer, or
(ii) a transfer of assets by the Company to: (a) a stockholder of the Company
(immediately before the asset transfer) in exchange for or with respect to the
Company’s stock, (b) an entity, fifty percent (50%) or more of the total value
or voting power of which is owned, directly or indirectly, by the Company, (c) a
Person, that owns, directly or indirectly, fifty percent (50%) or more of the
total value or voting power of all the outstanding stock of the Company, or
(d) an entity, at least fifty percent (50%) of the total value or voting power
of which is owned, directly or indirectly, by a Person.

 

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      “Cause” means (a) unauthorized use or disclosure of the Company’s
confidential information or trade secrets, (b) a material failure to comply with
the Company’s written policies or rules, (c) conviction of, or plea of “guilty”
or “no contest” to, a felony under the laws of the United States or any state
thereof or (d) gross misconduct.         “Involuntary Termination” means either
(a) involuntary discharge by the Company for reasons other than Cause or
(b) voluntary resignation following (i) a change in position with the Company
that materially reduces Participant’s level of authority or responsibility,
(ii) a material reduction in Participant’s base salary or (iii) receipt of
notice that Participant’s principal workplace will be relocated more than 35
miles.         The Company intends that all severance payments made under this
letter comply with the requirements of Section 409A of the Internal Revenue Code
of 1986, as amended, and any guidance promulgated thereunder (“Section 409A”) so
that none of the payments or benefits will be subject to the additional tax
imposed under Section 409A, and any ambiguities herein will be interpreted to so
comply. No severance to be paid to you, if any, pursuant to this letter, when
considered together with any other severance payments or separation benefits
that are considered deferred compensation under Section 409A (together, the
“Deferred Payments”) will be paid or otherwise provided until you have a
“separation from service” within the meaning of Section 409A. If, at the time of
your termination of employment, you are a “specified employee” within the
meaning of Section 409A and the payment of the Deferred Payments will be delayed
to the extent necessary to avoid the imposition of the additional tax imposed
under Section 409A, which generally means that you will receive payment on the
first payroll date that occurs on or after the date that is 6 months and 1 day
following your termination of employment. You and the Company agree to work
together in good faith to consider amendments to this letter and to take such
reasonable actions which are necessary, appropriate or desirable to avoid
imposition of any additional tax or income recognition prior to actual payment
to you under Section 409A. In no event will the Company reimburse you for any
taxes that may be imposed on you as a result of Section 409A.     7.   Annual
Performance Bonus. On or before September 1, 2009, we will recommend to the
Committee that it establish and approve a target bonus of 125% of your base
salary paid in shares of Common Stock that would be issued to you upon the
successful achievement of performance objectives to be recommended to the
Committee by the Company’s Chief Executive Officer (the “Performance Shares”).
The Company will issue the Performance Shares to you when and if the Committee
determines in its reasonable discretion that you have achieved the performance
objectives, and the number of shares issued will be based on the fair market
value of such common stock on the date the Committee approves the grant. In
addition, in order to receive the Performance Shares, you must remain employed
with the Company through the end of fiscal year 2010 in order to earn any such
bonus, which will be settled no later than the later of fifteenth day of the
third month following the (i) fiscal year of the Company in which the bonus is
earned, or (ii) the calendar year in which the bonus is earned.     8.  
Proprietary Information and Inventions Agreement; New Employee Guidelines: Like
all Company employees, you will be required, as a condition to your employment
with the

 

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      Company, to sign the Company’s standard Proprietary Information and
Inventions Agreement, a copy of which is attached hereto as Exhibit A. In
addition, you will be required to sign the Company’s New Employee Guidelines, a
copy of which is attached hereto as Exhibit B.     9.   Employment Relationship:
Employment with the Company is for no specific period of time. Your employment
with the Company will be “at will,” meaning that either you or the Company may
terminate your employment at any time and for any reason, with or without cause.
Any contrary representations that may have been made to you are superseded by
this offer. This is the full and complete agreement between you and the Company
on this term subject to the provisions of Section 6 hereof. Although your job
duties, title, compensation and benefits, as well as the Company’s personnel
policies and procedures, may change from time to time, the “at will” nature of
your employment may only be changed in an express written agreement signed by
you and the Chief Executive Officer of the Company.     10.   Outside
Activities: While you render services to the Company, you agree that you will
not engage in any other employment, consulting or other business activity
without the written consent of the Company. While you render services to the
Company, you also will not assist any person or entity in competing with the
Company, in preparing to compete with the Company or in hiring any employees or
consultants of the Company.     11.   Withholding Taxes: All forms of
compensation referred to in this letter are subject to reduction to reflect
applicable withholding and payroll taxes.     12.   Background Investigation:
This offer is contingent on the Company’s receipt and approval of the results of
a background investigation to which you have already consented. This offer will
expire seven calendar days from the date of this letter, unless extended in
writing by me.     13.   Entire Agreement: This letter supersedes and replaces
any prior understandings or agreements, whether oral or written, between you and
the Company regarding the subject matter described in this letter.

We hope that you find the foregoing terms acceptable. You may indicate your
agreement with these terms and accept this offer by signing and dating both the
enclosed duplicate original of this letter and the enclosed Proprietary
Information and Inventions Agreement and returning them to me. As required by
law, your employment with the Company is also contingent upon you providing
legal proof of your identity and authorization to work in the United States. We
look forward to having you join. If you have any questions, please call me at
408-227-4500. Welcome!

     
Very truly yours,
   
 
   
/s/ Aaron Bean

 
Aaron Bean
   
Vice President, Human Resources
   

 

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I have read and accept this employment offer:

     
/s/ Hitesh Sheth
  JULY 23, 2009   
Signature of
  Dated
 
   
August 14, 2009
 
Start Date