exv10w1










Exhibit 10.1









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.




 









 






	 	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)




 









 






	 	 	 	$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.




 









 












	 	 	 	“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




 









 






	 	 	 	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
	 	 






 









 







I have read and accept this employment offer:




	 	 	 
	/s/
Hitesh Sheth
	 	JULY 23, 2009 
	 
	Signature of

	 	Dated
	 
	 	 
	August 14, 2009
 

Start Date