Document:

exv10w5

Exhibit 10.5

ARUBA NETWORKS, INC.

2007 EQUITY INCENTIVE PLAN

(Amended and restated February 24, 2011)

	 	1.	 	Purposes of the Plan. The purposes of this Plan are:

	 	•	 	to attract and retain the best available personnel for positions of
substantial responsibility,
	 
	 	•	 	to provide additional incentive to Employees, Directors and Consultants, and
	 
	 	•	 	to promote the success of the Company’s business.

          The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted
Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Shares and/or Deferred Stock
Units.

	 	2.	 	Definitions. As used herein, the following definitions will apply:

          (a) “Administrator” means the Board or any of its Committees
as will be administering the Plan, in accordance with Section 4 of the
Plan.

          (b) “Applicable Laws” means the requirements relating to the
administration of equity-based awards under U.S. state corporate laws,
U.S. federal and state securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted and the
applicable laws of any other country or jurisdiction where Awards are, or
will be, granted under the Plan or a sub-plan or addendum hereto.

          (c) “Award” means, individually or collectively, a grant
under the Plan of Options, SARs, Restricted Stock, Restricted Stock Units,
Performance Shares or Deferred Stock Units.

          (d) “Award Agreement” means the written or electronic
agreement setting forth the terms and provisions applicable to each Award
granted under the Plan. The Award Agreement is subject to the terms and
conditions of the Plan.

          (e) “Board” means the Board of Directors of the Company.

          (f) “Change in Control” means:

 

 

               (i) for Awards granted prior to November 12, 2008 the occurrence of any of the following
events:

                    (1) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company’s then outstanding voting securities; or

                    (2) The consummation of the sale or disposition by the Company of all or substantially all of
the Company’s assets;

                    (3) A change in the composition of the Board occurring within a two-year period, as a result
of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors”
means directors who either (A) are Directors as of the effective date of the Plan, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of at least a majority
of the Incumbent Directors at the time of such election or nomination (but will not include an
individual whose election or nomination is in connection with an actual or threatened proxy contest
relating to the election of directors to the Company); or

                    (4) The consummation of a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or consolidation.

               (ii) Notwithstanding the foregoing, for Awards granted on or after November 12, 2008,
Change in Control means the occurrence of any of the following events:

                    (1) 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 for purposes of this subsection 2(f)(ii)(1), 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 in Control; or

                    (2) 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 twelve (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 (ii), 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 in Control; or

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                    (3) 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 twelve (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 fifty percent (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 2(f)(ii)(3), the following will not constitute a
change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an
entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a
transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the
asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty
percent (50%) or more of the total value or voting power of which is owned, directly or indirectly,
by the Company, (3) 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 (4) an entity, at least
fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly,
by a Person described in this subsection 2(f)(ii)(3)(B)(3). For purposes of this subsection
2(f)(ii)(3), gross fair market value means the value of the assets of the Company, or the value of
the assets being disposed of, determined without regard to any liabilities associated with such
assets.

               For purposes of this Section 2(f)(ii), persons will be considered to be acting as a group if
they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition
of stock, or similar business transaction with the Company.

               Notwithstanding the foregoing, a transaction shall not be deemed a Change in Control unless
the transaction qualifies as a change in control event within the meaning of Code Section 409A, as
it has been and may be amended from time to time, and any proposed, temporary or final Treasury
Regulations and Internal Revenue Service guidance thereunder that has been promulgated or may be
promulgated thereunder from time to time.

               Further and for the avoidance of doubt, a transaction shall not constitute a Change in Control
if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole
purpose is to create a holding company that shall be owned in substantially the same proportions by
the persons who held the Company’s securities immediately before such transaction.

          (g) “Code” means the Internal Revenue Code of 1986, as
amended. Any reference to a section of the Code herein will be a
reference to any successor or amended section of the Code.

          (h) “Committee” means a committee of Directors or of other
individuals satisfying Applicable Laws appointed by the Board in
accordance with Section 4 hereof.

          (i) “Common Stock” means the common stock of the Company.

          (j) “Company” means Aruba Networks, Inc., a Delaware
corporation, or any successor thereto.

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          (k) “Consultant” means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to
such entity.

          (l) “Deferred Stock Unit” means a deferred stock unit Award
granted to a Participant pursuant to Section 11.

          (m) “Director” means a member of the Board.

          (n) “Disability” means total and permanent disability as
defined in Section 22(e)(3) of the Code, provided that in the case of
Awards other than Incentive Stock Options, the Administrator in its
discretion may determine whether a permanent and total disability exists
in accordance with uniform and non-discriminatory standards adopted by the
Administrator from time to time.

          (o) “Employee” means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company. Neither service as a Director nor payment of a director’s fee by
the Company will be sufficient to constitute “employment” by the Company.

          (p) “Exchange Act” means the Securities Exchange Act of 1934,
as amended.

          (q) “Exchange Program” means a program under which (i)
outstanding Awards are surrendered or cancelled in exchange for Awards of
the same type (which may have lower exercise prices and different terms),
awards of a different type, and/or cash, (ii) Participants would have the
opportunity to transfer any outstanding Awards to a financial institution
or other person or entity selected by the Administrator, and/or (iii) the
exercise price of an outstanding Award is reduced. The Administrator will
determine the terms and conditions of any Exchange Program in its sole
discretion.

          (r) “Fair Market Value” means, as of any date, the value of
Common Stock determined as follows:

               (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq Global Select Market, Nasdaq Global Market or the
Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or
system on the day of determination (or, if the day of determination is not a market trading day, on
the first market trading day following the day of determination), as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;

               (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share will be the mean between

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the high bid and low asked prices for the Common Stock on the day of determination, as
reported in The Wall Street Journal or such other source as the Administrator deems reliable;

               (iii) For purposes of any Awards granted on the Registration Date, the Fair Market Value will
be the initial price to the public as set forth in the final prospectus included within the
registration statement in Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company’s Common Stock; or

               (iv) In the absence of an established market for the Common Stock, the Fair Market Value will
be determined in good faith by the Administrator.

          (s) “Fiscal Year” means the fiscal year of the Company.

          (t) “Incentive Stock Option” means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of
the Code and the regulations promulgated thereunder and which is expressly
designated by the Administrator at the time of grant as an incentive stock
option.

          (u) “Inside Director” means a Director who is an Employee.

          (v) “Nonstatutory Stock Option” means an Option that by its
terms does not qualify or is not intended to qualify as an Incentive Stock
Option.

          (w) “Officer” means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

          (x) “Option” means a stock option granted pursuant to the
Plan.

          (y) “Optioned Stock” means the Common Stock subject to an
Award.

          (z) “Outside Director” means a Director who is not an
Employee.

          (aa) “Outside Director Compensation Policy” means the
Company’s Outside Director Compensation Policy, as may be amended from
time to time.

          (bb) “Parent” means a “parent corporation,” whether now or
hereafter existing, as defined in Section 424(e) of the Code and the
regulations thereunder.

          (cc) “Participant” means the holder of an outstanding Award.

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          (dd) “Performance Share” means an Award denominated in Shares
which may be earned in whole or in part upon attainment of performance
goals or other vesting criteria as the Administrator may determine
pursuant to Section 10.

          (ee) “Period of Restriction” means the period during which
the transfer of Shares of Restricted Stock are subject to restrictions and
therefore, the Shares are subject to a substantial risk of forfeiture.
Such restrictions may be based on the passage of time (including the
continuation of employment or service), the achievement of target levels
of performance, or the occurrence of other events as determined by the
Administrator.

          (ff) “Plan” means this 2007 Equity Incentive Plan.

          (gg) “Registration Date” means the effective date of the
first registration statement that is filed by the Company and declared
effective pursuant to Section 12(g) of the Exchange Act, with respect to
any class of the Company’s securities.

          (hh) “Restricted Stock” means Shares issued pursuant to a
Restricted Stock award under Section 7 of the Plan, or issued pursuant to
the early exercise of an Option.

          (ii) “Restricted Stock Unit” means a bookkeeping entry
representing an amount equal to the Fair Market Value of one Share,
granted pursuant to Section 8. Each Restricted Stock Unit represents an
unfunded and unsecured obligation of the Company.

          (jj) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan.

          (kk) “Section 16(b)” means Section 16(b) of the Exchange Act.

          (ll) “Service Provider” means an Employee, Director or
Consultant.

          (mm) “Share” means a share of the Common Stock, as adjusted
in accordance with Section 15 of the Plan.

          (nn) “Stock Appreciation Right” or “SAR” means an
Award, granted alone or in connection with an Option, that pursuant to
Section 9 is designated as a SAR.

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          (oo) “Subsidiary” means a “subsidiary corporation,” whether
now or hereafter existing, as defined in Section 424(f) of the Code and
the regulations thereunder.

	 	3.	 	Stock Subject to the Plan.

          (a) Stock Subject to the Plan. Subject to the provisions of
Section 15 of the Plan, the maximum aggregate number of Shares that may be
issued under the Plan is (i) the number of Shares which have been reserved
but not issued under the Company’s 2002 Stock Plan (the “2002 Plan”) as of
the Registration Date, up to a maximum of seven million (7,000,000)
Shares, (ii) any Shares returned to the 2002 Plan as a result of
termination of options or repurchase of Shares issued under such plan, up
to a maximum of ten million (10,000,000) Shares, and (iii) an annual
increase to be added on the first day of the Company’s fiscal year
beginning with the Company’s 2008 fiscal year, equal to the lesser of (A)
fifteen million (15,000,000) Shares, or (B) five percent (5%) of the
outstanding Shares on the last day of the immediately preceding Company
fiscal year. The Shares may be authorized, but unissued, or reacquired
Common Stock.

          (b) Lapsed Awards. If an Award expires or becomes
unexercisable without having been exercised in full, is surrendered
pursuant to an Exchange Program, or, with respect to Restricted Stock,
Restricted Stock Units, Performance Shares or Deferred Stock Units, is
forfeited to or repurchased by the Company due to failure to vest, the
unpurchased Shares (or for Awards other than Options or SARs the forfeited
or repurchased Shares) which were subject thereto will become available
for future grant or sale under the Plan (unless the Plan has terminated).
With respect to SARs, only Shares actually issued pursuant to an SAR will
cease to be available under the Plan; all remaining Shares under SARs will
remain available for future grant or sale under the Plan (unless the Plan
has terminated). Shares that have actually been issued under the Plan
under any Award will not be returned to the Plan and will not become
available for future distribution under the Plan; provided, however, that
if Shares issued pursuant to awards of Restricted Stock, Restricted Stock
Units, Performance Shares or Deferred Stock Units are repurchased by the
Company or are forfeited to the Company due to their failure to vest, such
Shares will become available for future grant under the Plan. Shares used
to pay the exercise price of an Award or to satisfy the minimum statutory
withholding obligations related to an Award will become available for
future grant or sale under the Plan. Notwithstanding the foregoing and,
subject to adjustment as provided in Section 15, the maximum number of
Shares that may be issued upon the exercise of Incentive Stock Options
shall equal the aggregate Share number stated in Section 3(a), plus, to
the extent allowable under Section 422 of the Code

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and the regulations thereunder, any Shares that become available for
issuance under the Plan under this Section 3(b).

          (c) Share Reserve. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares
as will be sufficient to satisfy the requirements of the Plan.

	 	4.	 	Administration of the Plan.

          (a) Procedure.

               (i) Multiple Administrative Bodies. Different Committees with respect to different
groups of Service Providers may administer the Plan.

               (ii) Section 162(m). To the extent that the Administrator determines it to be
desirable to qualify Awards granted hereunder as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two (2) or
more “outside directors” within the meaning of Section 162(m) of the Code.

               (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule 16b-3.

               (iv) Other Administration. Other than as provided above, the Plan will be
administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy
Applicable Laws.

          (b) Powers of the Administrator. Subject to the provisions
of the Plan, and in the case of a Committee, subject to the specific
duties delegated by the Board to such Committee, the Administrator will
have the authority, in its discretion:

               (i) to determine the Fair Market Value;

               (ii) to select the Service Providers to whom Awards may be granted hereunder;

               (iii) to determine the number of Shares or equivalent units to be covered by each Award
granted hereunder;

               (iv) to approve forms of Award Agreement for use under the Plan;

               (v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any
Award granted hereunder. Such terms and conditions include, but are not limited to, the grant
date, the exercise price, the time or times when Awards may be exercised or earned (which may be
based on performance criteria), any vesting acceleration or waiver of forfeiture or repurchase
restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto,
based in each case on such factors as the Administrator will determine;

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               (vi) to institute an Exchange Program;

               (vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

               (viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of satisfying applicable
foreign laws or qualifying for preferred tax treatment under applicable foreign tax laws;

               (ix) to modify or amend each Award (subject to Section 20(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of Awards longer than
is otherwise provided for in the Plan (subject to compliance with Code Section 409A);

               (x) to allow Participants to satisfy withholding tax obligations in such manner as prescribed
in Section 16;

               (xi) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Award previously granted by the Administrator;

               (xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of
Shares that would otherwise be due to such Participant under an Award; and

               (xiii) to make all other determinations deemed necessary or advisable for administering the
Plan.

          (c) Effect of Administrator’s Decision. The Administrator’s
decisions, determinations and interpretations will be final and binding on
all Participants and any other holders of Awards.

	 	5.	 	Eligibility. Awards may be granted to Service Providers; provided, however that
Incentive Stock Options may be granted only to Employees.

	 	6.	 	Stock Options.

          (a) Limitations. The Administrator will have complete
discretion to determine the number of Shares that will be subject to an
Option granted to any Service Provider. Each Option will be designated in
the Award Agreement as either an Incentive Stock Option or a Nonstatutory
Stock Option. However, notwithstanding such designation, to the extent
that the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by the
Participant during any calendar year (under all plans of the Company and
any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000),
such Options will be treated as Nonstatutory Stock Options. For purposes
of this Section 6(a), Incentive Stock Options will be taken into account
in the order in which they were granted. The Fair Market
Value of the Shares will be determined as of the time the Option with
respect to such Shares is granted.

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          (b) Term of Option. The term of each Option will be stated
in the Award Agreement. In the case of an Incentive Stock Option, the
term will be ten (10) years from the date of grant or such shorter term as
may be provided in the Award Agreement. Moreover, in the case of an
Incentive Stock Option granted to a Participant who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten
percent (10%) of the total combined voting power of all classes of stock
of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option will be five (5) years from the date of grant or such shorter
term as may be provided in the Award Agreement.

          (c) Option Exercise Price and Consideration.

               (i) Exercise Price. The per share exercise price for the Shares to be issued pursuant
to exercise of an Option will be determined by the Administrator, subject to the following:

                    (1) In the case of an Incentive Stock Option

                         a) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant.

                         b) granted to any Employee other than an Employee described in paragraph (A) immediately
above, the per Share exercise price will be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.

                         c) Notwithstanding the foregoing, Incentive Stock Options may be granted with a per Share
exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant pursuant to a transaction described in, and in a manner consistent with, Section
424(a) of the Code.

                    (2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less
than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

               (ii) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised and will determine any
conditions that must be satisfied before the Option may be exercised.

               (iii) Form of Consideration. The Administrator will determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator will determine the acceptable form of consideration at
the time of grant. Such consideration may consist entirely of: (1) cash; (2) check;
(3) other Shares, provided Shares acquired directly or indirectly from the Company, (A) have
been owned by the Participant and not subject to substantial risk of forfeiture for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to
the

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aggregate exercise price of the Shares as to which said Option will be exercised; (4)
consideration received by the Company under a broker-assisted or other cashless exercise program;
(5) such other consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws; or (6) any combination of the foregoing methods of payment.

                         (d) Exercise of Option.

               (i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder
will be exercisable according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Award Agreement. An Option may not be
exercised for a fraction of a Share.

                    An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such
form as the Administrator specify from time to time) from the person entitled to exercise the
Option, and (ii) full payment for the Shares with respect to which the Option is exercised
(together with applicable withholding taxes). Full payment may consist of any consideration and
method of payment authorized by the Administrator and permitted by the Award Agreement and the
Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or,
if requested by the Participant, in the name of the Participant and his or her spouse. Until the
Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends or any other
rights as a stockholder will exist with respect to the Optioned Stock, notwithstanding the exercise
of the Option. The Company will issue or cause to be issued (and which issuance may be in
electronic form) such Shares promptly after the Option is exercised. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the Shares are issued,
except as provided in Section 15 of the Plan.

               Exercising an Option in any manner will decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.

               (ii) Termination of Relationship as a Service Provider. If a Participant ceases to be
a Service Provider, other than upon the Participant’s death or Disability, the Participant may
exercise his or her Option within such period of time as is specified in the Award Agreement to the
extent that the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In the absence of a
specified time in the Award Agreement, the Option will remain exercisable for three (3) months
following the Participant’s termination. Unless otherwise provided by the Administrator, if on the
date of termination the Participant is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option will revert to the Plan. If after termination the
Participant does not exercise his or her Option within the time specified by the Administrator, the
Option will terminate, and the Shares covered by such Option will revert to the Plan.

               (iii) Disability of Participant. If a Participant ceases to be a Service Provider as
a result of the Participant’s Disability, the Participant may exercise his or her Option within
such period of time as is specified in the Award Agreement to the extent the Option is vested on
the date of termination (but in no event later than the expiration of the term of such Option as
set

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forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for twelve (12) months following the Participant’s termination.
Unless otherwise provided by the Administrator, if on the date of termination the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
will revert to the Plan. If after termination the Participant does not exercise his or her Option
within the time specified herein, the Option will terminate, and the Shares covered by such Option
will revert to the Plan.

               (iv) Death of Participant. If a Participant dies while a Service Provider, the Option
may be exercised following the Participant’s death within such period of time as is specified in
the Award Agreement to the extent that the Option is vested on the date of death (but in no event
may the option be exercised later than the expiration of the term of such Option as set forth in
the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has
been designated prior to Participant’s death in a form acceptable to the Administrator. If no such
beneficiary has been designated by the Participant, then such Option may be exercised by the
personal representative of the Participant’s estate or by the person(s) to whom the Option is
transferred pursuant to the Participant’s will or in accordance with the laws of descent and
distribution. In the absence of a specified time in the Award Agreement, the Option will remain
exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the
Administrator, if at the time of death Participant is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If
the Option is not so exercised within the time specified herein, the Option will terminate, and the
Shares covered by such Option will revert to the Plan.

	 	7.	 	Restricted Stock.

          (a) Grant of Restricted Stock. Subject to the terms and
provisions of the Plan, the Administrator, at any time and from time to
time, may grant Shares of Restricted Stock to Service Providers in such
amounts as the Administrator, in its sole discretion, will determine.

          (b) Restricted Stock Agreement. Each Award of Restricted
Stock will be evidenced by an Award Agreement that will specify the Period
of Restriction, the number of Shares granted, and such other terms and
conditions as the Administrator, in its sole discretion, will determine.
Unless the Administrator determines otherwise, the Company as escrow agent
will hold Shares of Restricted Stock until the restrictions on such Shares
have lapsed.

          (c) Transferability. Except as provided in this Section 7,
Shares of Restricted Stock may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction.

          (d) Other Restrictions. The Administrator, in its sole
discretion, may impose such other restrictions on Shares of Restricted
Stock as it may deem advisable or appropriate. The Administrator may set

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restrictions based upon the achievement of Company-wide, departmental,
business unit, or individual goals (including, but not limited to,
continued employment or service) or any other basis determined by the
Administrator in its discretion.

          (e) Removal of Restrictions. Except as otherwise provided in
this Section 7, Shares of Restricted Stock covered by each Restricted
Stock grant made under the Plan will be released from escrow as soon as
practicable after the last day of the Period of Restriction or at such
other time as the Administrator may determine. The Administrator, in its
discretion, may accelerate the time at which any restrictions will lapse
or be removed.

          (f) Voting Rights. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to those Shares, unless the
Administrator determines otherwise.

          (g) Dividends and Other Distributions. During the Period of
Restriction, Service Providers holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with
respect to such Shares unless the Administrator provides otherwise. If
any such dividends or distributions are paid in Shares, the Shares will be
subject to the same restrictions on transferability and forfeitability as
the Shares of Restricted Stock with respect to which they were paid.

          (h) Return of Restricted Stock to Company. On the date set
forth in the Award Agreement, the Restricted Stock for which restrictions
have not lapsed will revert to the Company and again will become available
for grant under the Plan.

	 	8.	 	Restricted Stock Units.

          (a) Grant. Restricted Stock Units may be granted at any time
and from time to time as determined by the Administrator. After the
Administrator determines that it will grant Restricted Stock Units under
the Plan, it shall advise the Participant in an Award Agreement of the
terms, conditions, and restrictions related to the grant, including the
number of Restricted Stock Units.

          (b) Vesting Criteria and Other Terms. The Administrator
shall set vesting criteria in its discretion, which, depending on the
extent to which the criteria are met, will determine the number of
Restricted Stock Units that will be paid out to the Participant. The
Administrator may set
vesting criteria based upon the achievement of Company-wide,
departmental, business unit, or individual goals (including, but not
limited

-13-

 

to, continued employment or service), or any other basis
determined by the Administrator in its discretion.

          (c) Earning Restricted Stock Units. Upon meeting the
applicable vesting criteria, the Participant shall be entitled to receive
a payout as specified in the Restricted Stock Unit Award Agreement.
Notwithstanding the foregoing, at any time after the grant of Restricted
Stock Units, the Administrator, in its sole discretion, may reduce or
waive any vesting criteria that must be met to receive a payout.

          (d) Form and Timing of Payment. Payment of earned Restricted
Stock Units shall be made as soon as practicable after the date(s) set
forth in the Restricted Stock Unit Award Agreement. The Administrator may
only settle earned Restricted Stock Units in Shares.

          (e) Cancellation. On the date set forth in the Restricted
Stock Unit Award Agreement, all unearned Restricted Stock Units shall be
forfeited to the Company.

	 	9.	 	Stock Appreciation Rights.

          (a) Grant of SARs. Subject to the terms and conditions of
the Plan, a SAR may be granted to Service Providers at any time and from
time to time as will be determined by the Administrator, in its sole
discretion.

          (b) Number of Shares. The Administrator will have complete
discretion to determine the number of SARs granted to any Service
Provider.

          (c) Exercise Price and Other Terms. The per share exercise
price for the Shares to be issued pursuant to exercise of an SAR shall be
determined by the Administrator and shall be no less than one hundred
percent (100%) of the Fair Market Value per Share on the date of grant,
except that Stock Appreciation Rights may be granted with a per Share
exercise price of less than one hundred percent (100%) of the Fair Market
Value per Share on the date of grant pursuant to a transaction described
in, and in a manner consistent with, Section 424(a) of the Code and the
regulations thereunder. Otherwise the Administrator, subject to the
provisions of the Plan, shall have complete discretion to determine the
terms and conditions of SARs granted under the Plan; provided, however,
that no SAR may have a term of more than ten (10) years from the date of
grant.

          (d) SAR Agreement. Each SAR grant will be evidenced by an
Award Agreement that will specify the exercise price, the term of the
SAR, the conditions of exercise, and such other terms and conditions
as the Administrator, in its sole discretion, will determine.

-14-

 

          (e) Expiration of SARs. An SAR granted under the Plan
will expire upon the date determined by the Administrator, in its sole
discretion, and set forth in the Award Agreement. Notwithstanding the
foregoing, the rules of Section 6(d) also will apply to SARs.

          (f) Payment of SAR Amount. Upon exercise of an SAR, a
Participant will be entitled to receive payment from the Company in an
amount determined by multiplying:

               (i) The difference between the Fair Market Value of a Share on the date of exercise over the
exercise price; times

               (ii) The number of Shares with respect to which the SAR is exercised.

     The payment upon SAR exercise may only be in Shares of equivalent value (rounded down to the
nearest whole Share).

     10. Performance Shares.

     (a) Grant of Performance Shares. Subject to the terms and
conditions of the Plan, Performance Shares may be granted to Service
Providers at any time as shall be determined by the Administrator, in its
sole discretion. The Administrator shall have complete discretion to
determine (i) the number of Shares subject to a Performance Share award
granted to any Participant, and (ii) the conditions that must be
satisfied, which typically will be based principally or solely on
achievement of performance milestones but may include a service-based
component, upon which is conditioned the grant or vesting of Performance
Shares. Performance Shares shall be granted in the form of units to
acquire Shares. Each such unit shall be the equivalent of one Share for
purposes of determining the number of Shares subject to an Award. Until
the Shares are issued, no right to vote or receive dividends or any other
rights as a stockholder shall exist with respect to the units to acquire
Shares.

     (b) Other Terms. The Administrator, subject to the
provisions of the Plan, shall have complete discretion to determine the
terms and conditions of Performance Shares granted under the Plan.
Performance Share grants shall be subject to the terms, conditions, and
restrictions determined by the Administrator at the time the stock is
awarded, which may include such performance-based milestones as are
determined appropriate by the Administrator. The Administrator may
require the recipient to sign a Performance Shares Award Agreement as a
condition of the award. Any certificates representing the Shares of stock
awarded shall bear such legends as shall be determined by the
Administrator.

     (c) Performance Share Award Agreement. Each Performance
Share grant shall be evidenced by an Award Agreement that

 -15- 

 

     shall specify
such other terms and conditions as the Administrator, in its sole
discretion, shall determine.

     (d) Cancellation. On the date set forth in the Performance
Share Award Agreement, all unearned Performance Shares shall be forfeited
to the Company.

     11. Deferred Stock Units. Deferred Stock Units shall consist of a Restricted Stock,
Restricted Stock Unit or Performance Share Award that the Administrator, in its sole discretion
permits to be paid out in installments or on a deferred basis, in accordance with rules and
procedures established by the Administrator. Deferred Stock Units shall remain subject to the
claims of the Company’s general creditors until distributed to the Participant.

     12. Awards to Outside Directors. Outside Directors will be entitled to receive all
types of Awards (except Incentive Stock Options) under this Plan, including automatic and
nondiscretionary Awards granted pursuant to the Outside Director Compensation Policy and
nondiscretionary Awards not covered under the Outside Director Compensation Policy.

     13. Leaves of Absence/Transfers Between Locations. Unless the Administrator provides
otherwise or except as otherwise required by Applicable Laws, vesting of Awards granted hereunder
shall cease commencing on the first day of any unpaid leave of absence and shall only recommence
upon return to active service. A Service Provider will not cease to be an Employee in the case of
(i) any leave of absence approved by the Company or (ii) transfers between locations of the Company
or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no
such leave may exceed three (3) months (the “Maximum Leave Period”), unless reemployment upon
expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of
a leave of absence approved by the Company is not so guaranteed, then three (3) months following
the day after the end of the Maximum Leave Period any Incentive Stock Option held by the
Participant will cease to be treated as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option.

     14. Transferability of Awards. Unless determined otherwise by the Administrator, an
Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award will contain such additional terms and conditions as the Administrator
deems appropriate.

     15. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

          (a) Adjustments. In the event that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, or
other change in the corporate structure of the Company affecting the
Shares occurs, the Administrator, in order to prevent diminution or enlargement of the
benefits or potential benefits intended to be made available under the
Plan,

-16-

 

shall adjust the number and class of Shares that may be delivered
under the Plan and/or the number, class, and price of Shares covered by
each outstanding Award, and the numerical Share limits in Section 3 of the
Plan and the number of Shares issuable pursuant to Options to be granted
under Section 12 of the Plan.

          (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator will notify
each Participant as soon as practicable prior to the effective date of
such proposed transaction. To the extent it has not been previously
exercised, an Award will terminate immediately prior to the consummation
of such proposed action.

          (c) Change in Control. In the event of a merger or Change in
Control, each outstanding Award will be treated as the Administrator
determines, including, without limitation, that each Award be assumed or
an equivalent option or right substituted by the successor corporation or
a Parent or Subsidiary of the successor corporation. The Administrator
shall not be required to treat all Awards similarly in the transaction.

          In the event that the successor corporation does not assume or substitute for the Award, the
Participant will fully vest in and have the right to exercise all of his or her outstanding Options
and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be
vested or exercisable, all restrictions on Restricted Stock, Restricted Stock Units, Performance
Shares and Deferred Stock Units will lapse, and, with respect to Awards with performance-based
vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred
percent (100%) on-target levels and all other terms and conditions met. In addition, if an Option
or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the
Administrator will notify the Participant in writing or electronically that the Option or Stock
Appreciation Right will be exercisable for a period of time determined by the Administrator in its
sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of
such period.

          For the purposes of this subsection (c), an Award will be considered assumed if, following the
Change in Control, the Award confers the right to purchase or receive, for each Share subject to
the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or
other securities or property) received in the Change in Control by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the Change in Control is not
solely common stock of the successor corporation or its Parent, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be received upon the
exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit,
Performance Share or Deferred Stock Unit, for each Share subject to such Award, to be solely common
stock of
the successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.

-17-

 

          Notwithstanding anything in this Section 15(c) to the contrary, an Award that vests is earned
or paid-out upon the satisfaction of one or more performance goals will not be considered assumed
if the Company or its successor modifies any of such performance goals without the Participant’s
consent; provided, however, a modification to such performance goals only to reflect the successor
corporation’s post-Change in Control corporate structure will not be deemed to invalidate an
otherwise valid Award assumption.

          (d) Outside Director Awards. With respect to Awards granted
to an Outside Director that are assumed or substituted for, if on the date
of or following such assumption or substitution the Participant’s status
as a Director or a director of the successor corporation, as applicable,
is terminated other than upon a voluntary resignation by the Participant
(unless such resignation is at the request of the acquirer), then the
Participant will fully vest in and have the right to exercise Options
and/or Stock Appreciation Rights as to all of the Optioned Stock,
including Shares as to which such Awards would not otherwise be vested or
exercisable, all restrictions on Restricted Stock and Restricted Stock
Units will lapse, and, with respect to Performance Shares, all performance
goals or other vesting criteria will be deemed achieved at one hundred
percent (100%) on-target levels and all other terms and conditions met.

     16. Tax Withholding.

          (a) Withholding Requirements. Prior to the delivery of any
Shares or cash pursuant to an Award (or exercise thereof), the Company
will have the power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy
federal, state, local, foreign or other taxes (including the Participant’s
FICA obligation) required to be withheld with respect to such Award (or
exercise thereof).

          (b) Withholding Arrangements. The Administrator, in its sole
discretion and pursuant to such procedures as it may specify from time to
time, may permit a Participant to satisfy such tax withholding obligation,
in whole or in part by (without limitation) (a) paying cash, (b) electing
to have the Company withhold otherwise deliverable cash or Shares having a
Fair Market Value equal to the minimum statutory amount required to be
withheld, (c) delivering to the Company already-owned Shares having a Fair
Market Value equal to the minimum statutory amount required to be
withheld, or (d) a combination of the foregoing. The Fair Market Value of
the Shares to be withheld or delivered will be determined as of the date
that the taxes are required to be withheld.

     17. No Effect on Employment or Service. Neither the Plan nor any Award will confer
upon a Participant any right with respect to continuing the Participant’s relationship as a Service
Provider with the Company, nor will they interfere in any way with the Participant’s right or the

-18-

 

Company’s right to terminate such relationship at any time, with or without cause, to the extent
permitted by Applicable Laws.

     18. Date of Grant. The date of grant of an Award will be, for all purposes, the date
on which the Administrator makes the determination granting such Award, or such other later date as
is determined by the Administrator. Notice of the determination will be provided to each
Participant within a reasonable time after the date of such grant.

     19. Term of Plan. Subject to Section 23 of the Plan, the Plan will become effective
upon its adoption by the Board. It will continue in effect for a term of ten (10) years unless
terminated earlier under Section 20 of the Plan.

     20. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.

          (b) Stockholder Approval. The Company will obtain
stockholder approval of any Plan amendment to the extent necessary and
desirable to comply with Applicable Laws.

          (c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan will impair the rights
of any Participant, unless mutually agreed otherwise between the
Participant and the Administrator, which agreement must be in writing and
signed by the Participant and the Company. Termination of the Plan will
not affect the Administrator’s ability to exercise the powers granted to
it hereunder with respect to Awards granted under the Plan prior to the
date of such termination.

     21. Conditions Upon Issuance of Shares.

          (a) Legal Compliance. Shares will not be issued pursuant to
the exercise of an Award unless the exercise of such Award and the
issuance and delivery of such Shares will comply with Applicable Laws and
will be further subject to the approval of counsel for the Company with
respect to such compliance.

          (b) Investment Representations. As a condition to the
exercise of an Award, the Company may require the person exercising such
Award to represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel
for the Company, such a representation is required.

     22. Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of
any

-19-

 

liability in respect of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained.

     23. Stockholder Approval. The Plan will be subject to approval by the stockholders of
the Company within twelve (12) months after the date the Plan is adopted by the Board. Such
stockholder approval will be obtained in the manner and to the degree required under Applicable
Laws.

-20-exv10w13

Exhibit 10.13

Aruba Networks, Inc.

Outside Director Compensation Policy

(Effective as of February 24, 2011)

          Aruba Networks, Inc. (the “Company”) believes that compensation of its Directors, including
granting equity compensation, represents a powerful tool to attract, retain and reward Directors
who are not Employees of the Company (“Outside Directors”) and to align the interests of our
Outside Directors with those of our stockholders. This Outside Director Compensation Policy (the
“Policy”) is intended to formalize the Company’s policy regarding grants of equity compensation to
its Outside Directors.

Equity Compensation

	 	1.	 	Definitions.

	 	(a)	 	General. Unless otherwise defined herein, capitalized terms
used in this Policy will have the meaning given such terms in the Company’s 2007
Equity Incentive Plan (the “2007 Plan”).
	 
	 	(b)	 	Additional Definitions. As used herein, the following
definitions will apply:

	 	i.	 	“Audit Committee” means the Audit Committee of the
Board.
	 
	 	ii.	 	“Compensation Committee” means the Compensation
Committee of the Board.
	 
	 	iii.	 	“Corporate Governance and Nominating Committee”
means the Corporate
Governance and Nominating Committee of the Board.
	 
	 	iv.	 	“Value” means (i) with respect to any Restricted
Stock Units pursuant to any Award granted pursuant to this Policy, the
product of (A) the Fair Market Value of one Share on the grant date of such
Award and (B) the aggregate number of Restricted Stock Units pursuant to
such Award, and (ii) with respect to any Option granted pursuant to an
Award granted pursuant to this Policy, the value of such Option, determined
by using the Black-Scholes option valuation methodology, on the grant date
of such Award.

	 	2.	 	Board Service.

	 	(a)	 	General. Outside Directors will be entitled to receive all
types of Awards (except Incentive Stock Options) under the 2007 Plan, including
discretionary Awards not covered under this Policy. All grants of Awards to Outside
Directors pursuant to Sections 2(d) through 2(h) of this Policy will be automatic
and nondiscretionary, except as otherwise provided herein, and will be made in
accordance with the following provisions:
	 
	 	(b)	 	Type of Option. Options granted pursuant to this Policy will
be Nonstatutory Stock Options and, except as otherwise provided herein, will be
subject to the other terms and conditions of the 2007 Plan.

 

 

	 	(c)	 	No Discretion. No person will have any discretion to select
which Outside Directors will be granted Awards under this Policy or to determine the
number of Shares to be covered by such Awards (except as provided in Section 2(k)
below and Section 15 of the 2007 Plan).
	 
	 	(d)	 	Initial Award. Each person who first becomes an Outside
Director following February 24, 2011 will be automatically granted (i) an Option to
purchase 50,000 Shares (the “Initial Option Award”) and (ii) 10,000 Restricted Stock
Units (the “Initial RSU Award” and, together with the Initial Option Award, the
“Initial Award”) on or about the date on which such person first becomes an Outside
Director, whether through election by the stockholders of the Company or appointment
by the Board to fill a vacancy; provided, however, that an Inside Director who
ceases to be an Inside Director, but who remains a Director, will not receive an
Initial Award.
	 
	 	(e)	 	Annual Award. Each Outside Director will be automatically
granted an Option and/or Restricted Stock Units, as determined under Section 2(i),
with an aggregate Value of $230,000 (an “Annual Award”) on each date of the annual
meeting of the stockholders of the Company beginning in 2011, if as of such date, he
or she will have served on the Board for at least the preceding six (6) months.
	 
	 	(f)	 	Committee Chair Awards. On each date of the annual meeting
of the stockholders of the Company beginning in 2011, (i) any Outside Director who
is then serving as Chairman of the Audit Committee will be automatically granted an
Option and/or Restricted Stock Units, as determined under Section 2(i), with an
aggregate Value of $20,000, (ii) any Outside Director who is then serving as
Chairman of the Compensation Committee will be automatically granted an Option
and/or Restricted Stock Units, as determined under Section 2(i), with an aggregate
Value of $12,000, (iii) any Outside Director who is then serving as Chairman of the
Corporate Governance and Nominating Committee will be automatically granted an
Option and/or Restricted Stock Units, as determined under Section 2(i), with an
aggregate Value of $6,000, and (iv) any Outside Director who is then serving as
Chairman of any standing committee of the Board (other than the Audit Committee, the
Compensation Committee or the Corporate Governance and Nominating Committee) will be
automatically granted an Option and/or Restricted Stock Units, as determined under
Section 2(i), with an aggregate Value of $6,000. An Outside Director shall be
entitled to more than one Award pursuant to this Section 2(f) (a “Committee Chair
Award”) to the extent that on the date of any applicable annual meeting of the
stockholders of the Company, he or she is the Chairman of more than one standing
committee of the Board. Each Committee Chair Award granted pursuant to this Section
2(f) shall be in addition to any other Award(s) to which the Outside Director may be
entitled under any other section of this Policy.
	 
	 	(g)	 	Committee Member Award. On each date of the annual meeting
of the stockholders of the Company beginning in 2011, (i) any Outside Director who
is then serving as a non-Chairman member of the Audit Committee will be
automatically granted an Option and/or Restricted Stock Units, as determined under
Section 2(i), with an aggregate Value of $10,000, (ii) any Outside Director who is
then serving as a non-Chairman member of the Compensation Committee will be
automatically granted an Option and/or Restricted Stock Units, as determined under
Section 2(i), with an aggregate Value of $8,000, (iii) any Outside Director who is
then serving as a non-Chairman member of the Corporate Governance and Nominating
Committee will be automatically granted an Option and/or Restricted Stock Units, as
determined under Section 2(i), with an aggregate Value of $6,000, and (iv) any
Outside Director who is then serving as a non-Chairman member of any standing
committee of the Board (other than the Audit Committee, the Compensation Committee
or the Corporate Governance and Nominating Committee) will be automatically granted
an Option and/or Restricted Stock Units, as determined under Section 2(i), with an
aggregate Value of $6,000.

-2-

 

	 	 	 	An Outside Director shall be entitled to more than one Award pursuant to this
Section 2(g) (a “Committee Member Award”) to the extent that on the date of any
applicable annual meeting of the stockholders of the Company, he or she is a
non-Chairman member of more than one standing committee of the Board. Each
Committee Member Award granted pursuant to this Section 2(g) shall be in addition
to any other Award(s) to which the Outside Director may be entitled under any
other section of this Policy.
	 
	 	(h)	 	Lead Independent Director Award. On each date of the annual
meeting of the stockholders of the Company beginning in 2011, any Outside Director
who is then serving as Lead Independent Director will be automatically granted an
Option and/or Restricted Stock Units, as determined under Section 2(i), with an
aggregate Value of $10,000. Each Award granted pursuant to this Section 2(h) (a
“Lead Independent Director Award”) shall be in addition to any other Award(s) to
which the Outside Director may be entitled under any other section of this Policy.
	 
	 	(i)	 	Number of Option Shares and Restricted Stock Units for
Value-Based Director Awards. The number of Shares subject to Options and/or
number of Restricted Stock Units pursuant to any Annual Award, any Committee Chair
Award, any Committee Member Award and any Lead Independent Director Award (each, a
“Value-Based Director Award”) shall be determined such that:

	 	i.	 	40% of the aggregate Value of the applicable
Value-Based Director Award will be granted in the form of Restricted Stock
Units (a “40% Value RSU Award”); and
	 
	 	ii.	 	60% of the aggregate Value of the applicable
Value-Based Director Award will be granted in the form of either Restricted
Stock Units (a “60% Value RSU Award”) or an Option (a “60% Value Option
Award”), at the election (or deemed election) of the applicable recipient
Director as described below.

	 	 	 	Any determination as to the Value of any Option and/or Restricted Stock Units
pursuant to any Award granted in accordance with this Policy will be made by the
Administrator in its sole discretion.
	 
	 	 	 	On or before the day immediately preceding the date of the annual meeting of the
stockholders of the Company or such earlier deadline as may be established by the
Administrator in its discretion (the “Submission Deadline”), an individual who
will be granted any Value-Based Director Award on the date of such annual meeting
may elect to receive 60% of the aggregate Value of such Value-Based Director Award
in the form of either Restricted Stock Units or an Option, as provided above. Any
such election must be submitted to the Secretary of the Company or his or her
authorized designee in the form and manner specified by the Secretary or designee,
and shall become irrevocable effective as of the applicable Submission Deadline.
An individual who will be granted any Value-Based Director Award but fails to make
such election with respect thereto on or prior to the applicable Submission
Deadline shall automatically be deemed for purposes of this Section 2(i) to have
elected to receive 60% of the aggregate Value of such Value-Based Director Award
in the form of an Option instead of Restricted Stock Units. For the avoidance of
doubt, if an individual will be granted two or more Value-Based Director Awards on
the same day pursuant to this Policy but fails to make elections with respect to
all of such Awards on or prior to the applicable Submission Deadline, such
individual shall automatically be deemed for purposes of this Section 2(i) to have
elected to receive a 60% Value Option Award, instead of a 60% Value RSU Award, for
each such Award for which such individual failed to timely make an election.

-3-

 

	 	(j)	 	Terms. Each Award granted pursuant to this Policy shall be
governed by the terms of the 2007 Plan and be evidenced by an agreement in such form
as the Administrator shall determine and the terms of each Award granted pursuant to
this Policy will be as follows:

	 	i.	 	The term of each Option granted in accordance with
the Policy, including each Initial Option Award and each 60% Value Option
Award, will be seven (7) years.
	 
	 	ii.	 	The exercise price per Share of each Option granted
pursuant to this Policy, including each Initial Option Award and each 60%
Value Option Award, will equal 100% of the Fair Market Value of one Share
on the grant date for such Option.
	 
	 	iii.	 	Subject to Section 15 of the 2007 Plan, each
Initial Option Award will vest and become exercisable as to 1/48th of
the shares subject to the Initial Option Award on each monthly anniversary of
the Initial Option Award grant date (or on the last day of the month, if
there is no corresponding date), provided that the Participant continues to
serve as a Director through each such date.
	 
	 	iv.	 	Subject to Section 15 of the 2007 Plan, each
Initial RSU Award will vest in equal annual installments over a 4-year
period from the Initial RSU Award vesting commencement date, provided that
the Participant continues to serve as a Director through each such date.
	 
	 	v.	 	Subject to Section 15 of the 2007 Plan, each 40%
Value RSU Award will vest in full in one installment at the end of a 1-year
period from the 40% Value RSU Award vesting commencement date, provided
that the Participant continues to serve as a Director through the end of
such 1-year period; provided, however, that prior to the end of such 1-year
period, upon the death of the Participant, the Disability of the
Participant, the voluntary resignation of the Participant as a Director or
the Company’s termination of the Participant’s status as a Director (other
than for “Cause” as such term is defined in the applicable Award
Agreement), such 40% Value RSU Award will automatically vest to the extent
necessary such that the total number of Restricted Stock Units then vested
under such 40% Value RSU Award equals the product (rounded upward to the
nearest whole number) equal to (1) the total number of Restricted Stock
Units subject to such 40% Value RSU Award and (2) a fraction, the numerator
of which is the number of days after the vesting commencement date of such
40% Value RSU Award through and including the date of such death,
Disability, resignation or termination, and the denominator of which is the
total number of days in such 1-year period associated with such 40% Value
RSU Award.
	 
	 	vi.	 	Subject to Section 15 of the 2007 Plan, each 60%
Value RSU Award will vest in equal annual installments over a 4-year period
from the 60% Value RSU Award vesting commencement date, provided that the
Participant continues to serve as a Director through each such date.
	 
	 	vii.	 	Subject to Section 15 of the 2007 Plan, each 60%
Value Option Award will vest and become exercisable as to 1/48th of
the shares subject to the Value Option Award on each monthly anniversary of the
Value Option Award grant date (or on the last day of the month, if there is
no corresponding date), provided that the Participant continues to serve as
a Director through each such date.
	 
	 	viii.	 	Vested Restricted Stock Units will be paid in
Shares as soon as practicable after vesting, but in each such case within
the period ending no later than the later of (i) the end of the calendar
year that includes the vesting date or (ii) the date that is the fifteenth (15th) day

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	 	 	 	of the third (3rd) month following the
vesting date. In no event will the Participant be permitted, directly or
indirectly, to specify the taxable year of payment of any Restricted Stock
Units payable under this Policy.

	 	ix.	 	Each Award Agreement evidencing the grant of any
Restricted Stock Units pursuant to this Policy shall provide the
Participant with an automatic “sell to cover” election that complies with
the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act, such
that upon the vesting of all or any portion of such Restricted Stock Units,
a portion of the total Shares received by the Participant upon such vesting
will be automatically sold to pay the minimum income and any other
applicable taxes required to be withheld with respect to such total Shares.
The proceeds from such sale will be used to satisfy the Participant’s tax
withholding obligations (and any associated broker or other fees) arising
with respect to such total Shares and any proceeds from such sale in excess
of the tax withholding obligation (and any associated broker or other fees)
will be remitted to the Participant pursuant to such procedures as the
Administrator in its discretion may specify from time to time. In order to
make such election, a Participant will be required to make certain
representations and warranties to the Company as the Administrator
determines in its sole discretion are necessary or appropriate to comply
with applicable securities laws.

	 	(k)	 	Amendments. The Administrator in its discretion may change
the number of Shares subject to Options and/or number of Restricted Stock Units (or
cash payments in lieu thereof) pursuant to the Initial Awards, Annual Awards,
Committee Chair Awards, Committee Member Awards and Lead Independent Director
Awards.
	 
	 	 	 	Notwithstanding anything to the contrary contained in this Policy, with respect to
any 40% Value RSU Award, the Compensation Committee in its sole discretion (if the
Compensation Committee is the Administrator) or the Administrator at the direction
of the Compensation Committee in its sole discretion (if the Compensation
Committee is not the Administrator), may, on the date of grant for such 40% Value
RSU Award, substitute cash for all of the Restricted Stock Units pursuant to such
40% Value RSU Award, such that such 40% Value RSU Award consists of only cash.
Any such substitution will be made at the rate of an amount of cash equal to the
Fair Market Value of one Share, on the applicable grant date, for one Restricted
Stock Unit. For the avoidance of doubt, any cash so substituted for any
Restricted Stock Unit will be subject to the same vesting arrangements that would
otherwise have been applicable to such Restricted Stock Unit (including any
vesting acceleration provisions). Cash payments made pursuant to this section
will be paid as soon as practicable after vesting, but in each such case within
the period ending no later than the later of (i) the end of the calendar year that
includes the vesting date or (ii) the date that is the fifteenth (15th)
day of the third (3rd) month following the vesting date. In no event
will the Participant be permitted, directly or indirectly, to specify the taxable
year of payment of any cash award payable under this Policy.

* * *

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