Document:

exv4w3

Exhibit 4.3

LIME ENERGY CO.

2008 LONG-TERM INCENTIVE PLAN

1. ESTABLISHMENT AND PURPOSE.

          The Lime Energy Co. 2008 Long-Term Incentive Plan (the “Plan”) is established by Lime Energy
Co. (the “Company”) to enhance long-term profitability and stockholder value by offering common
stock and common stock-based and other performance incentives to those employees, directors and
consultants who are key to the Company’s growth and success; to attract and retain experienced
employees; and to align Participants’ interests with those of the Company’s other stockholders.
The Plan is adopted as of April 8, 2008, subject to approval by the Company’s stockholders within
12 months after such adoption date. Unless the Plan is discontinued earlier by the Board as
provided herein, and subject to the provisions of the Plan, the Plan shall terminate automatically,
and no Award shall be granted hereunder, on or after April 7, 2018.

          Certain terms used herein are defined as set forth in Section 10.

2. ADMINISTRATION; ELIGIBILITY.

          The Plan shall be administered by the Compensation Committee of the Company’s Board; provided,
however, that, if at any time no such Committee shall be in office, the Plan shall be administered
by the Board. The Plan may be administered by different Committees with respect to different
groups of Eligible Individuals as directed by the Board or its Compensation Committee. As used
herein, the term “Administrator” means the Board or any of its Committees as shall be administering
the Plan, as the context may require.

          The Administrator shall have plenary authority to grant Awards pursuant to the terms of the
Plan only to Eligible Individuals. Participation shall be limited to such Eligible Individuals as
are selected by the Administrator; subject to any eligibility restrictions applicable to different
types of Awards under the further provisions of the Plan. Awards may be granted as alternatives
to, in exchange or substitution for, or replacement of, awards outstanding under the Plan or any
other plan or arrangement of the Company or a Subsidiary (including a plan or arrangement of a
business or entity, all or a portion of which is acquired by the Company or a Subsidiary). The
provisions of Awards need not be the same with respect to each Participant.

          Among other things, the Administrator shall have the authority, subject to the terms of this
Plan:

	 	(a)	 	to select the Eligible Individuals to whom Awards may from time to time be
granted;
	 
	 	(b)	 	to determine whether and to what extent Stock Options, Stock Appreciation
Rights, Stock Awards or any combination thereof are to be granted hereunder;
	 
	 	(c)	 	to determine the number of shares of Stock to be covered by each Award
hereunder;

 

 

	 	(d)	 	to approve forms of Award agreements for use under the Plan;
	 
	 	(e)	 	to determine the terms and conditions, not inconsistent with the terms of this
Plan, of any Award granted hereunder (including, but not limited to: (i) the option
exercise price, (ii) any vesting restriction or limitation, including performance
conditions, (iii) any vesting acceleration or forfeiture waiver, (iv) any right of
repurchase, right of first refusal or other transfer or disposition restriction, (v)
any grant of registration rights, (vi) any repurchase rights, (vii) any restrictions on
voting, (viii) any restrictive covenants for breach of which forfeiture, repurchase and
other remedies shall be provided, (i) commitments to pay cash bonuses, to make, arrange
for or guaranty loans or to transfer other property to optionees upon exercise of Stock
Options regarding any Award and the shares of Stock relating thereto, based on such
factors or criteria as the Administrator shall determine;
	 
	 	(f)	 	subject to Section 8(a), to modify, amend or adjust the terms and conditions of
any Award, at any time or from time to time, including, but not limited to, with
respect to (i) performance goals and targets applicable to performance-based Awards
pursuant to the terms of the Plan, (ii) extension of the post-termination
exercisability period of Stock Options, and (iii) adjustments permitted under Section 3
below to reflect any future transactions that may affect the corporate structure, size
and capital of the Company;
	 
	 	(g)	 	to determine the Fair Market Value; and
	 
	 	(h)	 	to determine the type and amount of consideration, including any satisfaction
of tax withholding obligations, to be received by the Company for any Award issued
under the Plan.

          The Administrator shall have the authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable,
to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any
agreement relating thereto) and to otherwise supervise the administration of the Plan.

          Except to the extent prohibited by applicable law, the Administrator may allocate any or any
portion of its responsibilities and powers to any one or more of its members and may delegate all
or any portion of its responsibilities and powers to any other person or persons selected by it.
Any such allocation or delegation may be revoked by the Administrator at any time. The
Administrator may authorize any one or more of its members, or any officer of the Company, to
execute and deliver documents on behalf of the Administrator.

          Any determination made by the Administrator, or pursuant to authority delegated in accordance
with the provisions of the Plan, with respect to any Award shall be made in the sole discretion of
the Administrator or such delegate at the time of the grant of the Award or, unless in
contravention of any express term of the Plan, at any time thereafter. All decisions made by the
Administrator or any appropriate delegate pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and Participants.

- 2 -

 

          No member of the Administrator, and no officer of the Company, shall be liable for any action
taken or omitted to be taken by such individual or by any other member of the Administrator or
officer of the Company in connection with the performance of duties under this Plan, except for
such individual’s own willful misconduct or as expressly provided by law. Such persons shall be
entitled to indemnification and reimbursement from the Company for their service with respect to
the Plan to the fullest extent allowed by law. The Company, its Subsidiaries and Affiliates, all
officers and directors of any such corporation, and all members of the Administrator shall have no
liability with respect to any Participant for any taxes, penalties or related interest imposed upon
such Participant in connection with any Award granted under this Plan.

3. STOCK SUBJECT TO THE PLAN.

          Subject to adjustment as provided in this Section 3, the aggregate number of shares of Stock
which may be delivered under this Plan, net of shares of Stock which are subject to outstanding
Awards from time to time under the Company’s preceding 2001 Stock Incentive Plan, shall not exceed
280,000 shares; provided, however, that, as of January 1 of each year, commencing with the year
2009, the maximum number of shares of Stock which may be delivered under the Plan shall
automatically increase by 100,000 shares.

          To the extent any shares of Stock covered by an Award are not delivered to a Participant or
beneficiary thereof because the Award expires, is forfeited, canceled or otherwise terminated, or
the shares of Stock are not delivered because the Award is settled in cash or used to satisfy the
applicable tax withholding obligation, such shares shall not be deemed to have been delivered for
purposes of determining the maximum number of shares of Stock available for delivery under the
Plan.

          Subject to adjustment as provided in this Section 3, the maximum number of shares that may be
covered by Stock Options, Stock Appreciation Rights and Stock Awards, in the aggregate, granted to
any one Participant during any calendar year shall be 1,000,000 shares.

          In the event of any Company stock dividend (except stock dividends paid in Common Stock to the
holders of the Company’s preferred stock), stock split, combination or exchange of share,
recapitalization or other change in the capital structure of the Company, corporate separation or
division of the Company (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend), sale by the Company of all
or a substantial portion of its assets (measured on either a stand-alone or consolidated basis),
reorganization, rights offering, partial or complete liquidation, or any other corporate
transaction, Company share offering or other event involving the Company and having an effect
similar to any of the foregoing, the Administrator may make such substitution or adjustments in the
(A) number and kinds of shares that may be delivered under the Plan, (B) additional maximums
imposed in the immediately preceding paragraph, (C) number and kind of shares subject to
outstanding awards, (D) exercise price of outstanding Stock Options and Stock Appreciation Rights
and (E) other characteristics or terms of the Awards as it may determine appropriate in its sole
discretion to equitably reflect such corporate transaction, share offering or other event,
provided, however, that the number of shares subject to any Award shall always be a whole number.

- 3 -

 

4. STOCK OPTIONS.

          Stock Options may be granted alone or in addition to other Awards granted under the Plan and
may be of two types: Incentive Stock Options and Non-Qualified Stock Options. Any Stock Option
granted under this Plan shall be in such form as the Administrator may from time to time approve.

          The Administrator shall the authority to grant any Participant Incentive Stock Options,
Non-Qualified Stock Options or both types of Stock Options (in each case with or without Stock
Appreciation Rights). Incentive Stock Options may be granted only to employees of the Company and
its subsidiaries (within the meaning of Section 424(f) of the Code). To the extent that any Stock
Option is not designated as an Incentive Stock Option or, even if so designated, does not qualify
as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option. Incentive Stock
Options may be granted only within 10 years from the date the Plan is adopted, or the date the Plan
is approved by the Company’s stockholders, whichever is earlier.

          Stock Options shall be evidenced by options agreements, each in a form approved by the
Administrator. An option agreement shall indicate on its face whether it is intended to be an
agreement for an Incentive Stock Option or a Non-Qualified Stock Option. The grant of a Stock
Option shall occur as of the date the Administrator determines, consistent with applicable Treasury
regulations under Section 409A, 421 and 422 of the Code so as to exempt such Award from Code
Section 409A or qualify the Award as an Incentive Stock Option, or both.

	 	(a)	 	Exercise Price. The exercise price per share of Stock purchasable under a
Stock Option shall be determined by the Administrator; provided, however, that the
exercise price per share shall be not less than the Fair Market Value per share on the
date the Stock Option is granted or, if granted as an Incentive Stock Option to an
individual who is a Ten Percent Holder, not less than 110% of such Fair Market Value
per share.
	 
	 	(b)	 	Option Term. The term of each Stock Option shall be fixed by the
Administrator, but no Incentive Stock Option shall be exercisable more than 10 years
(or five years in the case of an individual who is a Ten Percent Holder) after the date
the Incentive Stock Option is granted.
	 
	 	(c)	 	Exercisability. Except as otherwise provided herein, Stock Options shall be
exercisable at such time or times, and subject to such terms and conditions, as shall
be determined by the Administrator as set forth in the applicable option agreement. If
the Administrator provides that any Stock Option is exercisable only in installments,
the Administrator may at any time waive such installment exercise provisions, in whole
or in part, based on such factors as the Administrator may determine. The
Administrator may at any time, in whole or in part, accelerate the exercisability of
any Stock Option. In addition, the aggregate Fair Market Value of the shares of Stock
(determined as of the respective date or dates of grant) for which one or more
Incentive Stock Options granted to any Participant under this Plan and any other option
plan of the Company (or any parent or subsidiary corporations) may for the first time
become exercisable

- 4 -

 

	 	 	 	during any one calendar year shall not exceed the sum of $100,000. To the extent
such Participant holds two or more Incentive Stock Options which become exercisable
for the first time in the same calendar year, the foregoing $100,000 limitation on
the exercisability of such options as Incentive Stock Options shall be applied on
the basis of the order in which such options were granted in order to determine if
any portion of either option must be treated instead as a Non-Qualified Stock
Option.

	 	(d)	 	Method of Exercise. Subject to the provisions of this Section 4, Stock Options
may be exercised, in whole or in part, at any time during the option term by giving
written notice of exercise to the Company specifying the number of shares of Stock
subject to the Stock Option to be purchased.

          The exercise price of any Stock Option shall be paid in full in cash (by certified or
bank check or such other instrument as the Company may accept) or, unless otherwise provided
in the applicable option agreement, by one or more of the following: (i) in the form of
Stock already owned by the Optionee, and already held by the Optionee for the requisite
period necessary both to avoid a change to the Company’s earnings for financial reporting
purposes and to comply with any contractual or other limitations on Optionee’s right to
dispose of such Stock, based in any such instance on the Fair Market Value of the Stock on
the date the Stock Option is exercised; (ii) by certifying ownership of shares of Stock
owned by the Optionee to the satisfaction of the Administrator for later delivery to the
Company as specified by the Company; (iii) for Non-Qualified Stock Options only, by
irrevocably authorizing a third party to sell shares of Stock (or a sufficient portion of
the shares) acquired upon exercise of the Stock Option and remit to the Company a sufficient
portion of the sale proceeds to pay the entire exercise price and any tax withholding
resulting from such exercise; or (iv) by any combination of cash and/or any one or more of
the methods specified in clauses (i), (ii) and (iii). Notwithstanding the foregoing, a form
of payment shall not be permitted to the extent it would cause the Company to recognize a
compensation expense (or additional compensation expense) with respect to the Stock Option
for financial reporting purposes, unless otherwise determined by the Administrator.

          No shares of Stock shall be issued upon exercise of a Stock Option until full payment
therefore has been made. Upon exercise of a Stock Option (or portion thereof), the Company
shall have a reasonable time to issue the Stock for which the Stock Option has been
exercised, and the Optionee shall not be treated as a stockholder for any purposes
whatsoever prior to such issuance. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date such Stock is recorded as issued and
transferred in the Company’s official stockholder records, except as otherwise provided
herein or in the applicable option agreement.

	 	(e)	 	Transferability of Stock Options. Except as otherwise provided in the
applicable option agreement, a Non-Qualified Stock Option (i) shall be transferable by
the Optionee to a Family Member of the Optionee, provided that (A) any such transfer
shall be by gift with no consideration and (B) non subsequent transfer of such Stock
Option shall be permitted other than by will or the laws of descent and

- 5 -

 

	 	 	 	distribution, and (ii) shall not otherwise be transferable except by will or the
laws of descent and distribution. An Incentive Stock Option shall not be
transferable except by will or the laws of descent and distribution. An Incentive
Stock Option shall be exercisable, during the Optionee’s lifetime, only by the
Optionee or, to the extent permitted without disqualifying such option under Code
Section 422, by the guardian or legal representative of the Optionee. A
Non-Qualified Stock Option may be exercisable by the Optionee or by any transferee
permitted above, it being understood that the terms “holder” and “Optionee” include
the guardian and legal representative of the Optionee named in the applicable option
agreement and any person to whom the Stock Option is transferred (X) pursuant to the
first sentence of this Section 4(e) or pursuant to the applicable option agreement
or (Y) by will or the laws of descent and distribution. Any Stock Option
exercisable by the Optionee at the time of death may be subsequently exercised by
the personal representative of the Optionee’s estate, by the Optionee’s designated
beneficiary, by the person or persons to whom the Stock Option is transferred
pursuant to the Optionee’s will or in accordance with the laws of descent and
distribution. Notwithstanding the foregoing, references herein to the termination
of an Optionee’s employment or provision of services shall mean the termination of
employment or provision of services of the person to whom the Stock Option was
originally granted.
	 
	 	(f)	 	Termination by Death. Unless otherwise provided in the applicable option
agreement (only for a Non-Qualified Stock Option), if an Optionee’s employment or
provision of services terminates by reason of death, any Stock Option held by such
Optionee may thereafter be exercised, to the extent then exercisable, or on such
accelerated basis as the Administrator may determine, for a period of not more than
three months from the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is shorter.
	 
	 	(g)	 	Termination by Reason of Disability. Unless otherwise provided in the
applicable option agreement, if an Optionee’s employment or provision of services
terminates by reason of Disability, any Stock Option held by such Optionee may
thereafter be exercised by the Optionee, to the extent it was exercisable at the time
of such termination, or on such accelerated basis as the Administrator may determine,
for a period of one year from the date of such termination of employment or provision
of services or until the expiration of the stated term of such Stock Option, whichever
period is shorter; provided, however, that if the Optionee dies within such period, an
unexercised Non-Qualified Stock Option held by such Optionee shall, notwithstanding the
expiration of such period, continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of three months from the date of such
death or until the expiration of the stated term of such Stock Option, whichever period
is shorter.
	 
	 	(h)	 	Termination for Other Reasons. Unless otherwise provided in the applicable
option agreement, if an Optionee’s employment or provision of services terminates other
than by reason of death, Disability or Cause, any Stock Option held by such Optionee
may thereafter be exercised by the Optionee, to the extent

- 6 -

 

	 	 	 	it was exercisable at the time of such termination, or on such accelerated basis as
the Administrator may determine, for a period of three months from the date of such
termination of employment or provision of services or until the expiration of the
stated term of such Stock Option, whichever period is shorter; provided, however,
that if the Optionee dies within such period, an unexercised Non-Qualified Stock
Option held by such Optionee shall, notwithstanding the expiration of such period,
continue to be exercisable to the extent to which it was exercisable at the time of
death for a period of three months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is shorter.
	 
	 	(i)	 	Termination for Cause. Unless otherwise provided in the applicable option
agreement, if an Optionee’s employment or provision of services terminates for Cause,
any Stock Option held by such Optionee shall thereupon terminate, cease to be
exercisable, and be entirely forfeited and cancelled, including any vested portion of
such Stock Option.
	 
	 	(j)	 	Transfer of Services. Notwithstanding anything in this Plan to the contrary,
if an Optionee’s employment by, or provision of services to, the Company or an
Affiliate ceases as a result of a transfer of such Optionee from the Company to an
Affiliate, or from an Affiliate to the Company, such transfer will not be a termination
of employment or provision of services to, the Company or an Affiliate, or from an
Affiliate to the Company, such transfer will not be a termination of employment or
provision of services for purposes of this Plan, unless expressly determined otherwise
by the Administrator. A termination of employment or provision of services shall occur
for an Optionee who is employed by, or provides services to, an Affiliate of the
Company if the Affiliate shall cease to be an Affiliate and the Optionee shall not
immediately thereafter be employed by, or provide services to, the Company or an
Affiliate.
	 
	 	(k)	 	Vesting Ceases. Notwithstanding the foregoing provisions of Sections 4(f)-(h),
any Stock Option that remains exercisable after the Optionee’s employment or provision
of services terminates shall only be exercisable after such termination to the extent
the Stock Option was vested as of such date of termination. Any non-vested portion of
the Stock Option shall be cancelled as of the date the Optionee’s employment or service
terminates, and any vested portion of the Stock Option shall be cancelled to the extent
not exercised by the last date on which it remains exercisable in accordance with its
terms, consistent with the foregoing provisions of this Section 4.

- 7 -

 

5. STOCK APPRECIATION RIGHTS.

          5.1. General. The Administrator shall have authority to grant Stock Appreciation
Rights, which may be “stand alone” rights independent of the grant of any Stock Options or rights
granted “in tandem” with grants of Stock Options, or a combination of both, under the Plan, at any
time or from time to time. A Stock Appreciation Right shall entitle the Participant to receive
payment from the Company, upon exercise of such right, of an amount not in excess of the
appreciation in the Fair Market Value of a specified number of shares of Stock, equal to the excess
of the SAR Exercise Price over the SAR Base Price multiplied by the number of shares with respect
to which the Stock Appreciation Right is exercised, subject to the Participant’s satisfaction in
full of the conditions, restrictions or limitations imposed in accordance with the Plan and the
applicable Stock Appreciation Rights agreement (which may differ from other such agreements).

          5.2. Grant of Stock Appreciation Rights. The grant of a Stock Appreciation Right
shall occur as of the date the Administrator determines, based on the same principles and rules
under Code Sections 409A, 421 and 422 as apply to Stock Options under the first paragraph of
Section 4 above. Each Stock Appreciation Right granted under the Plan shall be evidenced by a
written agreement, in a form prescribed or approved by the Administrator, which shall embody the
terms and conditions of such Stock Appreciation Right and which shall be subject to the express
terms and conditions set forth in the Plan. A person selected by the Administrator to receive a
Stock Appreciation Right shall not become a Participant or have any rights with respect to such
Stock Appreciation Right unless and until such person has executed such Agreement, has delivered a
fully executed copy thereof to the person or office designated by the Administrator and has
otherwise complied with any applicable requirements set forth by the Administrator as part of the
grant of the Stock Appreciation right.

          5.3. Terms and Conditions. Stock Appreciation Rights shall be subject to such terms
and conditions as shall be determined by the Administrator, including the following:

     (a) SAR Award Period. The SAR Award Period of each Stock Appreciation Right
shall be fixed by the Administrator, but shall not exceed a term of ten (10) years.

     (b) SAR Base Price. The SAR Base Price under a Stock Appreciation Right shall
be the Fair Market Value of a share of common Stock at the date of grant of the Stock
Appreciation Right, unless otherwise determined by the Administrator.

     (c) Vesting and Exercisability. Stock Appreciation Rights shall become vested
and be exercisable as determined by the Administrator and set forth in the agreement. The
agreement shall state, with respect to all or designated portions of the shares of Stock
covered thereunder, the time at which or the installments in which the Stock Appreciation
Right shall become vested and exercisable during the SAR Award Period. The Administrator
may establish requirements for vesting and exercisability based on (i) periods of employment
or rendering of services, (ii) the satisfaction of performance criteria with respect to the
Company or the Participant (or both), (iii) the occurrence of specified events or
circumstances, or (iv) any combination of factors described in (i)-(iii) above.

- 8 -

 

     Upon exercise of any Stock Appreciation Right that is granted in tandem with a Stock
Option, the exercise shall not be complete until the Participant surrenders the
corresponding vested portion of the Stock Option in accordance with procedures established
by the Administrator. Stock Option rights which have been so surrendered shall no longer be
exercisable after such exercise of the corresponding Stock Appreciation Right. The
Administrator shall have discretion to accelerate vesting and exercisable for all or any
portion of any one or more outstanding Stock Appreciation Rights and without having to do so
uniformly for all such Awards.

     (d) Tandem Grants. Stock Appreciation Rights may be granted in tandem with
Stock Options, under terms and conditions prescribed by the Administrator pursuant to which
the exercise by a Participant of a Stock Appreciation Right with respect to one share of
Stock covered thereunder cancels the right to purchase one share of Stock under the Stock
Option granted in tandem to the Participant. Notwithstanding anything herein to the
contrary, any Stock Appreciation Right granted in tandem with an Incentive Stock Option
shall (i) expire no later than the expiration of the Option, (ii) be for no more than the
difference between the exercise price of the Stock Option and the Fair Market Value of the
Stock subject to the Stock Option at the time the right is exercised, (iii) be transferable
only when the Stock Option is transferable and under the same conditions, (iv) be exercised
only when the Stock Option is exercisable and (v) be exercised only when the Fair Market
Value of the Common Stock subject to the Stock Option exceeds the exercise price of the
Stock Option.

     (e) Method of Payment. Payment by the Company of any amount due to or on
behalf of the Participant upon exercise of a Stock Appreciation Right may be made by cash or
by check at such time, or in installments at such times, as the Administrator shall specify
and set forth in the agreement evidencing the Stock Appreciation Right; provided, however,
that any payment due in excess of $1,000,000 shall be payable in three equal annual
installments, without interest accruing thereon, unless the Company agrees to make payment
in a single sum. Unless otherwise agreed, payment shall be made, (or commence in the case
of installments) within sixty (60) days after the date of exercise.

     (f) Nontransferability of Rights. Except as specifically provided herein or in
the agreement, no Stock Appreciation Right or interest therein shall be transferable by the
Participant other than by will or by the laws of descent and distribution, and a Stock
Appreciation Right shall be exercisable during the Participant’s lifetime only by the
Participant. Any Stock Appreciation Right issued in tandem with a Stock Option shall be
transferable, and transferred, only at the same time and subject to the same terms as govern
the transfer of such Stock Option.

     (g) Designation of Beneficiary. A Participant may designate a Beneficiary who
may exercise the Participant’s Stock Appreciation Right after the Participant’s death,
subject to the provisions of the Plan. Such designation shall be made in such manner and on
such form as shall be prescribed by the Administrator.

     (h) 409A Exemption. All Stock Appreciation Rights granted under this Plan
shall be issued on such terms and conditions as will exempt such Awards from regulation

- 9 -

 

under Code Section 409A, and all such Awards shall be interpreted and administered to
preserve that exempt status.

          5.4. Effect of Termination of Employment. The portion of any Stock Appreciation Right
that is vested and not yet exercised as of the date on which the Participant’s employment or
service terminates, shall (unless such termination is for Cause), continue to be exercisable for a
period of three (3) months after such termination date, or until the Stock Appreciation Right was
scheduled to expire, if earlier; provided, however, that if the Stock Appreciation Right was issued
in tandem with a Stock Option the vested portion of the Stock Appreciation Right shall continue to
be exercisable for so long as the Stock Option remains exercisable. Any portion of the Stock
Appreciation Right that is not vested or does not become vested, by its terms or by action of the
Administrator as of the date on which the Participant’s employment or service terminates shall
automatically be forfeited, cancelled and void as of that date. If a Participant’s employment or
services are suspended pending an investigation of whether the Participant’s employment or services
should be terminated for Cause, all of the Participant’s rights under any Stock Appreciation Right,
and any tandem Stock Option related thereto, shall likewise be suspended during the period of such
investigation.

          5.5. Exercise of Rights. A Stock Appreciation Right which is vested and exercisable
shall be exercised by or on behalf of a Participant, in whole or in part at any time during the SAR
Award Period, by giving written notice to the Company, in such form and manner as the Administrator
may prescribe, specifying the number of shares of Stock covered by the Stock Appreciation Right
with respect to which the Participant is exercising the right to receive payment.

          5.6. Withholding of Exercise. The Company shall have the right to deduct from all
payments made on the exercise of a Stock Appreciation Right all amounts required by law to be
withheld for the payment of any Federal, state, local or foreign taxes of any kind.

          5.7. No Stockholder Rights. A Stock Appreciation Right confers none of the rights of
a stockholder of the Company upon the holder of such Stock Appreciation Right. Therefore, no
voting, dividend or other stockholder rights accrue under a Stock Appreciation Right Award.

6. STOCK AWARDS OTHER THAN OPTIONS.

          Stock Awards may be directly issued under the Plan (without any intervening options), subject
to such terms, conditions, performance requirements, restrictions, forfeiture provisions,
contingencies and limitations as the Administrator shall determine. Stock Awards may be issued
which are fully and immediately vested upon issuance or which vest in one or more installments over
the Participant’s period of employment or other service to the Company or upon the attainment of
specified performance objectives, or the Administrator may issue Stock Awards which entitle the
Participant to receive a specified number of vested shares of Stock upon the attainment of one or
more performance goals or service, requirements established by the Administrator.

          Shares representing a Stock Award shall be evidenced in such manner as the Administrator may
deem appropriate, including book-entry registration or issuance of one or

- 10 -

 

more certificates (which may bear appropriate legends referring to the terms, conditions and
restrictions applicable to such Award). The Administrator may require that any such certificates
be held in custody by the Company until any restrictions thereon shall have lapsed and that the
Participant deliver a stock power, endorsed in blank, relating to the Stock covered by such Award.

          A Stock Award may be issued in exchange for any consideration which the Administrator may deem
appropriate in each individual instance, including, without limitation:

	 	(i)	 	cash or cash equivalents;
	 
	 	(ii)	 	past services rendered to the Company or any Affiliate; or
	 
	 	(iii)	 	future services to be rendered to the Company or any Affiliate
(provided that, in such case, the par value of the stock subject to such Stock
Award shall be paid in cash or cash equivalents, unless the Administrator
provides otherwise).

          A Stock Award that is subject to restrictions on transfer and/or forfeiture provisions may be
referred to as an award of “Restricted Stock” or “Restricted Stock Units.”

7. CHANGE IN CONTROL PROVISIONS.

	 	     (a)	 	Impact of Event. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control:

	 	(i)	 	Any Stock Options and Stock Appreciation Rights outstanding as
of the date such Change in Control is determined to have occurred and not then
exercisable and vested shall become fully exercisable and vested to the extent
such acceleration is then provided for in the grant agreement or is conferred
by the Administrator;
	 
	 	(ii)	 	The restrictions applicable to any outstanding Stock Award
shall lapse, and the Stock relating to such Award shall become free of all
restrictions and become fully vested and transferable to the full extent of the
original grant;
	 
	 	(iii)	 	All outstanding repurchase rights of the Company with respect
to any outstanding Award shall terminate, except for any repurchase rights that
would be triggered by a subsequent termination of employment or services by the
Participant; and
	 
	 	(iv)	 	Outstanding Awards shall be subject to any purchase agreement
or agreement of merger or reorganization that effects such Change in Control,
which agreement shall provide for:

	 	a)	 	The continuation of the outstanding Awards by
the Company, if the Company is a surviving corporation;

- 11 -

 

	 	b)	 	The assumption of the outstanding Awards by the
surviving corporation or its parent or subsidiary;
	 
	 	c)	 	The substitution by the surviving corporation
or its parent or subsidiary of equivalent awards for the outstanding
Awards; or
	 
	 	d)	 	Settlement of each vested share of Stock
subject to an outstanding Award for the Change in Control Price (less,
to the extent applicable, the per share exercise price), or, if the per
share exercise price equals or exceeds the Change in Control Price, the
outstanding Award shall terminate and be canceled.

	 	(v)	 	In the absence of any agreement with the Company effecting such
Change in Control, each vested share of Stock subject to an outstanding Award
shall be settled for the Change in Control Price (less, to the extent
applicable, the per share exercise price), or, if the per share exercise price
equals or exceeds the Change in Control Price, the outstanding Award shall
terminate and be canceled.

	 	     (b)	 	Definition of Change in Control. For purposes of the Plan, a “Change in
Control” shall mean the happening of any of the following events:

	 	(i)	 	An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14 (d)(2) of the Exchange Act) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 40% or more of either (1) the then outstanding shares of
common stock of the Company (the “Outstanding Company Common Stock”) or (2) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); excluding, however, the following: (1) any
acquisition directly from the Company, other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Company, (2) any acquisition by the
Company; (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company; or (4) any acquisition by any Person pursuant to a transaction which
complies with clauses (I), (2) and (3) of subsection (iii) of this
Section 7(b); or
	 
	 	(ii)	 	Within any period of 24 consecutive months, a change in the
composition of the Board such that the individuals who, immediately prior to
such period, constituted the Board (such Board shall be hereinafter referred to
as the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board, provided, however, for purposes of this Section 7(b),
that any individual who becomes a member of the Board during such period, whose
election, or nomination for election by the Company’s

- 12 -

 

	 	 	 	stockholders, was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board,
but, provided further, that any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board shall not be so
considered as a member of the Incumbent Board; or
	 
	 	(iii)	 	The approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (“Corporate Transaction”);
excluding, however, such a Corporate Transaction pursuant to which (1) all or
substantially all of the individuals and entities who are the beneficial
owners, respectively, of the outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 40% of, respectively, the
outstanding shares of common stock, and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Corporate
Transaction (including, without limitation, a corporation which has a result of
such transaction owns the Company or substantially, all of the Company’s
assets, either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Corporate
Transaction; of the outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (2) no Person (other than the Company;
any employee benefit plan (or related trust) sponsored or maintained by the
Company, by any corporation controlled by the Company, or by such corporation
resulting from such Corporate Transaction) will beneficially own, directly or
indirectly, more than 40% of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding voting securities of such corporation
entitled to vote generally in the election of directors, except to the extent
that such ownership existed with respect to the Company prior to the Corporate
Transaction; (3) individuals who were members of the Board immediately prior to
the approval by the stockholders of the Corporation of such Corporate
Transaction will constitute at lease a majority of the members of the board of
directors of the corporation resulting from such Corporate transaction, and (4)
a Corporate Transaction which results in the Company as the surviving entity;
or

- 13 -

 

	 	(iv)	 	The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, other than to a corporation pursuant
to a transaction which would comply with clauses (1), (2), (3) and (4) of
subsection (iii) of this Section 7(b), assuming for this purpose that such
transaction were a Corporate Transaction.

        Notwithstanding the foregoing definition, in the event any then outstanding Award is
determined to be a form of deferred compensation and subject to Code Section 409A, then only a
Change of Control event described above which also constitutes a change in the ownership or
effective control of the Company or a change in the ownership of a substantial portion of the
assets of the Company within the meaning of Treasury Regulation 1.409A-3 shall have the impact
provided in Sections 7(a)(i)-(iii), 7(a)(iv)(d) and 7(a)(v) above.

	 	(c)	 	Change in Control Price. For purposes of the Plan, “Change in Control Price”
means the higher of (i) the highest reported sales price, regular way, of a share of
Stock in any transaction reported on The American Stock Exchange or other national
securities exchange on which such shares are listed or on NASDAQ, as applicable, during
the 60-day period prior to and including the date of a Change in Control, (ii) if the
Change in Control is the result of a tender or exchange offer or a Corporate
Transaction, the highest price per share of Stock paid in such tender or exchange offer
or Corporate Transaction, and (iii) the Fair Market Value of a share of Stock upon the
Change in Control. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other non-cash consideration,
the value of such securities or other non-cash consideration shall be determined in the
sole discretion of the Board.
	 
	 	(d)	 	Participant Consent. A Participant, in the course of and as a condition to
exercising a Stock Option, shall waive all rights to object to or dissent from a
proposed Change in Control which is approved by the Board, and shall agree to consent
and raise no objection to such approved Change in Control; and, without limiting the
generality of the foregoing, the Participant shall agree to (i) vote the Participant’s
share to approve the terms of such approved Change in Control and (ii) waive any
appraisal rights that the Participant would have with respect to such approved Change
in Control.

          On and after the effective date of a Change in Control, a Participant may
transfer shares of Stock acquired pursuant to the exercise of an Option; provided
that in the event of a Change in Control approved by the Board, structured as a sale
of shares of Stock, a Participant shall transfer all shares of Stock acquired by the
Participant, pursuant to the exercise of an Option, on the same terms as the other
holders of Stock of the Company.

8. MISCELLANEOUS.

	 	(a)	 	Amendment. The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would adversely

- 14 -

 

	 	 	 	affect the rights of a Participant under an Award theretofore granted without the
Participant’s consent, except such an amendment (i) made to avoid an expense charge
to the Company or an Affiliate, (ii) made to permit the Company or an Affiliate a
deduction under the Code; or (iii) made to comply with or gain exemption from any
statute that would otherwise impose adverse tax consequences on the Participants.
No such amendment shall be made without the approval of the Company’s stockholders
to the extent such approval is required by law, agreement or the rules of any stock
exchange or market on which the stock is listed.

          The Administrator may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment shall
adversely affect the rights of the holder thereof without the holder’s consent.

          Notwithstanding anything in the Plan to the contrary, if any right under this
Plan would cause a transaction to be ineligible for pooling of interests accounting
that would, but for the right hereunder, be eligible for such accounting treatment,
the Administrator may modify or adjust the right so that pooling of interests
accounting shall be available, including the substitution of Common Stock having a
Fair Market Value equal to the cash otherwise payable hereunder for the right which
caused the transaction to be ineligible for pooling of interests accounting.

	 	(b)	 	Unfunded Status of Plan. It is intended that this Plan be an “unfunded” plan
for incentive compensation. The Administrator may authorize the creation of trusts or
other arrangements to meet the obligations created under this Plan to deliver Common
Stock or make payments, provided that, unless the Administrator otherwise determines,
the existence of such trusts or other arrangements is consistent with the “unfunded”
status of this Plan.
	 
	 	(c)	 	General Provisions.

	 	(i)	 	The Administrator may require each person purchasing or
receiving shares pursuant to an Award to represent to and agree with the
Company in writing that such person is acquiring the shares without a view to
the distribution thereof. The certificates for such shares may include any
legend which the Administrator deems appropriate to reflect any restrictions on
transfer.

          All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock transfer orders and other
restrictions as the Administrator may deem advisable under the rules,
regulations and other requirements of the Commission, any stock exchange or
market on which the Stock is then listed and any applicable Federal or state
securities law, and the Administrator may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.

- 15 -

 

	 	(ii)	 	Nothing contained in the Plan shall prevent the Company or any
Affiliate from adopting other or additional compensation arrangements for its
employees, directors and contract service providers.
	 
	 	(iii)	 	The adoption of the Plan shall not confer upon any employee,
director, consultant, independent contractor or advisor any right to continued
employment, directorship or service, nor shall it interfere in any way with the
right of the Company or any Subsidiary or Affiliate to terminate the employment
or service of any employee, consultant or advisor at any time.
	 
	 	(iv)	 	No later than the date as of which an amount first becomes
includible in the gross income of the Participant for Federal income tax
purposes with respect to any Award under the Plan, the Participant shall pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any Federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Administrator, withholding obligations may be settled with Stock, including
Stock that is part of the Award that gives rise to the withholding requirement.
The obligations of the Company under the Plan shall be conditioned on such
payment arrangements, and the Company, its Subsidiaries and its Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Participant. The Administrator may
establish such procedures as it deems appropriate for the settlement of
withholding obligations with Stock.
	 
	 	(v)	 	The Administrator shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any amounts
payable in the event of the Participant’s death are to be paid.
	 
	 	(vi)	 	Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the value of
any shares of Common Stock, cash or other thing of value under this Plan or an
agreement to be transferred to the Participant, and no shares of Common Stock,
cash or other thing of value under this Plan or an agreement shall be
transferred unless and until all disputes between the Company and the
Participant have been fully and finally resolved and the Participant has waived
all claims to such against the Company or an Affiliate.
	 
	 	(vii)	 	The grant of an Award shall in no way affect the right of the
Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
	 
	 	(viii)	 	If any payment or right accruing to a Participant under this Plan (without
the application of this Section 8(c)(viii), either alone or together with other

- 16 -

 

	 	 	 	payments or rights accruing to the Participant from the Company or an
Affiliate (“Total Payments”) would constitute a “parachute payment” (as
defined in Section 280G of the Code and regulations thereunder), such
payment or right shall be reduced to the largest amount or greatest right
that will result in no portion of the amount payable or right accruing under
this Plan being subject to an excise tax under Section 4999 of the Code or
being disallowed as a deduction under Section 280G of the Code, provided,
however, that the foregoing shall not apply to the extent provided otherwise
in an Award or in the event the Participant is party to an agreement with
the Company or an Affiliate that explicitly provides for an alternate
treatment of payments or rights that would constitute “parachute payments.”
The determination of whether any reduction in the rights or payments under
this Plan is to apply shall be made by the Administrator in good faith after
consultation with the Participant, and such determination shall be
conclusive and binding on the Participant. The Participant shall cooperate
in good faith with the Administrator in making such determination and
providing the necessary information for this purpose. The foregoing
provisions of this Section 8(c)(viii) shall apply with respect to any person
only if, after reduction for any applicable Federal excise tax imposed by
Section 4999 of the Code and Federal income tax imposed by the Code, the
Total Payments accruing to such person would be less than the amount of the
Total Payments as reduced, if applicable, under the foregoing provisions of
this Plan and after reduction for only Federal income taxes. The Company
shall have no liability or obligation under this Plan to reimburse or make
whole any Participant for any tax, interest or penalty accruing with respect
to any “parachute payment”.
	 
	 	(ix)	 	To the extent that the Administrator determines that the
restrictions imposed by the Plan preclude the achievement of the material
purposes of the Awards in jurisdictions outside the United States, the
Administrator in its discretion may modify those restrictions as it determines
to be necessary or appropriate to conform to applicable requirements or
practices of jurisdictions outside of the United States.
	 
	 	(x)	 	The headings contained in this Plan are for reference purposes
only and shall not affect the meaning or interpretation of this Plan.
	 
	 	(xi)	 	If any provision of this Plan shall for any reason be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision hereby, and this Plan shall be construed as if such
invalid or unenforceable provision were omitted.
	 
	 	(xii)	 	This Plan shall inure to the benefit of, and be binding upon,
each successor and assign of the Company. All obligations imposed upon a
Participant, and all rights granted to the Company hereunder, shall be binding
upon the Participant’s heirs, legal representatives and successors.

- 17 -

 

	 	(xiii)	 	This Plan and each agreement granting an Award constitute the entire
agreement with respect to the subject matter hereof and thereof.
	 
	 	(xiv)	 	In the event there is an effective registration statement
under the Securities Act pursuant to which shares of Stock shall be offered for
sale in an underwritten offering, a Participant shall not, during the period
requested by the underwriters managing the registered public offering, effect
any public sale or distribution of shares of Stock received, directly or
indirectly, as an Award or pursuant to the exercise or settlement of an Award
and shall become party to a lockup agreement if so required by the
underwriters.
	 
	 	(xv)	 	None of the Company, an Affiliate or the Administrator shall
have any duty or obligation to disclose affirmatively to a record or beneficial
holder of Stock or an Award, and such holder shall have no right to be advised
of, any material information regarding the Company or any Affiliate at any time
prior to, upon or in connection with receipt or the exercise of an Award or the
Company’s purchase of Stock or an Award from such holder in accordance with the
terms hereof.
	 
	 	(xvi)	 	This Plan, and all Awards, agreements and actions hereunder,
shall be governed by, and construed in accordance with, the laws of the state
of Delaware (other than its law respecting choice of law).

9. DEFINITIONS.

          For purposes of this Plan, the following terms are defined as set forth below:

	 	(a)	 	“Affiliate” means a corporation or other entity controlled by the Company and
designated by the Administrator as such.
	 
	 	(b)	 	“Award” means a Stock Appreciation Right, Stock Option or Stock Award.
	 
	 	(c)	 	“Board” means the Board of Directors of the Company.
	 
	 	(d)	 	“Cause” means, (i) the conviction of the Participant for committing a felony
under Federal law or the law of the state in which such action occurred, (ii)
dishonesty in the course of fulfilling the Participant’s duties as an employee or
director of, or consultant or advisor to, the Company or (iii) willful and deliberate
failure on the part of the Participant to perform such duties in any material respect.
Notwithstanding the foregoing, if the Participant and the Company or the Affiliate have
entered into an employment or services agreement which defines the term “Cause” (or a
similar term), such definition shall govern for purposes of determining whether such
Participant has been terminated for Cause for purposes of this Plan. The determination
of Cause shall be made by the Administrator, in its sole discretion.

- 18 -

 

	 	(e)	 	“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and any successor thereto.
	 
	 	(f)	 	“Commission” means the Securities and Exchange Commission or any successor
agency.
	 
	 	(g)	 	“Committee” means the Compensation Committee of Directors appointed by the
Board to administer this Plan. With respect to Options granted at the time the Company
is publicly held, if any, insofar as the Committee is responsible for granting Options
to Participants hereunder, it shall consist solely of two or more directors, each of
whom is a “Non-Employee Director” within the meaning of Rule 16b-3 and each of whom is
also an “outside director” under Section 162(m) of the Code.
	 
	 	(h)	 	“Company” means Lime Energy Co., a Delaware corporation.
	 
	 	(i)	 	“Director” means a member of the Company’s Board of Directors.
	 
	 	(j)	 	“Disability” means mental or physical illness that entitles the Participant to
receive benefits under the long-term disability plan of the Company or an Affiliate, or
if the Participant is not covered by such a plan or the Participant is not an employee
of the Company or an Affiliate, a mental or physical illness that renders a Participant
totally and permanently incapable of performing the Participant’s duties for the
Company or an Affiliate, provided, however, that a Disability shall not qualify under
this Plan if it is the result of (i) a willfully self-inflicted injury or willfully
self-induced sickness; or (ii) an injury or disease contracted, suffered or incurred
while participating in a criminal offense. Notwithstanding the foregoing, if the
Participant and the Company or an Affiliate have entered into an employment or services
agreement which defines the term “Disability” (or a similar term), such definition
shall govern for purposes of determining whether such Participant suffers a Disability
for purposes of this Plan. The determination of Disability shall be made by the
Administrator, in its Sole discretion. The determination of Disability for purposes of
this Plan shall not be construed to be an admission of disability for any other
purpose.
	 
	 	(k)	 	“Effective Date” means April 8, 2008.
	 
	 	(l)	 	“Eligible Individual” means any officer, employee or director of the Company or
a Subsidiary or Affiliate, or any consultant, independent contractor or advisor
providing services to the Company or a Subsidiary or Affiliate.
	 
	 	(m)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and any successor thereto.
	 
	 	(n)	 	“Fair Market Value” means, as of any given date, the fair market value of the
Stock as determined by the Administrator or under procedures established by the
Administrator. Unless otherwise determined by the Administrator, the Fair Market Value
per share shall be the closing sales price per share of the Stock on

- 19 -

 

	 	 	 	The American Stock Exchange (or the principal stock exchange or market on which the
Stock is then traded) on the date as of which such value is being determined or the
last previous day on which a sale was reported. If the Stock is not publicly traded
then Fair Market Value shall be determined by the Administrator, in its sole
discretion, in accordance with Treasury Regulation 1.409A-1(b)(5)(iv) provisions
applicable to the valuation of stock not readily tradeable on an established
securities market, by using a reasonable valuation method and taking into
consideration all relevant factors, facts and circumstances.
	 
	 	(o)	 	“Family Member” means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a
Participant (including adoptive relationships); any person sharing the Participant’s
household (other than a tenant or employee); any trust in which the Participant and any
of these persons have all of the beneficial interest; any foundation in which the
Participant and any of these persons control the management of the assets; any
corporation, partnership, limited liability company or other entity in which the
Participant and ay of these other persons are the direct and beneficial owners of all
of the equity interest (provided the Participant and these other persons agree in
writing to remain the direct and beneficial owners of all such equity interests); and
any personal representative of the Participant upon the Participant’s death for
purposes of administration of the Participant’s estate or upon the Participant’s
incompetency for purposes of the protection and management of the assets of the
Participant.
	 
	 	(p)	 	“Incentive Stock Option” means any Stock Option intended to be and designated
as an “incentive stock option” within the meaning of Section 422 of the Code.
	 
	 	(q)	 	“NASDAQ” means The NASDAQ Stock Market, including the NASDAQ National Market
and the NASDAQ SmallCap Market.
	 
	 	(r)	 	“Non-Employee Director” means a Director who is not an officer or employee of
the Company.
	 
	 	(s)	 	“Non-Qualified Stock Option” means any Stock Option that is not an Incentive
Stock Option.
	 
	 	(t)	 	“Optionee” means a person who holds a Stock Option.
	 
	 	(u)	 	“Participant” means a person granted an Award.
	 
	 	(v)	 	“Representative” means (i) the person or entity acting as the executor or
administrator of a Participant’s estate pursuant to the last will and testament of a
Participant or pursuant to the laws of the jurisdiction in which the Participant had
his or her primary residence at the date of the Participant’s death; (ii) the person or
entity acting as the guardian or temporary guardian of a Participant; (iii) the person
or entity which is the beneficiary of the Participant upon or following the
Participant’s death; or (iv) any person to whom an Option has been transferred

- 20 -

 

	 	 	 	with the permission of the Administrator or by operation of law; provided that only
one of the foregoing shall be the Representative at any point in time as determined
under applicable law and recognized by the Administrator.
	 
	 	(w)	 	“Stock” means common stock, par value $0.0001 per share, of the Company.
	 
	 	(x)	 	“Stock Appreciation Right” means a right granted under Section 5.
	 
	 	(y)	 	“Stock Award” means an Award, other than a Stock Option or Stock Appreciation
Right, made in Stock or denominated in shares of Stock.
	 
	 	(z)	 	“Stock Option” means an option granted under Section 4.
	 
	 	(aa)	 	“Subsidiary” means any company during any period in which it is a “subsidiary
corporation” (as such term is defined in Section 424(f) of the Code) with respect to
the Company.
	 
	 	(bb)	 	“Ten Percent Holder” means any individual who owns, or is deemed to own, stock
possessing 10% or more of the total combined voting power of all classes of stock of
the Company or of any parent or subsidiary corporation of the Company, determined
pursuant to the rules applicable to Section 422(b)(6) of the Code.

          In addition, certain other terms used herein have the definitions given to them in the first
places in which they are used.

          IN WITNESS WHEREOF, this 2008 Long-Term Incentive Plan, having been first duly adopted, in
hereby executed below by a duly authorized officer on behalf of the
Company on this 8th day of
April, 2008, to take effect as provided herein.

	 	 	 	 	 	 	 
	 	 	LIME ENERGY CO.	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	/s/ Jeffry R. Mistarz 	 	 
	 

	 	 	 	 

	 	  
	 
	 	 	 	 	 	 
	 

	 	Title:  	 	Chief Financial Officer 	 	 
	 

	 	 	 	 

	 	 

- 21 -exv10w1

Exhibit 10.1

ARUBA NETWORKS, INC.

2007 EQUITY INCENTIVE PLAN

NOTICE OF GRANT OF RESTRICTED STOCK UNITS

     Capitalized terms used but not defined herein shall have the meanings ascribed to them in the
Company’s 2007 Equity Incentive Plan (the “Plan”).

     Name
(the “Participant”):                                         

     You have been granted                      Restricted Stock Units. Each such Restricted Stock Unit
represents the right to receive one Share. No Shares will be issued with respect to the Restricted
Stock Units until the vesting conditions described below are satisfied. Additional terms of this
grant are as follows:

Date of
Grant:                                         

Grant
Number:                                         

Vesting Schedule:

[INSERT VESTING SCHEDULE]

     * Important additional information on vesting and forfeiture of the Restricted Stock Units
covered by this grant is contained in the attached Restricted Stock Unit Agreement; please be sure
to read the entire agreement.

     The Restricted Stock Units evidenced by this Notice of Grant is part of and subject in all
respects to the terms and conditions of the Plan (a copy of which has been made available to you by
the Company) and the attached Restricted Stock Unit Agreement (together with this Notice of Grant,
the “Agreement”).

     By your signature to this Agreement, you represent and warrant that you are familiar with, and
agree to be bound by, the terms and provisions of the Plan and this Agreement. You further
represent and warrant that you have reviewed this Agreement and the Plan in their entirety, have
had an opportunity to obtain the advice of counsel prior to executing this Agreement, and fully
understand all provisions of the Plan and this Agreement.

     You also agree (1) to accept as binding, conclusive and final all decisions or interpretations
of the Administrator upon any questions arising under the Plan or this Agreement and (2) to notify
the Company upon any change in the residence address indicated below (and any subsequent change).

     Finally, if you have not previously done so with respect to a prior equity grant, you
represent that you have reviewed the Stock Trading Plan for Mandatory Sale of Shares to Cover Tax
Withholding Obligations (Exhibit B to this Agreement), which you must sign (in writing or
electronically) and return to the Company.

 

 

     You acknowledge and agree that by submitting your acceptance on the E*TRADE online grant
acceptance page, it will act as your electronic signature to this Agreement and will result in a
contract between you and the Company with respect to this Award of Restricted Stock Units. You
may, if you prefer, sign and return to the Company a paper copy of this Agreement.

	 	 	 	 	 
	PARTICIPANT

	           ARUBA NETWORKS, INC.	 
	 
	 	 	 	 
	 

Signature

	 	 

By:
	 	 
	 
	 	 	 	 
	 

Print Name

	 	 

Title
	 	 
	 
	 	 	 	 
	Residence Address:
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

-2-

 

 EXHIBIT A

ARUBA NETWORKS, INC.

2007 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

     1. Grant. The Company hereby grants to the Participant an award of Restricted Stock
Units (“RSUs”), as set forth in the Notice of Grant of Restricted Stock Units attached to (and part
of) this Restricted Stock Unit Agreement (together, the “Agreement” or the “Restricted Stock Unit
Agreement”) and subject to the terms and conditions in this Agreement and the Company’s 2007 Equity
Incentive Plan (the “Plan”). Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Restricted Stock Unit Agreement.

     2. Company’s Obligation. Each RSU represents the right to receive a Share on the
vesting date (or at such later time as indicated in this Agreement). Unless and until the RSUs
vest, the Participant will have no right to receive Shares under such RSUs. Prior to actual
distribution of Shares pursuant to any vested RSUs, such RSUs will represent an unsecured
obligation of the Company, payable (if at all) only from the general assets of the Company. When
the RSUs are paid out to the Participant, they will be paid out in whole Shares only and the
purchase price will be deemed paid by the Participant for each RSU through the past services
rendered by the Participant, and will be subject to the appropriate tax reporting and, if
applicable, appropriate tax withholding.

     3. Vesting Schedule. Subject to paragraph 4 and the terms of the Plan, the RSUs
awarded by this Agreement will vest in the Participant according to the vesting schedule specified
in the Notice of Grant, subject to Participant remaining a Service Provider through each applicable
vesting date.

     4. Forfeiture upon Termination as Service Provider. Notwithstanding any contrary
provision of this Agreement or the Notice of Grant, if the Participant terminates service as a
Service Provider for any or no reason prior to vesting, the unvested RSUs awarded by this Agreement
will be forfeited at the time of such termination at no cost to the Company.

     5. Payment after Vesting.

     (a) Subject to paragraph 9, any RSUs that vest will be paid to the Participant (or in the
event of the Participant’s death, to his or her estate) in whole Shares. Subject to the provisions
of paragraph 5(b), such vested RSUs shall be paid in Shares as soon as practicable after vesting,
but in each such case no later than the date that is two-and-one-half months from the end of the
Company’s tax year that includes the vesting date.

     (b) Notwithstanding anything in the Plan or this Agreement to the contrary, if the vesting of
the balance, or some lesser portion of the balance, of the RSUs is accelerated in connection with
Participant’s termination as a Service Provider (provided that such termination is a “separation
from service” within the meaning of Section 409A, as determined by the Company), other than due to
death, and if (x) Participant is a “specified employee” within the meaning of Section 409A at the
time of such termination, and (y) the payment of such accelerated RSUs will result in the
imposition of additional tax under Section 409A if paid to

 

 

Participant on or within the six (6) month period following Participant’s termination as a
Service Provider, then, to the extent necessary to avoid the imposition of such additional
taxation, the payment of such accelerated RSUs otherwise payable to Participant during such six
(6) month period will accrue and will not be made until the date six (6) months and one (1) day
following the date of Participant’s termination as a Service Provider, unless the Participant dies
following his or her termination as a Service Provider, in which case, the RSUs will be paid in
Shares as soon as practicable following his or her death. It is the intent of this Agreement to
comply with the requirements of Section 409A so that none of the RSUs provided under this Agreement
or Shares issuable thereunder will be subject to the additional tax imposed under Section 409A, and
any ambiguities herein will be interpreted to so comply. For purposes of this Agreement, “Section
409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and any proposed,
temporary or final Treasury Regulations and Internal Revenue Service guidance thereunder, as each
may be amended from time to time.

     6. Payments after Death. Any distribution or delivery to be made to the Participant
under this Agreement will, if the Participant is then deceased, be made to the administrator or
executor of the Participant’s estate. Any such administrator or executor must furnish the Company
with (a) written notice of his or her status as transferee and (b) evidence satisfactory to the
Company to establish the validity of the transfer and compliance with any laws or regulations
pertaining to said transfer.

     7. Rights as Stockholder. Neither the Participant nor any person claiming under or
through the Participant will have any of the rights or privileges of a stockholder of the Company
in respect of any Shares deliverable hereunder unless and until certificates representing such
Shares (which may be in book entry form) will have been issued, recorded on the records of the
Company or its transfer agents or registrars, and delivered to the Participant or Participant’s
broker.

     8. No Effect on Employment or Service. The Participant’s employment or service with
the Company and its Parent or Subsidiaries is on an at-will basis only. Accordingly, nothing in
this Agreement or the Plan shall confer upon the Participant any right to continue to be employed
by or in service with the Company or any Parent or Subsidiary or shall interfere with or restrict
in any way the rights of the Company or the employing Parent or Subsidiary, which are hereby
expressly reserved, to terminate or change the terms of the employment or service of the
Participant at any time for any reason whatsoever, with or without good cause or notice.

     9. Tax Withholding. Until and unless the Administrator determines otherwise, on the
date or dates on which tax withholding obligations arise with respect to the RSUs, a number of
Shares sufficient to pay the minimum income, employment and other applicable taxes required to be
withheld with respect to the Shares (the “Tax-Related Items”) will be sold pursuant to such
procedures as the Administrator in its sole discretion may specify from time to time; provided,
however, that the Shares to be sold must have vested pursuant to the terms of this Agreement and
the Plan. The proceeds from such sale shall be used to satisfy Participant’s tax withholding
obligations (and any associated broker or other fees) arising with respect to the RSUs. Only whole
Shares will be sold to satisfy any tax withholding obligations. The proceeds from the sale of
Shares in excess of the tax withholding obligation (and any associated broker or

-2-

 

other fees) will be remitted to the Participant pursuant to such procedures as the
Administrator may specify from time to time. By accepting this Award, Participant expressly
consents to the sale of Shares to cover the tax withholding obligations (and any associated broker
or other fees), as set forth under this Section 9.

          In addition, the Administrator, in its sole discretion and pursuant to such procedures as it
may specify from time to time, may require the Participant to satisfy such tax withholding
obligations with respect to the Tax-Related Items, in whole or in part by one or more of the
following: (a) paying cash, (b) electing to have the Company withhold otherwise deliverable Shares
having a value equal to the minimum amount statutorily required to be withheld, (c) delivering to
the Company already vested and owned Shares having a value equal to the amount required to be
withheld, or (d) selling a sufficient number of such Shares otherwise deliverable to the
Participant through such means as the Administrator may determine in its sole discretion (whether
through a broker or otherwise) equal to the amount required to be withheld. Notwithstanding any
contrary provision of this Agreement, no Shares shall be distributed to the Participant unless and
until all Tax-Related Items have been withheld or otherwise satisfied with respect to such Shares.
If the Participant fails to make satisfactory arrangements for the payment of any Tax-Related Items
at the time any applicable Shares otherwise are scheduled to vest or tax withholdings are otherwise
due with respect to the RSUs, the Participant will permanently forfeit such Shares and the Shares
will be returned to the Plan at no cost. All income, employment and other taxes related to the
RSUs and any Shares delivered in payment thereof are the sole responsibility of Participant.

     10. Address for Notices. Any notice to be given to the Company under the terms of
this Agreement will be addressed to the Company at 1344 Crossman Ave., Sunnyvale, CA 94089-1113,
Attn: Stock Administration, or at such other address as the Company may hereafter designate
in writing or electronically.

     11. Grant is Not Transferable. This award of RSUs may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may be exercised during
the lifetime of Participant only by the Participant. The terms of the Plan and this Agreement
shall be binding upon the executors, administrators, heirs, successors and assigns of the
Participant. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of
this award of Restricted Sock Units, or any right or privilege conferred hereby, or upon any
attempted sale under any execution, attachment or similar process, this grant and the rights and
privileges conferred hereby immediately will become null and void.

     12. Binding Agreement. Subject to the limitation on the transferability of this grant
contained herein, this Agreement will be binding upon and inure to the benefit of the heirs,
legatees, legal representatives, successors and assigns of the parties hereto.

     13. Additional Conditions to Issuance of Stock. If at any time the Company will
determine, in its discretion, that the listing, registration or qualification of the Shares upon
any securities exchange or under any state or federal law, or the consent or approval of any
governmental regulatory authority is necessary or desirable as a condition to the issuance of
Shares to the Participant (or his or her estate), such issuance will not occur unless and until
such listing, registration, qualification, consent or approval will have been effected or obtained
free of

-3-

 

any conditions not acceptable to the Company. The Company will make all reasonable efforts to
meet the requirements of any such state or federal law or securities exchange and to obtain any
such consent or approval of any such governmental authority.

     14. Plan Governs. This Agreement (including the Notice of Grant) is subject to all
terms and provisions of the Plan. Subject to Section 20(c) of the Plan, in the event of a conflict
between one or more provisions of this Agreement or the Notice of Grant and one or more provisions
of the Plan, the provisions of the Plan will govern.

     15. Headings. Headings provided herein are for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.

     16. Administrator Authority. The Administrator will have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke any such rules
(including, but not limited to, the determination of whether or not any RSUs have vested). All
actions taken and all interpretations and determinations made by the Administrator in good faith
will be final and binding upon Participant, the Company and all other interested persons. Neither
the Administrator nor any person acting on behalf of the Administrator will be personally liable
for any action, determination or interpretation made in good faith with respect to the Plan or this
Agreement.

     17. Agreement Severable. In the event that any provision in this Agreement shall be
held invalid or unenforceable, such provision shall be severable from, and such invalidity or
unenforceability shall not be construed to have any effect on, the remaining provisions of this
Agreement.

     18. Entire Agreement; Governing Law; Modifications. The Plan is incorporated herein
by reference. The Plan and this Agreement (including the Notice of Grant) constitute the entire
Agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and Participant with respect to the subject
matter hereof, and may not be modified adversely to the Participant’s interest except by means of a
writing signed by the Company and Participant. Notwithstanding anything to the contrary in the
Plan or this Agreement, the Company reserves the right to revise this Agreement as it deems
necessary or advisable, in its sole discretion and without the consent of the Participant, to
comply with Section 409A or to otherwise avoid imposition of any additional tax or income
recognition under Section 409A prior to the actual payment of Shares pursuant to this award of
Restricted Stock Units. However, the Company makes no representation that this Award of Restricted
Stock Units is not subject to Section 409A nor makes any undertaking to preclude Section 409A from
applying to this Award of Restricted Stock Units. This Agreement is governed by California law
except for that body of law pertaining to conflict of laws.

-4-

 

 EXHIBIT B 

Stock Trading Plan

for Mandatory Sale of Shares to Cover Tax Withholding Obligations

     I am adopting and entering into this stock trading plan (the “Sales Plan”) so that I may
receive the necessary proceeds to satisfy any requirements to pay the minimum income, employment
and other applicable taxes (collectively, “Taxes”) required to be withheld by the Company (or the
employing Parent or Subsidiary) on my behalf if and when such tax withholding obligations arise as
a result of the grant by the Company to me of any RSUs, shares of restricted stock or performance
shares. I dispel any inference that I am selling Shares on the basis of or while aware of material
nonpublic information or that such sales evidence my awareness of material nonpublic information or
information at variance with the Company’s statements to investors.

1. Recitals

     a. I intend for this Sales Plan to comply with the requirements of Rule 10b5-1(c)(1) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).

     b. I am establishing this Sales Plan in order to permit the orderly disposition of a portion
of the Shares that I acquired (or will acquire) pursuant to an award of RSUs, restricted stock or
performance shares (each, an “Equity Award”). The Shares are being sold pursuant to a mandatory
sale provision in the Agreement to provide the necessary proceeds to satisfy any Taxes if and when
any tax withholding obligations arise, as well any broker or other fees associated with such sales.
This Sales Plan will apply to the mandatory sale of Shares under all future Equity Awards received
by me from the Company.

2. Representations, Warranties and Covenants

     I hereby represent, warrant and covenant that:

     a. I am not aware of any material nonpublic information concerning the Company or its
securities. I am entering into this Sales Plan in good faith and not as part of a plan or scheme
to evade compliance with the federal securities laws.

     b. Once vested, the Shares to be sold under this Sales Plan shall be owned free and clear by
me and are not subject to any liens, security interests or other encumbrances or limitations on
disposition other than those imposed by Rule 144 under the Securities Act of 1933, as amended.

     c. If I am an executive officer or director of the Company, I acknowledge that any filings
required under Section 16 of the Exchange Act are my sole responsibility.

     d. I am aware that in order for this Sales Plan to constitute a plan pursuant to Rule
10b5-1(c) of the Exchange Act, I must not enter into or alter a corresponding or hedging
transaction with respect to the Shares.

 

 

3. Implementation of the Plan

     a. The Company has appointed or shall appoint a broker (the “Broker”) (or the Company may, in
its discretion, permit me to appoint a Broker) to sell Shares pursuant to the terms and conditions
set forth below.

     b. The Broker is authorized to begin selling Shares pursuant to this Sales Plan commencing on
the date that the first Shares under the Equity Award vest. The Broker shall sell such number of
Shares as shall be required to satisfy (i) the applicable Taxes in accordance with my then current
applicable withholding rate and (ii) any associated broker or other fees.

     c. I understand that the Broker may not be able to effect a sale due to a market disruption or
a legal, regulatory or contractual restriction applicable to the Broker or any other event or
circumstance (a “Blackout”). I also understand that even in the absence of a Blackout, the Broker
may be unable to effect sales consistent with ordinary principles of best execution, due to
insufficient volume of trading, or other market factors in effect on the date of a sale.

4. Termination. This Sales Plan shall terminate upon the last day of my service with the Company.
This Sales Plan may not be terminated, modified or amended at any time without the prior approval
of the Administrator or the Company’s Compliance Officer.

     I acknowledge and agree that by submitting my acceptance on the E*TRADE online grant
acceptance page, it will act as my electronic signature to this Sales Plan and will result in a
contract between me and the Company with respect to this Sales Plan. I understand that I may, if I
prefer, sign and return to the Company a paper copy of this Sales Plan.

PARTICIPANT:

	 	 	 
	 

Signature

	 	 
	 
	 	 
	 

Print Name

	 	 

 

 

ARUBA NETWORKS, INC.

2007 EQUITY INCENTIVE PLAN

NOTICE OF GRANT OF RESTRICTED STOCK UNITS

(For Recipients Outside of the USA)

     Capitalized terms used but not defined herein shall have the meanings ascribed to them in the
Company’s 2007 Equity Incentive Plan (the “Plan”).

     Name
(the “Participant”):                                          

     You have been granted                     Restricted Stock Units. Each such Restricted Stock Unit
represents the right to receive one Share. No Shares will be issued with respect to the Restricted
Stock Units until the vesting conditions described below are satisfied. Additional terms of this
grant are as follows:

Date of
Grant:                                         

Grant
Number:                                         

Vesting Schedule:

[INSERT VESTING SCHEDULE]

     * Important additional information on vesting and forfeiture of the Restricted Stock Units
covered by this grant is contained in the attached Restricted Stock Unit Agreement; please be sure
to read the entire agreement.

     The Restricted Stock Units evidenced by this Notice of Grant is part of and subject in all
respects to the terms and conditions of the Plan (a copy of which has been made available to you by
the Company) and the attached Restricted Stock Unit Agreement (together with this Notice of Grant,
the “Agreement”), the terms of which are hereby incorporated herein by reference as if set forth
herein in full, and the Plan (a copy of which has been made available to you by the Company).

     By your signature below, you represent and warrant that you are familiar with, and agree to be
bound by, the terms and provisions of the Plan and this Agreement. You further represent and
warrant that you have reviewed this Agreement and the Plan in their entirety, have had an
opportunity to obtain the advice of counsel prior to executing this Agreement, and fully understand
all provisions of the Plan and this Agreement.

     You also agree (1) to accept as binding, conclusive and final all decisions or interpretations
of the Administrator upon any questions arising under the Plan or this Agreement and (2) to notify
the Company upon any change in the residence address indicated below (and any subsequent change).

     Finally, if you have not previously done so with respect to a prior equity grant, you
represent that you have reviewed the Stock Trading Plan for Mandatory Sale of Shares to Cover Tax
Withholding Obligations (Exhibit C to this Agreement), which you must sign and return to
the Company.

 

 

	 	 	 	 	 
	PARTICIPANT:

	 	ARUBA NETWORKS, INC.	 	 
	 
	 	 	 	 
	 

Signature

	 	 

By:
	 	 
	 
	 	 	 	 
	 

Print Name

	 	 

Title
	 	 
	 
	 	 	 	 
	Residence Address:
	 	 	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

-2-

 

EXHIBIT A 

ARUBA NETWORKS, INC.

2007 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

     1. Grant. The Company hereby grants to the Participant an award of Restricted Stock
Units (“RSUs”), as set forth in the Notice of Grant of Restricted Stock Units attached to (and part
of) this Restricted Stock Unit Agreement (together, the “Agreement” or the “Restricted Stock Unit
Agreement”) and subject to the terms and conditions in this Agreement and the Company’s 2007 Equity
Incentive Plan (the “Plan”). Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Restricted Stock Unit Agreement.

     2. Company’s Obligation. Each RSU represents the right to receive a Share on the
vesting date (or at such later time as indicated in this Agreement). Unless and until the RSUs
vest, the Participant will have no right to receive Shares under such RSUs. Prior to actual
distribution of Shares pursuant to any vested RSUs, such RSUs will represent an unsecured
obligation of the Company, payable (if at all) only from the general assets of the Company. When
the RSUs are paid out to the Participant, they will be paid out in whole Shares only and the
purchase price will be deemed paid by the Participant for each RSU through the past services
rendered by the Participant, and will be subject to the appropriate tax reporting and, if
applicable, appropriate tax withholding.

     3. Vesting Schedule. Subject to paragraph 4 and the terms of the Plan, the RSUs
awarded by this Agreement will vest in the Participant according to the vesting schedule specified
in the Notice of Grant, subject to Participant remaining a Service Provider through each applicable
vesting date.

     4. Forfeiture upon Termination as Service Provider. Notwithstanding any contrary
provision of this Agreement or the Notice of Grant, if the Participant terminates service as a
Service Provider for any or no reason prior to vesting, the unvested RSUs awarded by this Agreement
will be forfeited at the time of such termination at no cost to the Company.

     5. Payment after Vesting.

          (a) Subject to paragraph 9, any RSUs that vest will be paid to the Participant (or in the
event of the Participant’s death, to his or her estate or beneficiary under applicable law) in
whole Shares. Such vested RSUs shall be paid in Shares as soon as practicable after vesting, but
in each such case no later than the date that is two-and-one-half months from the end of the
Company’s tax year that includes the vesting date.

     6. Payments after Death. Any distribution or delivery to be made to the Participant
under this Agreement will, if the Participant is then deceased, be made to the administrator or
executor of the Participant’s estate or beneficiary under applicable law. Any such administrator,
executor or beneficiary must furnish the Company with (a) written notice of his or her status as
transferee and (b) evidence satisfactory to the Company to establish the validity of the transfer
and compliance with any laws or regulations pertaining to said transfer.

     7. Rights as Stockholder. Neither the Participant nor any person claiming under or
through the Participant will have any of the rights or privileges of a stockholder of the Company

 

 

in respect of any Shares deliverable hereunder unless and until certificates representing such
Shares (which may be in book entry form) will have been issued, recorded on the records of the
Company or its transfer agents or registrars, and delivered to the Participant or Participant’s
broker.

     8. No Effect on Employment or Service. Nothing in this Agreement or the Plan shall
confer upon the Participant any right to continue to be employed by or in service with his or her
employer (the “Employer”) or shall interfere with or restrict in any way the rights of the
Employer, which are hereby expressly reserved, to terminate or change the terms of the employment
or service of the Participant at any time for any reason whatsoever, with or without good cause or
notice to the extent permissible under applicable law.

     9. Tax Obligations/Withholding Authorization. Regardless of any action the
Administrator or the Employer takes with respect to any or all income tax (including federal,
state, foreign and local taxes), social insurance, payroll tax, payment on account or other
tax-related withholding (“Tax Related Items”), Participant acknowledges that the ultimate liability
for all Tax Related Items legally due by Participant is and remains Participant’s responsibility
and that the Administrator and/or the Employer (i) make no representations or undertakings
regarding the treatment of any Tax Related Items in connection with any aspect of the RSUs,
including the grant of the RSUs, the vesting of RSUs, the issuance of Shares at vesting or the
receipt of an equivalent cash payment, the subsequent sale of any Shares acquired at vesting and
the receipt of any dividends; and (ii) do not commit to structure the terms of the grant or any
aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax Related Items.

          Until and unless the Administrator determines otherwise, on the date or dates on which tax
withholding obligations arise with respect to the RSUs, a number of Shares sufficient to pay the
Tax-Related Items will be sold pursuant to such procedures as the Administrator in its sole
discretion may specify from time to time; provided, however, that the Shares to be sold must have
vested pursuant to the terms of this Agreement and the Plan. The proceeds of such sale shall be
used to satisfy Participant’s tax withholding obligations (and any associated broker or other fees)
arising with respect to the Restricted Stock Units. Only whole Shares will be sold to satisfy any
tax withholding obligations pursuant to this Section 9. The proceeds from the sale of Shares 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 may specify from time to time.
By accepting this Award, Participant expressly consents to the sale of Shares to cover the tax
withholding obligations (and any associated broker or other fees), as set forth under this
Section 9.

          In addition, upon required withholding of Tax-Related Items, prior to the issuance of Shares
hereunder or the receipt of an equivalent cash payment, the Administrator, in its sole discretion
and pursuant to such procedures as it may specify from time to time, may require the Participant to
pay, or make adequate arrangements satisfactory to the Administrator or to the Employer (as
directed by the Administrator) to satisfy all withholding and payment on account obligations of the
Administrator and/or the Employer. In this regard, Participant authorizes the Administrator or the
Employer to withhold all applicable Tax Related Items legally payable by Participant from
Participant’s wages or other cash compensation payable to Participant by the Administrator or the
Employer or from any equivalent cash payment received upon vesting of the RSUs. Alternatively, or
in addition, if permissible under local law, the Administrator or the

-2-

 

Employer may, in their sole discretion, (i) sell or arrange for the sale of Shares to be
issued on the vesting of RSUs to satisfy the withholding or payment on account obligation, and/or
(ii) withhold in Shares, provided that the Administrator and the Employer shall withhold only the
amount of Shares necessary to satisfy the minimum withholding amount. Participant shall pay to the
Administrator or to the Employer any amount of Tax Related Items that the Administrator or the
Employer may be required to withhold as a result of Participant’s receipt of RSUs, the vesting of
RSUs, the receipt of an equivalent cash payment, or the issuance of Shares at vesting that cannot
be satisfied by the means previously described. The Administrator may refuse to deliver shares to
Participant if Participant fails to comply with Participant’s obligation in connection with the Tax
Related Items as described herein. If the Participant fails to make satisfactory arrangements for
the payment of any Tax-Related Items at the time any applicable Shares otherwise are scheduled to
vest or tax withholdings are otherwise due with respect to the RSUs, the Participant will
permanently forfeit such Shares and the Shares will be returned to the Plan at no cost.

     10. Address for Notices. Any notice to be given to the Company under the terms of
this Agreement will be addressed to the Company at 1344 Crossman Ave., Sunnyvale, CA 94089-1113,
Attn: Stock Administration, or at such other address as the Company may hereafter designate
in writing or electronically.

     11. Grant is Not Transferable. This award of RSUs may not be transferred in any
manner otherwise than by will or by applicable law and may be exercised during the lifetime of
Participant only by the Participant. The terms of the Plan and this Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of the Participant. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this award of RSUs, or any
right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or
similar process, this grant and the rights and privileges conferred hereby immediately will become
null and void.

     12. Nature of Grant. In accepting the grant, Participant acknowledges that: (a) the
Plan is established voluntarily by the Company, it is discretionary in nature and it may be
modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in
the Plan and this Agreement; (b) the grant of the RSUs is voluntary and occasional and does not
create any contractual or other right to receive future grants of RSUs, or benefits in lieu of
RSUs, even if RSUs have been granted repeatedly in the past; (c) all decisions with respect to
future RSU grants, if any, will be at the sole discretion of the Company; (d) Participant’s
participation in the Plan shall not create a right to further employment with the Employer and
shall not interfere with the ability of the Employer to terminate Participant’s employment
relationship at any time with or without cause; (e) Participant is voluntarily participating in
the Plan; (f) the RSUs are extraordinary items that do not constitute compensation of any kind for
services of any kind rendered to the Company or the Employer, and which is outside the scope of
Participant’s employment contract, if any; (g) the RSU is not part of normal or expected
compensation or salary for any purposes, including, but not limited to, calculating any severance,
resignation, termination, redundancy, end of service payments, bonuses, long-service awards,
pension or retirement benefits or similar payments and in no event should be considered as
compensation for, or relating in any way to, past services for the Company or the Employer; (h) in
the event that Participant is not an employee of the Company,

-3-

 

the RSU grant will not be interpreted to form an employment contract or relationship with the
Company; and furthermore, the RSU grant will not be interpreted to form an employment contract with
the Employer or any Subsidiary or affiliate of the Company; (i) the future value of the underlying
Shares is unknown and cannot be predicted with certainty; (j) the value of Shares may increase or
decrease in value after Shares are issued at vesting; (k) in consideration of the grant of the
RSUs, no claim or entitlement to compensation or damages shall arise from termination of the RSUs
or diminution in value of the RSUs or Shares issued at vesting resulting from termination of
Participant’s employment by the Company or the Employer (for any reason whatsoever and whether or
not in breach of local labor laws) and Participant irrevocably releases the Company and the
Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is
found by a court of competent jurisdiction to have arisen, then, by signing this Agreement,
Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim;
and (l) in the event of termination of Participant’s employment (whether or not in breach of local
labor laws), Participant’s right to be eligible for future grants of RSUs, if any, will terminate
effective as of the date that Participant is no longer actively employed (active employment will
not include a period of “garden leave” or similar period pursuant to local law).

     13. Data Privacy. Participant hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of Participant’s personal data as
described in this Agreement and among, as applicable, Participant’s employer, the Company, its
Subsidiaries and its affiliates for the exclusive purpose of implementing, administering and
managing Participant’s participation in the Plan.

          Participant understands that the Company and Participant’s employer may hold certain personal
information about Participant, including, but not limited to, Participant’s name, home address and
telephone number, date of birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in the Company, details of all
RSUs or any other entitlement to shares awarded, canceled, vested, unvested or outstanding in
Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Data”).
Participant understands that Data may be transferred to any third parties assisting in the
implementation, administration and management of the Plan, that these recipients may be located in
Participant’s country, or elsewhere, and that the recipient’s country may have different data
privacy laws and protections than Participant’s country. Participant understands that Participant
may request a list with the names and addresses of any potential recipients of the Data by
contacting Participant’s local human resources representative. Participant authorizes the
recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for
the purposes of implementing, administering and managing Participant’s participation in the Plan,
including any requisite transfer of such Data as may be required to a broker, escrow agent or other
third party with whom the shares received upon vesting of the RSUs may be deposited. Participant
understands that Data will be held only as long as is necessary to implement, administer and manage
Participant’s participation in the Plan. Participant understands that Participant may, at any
time, view Data, request additional information about the storage and processing of Data, require
any necessary amendments to Data or refuse or withdraw the consents herein, in any case without
cost, by contacting in writing Participant’s local human resources representative. Participant
understands that refusal or withdrawal of consent may affect

-4-

 

Participant’s ability to participate in the Plan. For more information on the consequences of
Participant’s refusal to consent or withdrawal of consent, Participant understands that Participant
may contact Participant’s local human resources representative.

     14. Binding Agreement. Subject to the limitation on the transferability of this grant
contained herein, this Agreement will be binding upon and inure to the benefit of the heirs,
legatees, legal representatives, successors and assigns of the parties hereto.

     15. Additional Conditions to Issuance of Stock. If at any time the Company will
determine, in its discretion, that the listing, registration or qualification of the Shares upon
any securities exchange or under any state, federal or foreign law, or the consent or approval of
any governmental regulatory authority is necessary or desirable as a condition to the issuance of
Shares to the Participant (or his or her estate), such issuance will not occur unless and until
such listing, registration, qualification, consent or approval will have been effected or obtained
free of any conditions not acceptable to the Company. The Company will make all reasonable efforts
to meet the requirements of any such state, federal or foreign law or securities exchange and to
obtain any such consent or approval of any such governmental authority.

     16. Plan Governs. This Agreement (including the Notice of Grant) is subject to all
terms and provisions of the Plan. Subject to Section 20(c) of the Plan, in the event of a conflict
between one or more provisions of this Agreement or the Notice of Grant and one or more provisions
of the Plan, the provisions of the Plan will govern.

     17. Headings. Headings provided herein are for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.

     18. Administrator Authority. The Administrator will have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke any such rules
(including, but not limited to, the determination of whether or not any RSUs have vested). All
actions taken and all interpretations and determinations made by the Administrator in good faith
will be final and binding upon Participant, the Company and all other interested persons. Neither
the Administrator nor any person acting on behalf of the Administrator will be personally liable
for any action, determination or interpretation made in good faith with respect to the Plan or this
Agreement.

     19. Agreement Severable. In the event that any provision in this Agreement shall be
held invalid or unenforceable, such provision shall be severable from, and such invalidity or
unenforceability shall not be construed to have any effect on, the remaining provisions of this
Agreement.

     20. Language. If Participant has received this Agreement or any other document
related to the Plan translated into a language other than English and if the translated version is
different than the English version, the English version will control.

-5-

 

     21. Electronic Delivery. The Company may, in its sole discretion, decide to deliver
any documents related to the RSUs granted under and participation in the Plan or future RSUs that
may be granted under the Plan by electronic means or to request Participant’s consent to
participate in the Plan by electronic means. Participant hereby consents to receive such documents
by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or
electronic system established and maintained by the Company or another third party designated by
the Company.

     22. Entire Agreement; Governing Law; Modifications. The Plan is incorporated herein
by reference. The Plan and this Agreement (including the Notice of Grant) constitute the entire
Agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and Participant with respect to the subject
matter hereof, and may not be modified adversely to the Participant’s interest except by means of a
writing signed by the Company and Participant. This Agreement is governed by California law except
for that body of law pertaining to conflict of laws. For purposes of litigating any dispute that
arises directly or indirectly from the relationship of the parties evidenced by this grant or the
Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of
California and agree that such litigation shall be conducted only in the courts of Santa Clara,
California, or the federal courts for the United States for the Northern District of California,
and no other courts, where this grant is made and/or to be performed.

-6-

 

EXHIBIT B

ARUBA NETWORKS, INC.

2007 EQUITY INCENTIVE PLAN

Special Provisions for Restricted Stock Units in Countries Outside the U.S.

This Exhibit includes additional country-specific terms that apply to employees resident in
countries listed below. This Exhibit is part of the Agreement. Unless otherwise provided below,
capitalized terms used but not defined herein shall have the same meanings assigned to them in the
Plan and the Agreement.

Please note that the exchange control obligations described below are subject to change and it is
your responsibility (not the Company’s nor your Employer’s) to comply with the exchange controls
applicable to you. The Company strongly advises you to consult with your personal legal advisor
prior to selling Shares received under the Plan to determine the exchange controls that will apply
to you, if any.

Australia

If you acquire Shares of stock pursuant to your RSU awards and you offer your Shares for sale to a
person or entity resident in Australia, your offer may be subject to disclosure requirements under
Australian law. You should obtain legal advice on your disclosure obligations prior to making any
such offer.

Brazil

By accepting this RSU award, you agree to comply with all applicable Brazilian law and report and
pay any and all applicable taxes associated with the receipt and vesting of these RSUs, the sale of
the Shares issued upon vesting and the receipt of any dividends.

Employees resident or domiciled in Brazil will be required to submit annually a declaration of
assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of
such assets and rights is equal to or greater than US$100,000. Assets and rights that must be
reported include Shares of Company stock.

Canada

Consent to Receive Information in English for Employees in Quebec

The parties acknowledge that it is their express wish that the Agreement, as well as all documents,
notices and legal proceeds entered into, given or instituted pursuant hereto or relating directly
or indirectly hereto, be drawn up in English.

-7-

 

Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de
tous documents exécutés, avis donnés et procédures judiciaries intentées, directement ou
indirectement, relativement à ou suite à la présente convention.

China

When your RSUs vest under the Plan, you will be required to immediately sell all Shares issued to
you. You will be entitled to receive the cash proceeds from the sale of Shares less any required
withholding taxes and brokerage fees. You will not be entitled to retain any Shares upon vesting
of your RSUs.

You understand that your employer is not a party to the Plan, and thus, it is not required to make
any payments to you or on your behalf under either Plan.

People’s Republic of China exchange controls may limit your ability to withdraw/convert funds
received upon the sale of Shares, particularly if these amounts exceed US$50,000 on an annual
basis. You should confirm the procedures and requirements for withdrawals and conversions of
foreign exchange with your local bank prior to selling Shares.

Germany

Cross-border
payments in excess of €12,500 must be reported monthly. If you use a German bank
to effect a cross-border payment in excess of €12,500 in connection with the sale of securities
or the payment of dividends related to certain securities, the bank will make the report. In this
case, you will not have to report the transaction. In addition, you must report any receivables or
payables or debts in foreign currency exceeding an amount of
approximately €5,000,000 on a
monthly basis. Finally, you must report on an annual basis, shareholdings exceeding 10% of the
total voting capital of the Company.

Hong Kong

The contents of this document, the Agreement and the Plan have not been reviewed by any regulatory
authority in Hong Kong. You are advised to exercise caution in relation to this offer of RSU
awards. If you are in any doubt as to the contents of this document, the Agreement or the Plan,
you should obtain independent professional advice.

India

Proceeds from the sale of Shares must be repatriated to India within a reasonable period of time
(i.e., two weeks). You should obtain a foreign inward remittance certificate from the bank for
your records to document compliance with this requirement and submit a copy of the foreign inward
remittance certificate to your employer.

Japan

There are no special provisions.

Korea

-8-

 

Exchange control laws require Korean residents who realize US$500,000 or more from the sale of
Shares to repatriate the proceeds to Korea within eighteen (18) months of the sale.

Malaysia

If you are a director of a Malaysian affiliate of Aruba, you are subject to certain notification
requirements under the Malaysian Companies Act, 1965. Among these requirements is an obligation to
notify the Malaysian affiliate in writing when you receive an interest (e.g., RSUs, Shares) in the
Company or any related companies. In addition, you must notify the Malaysian affiliate when you
sell Shares of the Company or any related company (including when you sell Shares received at
vesting of your RSUs). These notifications must be made within fourteen days of acquiring or
disposing of any interest in the Company or any related company.

Mexico

You understand that your employer is not a party to the Plan and, thus, it is not required to make
any payments to you or on your behalf under the Plan. In addition, you acknowledge that any
benefit derived under the Plan is a fringe benefit.

Policy Statement:

La invitación que the Company hace en relación con el Plan es unilateral y discrecional, por lo
tanto, the Company se reserva el derecho absoluto para modificar o terminar el mismo, sin ninguna
responsabilidad parapara usted.

Esta invitación y, en su caso, la adquisición de acciones, de ninguna manera establecen relación
laboral alguna entre usted y the Company. Tampoco establece derecho alguno entre usted y su
empleador.

English Translation:

The invitation the Company is making under the Plan is unilateral and discretionary and, therefore,
the Company reserves the absolute right to amend it and discontinue it at any time without any
liability to you.

This invitation and, in your case, the acquisition of shares does not, in any way, establish a
labor relationship between you and the Company and it does not establish any rights between you and
your employer.

Netherlands

You should be aware of the Dutch insider trading rules which may impact the sale of Shares under
the Plan. In particular, you may be prohibited from effecting certain share transactions if you
have insider information regarding the Company. If you are uncertain whether the insider rules
apply, you should consult with your legal advisor.

New Zealand

-9-

 

No special provisions.

Saudi Arabia

Please note that your grant was made in the U.S., is subject to the laws of the State of California
and any sale or issuance of Shares will be conducted through a stockbroker in the U.S.

Singapore

Directors of a Singapore subsidiary are subject to certain notification requirements under the
Singapore Companies Act. Directors must notify the Singapore subsidiary in writing of an interest
(e.g., Shares) in the Company or any related companies within two days of (i) its acquisition or
disposal, (ii) any change in a previously disclosed interest (e.g., when the RSUs vest), or (iii)
becoming a director.

Sweden

No special provisions.

Taiwan

This offer of RSUs and the Shares to be issued pursuant to the Plan is available only for employees
of the Company and its Subsidiaries. It is not a public offer of securities by a Taiwanese
company; therefore, it is exempt from registration in Taiwan.

UAE (Dubai)

The Plan is only being offered to qualified employees and is in the nature of providing equity
incentives to employees of the Company’s Subsidiary in the United Arab Emirates.

-10-

 

EXHIBIT C

Stock Trading Plan

for Mandatory Sale of Shares to Cover Tax Withholding Obligations

     I am adopting and entering into this stock trading plan (the “Sales Plan”) so that I may
receive the necessary proceeds to satisfy any requirements to pay the minimum income, employment
and other applicable taxes (collectively, “Taxes”) required to be withheld by the Company (or the
employing Parent or Subsidiary) on my behalf if and when such tax withholding obligations arise as
a result of the grant by the Company to me of any RSUs, shares of restricted stock or performance
shares. I dispel any inference that I am selling Shares on the basis of or while aware of material
nonpublic information or that such sales evidence my awareness of material nonpublic information or
information at variance with the Company’s statements to investors.

1. Recitals

     a. I intend for this Sales Plan to comply with the requirements of Rule 10b5-1(c)(1) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).

     b. I am establishing this Sales Plan in order to permit the orderly disposition of a portion
of the Shares that I acquired (or will acquire) pursuant to an award of RSUs, restricted stock or
performance shares (each, an “Equity Award”). The Shares are being sold pursuant to a mandatory
sale provision in the Agreement to provide the necessary proceeds to satisfy any Taxes if and when
any tax withholding obligations arise, as well any broker or other fees associated with such sales.
This Sales Plan will apply to the mandatory sale of Shares under all future Equity Awards received
by me from the Company.

2. Representations, Warranties and Covenants

     I hereby represent, warrant and covenant that:

     a. I am not aware of any material nonpublic information concerning the Company or its
securities. I am entering into this Sales Plan in good faith and not as part of a plan or scheme
to evade compliance with the federal securities laws.

     b. Once vested, the Shares to be sold under this Sales Plan shall be owned free and clear by
me and are not subject to any liens, security interests or other encumbrances or limitations on
disposition other than those imposed by Rule 144 under the Securities Act of 1933, as amended.

     c. If I am an executive officer or director of the Company, I acknowledge that any filings
required under Section 16 of the Exchange Act are my sole responsibility.

     d. I am aware that in order for this Sales Plan to constitute a plan pursuant to Rule
10b5-1(c) of the Exchange Act, I must not enter into or alter a corresponding or hedging
transaction with respect to the Shares.

 

 

3. Implementation of the Plan

     a. The Company has appointed or shall appoint a broker (the “Broker”) (or the Company may, in
its discretion, permit me to appoint a Broker) to sell Shares pursuant to the terms and conditions
set forth below.

     b. The Broker is authorized to begin selling Shares pursuant to this Sales Plan commencing on
the date that the first Shares under the Equity Award vest. The Broker shall sell such number of
Shares as shall be required to satisfy (i) the applicable Taxes in accordance with my then current
applicable withholding rate and (ii) any associated broker or other fees.

     c. I understand that the Broker may not be able to effect a sale due to a market disruption or
a legal, regulatory or contractual restriction applicable to the Broker or any other event or
circumstance (a “Blackout”). I also understand that even in the absence of a Blackout, the Broker
may be unable to effect sales consistent with ordinary principles of best execution, due to
insufficient volume of trading, or other market factors in effect on the date of a sale.

4. Termination. This Sales Plan shall terminate upon the last day of my service with the Company.
This Sales Plan may not be terminated, modified or amended at any time without the prior approval
of the Administrator or the Company’s Compliance Officer.

Please sign and return a paper copy of this Sales Plan to [TITLE] at the Company. If you do not
have access to a printer and would like a paper copy to be sent to you, please contact [NAME] at
[CONTACT INFORMATION].

PARTICIPANT:

	 	 	 
	 
	 	 
	Signature

	 	 
	 
	 	 
	 
	 	 
	Print Name
	 	 

-2-

 

ARUBA NETWORKS, INC.

2007 EQUITY INCENTIVE PLAN

NOTICE OF GRANT OF RESTRICTED STOCK UNITS

For Employees Resident and Ordinarily Resident in the UK

     Capitalized terms used but not defined herein shall have the meanings ascribed to them in the
Company’s 2007 Equity Incentive Plan (the “Plan”).

     Name (the “Participant”):                                         

     You have been granted                      Restricted Stock Units. Each such Restricted Stock Unit
represents the right to receive one Share. No Shares will be issued with respect to the Restricted
Stock Units until the vesting conditions described below are satisfied. Additional terms of this
grant are as follows:

Date of Grant:                                         

Grant Number:                                         

Vesting Schedule:

[INSERT VESTING SCHEDULE]

     * Important additional information on vesting and forfeiture of the Restricted Stock Units
covered by this grant is contained in the attached Restricted Stock Unit Agreement; please be sure
to read the entire agreement.

     The Restricted Stock Units evidenced by this Notice of Grant is part of and subject in all
respects to the terms and conditions of the Plan (a copy of which has been made available to you by
the Company) and the attached Restricted Stock Unit Agreement (together with this Notice of Grant,
the “Agreement”), the terms of which are hereby incorporated herein by reference as if set forth
herein in full, and the Plan (a copy of which has been made available to you by the Company).

     By your signature below, you represent and warrant that you are familiar with, and agree to be
bound by, the terms and provisions of the Plan and this Agreement. You further represent and
warrant that you have reviewed this Agreement and the Plan in their entirety, have had an
opportunity to obtain the advice of counsel prior to executing this Agreement, and fully understand
all provisions of the Plan and this Agreement.

     You also agree (1) to accept as binding, conclusive and final all decisions or interpretations
of the Administrator upon any questions arising under the Plan or this Agreement and (2) to notify
the Company upon any change in the residence address indicated below (and any subsequent change).

     Finally, if you have not previously done so with respect to a prior equity grant, you
represent that you have reviewed the Stock Trading Plan for Mandatory Sale of Shares to Cover Tax
Withholding Obligations (Exhibit B to this Agreement), which you must sign and return to the
Company.

 

 

	 	 	 	 	 
	PARTICIPANT:

	 	     ARUBA NETWORKS, INC.
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	Signature

	 	By:	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	Print Name

	 	Title	 	 
	 
	 	 	 	 
	Residence Address:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 

-2-

 

EXHIBIT A

ARUBA NETWORKS, INC.

2007 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

     1. Grant. The Company hereby grants to the Participant an award of Restricted Stock
Units (“RSUs”), as set forth in the Notice of Grant of Restricted Stock Units attached to (and part
of) this Restricted Stock Unit Agreement (together, the “Agreement” or the “Restricted Stock Unit
Agreement”) and subject to the terms and conditions in this Agreement and the Company’s 2007 Equity
Incentive Plan (the “Plan”). Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Restricted Stock Unit Agreement.

     2. Company’s Obligation. Each RSU represents the right to receive a Share on the
vesting date (or at such later time as indicated in this Agreement). Unless and until the RSUs
vest, the Participant will have no right to receive Shares under such RSUs. Prior to actual
distribution of Shares pursuant to any vested RSUs, such RSUs will represent an unsecured
obligation of the Company, payable (if at all) only from the general assets of the Company. When
the RSUs are paid out to the Participant, they will be paid out in whole Shares only and the
purchase price will be deemed paid by the Participant for each RSU through the past services
rendered by the Participant, and will be subject to the appropriate tax reporting and, if
applicable, appropriate tax withholding.

     3. Vesting Schedule. Subject to paragraph 4 and the terms of the Plan, the RSUs
awarded by this Agreement will vest in the Participant according to the vesting schedule specified
in the Notice of Grant, subject to Participant remaining a Service Provider through each applicable
vesting date.

     4. Forfeiture upon Termination as Service Provider. Notwithstanding any contrary
provision of this Agreement or the Notice of Grant, if the Participant terminates service as a
Service Provider for any or no reason prior to vesting, the unvested RSUs awarded by this Agreement
will be forfeited at the time of such termination at no cost to the Company.

     5. Payment after Vesting.

          (a) Subject to paragraph 9, any RSUs that vest will be paid to the Participant (or in the
event of the Participant’s death, to his or her estate) in whole Shares. Such vested RSUs shall be
paid in Shares as soon as practicable after vesting, but in each such case no later than the date
that is two-and-one-half months from the end of the Company’s tax year that includes the vesting
date.

     6. Payments after Death. Any distribution or delivery to be made to the Participant
under this Agreement will, if the Participant is then deceased, be made to the administrator or
executor of the Participant’s estate. Any such administrator or executor must furnish the Company
with (a) written notice of his or her status as transferee and (b) evidence satisfactory to the
Company to establish the validity of the transfer and compliance with any laws or regulations
pertaining to said transfer.

 

 

     7. Rights as Stockholder. Neither the Participant nor any person claiming under or
through the Participant will have any of the rights or privileges of a stockholder of the Company
in respect of any Shares deliverable hereunder unless and until certificates representing such
Shares (which may be in book entry form) will have been issued, recorded on the records of the
Company or its transfer agents or registrars, and delivered to the Participant or Participant’s
broker.

     8. No Effect on Employment or Service. Nothing in this Agreement or the Plan shall
confer upon the Participant any right to continue to be employed by or in service with the Company
or any Parent or Subsidiary.

     9. Tax Withholding. Until and unless the Administrator determines otherwise, on the
date or dates on which tax withholding obligations arise with respect to the RSUs, a number of
Shares sufficient to pay the minimum income, employment employee and employer National Insurance
contributions and any other taxes which must be withheld with respect to such Shares (the
“Tax-Related Items”) will be sold pursuant to such procedures as the Administrator in its sole
discretion may specify from time to time; provided, however, that the Shares to be sold must have
vested pursuant to the terms of this Agreement and the Plan. The proceeds of such sale shall be
used to satisfy Participant’s tax withholding obligations (and any associated broker or other fees)
arising with respect to the Restricted Stock Units. Only whole Shares will be sold to satisfy any
tax withholding obligations pursuant to this Section 9. The proceeds from the sale of Shares 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 may specify from time to time.
By accepting this Award, Participant expressly consents to the sale of Shares to cover the tax
withholding obligations (and any associated broker or other fees), as set forth under this
Section 9.

          In addition, the Administrator, in its sole discretion and pursuant to such procedures as it
may specify from time to time, may require the Participant to satisfy such tax withholding
obligations with respect to the Tax-Related Items, in whole or in part by one or more of the
following: (a) paying cash, (b) electing to have the Company withhold otherwise deliverable Shares
having a value equal to the minimum amount statutorily required to be withheld, (c) delivering to
the Company already vested and owned Shares having a value equal to the amount required to be
withheld, or (d) selling a sufficient number of such Shares otherwise deliverable to the
Participant through such means as the Administrator may determine in its sole discretion (whether
through a broker or otherwise) equal to the amount required to be withheld. Notwithstanding any
contrary provision of this Agreement, no Shares shall be distributed to the Participant unless and
until all Tax-Related Items have been withheld or otherwise satisfied with respect to such Shares.
If the Participant fails to make satisfactory arrangements for the payment of any Tax-Related Items
hereunder at the time any applicable Shares otherwise are scheduled to vest or tax withholdings are
otherwise due with respect to the RSUs, the Participant will permanently forfeit such Shares and
the Shares will be returned to the Plan at no cost. All income, employment and other taxes related
to the RSUs and any Shares delivered in payment thereof are the sole responsibility of Participant.

-2-

 

          If Participant fails to make satisfactory arrangements for payment of all withholding amounts
within ninety (90) days (the “Due Date”) after the event giving rise to the tax liability (such as
the vesting of the RSUs), Participant agrees that the amount of any uncollected income tax shall
(assuming that Participant is not an applicable executive officer of the Company as the term is
used in Section 402 of the U.S. Sarbanes-Oxley Act of 2002) constitute a loan owed by Participant
to Participant’s employer, effective on the Due Date. Participant agrees that the loan will bear
interest at the then-current HM Revenue and Customs Official Rate and that it will be immediately
due and repayable, and the Company or Participant’s employer may recover it any time thereafter by
any of the means referred to above.

          As a condition of the RSUs vesting, Participant agrees to accept any liability for secondary
Class 1 NICs (“Employer NICs”) which may be payable by the Company (or the Parent or Subsidiary
employing or retaining Participant) with respect to the vesting of the RSUs or otherwise payable in
connection with the RSUs. To accomplish the foregoing, Participant agrees to execute a joint
election between the Company and/or Participant’s employer and Participant (the “Election”), the
form of such Election being formally approved by the HM Revenue and Customs, and any other consent
or elections required to accomplish the transfer of the Employer NICs to Participant. Participant
further agrees to execute such other joint elections as may be required between the Participant and
any successor to the Company and/or Participant’s employer. If Participant does not enter into an
Election prior to the first vesting date, the RSUs shall cease vesting and shall become null and
void without any liability to the Company and/or Participant’s employer.

     10. Address for Notices. Any notice to be given to the Company under the terms of
this Agreement will be addressed to the Company at 1344 Crossman Ave., Sunnyvale, CA 94089-1113,
Attn: Stock Administration, or at such other address as the Company may hereafter designate
in writing or electronically.

     11. Grant is Not Transferable. This award of RSUs may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may be exercised during
the lifetime of Participant only by the Participant. The terms of the Plan and this Agreement
shall be binding upon the executors, administrators, heirs, successors and assigns of the
Participant. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of
this award of Restricted Sock Units, or any right or privilege conferred hereby, or upon any
attempted sale under any execution, attachment or similar process, this grant and the rights and
privileges conferred hereby immediately will become null and void.

     12. Binding Agreement. Subject to the limitation on the transferability of this grant
contained herein, this Agreement will be binding upon and inure to the benefit of the heirs,
legatees, legal representatives, successors and assigns of the parties hereto.

     13. Additional Conditions to Issuance of Stock. If at any time the Company will
determine, in its discretion, that the listing, registration or qualification of the Shares upon
any securities exchange or under any state or federal law, or the consent or approval of any
governmental regulatory authority is necessary or desirable as a condition to the issuance of
Shares to the Participant (or his or her estate), such issuance will not occur unless and until
such listing, registration, qualification, consent or approval will have been effected or obtained
free of

-3-

 

any conditions not acceptable to the Company. The Company will make all reasonable efforts to
meet the requirements of any such state or federal law or securities exchange and to obtain any
such consent or approval of any such governmental authority.

     14. Plan Governs. This Agreement (including the Notice of Grant) is subject to all
terms and provisions of the Plan. Subject to Section 20(c) of the Plan, in the event of a conflict
between one or more provisions of this Agreement or the Notice of Grant and one or more provisions
of the Plan, the provisions of the Plan will govern.

     15. Headings. Headings provided herein are for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.

     16. Administrator Authority. The Administrator will have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke any such rules
(including, but not limited to, the determination of whether or not any RSUs have vested). All
actions taken and all interpretations and determinations made by the Administrator in good faith
will be final and binding upon Participant, the Company and all other interested persons. Neither
the Administrator nor any person acting on behalf of the Administrator will be personally liable
for any action, determination or interpretation made in good faith with respect to the Plan or this
Agreement.

     17. Agreement Severable. In the event that any provision in this Agreement shall be
held invalid or unenforceable, such provision shall be severable from, and such invalidity or
unenforceability shall not be construed to have any effect on, the remaining provisions of this
Agreement.

     18. Entire Agreement; Governing Law; Modifications. The Plan is incorporated herein
by reference. The Plan and this Agreement (including the Notice of Grant) constitute the entire
Agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and Participant with respect to the subject
matter hereof, and may not be modified adversely to the Participant’s interest except by means of a
writing signed by the Company and Participant. Notwithstanding anything to the contrary in the
Plan or this Agreement, the Company reserves the right to revise this Agreement as it deems
necessary or advisable, in its sole discretion and without the consent of the Participant, to
comply with Section 409A or to otherwise avoid imposition of any additional tax or income
recognition under Section 409A prior to the actual payment of Shares pursuant to this award of
Restricted Stock Units. However, the Company makes no representation that this Award of Restricted
Stock Units is not subject to Section 409A nor makes any undertaking to preclude Section 409A from
applying to this Award of Restricted Stock Units. This Agreement is governed by California law
except for that body of law pertaining to conflict of laws.

-4-

 

     19. Data Privacy. Participant hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of his or her personal data as described
in this document by and among, as applicable, the Employer and the Company, if different from the
Employer, and the Company’s subsidiaries and affiliates, for the exclusive purpose of implementing,
administering and managing Participant’s participation in the Plan. Participant understands that
the Company and the Employer hold certain personal information about him or her, including, but not
limited to, his or her name, home address and telephone number, date of birth, social insurance
number or other identification number, salary, nationality, job title, any Shares or directorships
held in the Company, details of all RSUs or any other entitlement to Shares of stock awarded,
canceled, exercised, vested, unvested or outstanding in his or her favor, for the purpose of
implementing, administering and managing the Plan (“Data”). Participant understands that Data may
be transferred to any third parties assisting in the implementation, administration and management
of the Plan, that these recipients may be located in his or her country or elsewhere, including
outside the European Economic Area, and that the recipient’s country may have different data
privacy laws and protections than Participant’s country. Participant understands that he or she
may request a list with the names and addresses of any potential recipients of the Data by
contacting his or her local human resources representative. Participant authorizes the recipients
to receive, possess, use, retain and transfer the Data, in electronic or other form, for the
purposes of implementing, administering and managing Participant’s participation in the Plan,
including any requisite transfer of such Data as may be required to a broker or other third party
with whom Participant may elect to deposit any Shares of stock acquired upon vesting of the RSUs.
Participant understands that Data will be held only as long as is necessary to implement,
administer and manage his or her participation in the Plan. Participant understands that he or she
may, at any time, view Data, request additional information about the storage and processing of
Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any
case without cost, by contacting in writing his or her local human resources representative.
Participant understands, however, that refusing or withdrawing consent may affect his or her
ability to participate in the Plan. For more information on the consequences of his or her refusal
to consent or withdrawal of consent, Participant understands that he or she may contact his or her
local human resources representative.

     20. Nature of Grant. By accepting the grant of the RSUs, Participant acknowledges and
agrees that:

	 	(a)	 	the Plan is discretionary in nature and may be modified, suspended or
terminated by the Company at any time as provided in the Plan;
	 
	 	(b)	 	the grant of an RSU is a one-time benefit which does not create any contractual
or other right to receive future grants of RSUs, or benefits in lieu of RSUs even if
RSUs have been granted repeatedly in the past;
	 
	 	(c)	 	participation in the Plan is voluntary;
	 
	 	(d)	 	the value of the RSU is an extraordinary item that does not constitute
compensation of any kind for services rendered to the Company or the Employer and which
is outside the scope of Participant’s employment contract, and the RSU

-5-

 

	 	 	 	is not part of normal or expected compensation for purposes of calculating any
severance, resignation, redundancy, end of service payments, bonuses, long-service
awards, pension or retirement benefits or similar payments;

	 	(e)	 	notwithstanding any terms or conditions of the Plan to the contrary, in the
event of involuntary termination of Participant’s employment, Participant’s right to be
eligible for future grants of RSUs, if any, will terminate effective as of the date
that Participant is no longer actively employed (active employment will not include a
period of “garden leave” or similar period pursuant to local law);
	 
	 	(f)	 	the future value of the underlying Shares is unknown and cannot be predicted
with certainty;
	 
	 	(g)	 	no claim or entitlement to compensation or damages arises from termination of
the RSUs or diminution in value of the RSUs or Shares acquired through vesting of the
RSUs and Participant irrevocably releases the Company and the Employer from any such
claim that may arise;
	 
	 	(h)	 	in the event that Participant is not an employee of the Company, the RSU grant
will not be interpreted to form an employment contract or relationship with the
Company; and furthermore, the RSU grant will not be interpreted to form an employment
contract with any subsidiary or affiliate of the Company; and
	 
	 	(i)	 	in consideration of the grant of the RSUs, no claim or entitlement to
compensation or damages shall arise from termination of the RSU or diminution in value
of the RSU or Shares purchased through vesting of the RSU resulting from termination of
Participant’s employment by the Employer (for any reason whatsoever and whether or not
in breach of local labor laws) and Participant irrevocably releases Company and the
Employer from any such claim that may arise; if, notwithstanding the foregoing, any
such claim is found by a court of competent jurisdiction to have arisen, then, by
signing this Agreement, Participant shall be deemed irrevocably to have waived his or
her entitlement to pursue such claim.

-6-

 

EXHIBIT B

Stock Trading Plan

for Mandatory Sale of Shares to Cover Tax Withholding Obligations

     I am adopting and entering into this stock trading plan (the “Sales Plan”) so that I may
receive the necessary proceeds to satisfy any requirements to pay the minimum income, employment
and other applicable taxes (collectively, “Taxes”) required to be withheld by the Company (or the
employing Parent or Subsidiary) on my behalf if and when such tax withholding obligations arise as
a result of the grant by the Company to me of any RSUs, shares of restricted stock or performance
shares. I dispel any inference that I am selling Shares on the basis of or while aware of material
nonpublic information or that such sales evidence my awareness of material nonpublic information or
information at variance with the Company’s statements to investors.

1. Recitals

     a. I intend for this Sales Plan to comply with the requirements of Rule 10b5-1(c)(1) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).

     b. I am establishing this Sales Plan in order to permit the orderly disposition of a portion
of the Shares that I acquired (or will acquire) pursuant to an award of RSUs, restricted stock or
performance shares (each, an “Equity Award”). The Shares are being sold pursuant to a mandatory
sale provision in the Agreement to provide the necessary proceeds to satisfy any Taxes if and when
any tax withholding obligations arise, as well any broker or other fees associated with such sales.
This Sales Plan will apply to the mandatory sale of Shares under all future Equity Awards received
by me from the Company.

2. Representations, Warranties and Covenants

     I hereby represent, warrant and covenant that:

     a. I am not aware of any material nonpublic information concerning the Company or its
securities. I am entering into this Sales Plan in good faith and not as part of a plan or scheme
to evade compliance with the federal securities laws.

     b. Once vested, the Shares to be sold under this Sales Plan shall be owned free and clear by
me and are not subject to any liens, security interests or other encumbrances or limitations on
disposition other than those imposed by Rule 144 under the Securities Act of 1933, as amended.

     c. If I am an executive officer or director of the Company, I acknowledge that any filings
required under Section 16 of the Exchange Act are my sole responsibility.

     d. I am aware that in order for this Sales Plan to constitute a plan pursuant to Rule
10b5-1(c) of the Exchange Act, I must not enter into or alter a corresponding or hedging
transaction with respect to the Shares.

 

 

3. Implementation of the Plan

     a. The Company has appointed or shall appoint a broker (the “Broker”) (or the Company may, in
its discretion, permit me to appoint a Broker) to sell Shares pursuant to the terms and conditions
set forth below.

     b. The Broker is authorized to begin selling Shares pursuant to this Sales Plan commencing on
the date that the first Shares under the Equity Award vest. The Broker shall sell such number of
Shares as shall be required to satisfy (i) the applicable Taxes in accordance with my then current
applicable withholding rate and (ii) any associated broker or other fees.

     c. I understand that the Broker may not be able to effect a sale due to a market disruption or
a legal, regulatory or contractual restriction applicable to the Broker or any other event or
circumstance (a “Blackout”). I also understand that even in the absence of a Blackout, the Broker
may be unable to effect sales consistent with ordinary principles of best execution, due to
insufficient volume of trading, or other market factors in effect on the date of a sale.

4. Termination. This Sales Plan shall terminate upon the last day of my service with the Company.
This Sales Plan may not be terminated, modified or amended at any time without the prior approval
of the Administrator or the Company’s Compliance Officer.

Please sign and return a paper copy of this Sales Plan to [TITLE] at the Company. If you do not
have access to a printer and would like a paper copy to be sent to you, please contact [NAME] at
[CONTACT INFORMATION].

PARTICIPANT:

	 	 	 
	 
	 	 
	Signature

	 	 
	 
	 	 
	 
	 	 
	Print Name
	 	 

-2-

 

ARUBA NETWORKS, INC.

2007 EQUITY INCENTIVE PLAN FOR INDIAN RESIDENTS

NOTICE OF GRANT OF RESTRICTED STOCK UNITS

     Capitalized terms used but not defined herein shall have the meanings ascribed to them in the
Company’s 2007 Equity Incentive Plan (the “Plan”) and Equity Incentive Sub-Plan for Indian
Residents (the “Sub-Plan).

     Name (the “Participant”):                                                             

     You
have been granted                      Restricted Stock Units. Each such Restricted Stock Unit
represents the right to receive one Share. No Shares will be issued with respect to the Restricted
Stock Units until the vesting conditions described below are satisfied. Additional terms of this
grant are as follows:

Date of
Grant:                                                             

Grant
Number:                                                             

Vesting Schedule:

[INSERT VESTING SCHEDULE]

     * Important additional information on vesting and forfeiture of the Restricted Stock Units
covered by this grant is contained in the attached Restricted Stock Unit Agreement; please be sure
to read the entire agreement.

     The Restricted Stock Units evidenced by this Notice of Grant is part of and subject in all
respects to the terms and conditions of the Plan (a copy of which has been made available to you by
the Company) and the attached Restricted Stock Unit Agreement (together with this Notice of Grant,
the “Agreement”), the terms of which are hereby incorporated herein by reference as if set forth
herein in full, and the Plan (a copy of which has been made available to you by the Company).

     By your signature below, you represent and warrant that you are familiar with, and agree to be
bound by, the terms and provisions of the Plan and this Agreement. You further represent and
warrant that you have reviewed this Agreement and the Plan in their entirety, have had an
opportunity to obtain the advice of counsel prior to executing this Agreement, and fully understand
all provisions of the Plan and this Agreement.

     You also agree (1) to accept as binding, conclusive and final all decisions or interpretations
of the Administrator upon any questions arising under the Plan or this Agreement and (2) to notify
the Company upon any change in the residence address indicated below (and any subsequent change).

     Finally, if you have not previously done so with respect to a prior equity grant, you
represent that you have reviewed the Stock Trading Plan for Mandatory Sale of Shares to Cover Tax
Withholding Obligations (Exhibit B to this Agreement), which you must sign and return to the
Company.

 

 

	 	 	 	 	 	 	 
	PARTICIPANT:

	 	 	 	ARUBA NETWORKS, INC.	 	 
	 
	 	 	 	 	 	 
	 

Signature

	 	 	 	 

By:
	 	 
	 
	 	 	 	 	 	 
	 

Print Name

	 	 	 	 

Title
	 	 
	 
	 	 	 	 	 	 
	Residence Address:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 
	 	 

-2-

 

EXHIBIT A

ARUBA NETWORKS, INC.

2007 EQUITY INCENTIVE PLAN FOR INDIAN RESIDENTS

RESTRICTED STOCK UNIT AGREEMENT

     1. Grant. The Company hereby grants to the Participant an award of Restricted Stock
Units (“RSUs”), as set forth in the Notice of Grant of Restricted Stock Units attached to (and part
of) this Restricted Stock Unit Agreement (together, the “Agreement” or the “Restricted Stock Unit
Agreement”) and subject to the terms and conditions in this Agreement and the Company’s 2007 Equity
Incentive Plan for Indian Residents (the “Sub-Plan”). Unless otherwise defined herein, the terms
defined in the Sub-Plan shall have the same defined meanings in this Restricted Stock Unit
Agreement.

     2. Company’s Obligation. Each RSU represents the right to receive a Share on the
vesting date (or at such later time as indicated in this Agreement). Unless and until the RSUs
vest, the Participant will have no right to receive Shares under such RSUs. Prior to actual
distribution of Shares pursuant to any vested RSUs, such RSUs will represent an unsecured
obligation of the Company, payable (if at all) only from the general assets of the Company. When
the RSUs are paid out to the Participant, they will be paid out in whole Shares only and the
purchase price will be deemed paid by the Participant for each RSU through the past services
rendered by the Participant, and will be subject to the appropriate tax reporting and, if
applicable, appropriate withholding for Tax-Related Items (as defined in Section 9 of this
Agreement).

     3. Vesting Schedule. Subject to paragraph 4 and the terms of the Sub-Plan, the RSUs
awarded by this Agreement will vest in the Participant according to the vesting schedule specified
in the Notice of Grant, subject to Participant remaining a Service Provider through each applicable
vesting date.

     4. Forfeiture upon Termination as Service Provider. Notwithstanding any contrary
provision of this Agreement or the Notice of Grant, if the Participant terminates service as a
Service Provider for any or no reason prior to vesting, the unvested RSUs awarded by this Agreement
will be forfeited at the time of such termination at no cost to the Company.

     5. Payment after Vesting.

          (a) Subject to paragraph 9, any RSUs that vest will be paid to the Participant (or in the
event of the Participant’s death, to his or her estate) in whole Shares. Subject to the provisions
of paragraph 5(b), such vested RSUs shall be paid in Shares as soon as practicable after vesting,
but in each such case no later than the date that is two-and-one-half months from the end of the
Company’s tax year that includes the vesting date.

          (b) Notwithstanding anything in the Plan or this Agreement to the contrary, if the vesting of
the balance, or some lesser portion of the balance, of the RSUs is accelerated in connection with
Participant’s termination as a Service Provider (provided that such termination is a “separation
from service” within the meaning of Section 409A, as determined by the Company), other than due to
death, and if (x) Participant is subject to U.S. income tax, (y) Participant is a “specified
employee” within the meaning of Section 409A at the time of such

 

 

termination, and (z) the payment of such accelerated RSUs will result in the imposition of
additional tax under Section 409A if paid to Participant on or within the six (6) month period
following Participant’s termination as a Service Provider, then, to the extent necessary to avoid
the imposition of such additional taxation, the payment of such accelerated RSUs otherwise payable
to Participant during such six (6) month period will accrue and will not be made until the date six
(6) months and one (1) day following the date of Participant’s termination as a Service Provider,
unless the Participant dies following his or her termination as a Service Provider, in which case,
the RSUs will be paid in Shares as soon as practicable following his or her death. It is the
intent of this Agreement to comply with the requirements of Section 409A so that none of the RSUs
provided under this Agreement or Shares issuable thereunder will be subject to the additional tax
imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. For
purposes of this Agreement, “Section 409A” means Section 409A of the Internal Revenue Code of 1986,
as amended, and any proposed, temporary or final Treasury Regulations and Internal Revenue Service
guidance thereunder, as each may be amended from time to time.

     6. Payments after Death. Any distribution or delivery to be made to the Participant
under this Agreement will, if the Participant is then deceased, be made to the administrator or
executor of the Participant’s estate. Any such administrator or executor must furnish the Company
with (a) written notice of his or her status as transferee and (b) evidence satisfactory to the
Company to establish the validity of the transfer and compliance with any laws or regulations
pertaining to said transfer.

     7. Rights as Stockholder. Neither the Participant nor any person claiming under or
through the Participant will have any of the rights or privileges of a stockholder of the Company
in respect of any Shares deliverable hereunder unless and until certificates representing such
Shares (which may be in book entry form) will have been issued, recorded on the records of the
Company or its transfer agents or registrars, and delivered to the Participant or Participant’s
broker.

     8. No Effect on Employment or Service. The Participant’s employment or service with
the Company and its Parent or Subsidiaries is on an at-will basis only. Accordingly, nothing in
this Agreement or the Sub-Plan shall confer upon the Participant any right to continue to be
employed by or in service with his or her employer (the “Employer”) or shall interfere with or
restrict in any way the rights of the Employer, which are hereby expressly reserved, to terminate
or change the terms of the employment or service of the Participant at any time for any reason
whatsoever, with or without good cause or notice.

     9. Tax Obligations/Withholding Authorization. Regardless of any action the
Administrator or the Employer takes with respect to any or all income tax (including federal,
state, foreign and local taxes), social insurance, payroll tax, or other tax-related withholding
(“Tax-Related Items”), Participant acknowledges that the ultimate liability for all Tax-Related
Items legally due by Participant is and remains Participant’s responsibility and that the
Administrator and/or the Employer (i) make no representations or undertakings regarding the
treatment of any Tax-Related Items in connection with any aspect of the RSUs, including the grant
of the RSUs, the vesting of RSUs, the issuance of Shares at vesting, the subsequent sale of any
Shares acquired at vesting and the receipt of any dividends; and (ii) do not commit to

 

 

structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s
liability for Tax-Related Items.

          Until and unless the Administrator determines otherwise, on the date or dates on which tax
withholding obligations arise with respect to the RSUs, a number of Shares sufficient to pay the
Tax-Related Items will be sold pursuant to such procedures as the Administrator in its sole
discretion may specify from time to time; provided, however, that the Shares to be sold must have
vested pursuant to the terms of this Agreement and the Plan. The proceeds of such sale shall be
used to satisfy Participant’s tax withholding obligations (and any associated broker or other fees)
arising with respect to the Restricted Stock Units. Only whole Shares will be sold to satisfy any
tax withholding obligations pursuant to this Section 9. The proceeds from the sale of Shares 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 may specify from time to time.
By accepting this Award, Participant expressly consents to the sale of Shares to cover the tax
withholding obligations (and any associated broker or other fees), as set forth under this Section
9.

     In addition, upon required withholding of Tax-Related Items, prior to the issuance of Shares
hereunder, the Administrator, in its sole discretion and pursuant to such procedures as it may
specify from time to time, may require the Participant to pay, or make adequate arrangements
satisfactory to the Administrator or to the Employer (as directed by the Administrator) to satisfy
all Tax-Related Items withholding obligations of the Administrator and/or the Employer. In this
regard, Participant authorizes the Administrator or the Employer to withhold all applicable
Tax-Related Items legally payable by Participant from Participant’s wages or other cash
compensation payable to Participant by the Administrator or the Employer. Alternatively, or in
addition, if permissible under local law, the Administrator or the Employer may, in their sole
discretion, (i) sell or arrange for the sale of Shares (as authorized and agreed to by the
Participant through this Agreement) to be issued on the vesting of RSUs to satisfy the withholding
obligation, and/or (ii) withhold in Shares, provided that the Administrator and the Employer shall
withhold only the amount of Shares necessary to satisfy the minimum withholding amount.
Participant shall pay to the Administrator or to the Employer any amount of Tax-Related Items that
the Administrator or the Employer may be required to withhold as a result of Participant’s receipt
of RSUs, the vesting of RSUs, or the issuance of Shares at vesting that cannot be satisfied by the
means previously described. The Administrator may refuse to deliver shares to Participant if
Participant fails to comply with Participant’s obligation in connection with the Tax-Related Items
as described herein. If the Participant fails to make satisfactory arrangements for the payment of
any Tax-Related Items at the time any applicable Shares otherwise are scheduled to vest or tax
withholdings are otherwise due with respect to the RSUs, the Participant will permanently forfeit
such Shares and the Shares will be returned to the Plan at no cost.

     10. India Fringe Benefit Tax. By accepting the grant of the RSU, Participant consents
and agrees to assume any liability for fringe benefit tax that may be payable by the Company and/or
the Employer in connection with the RSU granted under this Agreement.

     Further, by accepting the RSU grant, Participant agrees that the Company and/or the Employer
may collect the fringe benefit tax from Participant by any of the means set forth in this

 

 

Section 9 of this Agreement or any other reasonable method established by the Company and/or the
Employer. Participant further agrees to execute any other consents or elections required to
accomplish the above, promptly upon request of the Company and/or the Employer.

     11. Address for Notices. Any notice to be given to the Company under the terms of
this Agreement will be addressed to the Company at 1344 Crossman Ave., Sunnyvale, CA 94089-1113,
Attn: Stock Administration, or at such other address as the Company may hereafter designate
in writing or electronically.

     12. Grant is Not Transferable. This award of RSUs may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may be exercised during
the lifetime of Participant only by the Participant. The terms of the Sub-Plan and this Agreement
shall be binding upon the executors, administrators, heirs, successors and assigns of the
Participant. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of
this award of RSUs, or any right or privilege conferred hereby, or upon any attempted sale under
any execution, attachment or similar process, this grant and the rights and privileges conferred
hereby immediately will become null and void.

     13. Nature of Grant. In accepting the grant, Participant acknowledges that: (a) the
Plan is established voluntarily by the Company, it is discretionary in nature and it may be
modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in
the Plan and this Agreement; (b) the grant of the RSUs is voluntary and occasional and does not
create any contractual or other right to receive future grants of RSUs, or benefits in lieu of
RSUs, even if RSUs have been granted repeatedly in the past; (c) all decisions with respect to
future RSU grants, if any, will be at the sole discretion of the Company; (d) Participant is
voluntarily participating in the Plan; (e) the RSUs are extraordinary items that do not constitute
compensation of any kind for services of any kind rendered to the Company or the Employer, and
which is outside the scope of Participant’s employment contract, if any; (f) the RSU is not part of
normal or expected compensation or salary for any purposes, including, but not limited to,
calculating any severance, resignation, termination, redundancy, end of service payments, bonuses,
long-service awards, pension or retirement benefits or similar payments and in no event should be
considered as compensation for, or relating in any way to, past services for the Company or the
Employer; (g) in the event that Participant is not an employee of the Company, the RSU grant will
not be interpreted to form an employment contract or relationship with the Company; and
furthermore, the RSU grant will not be interpreted to form an employment contract with the Employer
or any Subsidiary or affiliate of the Company; (h) the future value of the underlying Shares is
unknown and cannot be predicted with certainty; (i) the value of Shares may increase or decrease in
value after Shares are issued at vesting; (j) in consideration of the grant of the RSUs, no claim
or entitlement to compensation or damages shall arise from termination of the RSUs or diminution in
value of the RSUs or Shares issued at vesting resulting from termination of Participant’s
employment by the Company or the Employer (for any reason whatsoever and whether or not in breach
of local labor laws) and Participant irrevocably releases the Company and the Employer from any
such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of
competent jurisdiction to have arisen, then, by signing this Agreement, Participant shall be deemed
irrevocably to have waived his or her entitlement to pursue such claim; and (k) in the event of
termination of Participant’s employment (whether or not in breach of local labor laws),
Participant’s right to

 

 

receive RSUs and vest in RSUs under the Plan, if any, will terminate effective as of the date
that Participant is no longer actively employed and will not be extended by any notice period
mandated under local law (e.g., active employment would not include a period of “garden leave” or
similar period pursuant to local law); furthermore, in the event of termination of employment
(whether or not in breach of local labor laws), the Board/Committee shall have the exclusive
discretion to determine when Participant is no longer actively employed for purposes of
Participant’s RSU grant.

     14. Data Privacy. Participant hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of Participant’s personal data as
described in this Agreement and among, as applicable, Participant’s employer, the Company, its
Subsidiaries and its affiliates for the exclusive purpose of implementing, administering and
managing Participant’s participation in the Plan.

     Participant understands that the Company and Participant’s employer may hold certain personal
information about Participant, including, but not limited to, Participant’s name, home address and
telephone number, date of birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in the Company, details of all
RSUs or any other entitlement to shares awarded, canceled, vested, unvested or outstanding in
Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Data”).
Participant understands that Data may be transferred to any third parties assisting in the
implementation, administration and management of the Plan, that these recipients may be located in
India, or elsewhere, and that the recipient’s country may have different data privacy laws and
protections than Participant’s country. Participant understands that Participant may request a
list with the names and addresses of any potential recipients of the Data by contacting
Participant’s local human resources representative. Participant authorizes the recipients to
receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes
of implementing, administering and managing Participant’s participation in the Plan, including any
requisite transfer of such Data as may be required to a broker, escrow agent or other third party
with whom the shares received upon vesting of the RSUs may be deposited. Participant understands
that Data will be held only as long as is necessary to implement, administer and manage
Participant’s participation in the Plan. Participant understands that Participant may, at any
time, view Data, request additional information about the storage and processing of Data, require
any necessary amendments to Data or refuse or withdraw the consents herein, in any case without
cost, by contacting in writing Participant’s local human resources representative. Participant
understands that refusal or withdrawal of consent may affect Participant’s ability to participate
in the Plan. For more information on the consequences of Participant’s refusal to consent or
withdrawal of consent, Participant understands that Participant may contact Participant’s local
human resources representative.

     15. Binding Agreement. Subject to the limitation on the transferability of this grant
contained herein, this Agreement will be binding upon and inure to the benefit of the heirs,
legatees, legal representatives, successors and assigns of the parties hereto.

     16. Additional Conditions to Issuance of Stock. If at any time the Company will
determine, in its discretion, that the listing, registration or qualification of the Shares upon
any

 

 

securities exchange or under any state, federal or foreign law, or the consent or approval of any
governmental regulatory authority is necessary or desirable as a condition to the issuance of
Shares to the Participant (or his or her estate), such issuance will not occur unless and until
such listing, registration, qualification, consent or approval will have been effected or obtained
free of any conditions not acceptable to the Company. The Company will make all reasonable efforts
to meet the requirements of any such state, federal or foreign law or securities exchange and to
obtain any such consent or approval of any such governmental authority.

     17. Sub-Plan Governs. This Agreement (including the Notice of Grant) is subject to
all terms and provisions of the Sub-Plan. Subject to Section 19(c) of the Sub-Plan, in the event
of a conflict between one or more provisions of this Agreement or the Notice of Grant and one or
more provisions of the Sub-Plan, the provisions of the Sub-Plan will govern.

     18. Headings. Headings provided herein are for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.

     19. Administrator Authority. The Administrator will have the power to interpret the
Plan, Sub-Plan and this Agreement and to adopt such rules for the administration, interpretation
and application of the Plan, Sub-Plan as are consistent therewith and to interpret or revoke any
such rules (including, but not limited to, the determination of whether or not any RSUs have
vested). All actions taken and all interpretations and determinations made by the Administrator in
good faith will be final and binding upon Participant, the Company and all other interested
persons. Neither the Administrator nor any person acting on behalf of the Administrator will be
personally liable for any action, determination or interpretation made in good faith with respect
to the Plan, Sub-Plan or this Agreement.

     20. Agreement Severable. In the event that any provision in this Agreement shall be
held invalid or unenforceable, such provision shall be severable from, and such invalidity or
unenforceability shall not be construed to have any effect on, the remaining provisions of this
Agreement.

     21. Language. If Participant has received this Agreement or any other document
related to the Plan translated into a language other than English and if the translated version is
different than the English version, the English version will control.

     22. Electronic Delivery. The Company may, in its sole discretion, decide to deliver
any documents related to the RSUs granted under and participation in the Plan or future RSUs that
may be granted under the Plan by electronic means or to request Participant’s consent to
participate in the Plan by electronic means. Participant hereby consents to receive such documents
by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or
electronic system established and maintained by the Company or another third party designated by
the Company.

     23. Exchange Control. Participant further acknowledges that proceeds from the sale of
Shares must be repatriated to India within a reasonable period of time (i.e., two weeks), and that
he/she should obtain a foreign inward remittance certificate from the bank for his/her records

 

 

to document compliance with this requirement and submit a copy of the foreign inward remittance
certificate to the Employer.

     24. Entire Agreement; Governing Law; Modifications. The Plan and Sub-Plan are
incorporated herein by reference. The Sub-Plan and this Agreement (including the Notice of Grant)
constitute the entire Agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company and Participant
with respect to the subject matter hereof, and may not be modified adversely to the Participant’s
interest except by means of a writing signed by the Company and Participant. Notwithstanding
anything to the contrary in the Sub-Plan or this Agreement, the Company reserves the right to
revise this Agreement as it deems necessary or advisable, in its sole discretion and without the
consent of the Participant, to comply with Section 409A or to otherwise avoid imposition of any
additional tax or income recognition under Section 409A prior to the actual payment of Shares
pursuant to this award of Restricted Stock Units. However, the Company makes no representation that
this Award of Restricted Stock Units is not subject to Section 409A nor makes any undertaking to
preclude Section 409A from applying to this Award of Restricted Stock Units. This Agreement is
governed by California law except for that body of law pertaining to conflict of laws. For purposes
of litigating any dispute that arises directly or indirectly from the relationship of the parties
evidenced by this grant or the Agreement, the parties hereby submit to and consent to the exclusive
jurisdiction of the State of California and agree that such litigation shall be conducted only in
the courts of Santa Clara, California, or the federal courts for the United States for the Northern
District of California, and no other courts, where this grant is made and/or to be performed.

 

 

EXHIBIT B

Stock Trading Plan

for Mandatory Sale of Shares to Cover Tax Withholding Obligations

     I am adopting and entering into this stock trading plan (the “Sales Plan”) so that I may
receive the necessary proceeds to satisfy any requirements to pay the minimum income, employment
and other applicable taxes (collectively, “Taxes”) required to be withheld by the Company (or the
employing Parent or Subsidiary) on my behalf if and when such tax withholding obligations arise as
a result of the grant by the Company to me of any RSUs, shares of restricted stock or performance
shares. I dispel any inference that I am selling Shares on the basis of or while aware of material
nonpublic information or that such sales evidence my awareness of material nonpublic information or
information at variance with the Company’s statements to investors.

1. Recitals

     a. I intend for this Sales Plan to comply with the requirements of Rule 10b5-1(c)(1) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).

     b. I am establishing this Sales Plan in order to permit the orderly disposition of a portion
of the Shares that I acquired (or will acquire) pursuant to an award of RSUs, restricted stock or
performance shares (each, an “Equity Award”). The Shares are being sold pursuant to a mandatory
sale provision in the Agreement to provide the necessary proceeds to satisfy any Taxes if and when
any tax withholding obligations arise, as well any broker or other fees associated with such sales.
This Sales Plan will apply to the mandatory sale of Shares under all future Equity Awards received
by me from the Company.

2. Representations, Warranties and Covenants

     I hereby represent, warrant and covenant that:

     a. I am not aware of any material nonpublic information concerning the Company or its
securities. I am entering into this Sales Plan in good faith and not as part of a plan or scheme
to evade compliance with the federal securities laws.

     b. Once vested, the Shares to be sold under this Sales Plan shall be owned free and clear by
me and are not subject to any liens, security interests or other encumbrances or limitations on
disposition other than those imposed by Rule 144 under the Securities Act of 1933, as amended.

     c. If I am an executive officer or director of the Company, I acknowledge that any filings
required under Section 16 of the Exchange Act are my sole responsibility.

     d. I am aware that in order for this Sales Plan to constitute a plan pursuant to Rule
10b5-1(c) of the Exchange Act, I must not enter into or alter a corresponding or hedging
transaction with respect to the Shares.

 

 

3. Implementation of the Plan

     a. The Company has appointed or shall appoint a broker (the “Broker”) (or the Company may, in
its discretion, permit me to appoint a Broker) to sell Shares pursuant to the terms and conditions
set forth below.

     b. The Broker is authorized to begin selling Shares pursuant to this Sales Plan commencing on
the date that the first Shares under the Equity Award vest. The Broker shall sell such number of
Shares as shall be required to satisfy (i) the applicable Taxes in accordance with my then current
applicable withholding rate and (ii) any associated broker or other fees.

     c. I understand that the Broker may not be able to effect a sale due to a market disruption or
a legal, regulatory or contractual restriction applicable to the Broker or any other event or
circumstance (a “Blackout”). I also understand that even in the absence of a Blackout, the Broker
may be unable to effect sales consistent with ordinary principles of best execution, due to
insufficient volume of trading, or other market factors in effect on the date of a sale.

4. Termination. This Sales Plan shall terminate upon the last day of my service with the Company.
This Sales Plan may not be terminated, modified or amended at any time without the prior approval
of the Administrator or the Company’s Compliance Officer.

Please sign and return a paper copy of this Sales Plan to [TITLE] at the Company. If you do not
have access to a printer and would like a paper copy to be sent to you, please contact [NAME] at
[CONTACT INFORMATION].

	 	 	 
	PARTICIPANT:
	 	 
	 
	 	 
	 

Signature

	 	 
	 
	 	 
	 

Print Name

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}]]