Aruba Wireless Networks, Inc. EXECUTIVE EMPLOYMENT AGREEMENT for DOMINIC ORR
Exhibit 10.5
Aruba Wireless Networks, Inc.
EXECUTIVE EMPLOYMENT AGREEMENT
for
XXXXXXX XXX
for
XXXXXXX XXX
This Executive Employment Agreement (“Agreement”) is effective as of April 4, 2006, by and
between Xxxxxxx Xxx (“Executive”) and Aruba Wireless Networks, Inc. (the “Company”).
Whereas, the Company desires to employ Executive to provide personal services to the
Company, and wishes to provide Executive with certain compensation and benefits in return for his
services; and
Whereas, Executive wishes to be employed by the Company and to provide personal
services to the Company in return for certain compensation and benefits;
Now, Therefore, in consideration of the mutual promises and covenants contained
herein, it is hereby agreed by and between the parties hereto as follows:
1. Employment by the Company.
1.1 Position. Subject to terms and conditions set forth herein, the Company agrees to employ
Executive effective as of April 4, 2006, and commencing as of April 10, 2006, Executive shall serve
in the position of Chief Executive Officer (“CEO”) beginning April 10, 2006 and Executive hereby
accepts such employment. Executive is currently serving as Chairman of the Board, but it is
expected that during a transition period to extend from April 10, 2006 until no later than August
10, 2006, Executive will not serve as Chairman, but will then be reappointed. During the term of
Executive’s employment with the Company, Executive will devote Executive’s best efforts and
Executive’s substantial business time and attention to the business of the Company, except for
vacation periods as set forth herein and reasonable periods of illness or other incapacities
permitted by the Company’s general employment policies.
1.2 Duties and Location. Executive shall serve in an executive capacity and shall perform
such duties as are customarily associated with the positions described above, consistent with the
bylaws of the Company and as required by the Company’s Board of Directors (the “Board”), to whom
Executive shall report. Executive’s primary office location shall be the Company’s corporate
headquarters, currently located in Sunnyvale, California. The Company reserves the right to
reasonably require Executive to perform Executive’s duties at places other than its corporate
headquarters from time to time, and to require reasonable business travel.
1.3 Policies and Procedures. The employment relationship between the parties shall be
governed by the general employment policies and practices of the
Company, except that when the terms of this Agreement differ from or are in conflict with the
Company’s general employment policies or practices, this Agreement shall control.
2. Compensation.
2.1 Salary. For services to be rendered hereunder, Executive shall receive a base salary at
the rate of $300,000 per year (the “Base Salary”), subject to standard payroll deductions and
withholdings and payable in accordance with the Company’s regular payroll schedule.
2.2 Standard Company Benefits. Executive shall be entitled to all employee benefit programs
for which Executive is eligible under the terms and conditions of the benefit plans which may be in
effect from time to time and provided by the Company to its senior executives.
2.3 Vacation. Executive shall accrue vacation at a rate consistent with the Company’s
standard vacation policies for executive employees.
2.4 Equity Compensation. Subject to the approval of the Board, Executive shall be granted an
option to purchase six million six hundred fifty-nine thousand, one hundred forty-three shares
(6,659,143) shares of the Company’s Common Stock (the “Option”) at the Fair Market Value as defined
below, which share amount represents 8.67% of the current fully-diluted capitalization of the
Company, taking into account the grant of the Option and shares the Company is entitled to
repurchase from departing employees as of April 10, 2006. The “Fair Market Value” of the Common
Stock will be determined in good faith by the Board, based on a independent third party appraisal
that the Company expects to obtain within 15 days from the date hereof. The Company has also
provided Executive with a copy of the independent valuation report obtained by the Company with
respect to the fair market value of the Common Stock as of February ___, 2006. The Option shall be
governed by the terms and conditions set forth in the applicable plan document, stock option
agreement and grant document.
3. Proprietary Information Obligations.
3.1 Proprietary Information Agreement. As a condition of employment, Executive agrees to
execute and abide by the Proprietary Information and Inventions Agreement attached hereto as
Exhibit A.
3.2 Third Party Agreements and Information. Executive represents and warrants that
Executive’s employment by the Company will not conflict with any prior employment or consulting
agreement or other agreement with any third party, and that Executive will perform Executive’s
duties to the Company without violating any such agreement. Executive represents and warrants that
Executive does not possess confidential information arising out of prior employment, consulting, or
other third party relationships, which would be used in connection with Executive’s employment by
the Company, except as expressly authorized by that third party. During Executive’s employment by
the Company, Executive will use in the performance of Executive’s duties only information which is
generally known and used by persons with training and experience comparable to
Executive’s own, common knowledge in the industry, otherwise legally in the public domain, or
obtained or developed by the Company or by Executive in the course of Executive’s work for the
Company.
4. Outside Activities During Employment.
4.1 Non-Company Business. Except with the prior written consent of the Board, Executive will
not during the term of Executive’s employment with the Company undertake or engage in any other
employment, occupation or business enterprise, other than ones in which Executive is a passive
investor; provided, however, that the Company hereby consents to Executive’s continued service as
the executive chairman of Ruckus Wireless Inc. and as a board member of Inveneo, Inc. Executive may
engage in civic and not-for-profit activities so long as such activities do not materially
interfere with the performance of Executive’s duties hereunder.
4.2 No Adverse Interests. Executive agrees not to acquire, assume or participate in, directly
or indirectly, any position, investment or interest known by him to be adverse or antagonistic to
the Company, its business or prospects, financial or otherwise.
5. Change in Control.
5.1 Accelerated Vesting. Upon the occurrence of a Change in Control, the Company will
accelerate the vesting of any equity awards granted to Executive that are unvested as of the date
of the Change in Control (the “Change in Control Date”) such that the Accelerated Amount (as
hereinafter defined) shall be deemed fully vested as of such date. If the Change in Control Date
occurs prior to April 10, 2007, the “Accelerated Amount” shall be the amount of vesting Executive
would have received in the eighteen (18) month period immediately following the Change in Control
Date. If the Change in Control Date occurs on or after April 10, 2007, the “Accelerated Amount”
shall be the amount of vesting Executive would have received in the twelve (12) month period
immediately following the Change in Control Date. In either case, immediately following the Change
in Control Date, additional vesting in any unvested portions of equity awards shall continue with
no interruption and at the rate and schedule (as adjusted to take account of the Accelerated Amount
so that there is no period during which additional vesting will not occur) in effect as of the
Change in Control Date.
5.2 Definition of “Change in Control.” For purposes of this Agreement, a “Change in Control”
shall mean any one or more of the following events:
(a) The consummation of a merger, consolidation or similar transaction involving (directly or
indirectly) the Company and, immediately after the consummation of such merger, consolidation or
similar transaction, the shareholders of the Company immediately prior thereto do not own, directly
or indirectly, either (i) outstanding voting securities representing a majority of the combined
outstanding voting power of the surviving entity in such merger, consolidation or similar
transaction or (ii) a majority of the combined outstanding voting power of the parent of the
surviving entity in such merger,
consolidation or similar transaction, in each case in substantially the same proportions as
their ownership of the outstanding voting securities of the Company immediately prior to such
transaction.
(b) The consummation of a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its subsidiaries, other than a
sale, lease, license or other disposition of all or substantially all of the consolidated assets of
the Company and its subsidiaries to an entity, a majority of the combined voting power of the
voting securities of which are owned by the shareholders of the Company in substantially the same
proportions as their ownership of the outstanding voting securities of the Company prior to such
sale, lease, license or other disposition.
The term “Change of Control” shall not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company.
6. Termination Of Employment.
6.1 At-Will Relationship. Executive’s employment relationship is at-will. Either Executive
or the Company may terminate the employment relationship at any time, with or without cause or
advance notice.
6.2 Termination Without Cause; Resignation for Good Reason. If, at any time, the Company
terminates Executive’s employment without Cause, or Executive resigns with Good Reason, and
Executive provides the Company with a general release of all claims in a form acceptable to the
Company and allows such release to become effective, then the Company will accelerate the vesting
of any equity awards granted to Executive such that the amount of vesting Executive would have
received if Executive had remained employed by the Company for an additional six (6) months from
the date of termination shall be accelerated and deemed fully vested as of Executive’s last day of
employment.
6.3 Termination for Cause; Resignation Without Good Reason. If the Company terminates
Executive’s employment with the Company for Cause, or Executive resigns without Good Reason, then
Executive will not be entitled to any further compensation from the Company (other than accrued
salary, and accrued and unused vacation, through Executive’s last day of employment), including
severance pay, pay in lieu of notice or any other such compensation.
6.4 Parachute Payments.
(a) Reduction of Severance Benefits. Notwithstanding anything set forth herein to the
contrary, if any payment or benefit that Executive would receive from the Company or any other
party whether in connection with the provisions herein or otherwise (the “Payment”) would (i)
constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the excise tax imposed
by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to the Best
Results Amount. The “Best Results Amount” shall be either (x) the full amount of such Payment or
(y) such
lesser amount as would result in no portion of the Payment being subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the applicable federal, state and local
employment taxes, income taxes and the Excise Tax, results in Executive’s receipt, on an after-tax
basis, of the greater amount notwithstanding that all or some portion of the Payment may be subject
to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is
necessary so that the Payment equals the Best Results Amount, reduction shall occur in the
following order unless Executive elects in writing a different order (provided, however, that such
election shall be subject to Company approval if made on or after the date on which the event that
triggers the Payment occurs): reduction of cash payments; cancellation of accelerated vesting of
stock awards; reduction of employee benefits. In the event that acceleration of vesting of stock
award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse
order of the date of grant of Executive’s stock awards unless Executive elects in writing a
different order for cancellation. Executive shall be solely responsible for the payment of all
personal tax liability that is incurred as a result of the payments and benefits received under
this Agreement, and Executive will not be reimbursed by the Company for any such payments.
(b) Determination of Excise Tax Liability. The Company shall attempt to cause its accountants
to make all of the determinations required to be made under this Section 6.4, or, in the event the
Company’s accountants will not perform such service, the Company may select another professional
services firm to perform the calculations. The Company shall request that the accountants or firm
provide detailed supporting calculations both to the Company and Executive prior to the date on
which the event that triggers the Payment occurs if administratively feasible, or subsequent to
such date if events occur that result in parachute payments to Executive at that time. For
purposes of making the calculations required by this Section 6.4, the accountants or firm may make
reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable,
good faith determinations concerning the application of the Code. The Company and Executive shall
furnish to the accountants or firm such information and documents as the accountants or firm may
reasonably request in order to make a determination under this Section 6.4. The Company shall bear
all costs the accountants or firm may reasonably incur in connection with any calculations
contemplated by this Section 6.4. Any such determination by the Company’s accountants or other
firm shall be binding upon the Company and Executive, and the Company shall have no liability to
Executive for the determinations of its accountants or other firm.
6.5 Definitions.
(a) Cause. For purposes of this Agreement, “Cause” shall mean: (i) indictment or conviction
of any felony or of any crime involving dishonesty; (ii) participation in any fraud against the
Company; (iii) material breach of Executive’s duties to the Company; or (iv) conduct by Executive
which in the good faith and reasonable determination of the Board demonstrates gross unfitness to
serve. With respect to any alleged Cause in subcategories (iii) or (iv) of this subparagraph,
Executive’s employment shall not be terminated until thirty (30) days after Executive receives
specified
written notice of the alleged Cause, and if Executive has not cured the alleged Cause by that
date.
(b) Good Reason. For purposes of this Agreement, Executive shall have Good Reason for
Executive’s resignation if any of the following occurs without Executive’s consent, and Executive
notifies the Company in writing, within fourteen (14) days after the occurrence of one of the
following events, that Executive intends to terminate his employment no earlier than thirty (30)
days after providing such notice:
(i) the assignment to Executive of any duties or responsibilities which result in the material
diminution of Executive’s position; provided, however, that the acquisition of the Company and
subsequent conversion of the Company to a division or unit of the acquiring corporation will not by
itself result in a diminution of Executive’s position;
(ii) a reduction by the Company in Executive’s annual base salary by greater than ten percent
(10%), except to the extent the base salaries of all other executive officers of the Company are
accordingly reduced;
(iii) a relocation of Executive’s place of work, or the Company’s principal executive offices
if Executive’s principal office is at such offices, to a location that increases Executive’s daily
one-way commute by more than thirty-five (35) miles;
(iv) any material breach by the Company of this Agreement, which breach remains uncured by the
Company following at least thirty (30) days advance written notice by Executive; or
(v) any failure by the Company to obtain the assumption of this Agreement by any successor or
assign of the Company.
7. General Provisions.
7.1 Notices. Any notices provided hereunder must be in writing and shall be deemed effective
upon the earlier of personal delivery (including personal delivery by fax) or the next day after
sending by overnight carrier, to the Company at its primary office location and to Executive at his
address as listed on the Company payroll.
7.2 Severability. Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any
other provision or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction to the extent possible in keeping with the intent of the parties.
7.3 Waiver. Any waiver of any breach of any provisions of this Agreement must be in writing
to be effective, and it shall not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision of this
Agreement.
7.4 Complete Agreement. This Agreement, including Exhibit A, constitutes the entire agreement
between Executive and the Company and it is the complete, final, and exclusive embodiment of their
agreement with regard to this subject matter. It is entered into without reliance on any promise
or representation other than those expressly contained herein, and it cannot be modified or amended
except in a writing signed by a duly authorized officer of the Company.
7.5 Counterparts. This Agreement may be executed in separate counterparts, any one of which
need not contain signatures of more than one party, but all of which taken together will constitute
one and the same Agreement.
7.6 Headings. The headings of the sections hereof are inserted for convenience only and shall
not be deemed to constitute a part hereof nor to affect the meaning thereof.
7.7 Successors and Assigns. This Agreement is intended to bind and inure to the benefit of
and be enforceable by Executive and the Company, and their respective successors, assigns, heirs,
executors and administrators, except that Executive may not assign any of his duties hereunder and
he may not assign any of his rights hereunder without the written consent of the Company, which
shall not be withheld unreasonably.
7.8 Choice of Law. All questions concerning the construction, validity and interpretation of
this Agreement will be governed by the law of the State of California.
In Witness Whereof, the parties have executed this Agreement on the day and year
first above written.
| Aruba Wireless Networks, Inc. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx
|
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| Title: | CFO | |||||
Understood and Agreed:
Executive
By:
|
/s/ Xxxxxxx Xxx
|
