S-1

As filed with the Securities and Exchange Commission on December 15, 2006

Registration No. 333-     

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Aruba Networks, Inc.

(Exact name of registrant as specified in its charter)

Delaware	3577	02-0579097
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

1322 Crossman Ave.

Sunnyvale, CA 94089-1113

(408) 227-4500

(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)

Dominic P. Orr

Chief Executive Officer

Aruba Networks, Inc.

1322 Crossman Ave.

Sunnyvale, CA 94089-1113

(408) 227-4500

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:

Steven E. Bochner, Esq.
David J. Segre, Esq.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300 Alexa King, Esq.
Senior Director, Legal Affairs
Aruba Networks, Inc.
1322 Crossman Ave.
Sunnyvale, CA 94089-1113
(408) 227-4500 William H. Hinman, Jr., Esq.
Simpson Thacher & Bartlett LLP
2550 Hanover Street
Palo Alto, California 94304
(650) 251-5000

Approximate date of commencement of proposed sale to the public:  As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box:  o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

CALCULATION OF REGISTRATION FEE

	Proposed Maximum	Amount of
Title of Each Class of	Aggregate Offering	Registration
Securities to be Registered	Price(1)(2)	Fee
Common Stock, $0.0001 par value per share	$100,000,000	$10,700

(1)	Estimated solely for the purpose of computing the amount of registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(2)	Includes underwriters’ option to purchase additional shares, if any.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated December 15, 2006.

          Shares

Common Stock

Aruba Networks, Inc. is offering           shares of its common stock. This is our initial public offering, and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $      and $      per share.

We expect to apply to have our common stock approved for quotation on the Nasdaq Global Market under the symbol “ARUN.”

Investing in our common stock involves risks. See “Risk Factors” beginning on page 6.

PRICE $      PER SHARE

	Per Share	Total
Initial Public Offering Price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to Aruba Networks	$	$

To the extent that the underwriters sell more than           shares of common stock, the underwriters have the option to purchase up to an additional           shares from us at the initial public offering price less the underwriting discount.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares on          , 2007.

Goldman, Sachs & Co. Lehman Brothers

JPMorgan RBC Capital Markets

Prospectus dated          , 2007.

TABLE OF CONTENTS

Prospectus Summary	1
Risk Factors	6
Special Note Regarding Forward-Looking Statements	19
Use of Proceeds	20
Dividend Policy	20
Capitalization	21
Dilution	23
Selected Consolidated Financial and Operating Data	24
Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Business	45
Management	58
Certain Relationships and Related Party Transactions	72
Principal Stockholders	73
Description of Capital Stock	76
Shares Eligible for Future Sale	80
Underwriting	82
Legal Matters	85
Experts	85
Where You Can Find Additional Information	86
Index to Consolidated Financial Statements	F-1
EXHIBIT 3.2A
EXHIBIT 4.2
EXHIBIT 4.3
EXHIBIT 4.4
EXHIBIT 4.5
EXHIBIT 10.2A
EXHIBIT 10.2B
EXHIBIT 10.5
EXHIBIT 10.6
EXHIBIT 10.7
EXHIBIT 10.8
EXHIBIT 10.9
EXHIBIT 10.10
EXHIBIT 10.11
EXHIBIT 10.12
EXHIBIT 10.13
EXHIBIT 10.14
EXHIBIT 21.1
EXHIBIT 23.1

     No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus.

     You should rely only on the information contained in this prospectus and any free writing prospectus prepared by or on behalf of us. This prospectus is an offer to sell only the shares offered hereby but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

     Through and including,          , 2007 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this summary together with the more detailed information, including our financial statements and the related notes and schedule, included elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in “Risk Factors.”

ARUBA NETWORKS, INC.

Overview

We provide an enterprise mobility solution that enables secure access to data, voice and video applications across wireless and wireline enterprise networks. Our Aruba Mobile Edge Architecture allows end-users to roam to different locations within an enterprise campus or office building while maintaining secure and consistent access to all of their network resources. Our architecture also enables IT managers to establish and enforce policies that control network access and prioritize application delivery based on an end-user’s organizational role and authorization level. We enable our enterprise customers to extend the same user-centric solution to remote locations such as branch offices and home offices connected over the Internet. Our solution integrates the ArubaOS operating system, optional value-added software modules, a centralized mobility management system, high-performance programmable mobility controllers, and wired and wireless access points.

We believe that the Aruba Mobile Edge Architecture is fundamentally different from “fixed edge” mobility solutions such as Wireless Local Area Networks (WLANs), open access to fixed ports and Virtual Private Networks (VPNs). Our user-centric architecture enables a new “mobile edge” that allows users to enjoy secure, high performance access to network applications as they roam across the enterprise network and to remote locations that have an Internet connection. Using our architecture, IT departments can manage user-based network access and enforce application delivery policies from a single integrated point-of-control in a consistent manner. Our Aruba Mobile Edge Architecture delivers the following benefits:

•  Secure mobility — Our architecture integrates user-based security and mobility in a single solution enabling secure roaming across an extended enterprise network;

•  Improved application performance in a mobile environment — Our architecture is user-centric and application-aware, which improves the performance of applications delivered in a mobile enterprise environment;

•  Ease of deployment and integration — We have designed our architecture as a non-disruptive overlay to existing enterprise networks, allowing quick deployment and preserving existing infrastructure investments;

•  Cost-effective scalability — We believe our architecture provides industry leading scalability, designed to support up to 100,000 concurrent users from a centralized point of control; and

•  Flexible platform for emerging mobile applications — Our architecture is designed to enable the rapid introduction and support of new applications such as mobile Voice over IP (VoIP), Enterprise Fixed Mobile Convergence (E-FMC), location-based services and other mobile enterprise applications.

Our goal is to establish our solution as the standard approach to enabling secure mobility for global enterprises. We believe that our products can provide significant benefits to mobile enterprise users across every major industry and geography. We began commercial shipments of our products in June 2003, and we now have over 2,000 end customers worldwide, including Burlington Northern Santa Fe, Google, Guangzhou Metro, NTT Data Corporation, The Ohio State University, Pu Dong International Airport (Shanghai), SAP, Saudi Aramco, United States Air Force and University of Washington. We sell our products and support services directly through our own sales force and indirectly through Value Added Resellers (VARs), distributors and Original Equipment Manufacturers (OEMs).

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Industry Background

End-users are increasingly mobile and are dependent on access to their enterprise network. Enterprises are deploying mobility solutions to maintain their competitiveness, increase productivity, improve resource management and reduce IT support costs. In addition, several new applications are being introduced that will require more effective enterprise mobility solutions.

To date, enterprises have responded to the increasing demands for mobility by deploying WLANs, enabling open access on wired network ports and/or providing VPN solutions. All of these solutions extend the fixed edge of the existing network on a limited basis and often result in reduced security and sub-optimal application performance. Traditional WLANs are fundamentally designed to extend fixed network services over the air as opposed to adapting them to roam with the user. Traditional WLANs also lack application awareness, which often results in poor performance for enterprise applications, particularly latency sensitive services such as voice and video. Many enterprises provide open access to wired network ports, which increases the potential for unauthorized access to the network through physical network ports and limits the number of users who can access the network. VPNs offer employees secure mobile access to the enterprise network, but this approach requires IT managers to install, configure and maintain client software on the end-user’s machine. VPNs are costly and complex to administer on a per-user basis and often restrict application functionality.

We believe significant demand exists for a user-centric solution that integrates security with mobility, is easy to deploy and scale, and is based on an architecture that delivers improved application performance with the ability to support new services.

The Aruba Strategy

Key elements of our strategy include:

•  Drive adoption of our enterprise mobility solution across the enterprise — We intend to drive further penetration and deployment of our solutions to extended enterprise locations, across corporate, government or educational campuses, as well as branch and home offices;

•  Maintain and extend our software offerings — We will continue to enhance our ArubaOS operating software and centralized mobility management system, as well as develop additional software modules to extend the functionality and performance of our ArubaOS operating software;

•  Utilize channel partners to expand our global market penetration — We intend to increase our market penetration and extend our geographic reach through our network of channel partners;

•  Realize increased operating efficiencies — We plan to continue to realize increased operating efficiencies by growing offshore manufacturing, research and development, and customer support operations; and

•  Expand our base of technology partners — We will continue to work with technology companies that are developing leading edge solutions to enhance the functionality and drive adoption of our Aruba Mobile Edge Architecture within the enterprise.

Corporate Information

We were incorporated in Delaware in February 2002. Our principal executive offices are located at 1322 Crossman Ave., Sunnyvale, California 94089-1113, and our telephone number is (408) 227-4500. Our website address is www.arubanetworks.com. The information on our website is not part of this prospectus.

Except where the context requires otherwise, in this prospectus the terms “Company,” “Aruba Networks,” “we,” “us” and “our” refer to Aruba Networks, Inc., a Delaware corporation, and, where appropriate, its subsidiaries. ARUBA NETWORKS and ARUBA WIRELESS NETWORKS are registered trademarks in the United States. Our unregistered trademarks include ARUBA THE MOBILE EDGE COMPANY, ARUBA MOBILITY MANAGEMENT SYSTEM, MOBILE EDGE ARCHITECTURE and PEOPLE MOVE. NETWORKS MUST FOLLOW. This prospectus also includes other trademarks of Aruba Networks and other persons.

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THE OFFERING

Shares of common stock offered	Shares
Shares of common stock to be outstanding after this offering	Shares
Use of proceeds	We plan to use the net proceeds of the offering for working capital and general corporate purposes, including further expansion of our sales and support functions for both direct and indirect sales channels, continued investments in research and development, and for capital expenditures. In addition, we may use a portion of the proceeds of this offering for acquisitions of complementary businesses, technologies or other assets. See “Use of Proceeds.”
Proposed Nasdaq Global Market symbol	ARUN

The number of shares of common stock that will be outstanding after this offering is based on the number of shares outstanding at          , 2006, and excludes:

•             shares of common stock issuable upon the exercise of options outstanding at          , 2006, at a weighted average exercise price of $      per share;

•             shares of common stock issuable upon the exercise of options granted after          , 2006, at a weighted average exercise price of $      per share;

•             shares of common stock reserved for issuance upon exercise of outstanding warrants, at a weighted average exercise price of $      per share;

•             shares of common stock reserved for future issuance under our 2002 Stock Plan;

•             shares of common stock reserved for future issuance under our 2007 Equity Incentive Plan; and

•             shares of common stock reserved for issuance under our Employee Stock Purchase Plan.

Unless otherwise indicated, all information in this prospectus assumes:

•  the automatic conversion of all outstanding shares of our preferred stock into           shares of common stock effective upon the completion of this offering;

•  no exercise by the underwriters of their right to purchase up to           additional shares of common stock from us;

•  the issuance of shares of our common stock upon the consummation of this offering with an aggregate value of $3.5 million (based upon the actual initial public offering price) to Microsoft Corporation in a private placement in which we will receive no cash consideration at the time such shares are issued; and

•  the filing of our restated certificate of incorporation upon the closing of this offering.

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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

The following summary consolidated statement of operations data for the fiscal years ended July 31, 2004, 2005 and 2006 are derived from our audited consolidated financial statements that are included elsewhere in this prospectus. The summary consolidated financial statements for the three months ended October 31, 2005 and 2006 and as of October 31, 2006 are derived from our unaudited consolidated financial statements that are included elsewhere in this prospectus. The unaudited consolidated financial statements were prepared on a basis consistent with our audited consolidated financial statements and include, in the opinion of management, all adjustments necessary for the fair statement of the financial information contained in those statements. The historical results presented below are not necessarily indicative of financial results to be achieved in future periods.

Prospective investors should read these summary consolidated financial data together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes and schedule included elsewhere in this prospectus.

	Years Ended July 31,									Three Months Ended October 31,
	2004			2005			2006			2005			2006
	(In thousands)
Consolidated Statements of Operations Data:
Revenues:
Product	$	—		$	—		$	43,171		$	—		$	19,106
Professional services and support		—			—			2,985			—			2,121
Ratable product and related professional services and support		1,147			12,043			26,347			6,775			3,278
Total revenues		1,147			12,043			72,503			6,775			24,505
Cost of revenues(1):
Product		—			—			16,904			—			7,301
Professional services and support		—			—			2,409			—			1,174
Ratable product and related professional services and support		2,696			9,077			10,572			3,794			1,186
Total cost of revenues		2,696			9,077			29,885			3,794			9,661
Gross profit (loss)		(1,549	)		2,966			42,618			2,981			14,844
Operating expenses:
Research and development(1)		6,982			9,353			14,130			3,273			5,091
Sales and marketing(1)		11,277			22,369			33,765			7,149			10,808
General and administrative(1)		2,531			3,576			5,963			1,116			2,613
Total operating expenses		20,790			35,298			53,858			11,538			18,512
Operating loss		(22,339	)		(32,332	)		(11,240	)		(8,557	)		(3,668	)
Other income (expense), net		(129	)		(147	)		(529	)		(42	)		(754	)
Loss before provision for income taxes and cumulative effect of change in accounting principle		(22,468	)		(32,479	)		(11,769	)		(8,599	)		(4,422	)
Provision for income taxes		34			156			306			—			88
Loss before cumulative effect of change in accounting principle		(22,502	)		(32,635	)		(12,075	)		(8,599	)		(4,510	)
Cumulative effect of change in accounting principle		—			—			66			66			—
Net loss	$	(22,502	)	$	(32,635	)	$	(12,009	)	$	(8,533	)	$	(4,510	)

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(1) Includes stock-based compensation as follows:

	Years Ended July 31,						Three Months Ended October 31,
	2004		2005		2006		2005		2006
	(In thousands)
Cost of revenues	$	5	$	23	$	34	$	6	$	47
Research and development		42		179		259		52		226
Sales and marketing		272		678		749		156		888
General and administrative		71		194		213		48		653
Total stock-based compensation	$	390	$	1,074	$	1,255	$	262	$	1,814

	As of October 31, 2006
							Pro Forma as
	Actual			Pro Forma(2)			Adjusted(3)
	(In thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	17,908		$	17,908		$
Working capital (deficit)		(11,129	)		(9,404	)
Total assets		47,992			47,992
Equipment loans payable		432			432
Deposit for Series D redeemable convertible preferred stock		29,930			29,930
Redeemable convertible preferred stock		58,009			—
Common stock and additional paid-in-capital		7,175			66,909
Total stockholders’ equity (deficit)	$	(74,048	)	$	(14,314	)

(2)

The pro forma column in the consolidated balance sheet data table above reflects the automatic conversion of all outstanding shares of preferred stock into common stock upon the closing of this offering and the reclassification of the preferred stock warrant liability to common stock and additional paid-in-capital.

(3)

The pro forma as adjusted column in the consolidated balance sheet data table above reflects (i) the conversion of all outstanding shares of our preferred stock into common stock upon the closing of this offering and the reclassification of the preferred stock warrant liability to common stock and additional paid-in-capital, (ii) the receipt of the estimated net proceeds from the sale of the shares of common stock offered by us in this offering, and (iii) the issuance of shares of our common stock upon the consummation of this offering with an aggregate value of $3.5 million (based upon the actual initial public offering price) to Microsoft in a private placement in which we will receive no cash consideration at the time such shares are issued.

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RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below before making an investment decision. Our business, prospects, financial condition or operating results could be materially adversely affected by any of these risks, as well as other risks not currently known to us or that we currently deem immaterial. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. In assessing the risks described below, you should also refer to the other information contained in this prospectus, including our consolidated financial statements and the related notes and schedule, before deciding to purchase any shares of our common stock.

Risks Related to Our Business and Industry

We compete in new and rapidly evolving markets and have a limited operating history, which makes it difficult to predict our future operating results.

We were incorporated in February 2002 and began commercial shipments of our products in June 2003. As a result of our limited operating history, it is very difficult to forecast our future operating results. In addition, we operate in an industry characterized by rapid technological change. You should consider and evaluate our prospects in light of the risks and uncertainties frequently encountered by early stage companies in rapidly evolving markets characterized by rapid technological change, changing customer needs, evolving industry standards and frequent introductions of new products and services. These risks and difficulties include challenges in accurate financial planning as a result of limited historical data and the uncertainties resulting from having had a relatively limited time period in which to implement and evaluate our business strategies as compared to older companies with longer operating histories.

In addition, our products are designed to be compatible with industry standards for secure communications over wireless and wireline networks. As we encounter changing standards, customer requirements and competitive pressures, we likely will be required to reposition our product and service offerings and introduce new products and services. We may not be successful in doing so in a timely and appropriately responsive manner, or at all. Our failure to address these risks and difficulties successfully could materially harm our business and operating results.

Our operating results may fluctuate significantly, which makes our future results difficult to predict and could cause our operating results to fall below expectations.

Our annual and quarterly operating results have fluctuated in the past and may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control. In addition, beginning in the second quarter of fiscal 2006, we established Vendor Specific Objective Evidence, or VSOE, and began recognizing product revenues upon delivery using the residual method for transactions where all other revenue recognition criteria were met. See Note 1 of Notes to Consolidated Financial Statements. As a result, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results, in particular, the absolute dollar growth in our revenues on a year-over-year basis, as an indication of our future performance.

In addition to other risk factors listed in this “Risk Factors” section, factors that may cause our operating results to fluctuate include:

•  fluctuations in demand, sales cycles and prices for our products and services;

•  reductions in customers’ budgets for information technology purchases and delays in their purchasing cycles;

•  the sale of our products in the timeframes we anticipate, including the number and size of orders in each quarter;

•  our ability to develop, introduce and ship in a timely manner new products and product enhancements that meet customer requirements;

•  the timing of product releases or upgrades by us or by our competitors;

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•  any significant changes in the competitive dynamics of our markets, including new entrants, or further consolidation;

•  our ability to control costs, including our operating expenses, and the costs of the components we purchase;

•  product mix and average selling prices, as well as increased discounting of products by us and our competitors;

•  the proportion of our products that are sold through direct versus indirect channels;

•  our ability to attain volume manufacturing pricing from Flextronics Sales and Marketing North Asia (L) Ltd. and our component suppliers;

•  growth in our headcount and other related costs incurred in our customer support organization;

•  the timing of revenue recognition in any given quarter as a result of software revenue recognition rules;

•  the regulatory environment for the certification and sale of our products;

•  potential seasonal demand for our products that may not be currently evident due to our revenue growth; and

•  general economic conditions in our domestic and international markets.

Our quarterly operating results are difficult to predict even in the near term. In one or more future quarterly periods, our operating results may fall below the expectations of securities analysts and investors. In this event, the trading price of our common stock could decline significantly.

We have a history of losses and may not achieve profitability in the future.

We have a history of losses and have not achieved profitability on a quarterly or annual basis, and we anticipate that we will incur net losses for at least the next several quarters. We experienced net losses of $32.6 million and $12.0 million for the fiscal years ended July 31, 2005 and 2006, respectively, and $4.5 million for the three months ended October 31, 2006. As of October 31, 2006, our accumulated deficit was $81.2 million. We expect to incur operating losses in the future as a result of the expenses associated with the continued development and expansion of our business, including expenditures to hire additional personnel relating to sales and marketing and technology development. If we fail to increase revenues or manage our cost structure, we may not achieve or sustain profitability in the future. As a result, our business could be harmed, and our stock price could decline.

Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense. As a result, our sales are difficult to predict and may vary substantially from quarter to quarter, which may cause our operating results to fluctuate significantly.

The timing of our revenues is difficult to predict. Our sales efforts involve educating our customers about the use and benefits of our products, including the technical capabilities of our products and the potential cost savings achieved by organizations that utilize our products. Customers typically undertake a significant evaluation process, which frequently involves not only our products but also those of our competitors and results in a lengthy sales cycle. We spend substantial time, effort and money in our sales efforts without any assurance that our efforts will produce any sales. In addition, product purchases are frequently subject to budget constraints, multiple approvals, and unplanned administrative, processing and other delays. If sales expected from a specific customer for a particular quarter are not realized in that quarter or at all, our business, operating results and financial condition could be materially adversely affected.

We depend upon the development of new products and enhancements to our existing products. If we fail to predict and respond to emerging technological trends and our customers’ changing needs, we may not be able to remain competitive.

We may not be able to anticipate future market needs or be able to develop new products or product enhancements to meet such needs. For example, we anticipate a need to continue to increase the mobility of our solution. If we fail to do so, our business could be adversely affected, especially if our competitors are able to

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introduce solutions with such increased functionality. In addition, as new mobile applications are introduced, our success may depend on our ability to provide a solution that supports these applications.

We are active in the research and development of new products and technologies and enhancing our current products. However, research and development in the enterprise mobility industry is complex and filled with uncertainty. If we expend a significant amount of resources on research and development and our efforts do not lead to the successful introduction of products that are competitive in the marketplace, there could be a material adverse effect on our business, operating results, financial condition and market share. In addition, it is common for research and development projects to encounter delays due to unforeseen problems, resulting in low initial volume production, fewer product features than originally considered desirable and higher production costs than initially budgeted, which may result in lost market opportunities. In addition, any new products or product enhancements that we introduce may not achieve any significant degree of market acceptance or be accepted into our sales channel by our channel partners. There could be a material adverse effect on our business, operating results, financial condition and market share due to such delays or deficiencies in the development, manufacturing and delivery of new products.

Once a product is in the marketplace, its selling price often decreases over the life of the product, especially after a new competitive product is publicly announced. To lessen the effect of price decreases, our product management team attempts to reduce development and manufacturing costs in order to maintain or improve our margins. However, if cost reductions do not occur in a timely manner, there could be a material adverse effect on our operating results and market share. In addition, customers often delay purchases of existing products until the new or improved versions of those products are available.

Our business, operating results and growth rates may be adversely affected by unfavorable economic and market conditions, as well as the volatile geopolitical environment.

Our business depends on the overall demand for information technology, or IT, and on the economic health of our current and prospective customers. Our current business and operating plan assumes that economic activity in general, and IT spending in particular, will at least remain at current levels. However, we cannot be assured of the level of IT spending, the deterioration of which could have a material adverse effect on our results of operations and growth rates. The purchase of our products is often discretionary and may involve a significant commitment of capital and other resources. Therefore, weak economic conditions, or a reduction in IT spending, even if economic conditions improve, would likely adversely impact our business, operating results and financial condition in a number of ways, including longer sales cycles, lower prices for our products and services, and reduced unit sales. If interest rates rise, overall demand could be further dampened and related IT spending may be reduced.

The market in which we compete is highly competitive, and competitive pressures from existing and new companies may have a material adverse effect on our business, revenues, growth rates and market share.

The market in which we compete is a highly competitive industry that is influenced by the following competitive factors:

•  comprehensiveness of the solution;

•  total cost of ownership;

•  performance of software and hardware products;

•  ability to deploy easily into existing networks;

•  interoperability with other devices;

•  scalability of solution;

•  ability to provide secure mobile access to the network;

•  speed of mobile connectivity offering;

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•  ability to allow centralized management of products; and

•  ability to obtain regulatory and other industry certifications.

We expect competition to intensify in the future as other companies introduce new products in the same markets we serve or intend to enter. This competition could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses and failure to increase, or the loss of, market share, any of which would likely seriously harm our business, operating results or financial condition. If we do not keep pace with product and technology advances, there could be a material adverse effect on our competitive position, revenues and prospects for growth.

A number of our current or potential competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical, sales, marketing and other resources than we do. Potential customers may prefer to purchase from their existing suppliers rather than a new supplier regardless of product performance or features. Currently, we compete with a number of large and well established public companies, including Cisco Systems, primarily through its Wireless Networking Business Unit, and Symbol Technologies (which recently announced that it will be acquired by Motorola), as well as smaller private companies and new market entrants, any of which could reduce our market share, require us to lower our prices, or both.

We expect increased competition from other established and emerging companies if our market continues to develop and expand. For example, our channel partners could market products and services that compete with our products and services. In addition, some of our competitors have made acquisitions or entered into partnerships or other strategic relationships with one another to offer a more comprehensive solution than they individually had offered. We expect this trend to continue as companies attempt to strengthen or maintain their market positions in an evolving industry and as companies enter into partnerships or are acquired. Many of the companies driving this consolidation trend have significantly greater financial, technical and other resources than we do and are better positioned to acquire and offer complementary products and technologies. The companies resulting from these possible consolidations may create more compelling product offerings and be able to offer greater pricing flexibility, making it more difficult for us to compete effectively, including on the basis of price, sales and marketing programs, technology or product functionality. Continued industry consolidation may adversely impact customers’ perceptions of the viability of smaller and even medium-sized technology companies and, consequently, customers’ willingness to purchase from such companies. These pressures could materially adversely affect our business, operating results and financial condition.

As a result of the fact that we outsource the manufacturing of our products to Flextronics, we do not have the ability to ensure quality control over the manufacturing process. Furthermore, if there are significant changes in the financial or business condition of Flextronics, our ability to supply quality products to our customers may be disrupted.

As a result of the fact that we outsource the manufacturing of our products to Flextronics, we are subject to the risk of supplier failure and customer dissatisfaction with the quality or performance of our products. Quality or performance failures of our products or changes in Flextronic’s financial or business condition could disrupt our ability to supply quality products to our customers and thereby have a material adverse effect on our business, revenues and financial condition.

Our orders with Flextronics represent a relatively small percentage of the overall orders received by Flextronics from its customers. As a result, fulfilling our orders may not be considered a priority in the event Flextronics is constrained in its ability to fulfill all of its customer obligations in a timely manner. We provide demand forecasts to Flextronics. If we overestimate our requirements, Flextronics may assess charges, or we may have liabilities for excess inventory, each of which could negatively affect our gross margins. Conversely, because lead times for required materials and components vary significantly and depend on factors such as the specific supplier, contract terms and the demand for each component at a given time, if we underestimate our requirements, Flextronics may have inadequate materials and components required to produce our products. This could result in an interruption of the manufacturing of our products, delays in shipments and deferral or loss of revenue. In addition, on occasion we have underestimated our requirements, and, as a result, we have been required to pay additional fees to Flextronics in order for manufacturing to be completed and shipments to be made on a timely basis.

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If Flextronics suffers an interruption in its business, or experiences delays, disruptions or quality control problems in its manufacturing operations, or we have to change or add additional contract manufacturers, our ability to ship products to our customers would be delayed, and our business, operating results and financial condition would be adversely affected.

Some components, subassemblies and products are purchased from a single supplier or a limited number of suppliers. The loss of any of these suppliers may cause us to incur additional set-up costs, result in delays in manufacturing and delivering our products or cause us to carry excess or obsolete inventory.

Shortages in components that we use in our products are possible, and our ability to predict the availability of such components may be limited. While components and supplies are generally available from a variety of sources, we currently depend on a single or limited number of suppliers for several components for our equipment and certain subassemblies and products, and we also rely on Flextronics to obtain certain components, subassemblies and products necessary for the manufacture of our products. For example, the chipsets that we utilize in our products are currently available only from a limited number of suppliers. In addition, for certain components, subassemblies and products for which we may have multiple sources, we are still subject to potential price increases and limited availability due to market demand for such components, subassemblies and products. In the past, unexpected demand for communication products caused worldwide shortages of certain electronic parts. If such shortages occur in the future, our business would be adversely affected. We carry very little inventory of our product components, and we and Flextronics rely on our suppliers to deliver necessary components in a timely manner. We and Flextronics rely on purchase orders rather than long-term contracts with some suppliers. As a result, even if available, we or Flextronics may not be able to secure sufficient components at reasonable prices or of acceptable quality to build products in a timely manner and, therefore, may not be able to meet customer demands for our products, which would have a material adverse effect on our business, operating results and financial condition.

We sell a majority of our products through VARs, distributors and OEMs. If the third-party distribution sources on which we rely do not perform their services adequately or efficiently or if they exit the industry, and we are not able to quickly find adequate replacements, there could be a material adverse effect on our revenues.

Our future success is highly dependent upon establishing and maintaining successful relationships with a variety of VARs, distributors and OEMs. A significant amount of our revenues are derived through indirect channel sales, and we expect indirect channel sales to continue to increase as a percentage of our total revenues. Accordingly, our revenues depend in large part on the effective performance of these channel partners. Some of our third-party distribution sources may have insufficient financial resources and may not be able to withstand changes in worldwide business conditions, including economic downturns, or abide by our inventory and credit requirements. If the third-party distribution sources on which we rely do not perform their services adequately or efficiently, or if they exit the industry and we are not able to quickly find adequate replacements, there could be a material adverse effect on our revenues and market share. By relying on these indirect channels, we may have less contact with the end users of our products, thereby making it more difficult for us to establish brand awareness, ensure proper delivery and installation of our products, service ongoing customer requirements and respond to evolving customer needs. In addition, some of our OEMs negotiated preferential pricing terms on which they purchase products from us. In such cases our margins may be adversely affected to the extent sales to such OEMs increase.

Recruiting and retaining qualified channel partners and training them in our technology and product offerings requires significant time and resources. In order to develop and expand our distribution channel, we must continue to scale and improve our processes and procedures that support our channel partners, including investment in systems and training, and those processes and procedures may become increasingly complex and difficult to manage. We have no minimum purchase commitments with any of our VARs, distributors or OEMs, and our contracts with these channel partners do not prohibit them from offering products or services that compete with ours or from terminating our contract on short notice. Our competitors may be effective in providing incentives to existing and potential channel partners to favor their products or to prevent or reduce sales of our products. Our channel partners may choose not to focus primarily on the sale of our products or offer our products at all. Our

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failure to establish and maintain successful relationships with third-party distribution sources would likely materially adversely affect our business, operating results and financial condition.

Our international sales and operations subject us to additional risks that may adversely affect our operating results.

We derive a significant portion of our revenues from customers outside the United States. We have sales and technical support personnel in numerous countries worldwide. In addition, a portion of our engineering efforts are currently handled by personnel located in India, and we expect to expand our offshore development efforts and general administrative functions within India and possibly in other countries. We expect to continue to add personnel in additional countries. Our international operations subject us to a variety of risks, including:

•  the difficulty of managing and staffing international offices and the increased travel, infrastructure and legal compliance costs associated with multiple international locations;

•  difficulties in enforcing contracts and collecting accounts receivable, and longer payment cycles, especially in emerging markets;

•  the need to localize our products for international customers;

•  tariffs and trade barriers, export regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets;

•  increased exposure to foreign currency exchange rate risk; and

•  reduced protection for intellectual property rights in some countries.

As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. Our failure to manage any of these risks successfully could harm our international operations and reduce our international sales, adversely affecting our business, operating results and financial condition.

If we are unable to protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce our rights.

We depend on our ability to protect our proprietary technology. We protect our proprietary information and technology through licensing agreements, third-party nondisclosure agreements and other contractual provisions, as well as through patent, trademark, copyright and trade secret laws in the United States and similar laws in other countries. There can be no assurance that these protections will be available in all cases or will be adequate to prevent our competitors from copying, reverse engineering or otherwise obtaining and using our technology, proprietary rights or products. For example, the laws of certain countries in which our products are manufactured or licensed do not protect our proprietary rights to the same extent as the laws of the United States. In addition, third parties may seek to challenge, invalidate or circumvent our patents, trademarks, copyrights and trade secrets, or applications for any of the foregoing. There can be no assurance that our competitors will not independently develop technologies that are substantially equivalent or superior to our technology or design around our proprietary rights. In each case, our ability to compete could be significantly impaired. To prevent substantial unauthorized use of our intellectual property rights, it may be necessary to prosecute actions for infringement and/or misappropriation of our proprietary rights against third parties. Any such action could result in significant costs and diversion of our resources and management’s attention, and there can be no assurance that we will be successful in such action. Furthermore, many of our current and potential competitors have the ability to dedicate substantially greater resources to enforce their intellectual property rights than we do. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property.

Claims by others that we infringe their proprietary technology could harm our business.

Third parties have asserted and may in the future assert claims of infringement of intellectual property rights against us or against our customers or channel partners for which we may be liable. Due to the rapid pace of technological change in our industry, much of our business and many of our products rely on proprietary

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technologies of third parties, and we may not be able to obtain, or continue to obtain, licenses from such third parties on reasonable terms. As the number of products and competitors in our market increases and overlaps occur, we expect that infringement claims may increase. Any claim of infringement by a third party, even those without merit, could cause us to incur substantial costs defending against the claim and could distract our management from our business. Furthermore, a successful claimant could secure a judgment that requires us to pay substantial damages or prevents us from distributing certain products or performing certain services. In addition, we might be required to seek a license for the use of such intellectual property, which may not be available on commercially acceptable terms or at all. Alternatively, we may be required to develop non-infringing technology, which could require significant effort and expense and may ultimately not be successful. Any of these events could seriously harm our business, operating results and financial condition.

If we fail to effectively integrate our new officers into our organization, our business could be harmed.

Many of our current officers have recently joined us, including our Chief Executive Officer, Vice President, Engineering, Vice President, Customer Advocacy and Vice President, Human Resources, each of whom have joined us in the last year. As a result, our executive team has not worked together as a group for a significant period of time. Our future performance will depend in part on our ability to successfully integrate our newly hired executive officers into our management team and develop an effective working relationship among senior management. If we fail to integrate these individuals and create effective working relationships among them and other members of management, our business operating results and financial condition could be adversely affected.

If we lose members of our senior management or are unable to recruit and retain key employees on a cost-effective basis, we may not be able to successfully grow our business.

Our success is substantially dependent upon the performance of our senior management. All of our executive officers are at-will employees, and we do not maintain any key-man life insurance policies. The loss of the services of any of our management may significantly delay or prevent the achievement of our product development and other business objectives and could harm our business. Our success also is substantially dependent upon our ability to attract additional personnel for all areas of our organization, particularly in our sales, research and development, and customer service departments. For example, unless and until we hire a Vice President of Worldwide Sales, our Chief Executive Officer will fill this role in addition to his other responsibilities. Experienced management and technical, sales, marketing and support personnel in the IT industry are in high demand, and competition for their talents is intense. We may not be successful in attracting and retaining such personnel on a timely basis, on competitive terms, or at all. The loss of, or the inability to recruit, such employees could have a material adverse effect on our business.

If we fail to manage future growth effectively, our business would be harmed.

We have expanded our operations significantly since inception and anticipate that further significant expansion will be required. We intend to increase our market penetration and extend our geographic reach by expanding our network of channel partners by adding additional sales personnel who will be dedicated to supporting this growing channel footprint. We also plan to increase offshore operations by establishing additional offshore capabilities for certain engineering and general and administrative functions. This future growth, if it occurs, will place significant demands on our management, infrastructure and other resources. To manage any future growth, we will need to hire, integrate and retain highly skilled and motivated employees. If we do not effectively manage our growth, our business, operating results and financial condition would be adversely affected.

Our ability to sell our products is highly dependent on the quality of our support and services offerings, and our failure to offer high quality support and services would have a material adverse effect on our sales and results of operations.

Once our products are deployed within our end customers’ networks, they depend on our support organization to resolve any issues relating to our products. A high level of support is critical for the successful marketing and sale of our products. If we or our channel partners do not effectively assist our end customers in deploying our products, succeed in helping our end customers quickly resolve post-deployment issues, or provide effective ongoing support, it would adversely affect our ability to sell our products to existing customers and could harm our reputation with

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potential customers. In addition, as we expand our operations internationally, our support organization will face additional challenges including those associated with delivering support, training and documentation in languages other than English. As a result, our failure, or the failure of our channel partners, to maintain high quality support and services would have a material adverse effect on our business, operating results and financial condition.

Enterprises are increasingly concerned with the security of their data, and to the extent they elect to encrypt data between the end-user and the server, our products will become less effective.

Our products depend on the ability to identify applications. Our products currently do not identify applications if the data is encrypted as it passes through our Mobility Controllers. Since most organizations currently encrypt most of their data transmissions only between sites and not on the LAN, the data is not encrypted when it passes through our Mobility Controllers. If more organizations elect to encrypt their data transmissions from the end-user to the server, our products will offer limited benefits unless we have been successful in incorporating additional functionality into our products that address those encrypted transmissions. At the same time, if our products do not provide the level of network security expected by our customers, our reputation and brand would be damaged, and we would expect to experience decreased sales. Our failure to provide such additional functionality and expected level of network security could adversely affect our business, operating results and financial condition.

Enterprises may have slow WAN connections between some of their locations that may cause our products to become less effective.

Our Mobility Controllers and Mobility Management System were initially designed to function at LAN-like speeds in an office building or campus environment. In order to function appropriately, our Mobility Controllers synchronize with each other over network links. The ability of our products to synchronize may be limited by slow or congested data-links, including DSL and dial-up. Our failure to provide such additional functionality could adversely affect our business, operating results and financial condition.

Our products are highly technical and may contain undetected hardware errors or software bugs, which could cause harm to our reputation and adversely affect our business.

Our products are highly technical and complex and, when deployed, are critical to the operation of many networks. Our products have contained and may contain undetected errors, bugs or security vulnerabilities. Some errors in our products may only be discovered after a product has been installed and used by customers. Any errors, bugs, defects or security vulnerabilities discovered in our products after commercial release could result in loss of revenues or delay in revenue recognition, loss of customers and increased service and warranty cost, any of which could adversely affect our business, operating results and financial condition. In addition, we could face claims for product liability, tort or breach of warranty, including claims relating to changes to our products made by our channel partners. Our contracts with customers contain provisions relating to warranty disclaimers and liability limitations, which may not be upheld. Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention and adversely affect the market’s perception of us and our products. In addition, if our business liability insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business, operating results and financial condition could be adversely impacted.

Our use of open source software could impose limitations on our ability to commercialize our products.

We incorporate open source software into our products. Although we monitor our use of open source closely, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products. In such event, we could be required to seek licenses from third parties in order to continue offering our products, to re-engineer our products or to discontinue the sale of our products in the event re-engineering cannot be accomplished on a timely basis, any of which could adversely affect our business, operating results and financial condition.

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We rely on the availability of third-party licenses.

Many of our products are designed to include software or other intellectual property licensed from third parties. It may be necessary in the future to seek or renew licenses relating to various aspects of these products. There can be no assurance that the necessary licenses would be available on acceptable terms, if at all. The inability to obtain certain licenses or other rights or to obtain such licenses or rights on favorable terms, or the need to engage in litigation regarding these matters, could have a material adverse effect on our business, operating results, and financial condition. Moreover, the inclusion in our products of software or other intellectual property licensed from third parties on a nonexclusive basis could limit our ability to protect our proprietary rights in our products.

New safety regulations or changes in existing safety regulations related to our products may result in unanticipated costs or liabilities, which could have a material adverse effect on our business, results of operations and future sales, and could place additional burdens on the operations of our business.

Radio emissions are subject to regulation in the United States and in other countries in which we do business. In the United States, various federal agencies including the Center for Devices and Radiological Health of the Food and Drug Administration, the Federal Communications Commission, the Occupational Safety and Health Administration and various state agencies have promulgated regulations that concern the use of radio/electromagnetic emissions standards. Member countries of the European Union, or the EU, have enacted similar standards concerning electrical safety and electromagnetic compatibility and emissions standards.

If any of our products becomes subject to new regulations or if any of our products becomes specifically regulated by additional government entities, compliance with such regulations could become more burdensome, and there could be a material adverse effect on our business and our results of operations.

In addition, our wireless communication products operate through the transmission of radio signals. Currently, operation of these products in specified frequency bands does not require licensing by regulatory authorities. Regulatory changes restricting the use of frequency bands or allocating available frequencies could become more burdensome and could have a material adverse effect on our business, results of operations and future sales.

Compliance with environmental matters and worker health and safety laws could be costly, and noncompliance with these laws could have a material adverse effect on our results of operations, expenses and financial condition.

Some of our operations use substances regulated under various federal, state, local and international laws governing the environment and worker health and safety, including those governing the discharge of pollutants into the ground, air and water, the management and disposal of hazardous substances and wastes, and the cleanup of contaminated sites. Some of our products are subject to various federal, state, local and international laws governing chemical substances in electronic products. We could be subject to increased costs, fines, civil or criminal sanctions, third-party property damage or personal injury claims if we violate or become liable under environmental and/or worker health and safety laws.

In January 2003, the EU issued two directives relating to chemical substances in electronic products. The Waste Electrical and Electronic Equipment Directive requires producers of electrical goods to pay for specified collection, recycling, treatment and disposal of past and future covered products. EU governments were required to enact and implement legislation that complies with this directive by August 13, 2004 (such legislation together with the directive, the “WEEE Legislation”), and certain producers are to be financially responsible under the WEEE Legislation beginning in August 2005. The EU has issued another directive that requires electrical and electronic equipment placed on the EU market after July 1, 2006 to be free of lead, mercury, cadmium, hexavalent chromium (above a threshold limit) and brominated flame retardants. EU governments were required to enact and implement legislation that complies with this directive by August 13, 2004 (such legislation together with this directive, the “RoHS Legislation”). If we do not comply with these directives, we may suffer a loss of revenues, be unable to sell in certain markets and/or countries, be subject to penalties and enforced fees and/or suffer a competitive disadvantage. Similar legislation could be enacted in other jurisdictions, including in the United States. Costs to comply with the WEEE Legislation, RoHS Legislation and/or similar future legislation, if applicable, could include costs associated with modifying our products, recycling and other waste processing costs, legal and

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regulatory costs and insurance costs. We have taken and will also be required to take additional reserves for costs associated with compliance with these regulations. We cannot assure you that the costs to comply with these new laws, or with current and future environmental and worker health and safety laws will not have a material adverse effect on our results of operation, expenses and financial condition.

We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.

Because we incorporate encryption technology into our products, our products are subject to U.S. export controls and may be exported outside the United States only with the required level of export license or through an export license exception. In addition, various countries regulate the import of certain encryption technology and have enacted laws that could limit our ability to distribute our products or could limit our customers’ ability to implement our products in those countries. Changes in our products or changes in export and import regulations may create delays in the introduction of our products in international markets, prevent our customers with international operations from deploying our products throughout their global systems or, in some cases, prevent the export or import of our products to certain countries altogether. Any change in export or import regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by such regulations, could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations.

We may engage in future acquisitions that could disrupt our business, cause dilution to our stockholders and harm our business, operating results and financial condition.

In the future we may acquire other businesses, products or technologies. We have not made any acquisitions to date, and, as a result, our ability as an organization to make acquisitions is unproven. We may not be able to find suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, or such acquisitions may be viewed negatively by customers, financial markets or investors. In addition, any acquisitions that we make could lead to difficulties in integrating personnel and operations from the acquired businesses and in retaining and motivating key personnel from these businesses. Acquisitions may disrupt our ongoing operations, divert management from day-to-day responsibilities, increase our expenses and adversely impact our business, operating results and financial condition. Future acquisitions may reduce our cash available for operations and other uses and could result in an increase in amortization expense related to identifiable assets acquired, potentially dilutive issuances of equity securities or the incurrence of debt, which could harm our business, operating results and financial condition.

Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, and to interruption by manmade problems such as computer viruses or terrorism.

Our corporate headquarters are located in the San Francisco Bay Area, a region known for seismic activity. A significant natural disaster, such as an earthquake, fire or a flood, occurring at our headquarters or in China, where our contract manufacturer, Flextronics, is located, could have a material adverse impact on our business, operating results and financial condition. In addition, our servers are vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems. In addition, acts of terrorism could cause disruptions in our or our customers’ businesses or the economy as a whole. To the extent that such disruptions result in delays or cancellations of customer orders, or the deployment of our products, our business, operating results and financial condition would be adversely affected.

Risks Related to this Offering and our Common Stock

Our stock price may be volatile, and you may not be able to resell shares of our common stock at or above the price you paid.

Prior to this offering, there has been no public market for shares of our common stock, and an active public market for these shares may not develop or be sustained after this offering. We and the representatives of the

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underwriters will determine the initial public offering price of our common stock through negotiation. This price will not necessarily reflect the price at which investors in the market will be willing to buy and sell our shares following this offering. In addition, the trading price of our common stock following this offering is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control.

In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect the market price of our common stock, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our stock shortly following this offering. In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our stock would be negatively impacted. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Future sales of shares by existing stockholders could cause our stock price to decline.

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market after the lock-up and other legal restrictions on resale discussed in this prospectus lapse, the trading price of our common stock could decline. Based on shares outstanding as of October 31, 2006, we will have outstanding a total of           shares of common stock upon completion of this offering, an increase of     % from the number of shares outstanding prior to the offering. Of these shares, only the           shares of common stock sold in this offering will be freely tradable, without restriction, in the public market. Our underwriters, however, may, in their sole discretion, permit our officers, directors and other current stockholders who are subject to the contractual lock-up to sell shares prior to the expiration of the lock-up agreements.

We expect that the lock-up agreements pertaining to this offering will expire 180 days from the date of this prospectus, although those lock-up agreements may be extended under certain circumstances. After the lock-up agreements expire, up to an additional           shares of common stock will be eligible for sale in the public market,           of which are held by directors, executive officers and other affiliates and will be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements. In addition,           shares of common stock that are either subject to outstanding options or reserved for future issuance under our employee benefit plans will become eligible for sale in the public market to the extent permitted by the provisions of various vesting agreements, the lock-up agreements and Rules 144 and 701 under the Securities Act. If these additional shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

Insiders will continue to have substantial control over us after this offering and will be able to influence corporate matters.

Upon completion of this offering, our directors and executive officers and their affiliates will beneficially own, in the aggregate, approximately     % of our outstanding common stock. As a result, these stockholders will be able to exercise significant influence over all matters requiring stockholder approval, including the election of directors and

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approval of significant corporate transactions, such as a merger or other sale of our company or its assets. This concentration of ownership could limit your ability to influence corporate matters and may have the effect of delaying or preventing a third party from acquiring control over us. For information regarding the ownership of our outstanding stock by our executive officers and directors and their affiliates, see “Principal Stockholders.”

Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.

The initial public offering price of our common stock is substantially higher than the pro forma net tangible book value per share of our common stock immediately after this offering. Therefore, if you purchase our common stock in this offering, you will incur an immediate dilution of $      in net tangible book value per share from the price you paid. The exercise of outstanding options and warrants will, and future equity issuances may, result in further dilution. For a further description of the dilution that you will experience immediately after this offering, see “Dilution.”

We have broad discretion to determine how to use the funds raised in this offering, and may use them in ways that may not enhance our operating results or the price of our common stock.

We could spend the proceeds from this offering in ways our stockholders may not agree with or that do not yield a favorable return. We intend to use a significant portion of the net proceeds from this offering for general corporate purposes, which may include expansion of our sales and marketing and research and development efforts, working capital, capital expenditures and potential acquisitions of, or investments in, complementary businesses, products and technologies. However, we do not have more specific plans for the net proceeds from this offering and will have broad discretion in how we use the net proceeds of this offering. If we do not invest or apply the proceeds of this offering in ways that improve our operating results, we may fail to achieve expected financial results, which could cause our stock price to decline.

We may need to raise additional capital, which may not be available, which would adversely affect our ability to operate our business.

We expect that the net proceeds from this offering, together with our existing cash balances, will be sufficient to meet our working capital and capital expenditure needs for the foreseeable future. If we need to raise additional funds due to unforeseen circumstances or material expenditures, we cannot be certain that we will be able to obtain additional financing on favorable terms, if at all, and any additional financings could result in additional dilution to our existing stockholders. If we need additional capital and cannot raise it on acceptable terms, we may not be able to meet our business objectives, our stock price may decline, and you may lose some or all of your investment.

Provisions in our charter documents, Delaware law and our OEM supply agreement with Alcatel-Lucent could discourage a takeover that stockholders may consider favorable.

Provisions in our certificate of incorporation and bylaws, as amended and restated upon the closing of this offering, may have the effect of delaying or preventing a change of control or changes in our management. These provisions include the following:

•  our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

•  our stockholders may not act by written consent or call special stockholders’ meetings; as a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions other than at annual stockholders’ meetings or special stockholders’ meetings called by the board of directors, the chairman of the board, the chief executive officer or the president;

•  our certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

•  stockholders must provide advance notice to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential

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acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company; and

•  our board of directors may issue, without stockholder approval, shares of undesignated preferred stock; the ability to authorize undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.

As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction. Our board of directors could rely on Delaware law to prevent or delay an acquisition of us. For a description of our capital stock, see “Description of Capital Stock.”

In addition, our OEM supply agreement with Alcatel-Lucent provides that, in the event of a change of control that would cause Alcatel-Lucent to purchase our products from an entity that is an Alcatel-Lucent competitor, we must, without additional consideration, (1) provide Alcatel-Lucent with any information required by Alcatel-Lucent to make, test and support the products that we distribute through our OEM relationship with Alcatel-Lucent, including all hardware designs and software source code, and (2) otherwise cooperate with Alcatel-Lucent to transition the manufacturing, testing and support of these products to Alcatel-Lucent. We are also obligated to promptly inform Alcatel-Lucent if and when we receive an inquiry concerning a bona fide proposal or offer to effect a change of control and will not enter into negotiations concerning a change of control without such prior notice to Alcatel-Lucent. Each of these provisions could delay or result in a discount to the proceeds our stockholders would otherwise receive upon a change of control or could discourage a third party from making a change of control offer.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the Securities and Exchange Commission and the Nasdaq Global Market, have imposed various new requirements on public companies, including requiring changes in corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these new rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial costs to maintain the same or similar coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

In addition, the Sarbanes-Oxley Act requires, among other things, that we assess the effectiveness of our internal control over financial reporting annually and disclosure controls and procedures quarterly. In particular, for the fiscal year ending on July 31, 2007, or, in the event the Securities and Exchange Commission’s proposed transition relief for newly public companies is adopted, July 31, 2008, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management time on compliance related issues. We will evaluate the need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the Nasdaq Global Market, the Securities and Exchange Commission or other regulatory authorities, which would require additional financial and management resources.

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SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

•  anticipated trends and challenges in our business and competition in the markets in which we operate;

•  our ability to hire and retain key personnel or qualified sales and marketing and technical staff;

•  expected future financial performance;

•  our ability to expand our distribution channel;

•  expected adoption of our products;

•  our ability to manage operating expenses as we grow;

•  our ability to manage expansion into international markets;

•  our expectations about revenue mix between direct and indirect sales channels and between sales of products and support services;

•  our ability to compete in our industry and innovation by our competitors;

•  our ability to expand our customer base;

•  our ability to realize increased operating efficiencies;

•  our ability to anticipate market needs or develop new or enhanced products to meet those needs;

•  our ability to develop new products and enhance our existing products;

•  our ability to protect our confidential information and intellectual property rights;

•  our expectations regarding the use of proceeds from this offering; and

•  our need to obtain additional funding and our ability to obtain funding in the future on acceptable terms.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this prospectus to confirm these statements to actual results or revised expectations.

You may rely only on the information contained in this prospectus. Neither we nor any of the underwriters have authorized anyone to provide information different from that contained in this prospectus. Neither the delivery of this prospectus, nor sale of common stock, means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy shares of common stock in any circumstances under which the offer or solicitation is unlawful.

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USE OF PROCEEDS

We estimate that we will receive net proceeds of $      from our sale of the shares of common stock offered by us in this offering, based upon an assumed initial public offering price of $      per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The principal purposes of this offering are to obtain additional capital, to create a public market for our common stock and to facilitate our future access to the public equity markets.

We currently plan to use the net proceeds received by us from this offering for working capital and general corporate purposes, including further expansion of our sales and support functions for both direct and indirect sales channels, continued investments in research and development, and for capital expenditures. In addition, we may use a portion of the proceeds of this offering for acquisitions of complementary businesses, technologies or other assets. We have no current agreements or commitments with respect to any material acquisitions.

Pending such uses, we plan to invest the net proceeds in short- and intermediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.

DIVIDEND POLICY

We have never declared or paid any cash dividend on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.

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CAPITALIZATION

The following table sets forth our cash, cash equivalents and capitalization at October 31, 2006, as follows:

•  our actual cash and cash equivalents and capitalization as of October 31, 2006;

•  our pro forma cash and cash equivalents and capitalization after giving effect to the automatic conversion of all outstanding shares of preferred stock into common stock upon the closing of this offering and the reclassification of the preferred stock warrant liability to common stock and additional paid-in-capital; and

•  our pro forma as adjusted cash and cash equivalents and capitalization reflecting (1) the conversion of all outstanding shares of our preferred stock into common stock upon the closing of this offering and the reclassification of the preferred stock warrant liability to common stock and additional paid-in-capital, (2) the receipt of the estimated net proceeds from the sale of the           shares of common stock offered by us in this offering and (3) the issuance of shares of our common stock upon the consummation of this offering with an aggregate value of $3.5 million (based upon the actual initial public offering price) to Microsoft in a private placement in which we will receive no cash consideration at the time such shares are issued.

You should read this table in conjunction with the sections titled “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes and schedule included elsewhere in this prospectus.

	As of October 31, 2006
							Pro Forma as
	Actual			Pro Forma			Adjusted
	(In thousands, except per share data)
Cash and cash equivalents	$	17,908		$	17,908		$
Equipment loans payable		432			432
Preferred stock warrant liability(1)		1,725			—
Deposit for Series D redeemable convertible preferred stock, net of deferred issuance costs(2)		29,803			29,803
Other long-term liabilities(3)		3,115			3,115
Redeemable convertible preferred stock, $0.0001 par value: 46,445 shares authorized, 45,108 shares issued and outstanding actual; no shares authorized, issued and outstanding pro forma and pro forma as adjusted		58,009			—
Stockholders’ equity (deficit):
Preferred stock, $0.0001 par value:      shares authorized, pro forma as adjusted		—			—
Common stock and additional paid-in-capital, $0.0001 par value: 75,000 shares authorized, 15,500 shares issued and outstanding actual; 75,000 shares authorized, 60,608 shares issued and outstanding pro forma;           shares authorized,           shares issued and outstanding pro forma as adjusted		7,175			66,909
Accumulated deficit		(81,223	)		(81,223	)
Total stockholders’ equity (deficit)		(74,048	)		(14,314	)
Total capitalization	$	19,036		$	19,036		$

(1)	Refers to the liability related to outstanding preferred stock warrants. See Note 2 of Notes to Consolidated Financial Statements.
(2)	On December 13, 2006, our stockholders approved, and we filed, a restated certificate of incorporation to create and authorize the issuance of up to 4,640,000 shares of Series D redeemable convertible preferred stock and

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increase the number of authorized shares of common stock to 95,440,000 shares. At that time, we issued 4,573,296 shares of Series D redeemable convertible preferred stock at $6.5443 per share. These shares were issued in full satisfaction of the Company’s obligations under the Series D preferred stock purchase agreement entered into in September 2005 and September 2006. The $19.3 million and $10.6 million that we received in September 2005 and September 2006, respectively, in connection with the Series D preferred stock purchase agreement has been recorded as a deposit for the Series D redeemable convertible preferred stock. See Note 8 of Notes to Consolidated Financial Statements.

(3)

Refers to the liability related to our obligation to issue shares of our common stock upon the consummation of this offering with an aggregate value of $3.5 million (based upon the actual initial public offering price) to Microsoft in a private placement in which we will receive no cash consideration at the time such shares are issued. See Note 9 of Notes to Consolidated Financial Statements.

If the underwriters’ option to purchase additional shares were exercised in full, pro forma as adjusted cash and cash equivalents, common stock and additional paid-in-capital, stockholders’ equity (deficit) and shares issued and outstanding as of October 31, 2006 would be $      million, $      million, $      million and          , respectively.

This table excludes the following shares:

•             shares of common stock issuable upon exercise of stock options outstanding as of October 31, 2006, at a weighted average exercise price of $      per share;

•             shares of common stock issuable upon the exercise of options granted after          , 2006, at a weighted average exercise price of $      per share;

•             shares of common stock issuable upon the exercise of warrants outstanding as of October 31, 2006, at a weighted average exercise price of $      per share;

•             shares of common stock reserved as of October 31, 2006 for future grant under our 2002 Stock Plan;

•             shares of common stock reserved for issuance under our 2007 Equity Incentive Plan;

•             shares of common stock reserved for issuance under our Employee Stock Purchase Plan; and

•             shares of Series D redeemable convertible preferred stock issued on December 13, 2006.

See “Management — Employee Benefit Plans” for a description of our equity plans.

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DILUTION

Our pro forma net tangible book value as of October 31, 2006 was $      million, or approximately $      per share. Net tangible book value per share represents the amount of stockholders’ equity, divided by           shares of common stock outstanding after giving effect to the automatic conversion of all outstanding shares of preferred stock into shares of common stock upon completion of this offering and the issuance of shares of our common stock upon the consummation of this offering with an aggregate value of $3.5 million (based upon the actual initial public offering price) to Microsoft in a private placement in which we will receive no cash consideration at the time such shares are issued.

Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the pro forma net tangible book value per share of common stock immediately after completion of this offering. After giving effect to our sale of           shares of common stock in this offering at an assumed initial public offering price of $      per share, which is the midpoint of the range listed on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses, our pro forma net tangible book value as of October 31, 2006 would have been $      million, or $      per share. This represents an immediate increase in net tangible book value of $      per share to existing stockholders and an immediate dilution in net tangible book value of $      per share to purchasers of common stock in this offering, as illustrated in the following table:

Assumed initial public offering price per share		$
Pro forma net tangible book value per share as of October 31, 2006	$
Increase in pro forma net tangible book value per share attributable to new investors
Pro forma net tangible book value per share after this offering
Dilution per share to new investors in this offering		$

If the underwriters exercise their option to purchase additional shares of our common stock in full in this offering, the pro forma net tangible book value per share after this offering would be $      per share, the increase in pro forma net tangible book value per share to existing stockholders would be $      per share and the dilution to new investors purchasing shares in this offering would be $      per share.

The following table presents on a pro forma basis as of October 31, 2006, after giving effect to the automatic conversion of all outstanding shares of preferred stock into common stock and the issuance of shares of our common stock upon the consummation of this offering with an aggregate value of $3.5 million (based upon the actual initial public offering price) to Microsoft in a private placement in which we will receive no cash consideration at the time such shares are issued, the differences between the existing stockholders and the purchasers of shares in this offering with respect to the number of shares purchased from us, the total consideration paid and the average price paid per share:

	Shares Purchased				Total Consideration				Average Price
	Number	Percent			Amount	Percent			per Share
Existing stockholders				%	$			%	$
New investors
Totals			100.0	%	$		100.0	%	$

As of October 31, 2006, there were options outstanding to purchase a total of           shares of common stock at a weighted average exercise price of $      per share. In addition, as of October 31, 2006, there were warrants outstanding to purchase           shares of preferred stock with a weighted average exercise price of $      per share. To the extent outstanding options or warrants are exercised, there will be further dilution to new investors. For a description of our equity plans, see “Management — Employee Benefit Plans.”

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SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

You should read the following selected consolidated historical financial data below in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements, related notes and schedule, and other financial information included in this prospectus. The selected consolidated financial data in this section is not intended to replace the consolidated financial statements and is qualified in its entirety by the consolidated financial statements and related notes and schedule included in this prospectus.

We derived the selected consolidated financial data for the years ended July 31, 2004, 2005 and 2006 and as of July 31, 2005 and 2006 from our audited consolidated financial statements and related notes and schedule, which are included elsewhere in this prospectus. We derived the selected consolidated financial data for the year ended July 31, 2003 and as of July 31, 2003 and 2004 from our audited consolidated financial statements and related notes and schedule, which are not included in this prospectus. We derived the selected consolidated financial data for the period from inception to July 31, 2002 and as of July 31, 2002 from our unaudited consolidated financial statements, which are not included in this prospectus. The consolidated statements of operations data for the three months ended October 31, 2005 and 2006 and as of October 31, 2006 are derived from our unaudited consolidated financial statements, which are included elsewhere in this prospectus. The unaudited consolidated financial statements include, in the opinion of management, all adjustments, which include only normal recurring adjustments, that management considers necessary for the fair statement of the financial information set forth in those statements. Historical results are not necessarily indicative of future results.

The pro forma basic and diluted net loss per common share data for the year ended July 31, 2006 and the three months ended October 31, 2006 reflect the conversion of our convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred on the original dates of issuance. See Note 3 of Notes to Consolidated Financial Statements for an explanation of the method used to determine the number of shares used in computing pro forma basic and diluted net loss per common share.

	Period
	From
	February 11,
	2002
	(Inception)
	to July 31,			Years Ended July 31,										Three Months Ended October 31,
	2002			2003			2004			2005		2006		2005		2006
	(In thousands)
Consolidated Statements of Operations Data:
Revenues:
Product	$	—		$	—		$	—		$	—	$	43,171	$	—	$	19,106
Professional services and support		—			—			—			—		2,985		—		2,121
Ratable product and related professional services and support		—			3			1,147			12,043		26,347		6,775		3,278
Total revenues		—			3			1,147			12,043		72,503		6,775		24,505
Cost of revenues(1):
Product		—			—			—			—		16,904		—		7,301
Professional services and support		—			—			—			—		2,409		—		1,174
Ratable product and related professional services and support		5			126			2,696			9,077		10,572		3,794		1,186
Total cost of revenues		5			126			2,696			9,077		29,885		3,794		9,661
Gross profit (loss)		(5	)		(123	)		(1,549	)		2,966		42,618		2,981		14,844

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	Period
	From
	February 11,
	2002
	(Inception)
	to July 31,			Years Ended July 31,												Three Months Ended October 31,
	2002			2003			2004			2005			2006			2005			2006
	(In thousands)
Operating expenses:
Research and development(1)		505			5,743			6,982			9,353			14,130			3,273			5,091
Sales and marketing(1)		52			1,449			11,277			22,369			33,765			7,149			10,808
General and administrative(1)		242			1,488			2,531			3,576			5,963			1,116			2,613
Total operating expenses		799			8,680			20,790			35,298			53,858			11,538			18,512
Operating loss		(804	)		(8,803	)		(22,339	)		(32,332	)		(11,240	)		(8,557	)		(3,668	)
Other income (expense), net		32			8			(129	)		(147	)		(529	)		(42	)		(754	)
Loss before provision for income taxes and cumulative effect of change in accounting principle		(772	)		(8,795	)		(22,468	)		(32,479	)		(11,769	)		(8,599	)		(4,422	)
Provision for income taxes		—			—			34			156			306			—			88
Loss before cumulative effect of change in accounting principle		(772	)		(8,795	)		(22,502	)		(32,635	)		(12,075	)		(8,599	)		(4,510	)
Cumulative effect of change in accounting principle		—			—			—			—			66			66			—
Net loss	$	(772	)	$	(8,795	)	$	(22,502	)	$	(32,635	)	$	(12,009	)	$	(8,533	)	$	(4,510	)
Net loss per common share, basic and diluted	$	(3.46	)	$	(7.96	)	$	(6.35	)	$	(4.66	)	$	(1.07	)	$	(0.88	)	$	(0.34	)
Pro forma net loss per common share, basic and diluted													$	(0.21	)				$	(0.08	)

(1) Includes stock-based compensation as follows:

	Period
	From
	February 11,
	2002
	(Inception)
	to July 31,		Years Ended July 31,								Three Months Ended October 31,
	2002		2003		2004		2005		2006		2005		2006
	(In thousands)
Cost of revenues	$	—	$	—	$	5	$	23	$	34	$	6	$	47
Research and development		—		—		42		179		259		52		226
Sales and marketing		—		9		272		678		749		156		888
General and administrative		5		4		71		194		213		48		653
Total stock-based compensation	$	5	$	13	$	390	$	1,074	$	1,255	$	262	$	1,814

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																As of
	As of July 31,															October 31,
	2002			2003			2004			2005			2006			2006
	(In thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	8,478		$	915		$	27,390		$	4,293		$	9,263		$	17,908
Working capital (deficit)		8,370			475			27,584			(285	)		(9,104	)		(11,129	)
Total assets		8,881			2,762			38,273			30,337			38,017			47,992
Equipment loans payable		—			1,550			2,885			1,867			613			432
Deposit for Series D redeemable convertible preferred stock		—			—			—			—			19,329			29,930
Redeemable convertible preferred stock		9,401			9,450			56,310			58,009			58,009			58,009
Common stock and additional paid-in-capital		46			356			3,076			5,430			7,445			7,175
Total stockholders’ equity (deficit)	$	(726	)	$	(9,210	)	$	(30,302	)	$	(61,860	)	$	(71,632	)	$	(74,048	)

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with our consolidated financial statements and related notes and schedule included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this prospectus.

Overview

We were founded in 2002 with the intention to develop a new approach to enabling secure enterprise mobility. We believed that end-users and IT departments were demanding mobility solutions, but traditional approaches were limited by security, application performance and scalability challenges. Our executive management team, which consists of industry veterans in the areas of wireless, security and enterprise networking, has led the development of our Aruba Mobile Edge Architecture. Our architecture allows end-users to roam to different locations within an enterprise campus or office building while maintaining secure and consistent access to all of their network resources. Our architecture also enables IT managers to establish and enforce policies that control network access and prioritize application delivery based on an end-user’s organizational role and authorization level. Our solution, the Aruba Mobile Edge Architecture, consists of the ArubaOS operating system, optional value-added software modules, a centralized mobility management system, high-performance programmable mobility controllers, and wired and wireless access points.

We began commercial shipments of our products in June 2003. Since that time, our products have been sold to more than 2,000 end customers worldwide, including some of the largest and most complex global organizations such as Burlington Northern Santa Fe, Google, Guangzhou Metro, NTT Data Corporation, The Ohio State University, Pu Dong International Airport (Shanghai), SAP, Saudi Aramco, United States Air Force and University of Washington.

We were incorporated in Delaware in 2002 and are headquartered in Sunnyvale, California. We have offices in North America, Europe, the Middle East and Asia Pacific, and employ staff around the world. We expect to continue to add personnel in the United States and internationally to provide additional geographic sales and technical support coverage.

Our product revenue growth rate will depend significantly on continued growth in the market for enterprise mobility solutions, our ability to continue to attract new customers and our ability to compete against more established companies in the market. Our growth in professional services and support revenues is dependent upon increasing the number of products under support contracts, which is dependent on both growing our installed base of customers and renewing existing support contracts. Our future profitability and rate of growth, if any, will be directly affected by the continued acceptance of our products in the marketplace, as well as the timing and size of orders, product and channel mix, average selling prices, costs of our products and general economic conditions. Our ability to attain profitability will also be affected by the extent to which we invest in our sales and marketing, research and development, and general and administrative resources to grow our business.

Since our inception, we have incurred significant losses, and as of October 31, 2006, we had an accumulated deficit of $81.2 million. We have not achieved profitability on a quarterly or annual basis, and we anticipate that we will incur net losses for at least the next several quarters. We expect to incur significant research and development, sales and marketing, and general and administrative expenses for the foreseeable future, and, as a result, we will need to generate higher revenues to achieve and maintain profitability.

We have outsourced the significant majority of our manufacturing, repair and supply chain operations. Accordingly, a significant portion of our cost of revenues consists of payments to Flextronics, our contract manufacturer. Flextronics manufactures our products in China and Singapore using quality assurance programs and standards that we jointly established. Manufacturing, engineering and documentation controls are conducted at our facilities in Sunnyvale, California and Bangalore, India.

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The last day of our fiscal year is July 31. Our fiscal quarters end on October 31, January 31, April 30 and July 31. Our current fiscal year, which we refer to as “fiscal 2007,” will end on July 31, 2007.

Revenues, Cost of Revenues and Operating Expenses

Revenues.  We derive our revenues from sales of our controllers, wired and wireless access points, application software modules, and professional services and support. Professional services revenues consist of consulting and training services. Product support typically includes software updates, on a when and if available basis, telephone and internet access to technical support personnel and hardware support. Software updates provide customers with rights to unspecified software product upgrades and to maintenance releases and patches released during the term of the support period. Consulting services primarily consist of installation support services. Training services are instructor led courses on the use of our products. Consulting and training revenues to date have been insignificant.

Our revenues have grown rapidly since we began commercial shipments of our products in June 2003. Comparisons of our revenues since then are significantly affected by the fact that we only began recognizing product revenues upon delivery using the residual method for transactions in which all other revenue recognition criteria are met, in the three months ended January 31, 2006. As we have not been able to establish VSOE on our prior services and support offerings, all transactions prior to the three months ended January 31, 2006 continue to be recognized ratably over the support period. See “Critical Accounting Policies — Revenue Recognition.”

Our revenue growth has been driven primarily by an expansion of our customer base to more than 2,000 end customers as of October 31, 2006, coupled with increased purchases from existing customers. We believe the market for our products has grown due to the increased demand of business enterprises to provide secure mobility to their users.

We sell our products directly through our sales force and indirectly through VARs, distributors and OEMs. We expect revenues from indirect channels to continue to constitute a substantial majority of our future revenues. Due to higher discounts received in the indirect channel, our overall gross margins on indirect channel transactions are typically lower than those associated with direct transactions.

We sell our products to channel partners and end customers located in the Americas, Europe, the Middle East, Africa and Asia Pacific. Shipments to our channel partners that are located in the United States are classified as U.S. revenue regardless of the location of the end customer. We continue to expand into international locations and introduce our products in new markets, and we expect international revenues to increase in absolute dollars and as a percentage of total revenues in future periods. For more information about our international revenues, see Note 11 of Notes to Consolidated Financial Statements.

In 2005, we began to sell our products to Alcatel-Lucent, one of our OEMs that sells our products under its own brand name. For the year ended July 31, 2006 and the three months ended October 31, 2006, Alcatel-Lucent accounted for 15% and 18% of our revenues, respectively. No other customer accounted for 10% or more of our revenues during these periods.

Cost of Revenues.  Cost of product revenues consists primarily of manufacturing costs for our products, shipping and logistics costs, and expenses for inventory obsolescence and warranty obligations. We utilize third parties to manufacture our products and perform shipping logistics. Cost of professional services and support revenues is primarily comprised of the personnel costs of providing technical support, including personnel costs associated with our internal support organization. In addition, during fiscal 2006, we hired a third-party support vendor to complement our internal support resources, the costs of which are included within costs of professional services and support revenues.

Gross Margin.  Our gross margin has been, and will continue to be, affected by a variety of factors, including:

•  demand for our products and services;

•  new product introductions and enhancements both by us and by our competitors;

•  product mix and average selling prices;

•  the proportion of our products that are sold through direct versus indirect channels;

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•  our ability to attain volume manufacturing pricing from Flextronics and our component suppliers; and

•  growth in our headcount and other related costs incurred in our customer support organization.

Operating Expenses.  Operating expenses consist of research and development, sales and marketing, and general and administrative expenses. The largest component of our operating expenses is personnel costs. Personnel costs consist of salaries, benefits and incentive compensation for our employees, including commissions for sales personnel and stock-based compensation for all employees.

We grew from 117 employees at July 31, 2004 to 171 employees at July 31, 2005, 282 employees at July 31, 2006 and 307 employees at October 31, 2006. We expect to continue to hire a significant number of new employees to support our growth. The timing of these additional hires could materially affect our operating expenses, both in absolute dollars and as a percentage of revenue, in any particular period. Assuming our revenues continue to grow, we expect each of the operating expenses described below will continue to grow in absolute dollars, and each may continue to grow as a percentage of revenues in the near term, as we continue to invest in our sales and marketing and research and development efforts prior to recognizing additional revenues from these investments.

Research and development expenses primarily consist of personnel costs and facilities costs. We expense research and development expenses as incurred. We are devoting substantial resources to the continued development of additional functionality for existing products and the development of new products. We intend to continue to invest significantly in our research and development efforts because we believe they are essential to maintaining our competitive position.

Sales and marketing expenses represent the largest component of our operating expenses and primarily consist of personnel costs, sales commissions, marketing programs and facilities costs. Marketing programs are intended to generate revenue from new and existing customers and are expensed as incurred.

We plan to continue to invest heavily in sales and marketing by increasing the number of sales personnel worldwide with the intent to add new customers and increase penetration within our existing customer base, expand our domestic and international sales and marketing activities, build brand awareness and sponsor additional marketing events. We expect future sales and marketing expenses to continue to be our most significant operating expense. Generally, sales personnel are not immediately productive, and thus, the increase in sales and marketing expenses that we experience as we hire additional sales personnel is not expected to immediately result in increased revenues and reduces our operating margins until such sales personnel become productive and generate revenue. Accordingly, the timing of sales personnel hiring and the rate at which they become productive will affect our future performance.

General and administrative expenses primarily consist of personnel and facilities costs related to our executive, finance, human resource, information technology and legal organizations, and fees for professional services. Professional services consist of outside legal, audit, and Sarbanes-Oxley and information technology consulting costs. We expect that, after this offering, we will incur significant additional accounting and legal costs related to compliance with rules and regulations implemented by the Securities and Exchange Commission, as well as additional insurance, investor relations and other costs associated with being a public company.

Stock-Based Compensation Expense.  Effective August 1, 2006, we began measuring and recognizing compensation expense for all stock-based payments at fair value, in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004) Share Based Payment, or SFAS 123R. On a pro forma basis in fiscal 2006, we recognized $2.6 million in stock-based compensation expense. We expect that the amount of stock-based compensation expense that we will recognize in fiscal 2007 will be greater than the amount of stock-based compensation expense we recognized in fiscal 2006. For the three months ended October 31, 2006, we recognized $1.8 million in stock-based compensation expense compared to $370,000 in stock-based compensation expense on a pro forma basis for the three months ended October 31, 2005.

Other Income (Expense), net.  Other income (expense), net includes interest income on cash balances, interest expense on our outstanding debt and losses or gains on conversion of non-U.S. dollar transactions into U.S. dollars. Cash has historically been invested in money market funds. Beginning in fiscal 2006, other income (expense), net also includes charges to record outstanding preferred stock warrants at fair value.

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Our Relationship with Microsoft

Our strategic relationship with Microsoft began in June 2005, when Microsoft chose our products for a worldwide deployment. As part of the relationship, we have entered into a vendor agreement, a technology collaboration, and a stock issuance agreement with Microsoft. Under the vendor agreement, we have shipped products that Microsoft has installed in various sites in the United States, Asia and Europe. Under the technology collaboration, we support Microsoft’s Network Access Protection (NAP) architecture for enterprise security and provide interoperability with Microsoft products such as the Internet Authentication Server (IAS) and Network Policy Server (NPS). We also collaborate with Microsoft on developing and promoting open industry standards for network security and wireless networking. Under the stock issuance agreement, upon the closing of our initial public offering, we will issue shares of our common stock to Microsoft with a value of $3.5 million, based on the initial public offering price. While our arrangement provides that the shares to be issued are subject to completion of our initial public offering and will vary depending on the per share price of our initial public offering, no cash consideration will be paid by Microsoft for our shares at the time such shares are issued. We have not recognized revenue related to product sales to Microsoft to date. As of November 30, 2006, our sales to Microsoft exceeded $3.5 million. Accordingly, upon completion of this offering, and assuming all other revenue recognition criteria have been met, we will recognize revenues on sales to Microsoft in excess of $3.5 million.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). These accounting principles require us to make estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the periods presented. We believe that the estimates and judgments upon which we rely are reasonable based upon information available to us at the time that these estimates and judgments are made. To the extent there are material differences between these estimates and actual results, our consolidated financial statements will be affected. The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include revenue recognition, stock-based compensation, fair value of warrants to purchase convertible preferred stock, inventory valuation, allowances for doubtful accounts and income taxes.

Revenue Recognition

Our revenues are derived primarily from two sources: (1) product revenue, including hardware and software products, and (2) related professional services and support revenue. Support typically includes software updates, on a when and if available basis, telephone and internet access to technical support personnel and hardware support. Software updates provide customers with rights to unspecified software product upgrades and to maintenance releases and patches released during the term of the support period. Revenues for support services are recognized on a straight-line basis over the service contract term, which is typically between one year and five years.

We account for revenues in accordance with Statement of Position No. 97-2, “Software Revenue Recognition,” and all related amendments and interpretations, or SOP 97-2, because our products are integrated with software that is essential to their functionality and because we provide unspecified software upgrades and enhancements related to the equipment through support agreements.

Typically, our sales involve multiple elements, such as sales of products that include support, training and/or consulting services. When a sale involves multiple elements, we allocate the entire fee from the arrangement to each respective element based on its Vendor Specific Objective Evidence, or VSOE, of fair value and recognize revenue when each element’s revenue recognition criteria are met. VSOE of fair value for each element is established based on the sales price we charge when the same element is sold separately. If VSOE of fair value cannot be established for the undelivered element of an agreement, when the undelivered element is support, the entire amount of revenue from the arrangement is deferred and recognized ratably over the period that the support is delivered. Prior to the second quarter of fiscal 2006, we had not been able to establish VSOE of fair value in accordance with SOP 97-2 at the outset of our arrangements. Accordingly, we recognized revenue on our transactions prior to the second quarter of fiscal 2006 ratably over the support period, as the only undelivered element was typically support.

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Beginning in the second quarter of fiscal 2006, we were able to establish VSOE of fair value at the outset of our arrangements as we established a new support and services pricing policy, with different services and support offerings than were previously sold. We also began selling support services separately from our arrangements in the form of support renewals. Accordingly, beginning in the second quarter of fiscal 2006, we began recognizing product revenues upon delivery using the residual method, for transactions where all other revenue recognition criteria were met. As we had not been able to establish VSOE on our prior services and support offerings, all transactions prior to the second quarter of fiscal 2006 continue to be recognized ratably over the support period.

We recognize revenue only when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectibility is probable. We evaluate each of these criteria as follows:

•  Evidence of an arrangement — Contracts and/or customer purchase orders are used to determine the existence of an arrangement.

•  Delivery — Delivery is considered to occur when the ordered equipment and the media containing the licensed programs are provided to a common carrier and title has transferred or, in the case of electronic delivery of the licensed programs, the customer is given access to download the programs. We recognize revenue from indirect sales channels upon persuasive evidence provided by our indirect channel customers of a sale to the end customer.

•  Fixed or determinable fee — We assess whether fees are fixed or determinable at the time of sale. We only consider the fee to be fixed or determinable if the fee is not subject to refund or adjustment. Our standard payment terms may vary based on the country in which the agreement is executed and the credit standing of the individual customer, among other factors. If the arrangement fee is not fixed or determinable, revenue is recognized as amounts become due and payable. In instances where final acceptance of the product, system, or solution is specified by the customer, revenue is deferred until all acceptance criteria have been met.

•  Collection is deemed probable — Collection is deemed probable if we expect that the customer will be able to pay amounts under the arrangement as payments become due. If we determine that collection is not probable, we defer the revenue and recognize the revenue upon cash collection.

Shipping charges billed to customers are included in product revenues and the related shipping costs are included in cost of product revenues.

Stock-Based Compensation

Prior to August 1, 2006, we accounted for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, or APB 25, Financial Accounting Standards Board’s Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation, an Interpretation of APB Opinion No. 25, or FIN 44, and FIN 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans, and had adopted the disclosure provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, or SFAS 123, and SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure, or SFAS 148.

In accordance with APB 25, stock-based compensation expense resulted from stock options that were granted with exercise prices that, for financial reporting purposes, were deemed to be below the estimated fair market value of the underlying common stock on the date of grant. During fiscal 2004, 2005 and 2006, we estimated the fair market value of our common stock based upon several factors, including progress and milestones attained in our business and subsequent rounds of financing. During these periods, we granted options to employees to purchase a total of 7,837,912, 3,471,250, and 3,441,000 shares of common stock, respectively, at exercise prices ranging from $0.12 to $1.50 per share. Prior to February 2006, we did not obtain contemporaneous valuations from an unrelated valuation specialist. During fiscal 2006, we reassessed the value of our common stock for financial reporting purposes and performed detailed analyses for fiscal 2004, 2005 and 2006 based upon the factors described above, together with discounted cash flows analyses. These internal valuations resulted in reassessed common stock valuations for financial reporting purposes between $0.14 and $1.70 per share. See Note 10 of Notes to Consolidated Financial Statements.

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As a result of the reassessed fair market value of options granted, and in accordance with the requirements of APB No. 25, we recorded deferred stock-based compensation expense for the difference between the options’ exercise price and the deemed fair market value of our stock at the date of grant. We are amortizing this deferred stock-based compensation expense on a straight-line basis over the period during which the options vest, which is generally four years. During fiscal 2004, 2005 and 2006, we recorded deferred stock-based compensation expense related to these options of $1.5 million, $1.9 million and $804,000, respectively, of which $175,000, $635,000 and $1.0 million, respectively, was expensed in each of these periods.

Had the expenses for our stock-based compensation plans been determined based on the fair value of the options at the grant date of the awards consistent with the provisions of SFAS 123, our net loss would have been increased to the pro forma amounts indicated below:

										Three Months
										Ended
	Years Ended July 31,									October 31,
	2004			2005			2006			2005
	(In thousands, except per share data)
Net loss, as reported	$	(22,502	)	$	(32,635	)	$	(12,009	)	$	(8,533	)
Add: Employee stock-based compensation expense included in reported net loss		176			644			1,028			232
Less: Total employee stock-based compensation expense determined under the fair value method		(337	)		(984	)		(2,642	)		(370	)
Pro forma, net loss	$	(22,663	)	$	(32,975	)	$	(13,623	)	$	(8,671	)
Basic and diluted net loss per share
As reported	$	(6.35	)	$	(4.66	)	$	(1.07	)	$	(0.88	)
Pro forma	$	(6.39	)	$	(4.71	)	$	(1.22	)	$	(0.90	)

Effective August 1, 2006, we adopted SFAS No. 123R, Share-Based Payment, or SFAS 123R, using the modified prospective transition method, which requires the measurement and recognition of compensation expense beginning August 1, 2006 for all share-based payment awards made to employees and directors based on estimated fair values. Under SFAS 123R, we estimate the fair value of stock options granted using the Black-Scholes option-pricing model and a single option award approach. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. This model also utilizes the estimated fair value of our common stock and requires that, at the date of grant, we use the expected term of the stock-based award, the expected volatility of the price of our common stock over the expected term, risk free interest rates and expected dividend yield of our common stock to determine the estimated fair value. We determined the amount of stock-based compensation expense in the three months ended October 31, 2006, based on awards that we ultimately expected to vest, reduced for estimated forfeitures. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation expense includes awards granted prior to, but not yet vested as of July 31, 2006, based on the grant date fair value estimated in accordance with the pro forma provisions of SFAS 123 and compensation expense for awards granted subsequent to July 31, 2006 based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. For purposes of SFAS 123R, employee stock based compensation related to both unvested awards granted prior to August 1, 2006 and awards granted on or after August 1, 2006 are being amortized on a straight-line basis, which is consistent with the methodology used historically for pro forma purposes under SFAS 123.

The expected term of the stock-based award represents the period of time that we expect such stock-based award to be outstanding, giving consideration to the contractual terms of the award, vesting schedules and expectations of future employee behavior. For the three months ended October 31, 2006, we gave consideration to our historical exercises, the vesting term of our options, the post vesting cancellation history of our options and the options’ contractual term of 10 years. Given our limited operating history, we then compared this estimated term to those of comparable companies from a representative peer group selected based on industry data to determine the expected term. The computation of expected volatility for the three months ended October 31, 2006 was based on the historical volatility of comparable companies from a representative peer group that we selected based on

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industry data. As required by SFAS 123R, management made an estimate of expected forfeitures, and we are recognizing stock-based compensation only for those equity awards that we expect to vest. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury Constant Maturity rate as of the date of grant.

The assumptions used to value options granted during the three months ended October 31, 2006 for purposes of determining fair value under SFAS 123R were as follows:

	October 31,
	2006
Assumptions
Risk-free interest rates		4.74	%
Expected term (in years)		4.3
Dividend yield		0	%
Volatility		56	%

The weighted average fair value of options granted during fiscal 2004, 2005 and 2006 and the three months ended October 31, 2005 was $0.30, $0.80, $1.20 and $1.01, respectively. The fair value of each option grant was estimated on the date of grant using the Black-Scholes model with the following average assumptions used to determine the fair value of awards under SFAS 123 for the periods presented:

	July 31,									October 31,
	2004			2005			2006			2005
Assumptions
Risk-free interest rates		2.94	%		3.56	%		4.58	%		4.13	%
Expected term (in years)		4.0			4.0			4.0			4.0
Dividend yield		0	%		0	%		0	%		0	%
Volatility		100	%		100	%		70	%		100	%

Total stock-based compensation in the three months ended October 31, 2006 was $1.8 million. As a result of adopting SFAS 123R on August 1, 2006, during the three months ended October 31, 2006, our net loss was $930,000 greater than if we had continued to account for stock-based compensation under APB 25, and our basic and diluted net loss per share for the three months ended October 31, 2006 was higher by $0.07. At October 31, 2006, we had $15.4 million of total unrecognized compensation expense under SFAS 123R, net of estimated forfeitures, related to outstanding awards that we will recognize over a weighted average period of 3.3 years.

In the first quarter of fiscal 2007, we accelerated the vesting of 231,417 unvested shares underlying certain outstanding options held by two former employees. As a result of the modification to the terms of their stock awards, we recognized additional compensation expense of $519,000 for the three months ended October 31, 2006.

We account for equity instruments issued in exchange for the receipt of goods or services from non-employees in accordance with the consensus reached by the EITF in Issue No. 96-18, Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. Costs are measured at the fair market value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of the date on which there first exists a firm commitment for performance by the provider of goods or services or on the date performance is complete, using the Black-Scholes model.

Fair Value of Warrants to Purchase Convertible Preferred Stock

On June 29, 2005, the FASB issued Staff Position 150-5, Issuer’s Accounting under FASB Statement No. 150 for Freestanding Warrants and Other Similar Instruments on Shares That Are Redeemable, or FSP 150-5. FSP 150-5 requires us to classify our outstanding preferred stock warrants as liabilities on our balance sheet and record adjustments to the value of our preferred stock warrants in our statement of operations to reflect their fair value at each reporting period. We previously accounted for such warrants in accordance with EITF Issue No. 96-18,

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Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Good or Services, or EITF 96-18.

We adopted FSP 150-5 in the first quarter of fiscal 2006 and accounted for the cumulative effect of the change in accounting principle as of August 1, 2005. The impact of the change in accounting principle was to record a cumulative gain of $66,000, or $0.01 per share, as of August 1, 2005. In fiscal 2006, we recorded $667,000 of additional expense as other expense, net to reflect the increase in fair value of our preferred stock warrants between August 1, 2005 and July 31, 2006. In the three months ended October 31, 2006, we recorded an additional $784,000 of expense as other expense, net to reflect the further increase in fair value of these warrants between August 1, 2006 and October 31, 2006.

Upon the closing of this offering, these warrants will convert into warrants to purchase shares of our common stock and, as a result, will no longer be subject to FSP 150-5. At that time, the then-current aggregate fair value of these warrants will be reclassified from current liabilities to additional paid-in capital, a component of stockholders’ deficit, and we will cease to record any related periodic fair value adjustments.

Inventory Valuation

Inventory consists of hardware and related component parts and is stated at the lower of cost or market. Cost is computed using the standard cost, which approximates actual cost, on a first-in, first-out basis. We record inventory write-downs for potentially excess inventory based on forecasted demand, economic trends and technological obsolescence of our products. If future demand or market conditions are less favorable than our projections, additional inventory write-downs could be required and would be reflected in cost of product revenues in the period the revision is made. At the point of the loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Inventory write-downs amounted to approximately $552,000, $1.2 million and $939,000 in fiscal 2004, 2005 and 2006, respectively, and $248,000 and $338,000 for the three months ended October 31, 2005 and 2006, respectively.

Allowances for Doubtful Accounts

We record a provision for doubtful accounts based on historical experience and a detailed assessment of the collectibility of our accounts receivable. In estimating the allowance for doubtful accounts, our management considers, among other factors, (1) the aging of the accounts receivable, including trends within and ratios involving the age of the accounts receivable, (2) our historical write-offs, (3) the credit-worthiness of each customer, (4) the economic conditions of the customer’s industry, and (5) general economic conditions. In cases where we are aware of circumstances that may impair a specific customer’s ability to meet their financial obligations to us, we record a specific allowance against amounts due from the customer, and thereby reduce the net recognized receivable to the amount we reasonably believe will be collected. The allowance for doubtful accounts was $164,000 and $352,000 at July 31, 2005 and 2006, respectively, and $365,000 at October 31, 2006.

Income Taxes

We use the asset and liability method of accounting for income taxes in accordance with FASB Statement No. 109, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for deductible temporary differences, along with net operating loss carryforwards, if it is more likely than not that the tax benefits will be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. To the extent a deferred tax asset cannot be recognized under the preceding criteria, a valuation allowance is established.

Based on the available objective evidence, including the fact that we have generated losses since inception, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, management has applied a full valuation allowance against our deferred tax assets as of the fiscal years ended July 31, 2005 and 2006 and as of October 31, 2006.

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Results of Operations

The following table presents our historical operating results as a percentage of revenues for the periods indicated:

										Three Months Ended
	Years Ended July 31,									October 31,			July 31,			October 31,
	2004			2005			2006			2005			2006			2006
Revenues:
Product		—	%		—	%		59.6	%		—	%		70.4	%		78.0	%
Professional services and support		—			—			4.1			—			6.6			8.6
Ratable product and related professional services and support		100.0			100.0			36.3			100.0			23.0			13.4
Cost of revenues:
Product		—			—			23.3			—			27.1			29.8
Professional services and support		—			—			3.3			—			3.4			4.8
Ratable product and related professional services and support		235.2			75.4			14.6			56.0			8.0			4.9
Gross margin		(135.2	)		24.6			58.8			44.0			61.5			60.5
Operating expenses:
Research and development		609.1			77.7			19.5			48.3			15.7			20.8
Sales and marketing		983.8			185.7			46.6			105.5			42.6			44.1
General and administrative		220.9			29.7			8.2			16.5			8.1			10.7
Operating margin		(1,949.0	)		(268.5	)		(15.5	)		(126.3	)		(4.9	)		(15.1	)
Other income (expense), net		(11.2	)		(1.2	)		(0.7	)		(0.6	)		(0.1	)		(2.9	)
Loss before income taxes and cumulative effect of change in accounting principle		(1,960.2	)		(269.7	)		(16.2	)		(126.9	)		(5.0	)		(18.0	)
Income taxes		2.9			1.3			0.4			—			1.0			0.4
Loss before cumulative effect of change in accounting principle		(1,963.1	)		(271.0	)		(16.6	)		(126.9	)		(6.0	)		(18.4	)
Cumulative effect of change in accounting principle		—			—			0.1			1.0			—			—
Net loss		(1,963.1	)%		(271.0	)%		(16.5	)%		(125.9	)%		(6.0	)%		(18.4	)%

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Revenues

The following table presents our revenues, by revenue source, for the periods presented:

	Years Ended						Three Months Ended
	July 31,		July 31,		July 31,		October 31,		July 31,		October 31,
	2004		2005		2006		2005		2006		2006
	(In thousands)
Total revenues	$	1,147	$	12,043	$	72,503	$	6,775	$	23,898	$	24,505
Type of revenues:
Product		—		—		43,171		—		16,819		19,106
Professional services and support revenues		—		—		2,985		—		1,576		2,121
Ratable product and related professional services and support		1,147		12,043		26,347		6,775		5,503		3,278
Revenues by geography:
United States		803		8,791		53,132		4,946		17,814		16,794
Europe, the Middle East and Africa		138		1,325		7,711		677		2,747		3,300
Asia Pacific		195		1,566		7,232		881		1,915		2,304
Rest of World		11		361		4,428		271		1,422		2,107

Prior to the second quarter of fiscal 2006, we recognized revenue from sales of our products ratably over the term of the support contract with each customer, which is typically one to five years. Beginning in the second quarter of fiscal 2006, when we were able to establish VSOE of fair value, we began recognizing revenue upon shipment of our products, for transactions where all other criteria for revenue recognition were satisfied. Professional services and support revenues are recognized ratably over the contractual period, which is typically one to five years. Because of the change in the timing of our revenue recognition in the second quarter of fiscal 2006, comparisons of the absolute dollar growth in our revenues on a year-over-year basis are not meaningful.

Three Months Ended October 31, 2006 Compared to the Three Months Ended July 31, 2006

In the three months ended October 31, 2006, total revenues increased 3% over the three months ended July 31, 2006 due primarily to an increase in new customers and additional purchases by existing customers, partially offset by a $2.2 million decrease in ratable product and related professional services and support revenues. In the three months ended October 31, 2006, product revenues increased by 14% over the three months ended July 31, 2006 and professional services and support revenues increased by 35% over the three months ended July 31, 2006.

The decrease in ratable product and related professional services and support revenues in the three months ended October 31, 2006 compared to the three months ended July 31, 2006 was due to the run-off in the amortization of deferred revenue associated with those customer contracts that we entered into prior to our establishment of VSOE of fair value. We expect ratable product and related professional services and support revenues to continue to decrease in absolute dollars and as a percentage of total revenues in future periods. At October 31, 2006, we had $9.3 million in deferred revenue associated with ratable product and professional services and support revenues, of which $3.5 million will be amortized to revenue over the remainder of fiscal 2007.

In the three months ended October 31, 2005, July 31, 2006 and October 31, 2006, we derived a substantial majority of our revenues from indirect channels. We expect to continue to derive a significant majority of our product revenues from indirect channels as a result of our focus on expanding our indirect channel sales.

We generated 31% of our revenues in the three months ended October 31, 2006 from shipments to locations outside the United States, compared to 25% and 27% in the three months ended July 31, 2006 and October 31, 2005, respectively. We continue to expand into international locations and introduce our products in new markets, and we expect international revenues to increase in absolute dollars and as a percentage of total revenues in future periods.

Substantially all of our customers purchase support when they purchase our products. The increase in professional services and support revenues is a result of increased product and first year support sales combined

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with the renewal of support contracts by existing customers. As our customer base grows, we expect the proportion of our revenues represented by support revenues to increase.

Fiscal 2006 Compared to Fiscal 2005 and Fiscal 2004

Total revenues increased in fiscal 2006 over fiscal 2005 due to an increase in new customers, both domestically and internationally, and additional purchases by existing customers. The fact that we began to use the residual method to recognize revenues beginning in the second quarter of fiscal 2006 makes comparisons between these periods not meaningful on an absolute dollar basis.

We generated 27% of our revenues in fiscal 2006 from shipments to locations outside the United States, compared to 27% and 30% in fiscal 2005 and 2004, respectively.

As a percentage of total revenues, professional services and support revenues decreased in fiscal 2006, compared to fiscal 2005 and 2004 due to the fact that we began to recognize product revenues upon shipment in the second quarter of fiscal 2006, which resulted in a substantial increase in product revenue.

The increase in ratable product and related professional services and support revenue in fiscal 2006, compared with fiscal 2005 and fiscal 2004 was primarily due to an increase in new customers and additional purchases from existing customers.

Cost of Revenues and Gross Margin

The following table presents our revenues and cost of revenues, by revenue source, for the periods presented:

	Years Ended									Three Months Ended
	July 31,			July 31,			July 31,			October 31,			July 31,			October 31,
	2004			2005			2006			2005			2006			2006
	(Dollars in thousands)
Total revenues	$	1,147		$	12,043		$	72,503		$	6,775		$	23,898		$	24,505
Cost of product		—			—			16,904			—			6,476			7,301
Cost of professional services and support		—			—			2,409			—			825			1,174
Cost of ratable product and related professional services and support		2,696			9,077			10,572			3,794			1,904			1,186
Total cost of revenues		2,696			9,077			29,885			3,794			9,205			9,661
Gross profit (loss)	$	(1,549	)	$	2,966		$	42,618		$	2,981		$	14,693		$	14,844
Gross margin		(135.2	)%		24.6	%		58.8	%		44.0	%		61.5	%		60.5	%

Three Months Ended October 31, 2006 Compared to the Three Months Ended July 31, 2006 and the Three Months Ended October 31, 2005

The increase in cost of product revenues in the three months ended October 31, 2006, compared to the three months ended July 31, 2006, was primarily due to increased shipments of our products to customers. Cost of professional services and support revenues increased during this period as we added more technical support headcount domestically and abroad to support our growing customer base. Cost of ratable product and related support and services decreased during this period consistent with the decrease in ratable product and related professional services and support revenues.

As we expand internationally, we may incur additional costs to conform our products to comply with local laws or local product specifications. In addition, as we expand internationally, we will continue to hire additional technical support personnel to support our growing international customer base.

Gross margins remained relatively consistent in the three months ended October 31, 2006 compared to the three months ended July 31, 2006 and increased over the three months ended October 31, 2005, due to the large increase in our revenues, which grew at a higher rate than the associated costs primarily as a result of economic efficiencies we were able to gain with Flextronics, our contract manufacturer.

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Fiscal 2006 Compared to Fiscal 2005 and Fiscal 2004

The increase in total cost of revenues in fiscal 2006 compared to fiscal 2005 and fiscal 2004 was due largely to increased shipments of our products to customers. Gross margin increased in fiscal 2006 compared to fiscal 2005 and fiscal 2004, due to the significant increase in our revenues, which grew at a higher rate than the associated costs. We do not expect gross margin to continue to increase at the same rate it increased from fiscal 2005 to fiscal 2006 because we expect the opportunities to gain economic efficiencies with Flextronics will be less.

Research and Development Expenses

	Years Ended									Three Months Ended
	July 31,			July 31,			July 31,			October 31,			July 31,			October 31,
	2004			2005			2006			2005			2006			2006
	(Dollars in thousands)
Research and development expenses	$	6,982		$	9,353		$	14,130		$	3,273		$	3,753		$	5,091
Percent of total revenue		609.1	%		77.7	%		19.5	%		48.3	%		15.7	%		20.8	%

Three Months Ended October 31, 2006 Compared to the Three Months ended July 31, 2006 and the Three Months Ended October 31, 2005

In the three months ended October 31, 2006, research and development expenses increased 36% over the three months ended July 31, 2006 and 56% over the three months ended October 31, 2005, primarily due to an increase in personnel and related costs as a result of increased research and development headcount, stock based compensation related to FAS 123R and purchases of design equipment and services. In the three months ended October 31, 2006, the personnel and related costs accounted for $3.4 million, compared to $2.7 million and $2.0 million in the three months ended July 31, 2006 and the three months ended October 31, 2005, respectively.

Fiscal 2006 Compared to Fiscal 2005 and Fiscal 2004

In fiscal 2006, research and development expenses increased 51% over fiscal 2005 and 102% over fiscal 2004, primarily due to an increase in personnel and related costs as a result of increased research and development headcount and, to a lesser extent, purchases of design equipment and services. Personnel and related costs were $9.3 million in fiscal 2006, $6.0 million in fiscal 2005 and $4.4 million in fiscal 2004.

Sales and Marketing Expenses

	Years Ended									Three Months Ended
	July 31,			July 31,			July 31,			October 31,			July 31,			October 31,
	2004			2005			2006			2005			2006			2006
	(Dollars in thousands)
Sales and marketing expenses	$	11,277		$	22,369		$	33,765		$	7,149		$	10,180		$	10,808
Percent of total revenue		983.8	%		185.7	%		46.6	%		105.5	%		42.6	%		44.1	%

Three Months Ended October 31, 2006 Compared to Three Months ended July 31, 2006 and Three Months Ended October 31, 2005

In the three months ended October 31, 2006, sales and marketing expenses increased 6% over the three months ended July 31, 2006, primarily due to an increase of $732,000 in stock based compensation as a result of our adoption of FAS 123R on August 1, 2006. Compared to the three months ended October 31, 2005, sales and marketing expenses increased 51% primarily due to an increase of $2.2 million in personnel costs and sales commissions as a result of increased headcount and $733,000 in stock based compensation related to the adoption of FAS 123R.

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Fiscal 2006 Compared to Fiscal 2005 and Fiscal 2004

In fiscal 2006, sales and marketing expenses increased 51% over fiscal 2005 and 199% over fiscal 2004, primarily due to an increase in personnel and related costs as a result of increased headcount. Personnel and related costs were $22.0 million in fiscal 2006, $13.7 million in fiscal 2005 and $6.5 million in fiscal 2004.

General and Administrative Expenses

	Years Ended									Three Months Ended
	July 31,			July 31,			July 31,			October 31,			July 31,			October 31,
	2004			2005			2006			2005			2006			2006
	(Dollars in thousands)
General and administrative expenses	$	2,531		$	3,576		$	5,963		$	1,116		$	1,934		$	2,613
Percent of total revenue		220.9	%		29.7	%		8.2	%		16.5	%		8.1	%		10.7	%

Three Months Ended October 31, 2006 Compared to Three Months ended July 31, 2006 and Three Months Ended October 31, 2005

In the three months ended October 31, 2006, general and administrative expenses increased 35% over the three months ended July 31, 2006, primarily due to an increase of $604,000 in stock based compensation as a result of our adoption of FAS 123R on August 1, 2006. Compared to the three months ended October 31, 2005, general and administrative expenses increased 134% primarily due to an increase of $605,000 in stock based compensation.

Fiscal 2006 Compared to Fiscal 2005 and Fiscal 2004

In fiscal 2006, general and administrative expenses increased 67% over fiscal 2005 and 136% over fiscal 2004, primarily due to an increase in personnel and related costs as a result of increased headcount and professional services fees associated with legal and audit services and Sarbanes-Oxley consulting expenses. Personnel and related costs were $3.2 million in fiscal 2006, $1.9 million in fiscal 2005 and $1.4 million in fiscal 2004.

Other Income (Expense), Net

Other income (expense), net consists primarily of interest income, interest expense, including warrants issued in connection with equipment loans, and foreign currency exchange gains (losses).

	Years Ended									Three Months Ended
	July 31,			July 31,			July 31,			October 31,			July 31,			October 31,
	2004			2005			2006			2005			2006			2006
	(Dollars in thousands)
Interest income	$	158		$	350		$	551		$	121		$	100		$	112
Interest expense		(285	)		(443	)		(315	)		(93	)		(61	)		(35	)
Other		(2	)		(54	)		(765	)		(70	)		(92	)		(831	)
Total other income (expense), net	$	(129	)	$	(147	)	$	(529	)	$	(42	)	$	(53	)	$	(754	)

Three Months Ended October 31, 2006 Compared to Three Months ended July 31, 2006 and Three Months Ended October 31, 2005

Other expense, net increased in the three months ended October 31, 2006 compared to the three months ended July 31, 2006 and October 31, 2005, primarily due to increased expense resulting from our adoption of FSP 150-5 which required us to classify our preferred stock warrants as liabilities and adjust the carrying value to fair value each period. Other expense, net also increased in the three months ended July 31, 2006 compared to the three months ended October 31, 2005 as a result of this charge.

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Fiscal 2006 Compared to Fiscal 2005 and Fiscal 2004

Other expense, net increased in fiscal 2006 compared to fiscal 2005 and fiscal 2004, primarily as a result of the $667,000 in expense we recognized as a result of our adoption of FSP 150-5 in fiscal 2006, partially offset by an increase in interest income due to rising average cash balances and a decrease in interest expense. Interest income increased in fiscal 2006 as we received net proceeds of $19.2 million as a deposit for the issuance of 2,953,571 shares of Series D redeemable convertible preferred stock. Interest expense decreased $128,000 in 2006 from 2005 due to the decline in the outstanding balance of our equipment loans.

Provision for Income Taxes

Since inception, we have incurred operating losses, and, accordingly, we have not recorded a provision for income taxes for any of the periods presented other than foreign provisions for income tax. As of July 31, 2006, we had net operating loss carryforwards of $55.4 million and $50.3 million for federal and state income tax purposes. We also had federal research and development tax credit carryforwards of approximately $1.5 million and state research and development tax credit carryforwards of approximately $1.1 million. Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. If not utilized, the federal and state net operating loss and tax credit carryforwards will expire between 2013 and 2022. Utilization of these net operating losses and credit carryforwards may be subject to an annual limitation due to provisions of the Internal Revenue Code of 1986, as amended, that are applicable if we have experienced an “ownership change” in the past, or if an ownership change occurs in the future, for example, as a result of this offering aggregated with certain other sales of our stock before or after this offering. See Note 7 of Notes to Consolidated Financial Statements.

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Quarterly Results of Operations

The following table sets forth our unaudited quarterly consolidated statement of operations data for each of the five quarters ended October 31, 2006. In management’s opinion, the data has been prepared on the same basis as the audited consolidated financial statements included in this prospectus, and reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of this data. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.

	Three Months Ended
	October 31,			January 31,			April 30,			July 31,			October 31,
(in thousands, except per share data)	2005			2006			2006			2006			2006
Revenues
Product	$	—		$	13,044		$	13,308		$	16,819		$	19,106
Professional services and support		—			440			969			1,576			2,121
Ratable product and related professional services and support		6,775			7,396			6,673			5,503			3,278
Total revenues		6,775			20,880			20,950			23,898			24,505
Cost of revenues
Product		—			5,150			5,278			6,476			7,301
Professional services and support		—			805			779			825			1,174
Ratable product and related professional services and support		3,794			2,586			2,288			1,904			1,186
Total cost of revenues		3,794			8,541			8,345			9,205			9,661
Gross profit		2,981			12,339			12,605			14,693			14,844
Operating expenses
Research and development		3,273			3,344			3,760			3,753			5,091
Sales and marketing		7,149			7,772			8,664			10,180			10,808
General and administrative		1,116			1,274			1,639			1,934			2,613
Total operating expenses		11,538			12,390			14,063			15,867			18,512
Operating loss		(8,557	)		(51	)		(1,458	)		(1,174	)		(3,668	)
Other income (expense), net		(42	)		(449	)		15			(53	)		(754	)
Loss before provision for income taxes and cumulative effect of change in accounting principle		(8,599	)		(500	)		(1,443	)		(1,227	)		(4,422	)
Provision for income taxes		—			6			82			218			88
Loss before cumulative effect of change in accounting principle		(8,599	)		(506	)		(1,525	)		(1,445	)		(4,510	)
Cumulative effect of change in accounting principle		66			—			—			—			—
Net loss		(8,533	)		(506	)		(1,525	)		(1,445	)		(4,510	)
Net loss per common share, basic and diluted	$	(0.88	)	$	(0.05	)	$	(0.13	)	$	(0.11	)	$	(0.34	)

Our operating results may fluctuate due to a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future performance.

Our revenues have increased sequentially in each of the quarters presented, due to increases in the number of products sold to new and existing customers, international expansion, and, beginning in the second quarter of fiscal 2006, the recognition of product revenue upon shipment due to the establishment of VSOE of fair value of undelivered products in our arrangements. This increase was offset by the quarterly decrease in the amortization of deferred revenue associated with those customer contracts that we entered into prior to establishment of VSOE of fair value.

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Prior to the second quarter of fiscal 2006, we recognized product revenue ratably over the term of the support period, of one to five years. Subsequent to the second quarter of fiscal 2006, the dollar value of revenue and percentage of total revenue derived from such arrangements that are recognized ratably has decreased, and we expect it will continue to decrease each quarter until the related support periods have ended.

Operating expenses in all quarters increased sequentially as we continued to add headcount and related costs to accommodate the growing business on a quarterly basis.

In the first quarter of fiscal 2006, we adopted FSP 150-5, which subjects warrants to the requirements in Statement 150, regardless of the timing of the redemption feature or the redemption price and requires us to classify the warrants on our preferred stock as liabilities and adjust our warrant instruments to fair value at each reporting period. We recorded a $66,000 cumulative gain on adoption as of August 1, 2005, reflecting the fair value of the warrants as of that date, and $67,000, $516,000, $22,000, $62,000 and $784,000 of expense was recorded in other income (expense), net in the quarters ended October 31, 2005, January 31, 2006, April 30, 2006, July 31, 2006 and October 31, 2006, to reflect the increase in fair value of the warrants.

Liquidity and Capital Resources

	As of July 31,						As of October 31,
	2005			2006			2006
	(In thousands)
Working capital (deficit)		$(285	)	$	(9,104	)	$	(11,129	)
Cash and cash equivalents		4,293			9,263			17,908
Short term investments		899			—			—

	Years Ended									Three Months Ended
	July 31,			July 31,			July 31,			October 31,			July 31,			October 31,
	2004			2005			2006			2005			2006			2006
	(In thousands)
Cash used in operating activities	$	(20,316	)	$	(22,567	)	$	(14,288	)	$	(3,710	)	$	(3,679	)	$	(2,296	)
Cash provided by (used in) investing activities		(2,256	)		(1,194	)		(1,192	)		70			(403	)		(650	)
Cash provided by financing activities		49,038			674			20,447			19,567			329			11,590

Since our inception in February 2002, we have funded our operations primarily with proceeds from issuances of, and deposits received for, redeemable convertible preferred stock, which provided us with aggregate net proceeds of $87.8 million. We have also funded purchases of equipment with various equipment loans.

In March 2003, we entered into an equipment loan and security agreement with a financial institution for borrowings up to $1.8 million. The agreement requires three consecutive interest-only payments, followed by 36 equal monthly payments through December 2006 of principal plus interest. We are also required to pay an additional payment in the amount of 12.5% of the draw-down amount at the end of the term.

In July 2003, we entered into another equipment loan and security agreement with a financial institution for borrowings up to $2.0 million. The agreement requires 39 equal monthly payments through July 2007 of principal plus interest.

Most of our sales contracts are denominated in United States dollars and as such, the increase in our revenues derived from international customers has not affected our cash flows from operations. As we fund our international operations, our cash and cash equivalents are affected by changes in exchange rates. To date, the foreign currency effect on our cash and cash equivalents has been immaterial.

Cash Flows from Operating Activities

We have experienced negative cash flows from operations as we continue to expand our business and build our infrastructure domestically and internationally. Our cash flows from operating activities will continue to be affected

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principally by our working capital requirements and the extent to which we increase spending on personnel as our business grows. The timing of hiring sales personnel in particular affects cash flows as there is a lag between the hiring of sales personnel and the generation of revenue and cash flows from sales personnel. To a lesser extent, the start up costs associated with international expansion have also negatively affected our cash flows from operations. Our largest source of operating cash flows is cash collections from our customers. Our primary uses of cash from operating activities are for personnel related expenditures, purchases of inventory, rent payments and technology costs.

Cash used in operating activities decreased in the three months ended October 31, 2006 compared to the three months ended October 31, 2005 due to higher gross margins, which resulted from increased revenues and economic efficiencies we were able to gain through our contract manufacturing relationship with Flextronics.

Cash used in operating activities decreased in fiscal 2006 compared to fiscal 2005 mainly due to higher gross margins, which resulted from economic efficiencies we were able to gain through our contract manufacturing relationship with Flextronics.

Cash used in operating activities increased in fiscal 2005 from fiscal 2004. In fiscal 2004 we were a development stage company and did not have significant operating activities.

Cash Flows from Investing Activities

Cash used in investing activities increased in the three months ended October 31, 2006, compared to the three months ended October 31, 2005 due to increased capital expenditures. Capital expenditures in the three months ended October 31, 2006 primarily related to leasehold improvements for newly leased space for our headquarters, increased research and development lab equipment expenditures and increased computer equipment for new employees.

Cash used in investing activities was relatively consistent in fiscal 2006 compared to fiscal 2005 and decreased from fiscal 2004 due to a decrease in purchases of short term investments, partially offset by an increase in capital expenditures from fiscal 2004 levels to support our growth.

Cash Flows from Financing Activities

We have financed our operations primarily with net proceeds from private sales of, and deposits received for, redeemable convertible preferred stock totaling $87.8 million through October 31, 2006, including deposits of $10.6 million for the purchase of 1,619,725 shares of our Series D redeemable convertible preferred stock received during the three months ended October 31, 2006, and the use of our equipment loans under which we have borrowed an aggregate of $3.7 million as of October 31, 2006.

Cash provided by financing activities was higher in fiscal 2006 compared to fiscal 2005 due to the deposit received for 2,953,571 shares of our Series D redeemable convertible preferred stock in September 2005 for net proceeds of $19.2 million.

In fiscal 2004, we sold 18,333,333 shares of our Series B redeemable convertible preferred stock for net proceeds of $22.0 million, and we sold 11,701,135 shares of our Series C redeemable convertible preferred stock for net proceeds of $24.9 million.

We believe that the net proceeds from this offering, together with our existing cash balances, will be sufficient to fund our projected operating requirements for the foreseeable future. However, we may need to raise additional capital or incur additional indebtedness to continue to fund our operations in the future. Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of expansion into new territories, the timing of introductions of new products and enhancements to existing products, and the continuing market acceptance of our products. Although we currently are not a party to any agreement or letter of intent with respect to potential investments in, or acquisitions of, complementary businesses, services or technologies, we may enter into these types of arrangements in the future, which could also require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

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Contractual Obligations

The following is a summary of our contractual obligations as of July 31, 2006:

	Year Ending July 31,
													More
													Than
	Total		2007		2008		2009		2010		2011		5 Years
	(In thousands)
Balance Sheet Contractual Obligations
Principal payments on equipment loans	$	613	$	613	$	—	$	—	$	—	$	—	$	—
Other Contractual Obligations
Operating leases		1,729		677		312		255		264		209		12
Non-cancellable inventory purchase commitments(1)		4,567		4,567		—		—		—		—		—
Total contractual obligations	$	6,909	$	5,857	$	312	$	255	$	264	$	209	$	12

(1) We outsource the production of our hardware to third-party manufacturing suppliers. We enter into various inventory related purchase agreements with these suppliers. Generally, under these agreements, 40% of the orders are cancelable by giving notice 60 days prior to the expected shipment date, and 20% of orders are cancelable by giving notice 30 days prior to the expected shipment date. Orders are not cancelable within 30 days prior to the expected shipment date. We had $6.1 million in noncancelable purchase commitments with suppliers as of October 31, 2006.

Off-Balance Sheet Arrangements

At October 31, 2006 and July 31, 2006, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Recent Accounting Pronouncements

See Note 1 of Notes to Consolidated Financial Statements for recent accounting pronouncements that could have an effect on us.

Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Risk

Most of our sales contracts are denominated in United States dollars, and therefore, our revenue is not subject to foreign currency risk. Our operating expenses and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the British pound, Euro and Japanese Yen. To date, we have not entered into any hedging contracts because expenses in foreign currencies have been insignificant to date, and exchange rate fluctuations have had little impact on our operating results and cash flows.

Interest Rate Sensitivity

We had unrestricted cash and cash equivalents totaling $17.9 million, $9.3 million and $4.3 million at October 31, 2006, July 31, 2006 and July 31, 2005. These amounts were invested primarily in money market funds. The unrestricted cash and cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes. We believe that we do not have any material exposure to changes in the fair value as a result of changes in interest rates due to the short term nature of our cash equivalents. Declines in interest rates, however, would reduce future investment income.

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BUSINESS

Overview

We provide an enterprise mobility solution that enables secure access to data, voice and video applications across wireless and wireline enterprise networks. Our Aruba Mobile Edge Architecture allows end-users to roam to different locations within an enterprise campus or office building while maintaining secure and consistent access to all of their network resources. Our architecture also enables IT managers to establish and enforce policies that control network access and prioritize application delivery based on an end-user’s organizational role and authorization level. We enable our enterprise customers to extend the same user-centric solution to remote locations such as branch offices and home offices connected over the Internet. Our solution, the Aruba Mobile Edge Architecture, consists of the ArubaOS modular operating system, optional value-added software modules, a centralized mobility management system, high-performance programmable mobility controllers, and wired and wireless access points.

We believe that our user-centric architecture is fundamentally different from alternative enterprise mobility solutions. In traditional enterprise networks, users are connected at the “fixed edge” of the network via physical ports using cables. In such port-centric architectures, network access policies and application delivery priorities are defined for ports, assuming a static association of a user to a port. To enable user mobility, enterprises typically either have opened access to these fixed ports so any user can connect from any port, or have deployed WLANs, each of which reduces network security and application performance. Enterprises also commonly deploy VPNs to secure mobile access, which increases cost and complexity while often degrading the user experience and application performance. None of these alternatives addresses the fundamental challenge of creating and applying user-based network access control and application delivery policies and priorities consistently across wireless and wireline networks at local and remote locations.

Our user-centric architecture enables a new “mobile edge” that allows users to roam across the enterprise network and to remote locations that have an Internet connection while maintaining secure, high-performance access to network applications. Using our architecture, IT departments can consistently manage user-based network access and enforce application delivery policies from a single integrated point-of-control. Our Aruba Mobile Edge Architecture delivers the following benefits:

•  Secure mobility — Our architecture integrates user-based security and mobility in a single solution enabling secure roaming across an extended enterprise network including the headquarters or main campus, remote office locations and home offices. End-users at any of these locations experience the same login procedure and network access rights while IT departments are assured of a consistent security and application delivery policy applied to individual user traffic. Our architecture enables this capability without requiring IT departments to deploy additional services such as VPNs or access control firewalls;

•  Improved application performance in a mobile environment — Most existing enterprise applications are designed for delivery in a fixed port-centric network, which typically provides dedicated bandwidth to each user. The performance of these applications often degrades in most mobile environments where bandwidth is shared among a group of users. Our architecture is user-centric and application-aware, which improves the performance of applications delivered in a mobile enterprise environment. IT managers can use our architecture to implement policies that prioritize and optimize data, voice and video services based on the specific user and/or the application being delivered. These application delivery policies follow the user ensuring a consistent user experience wherever a user connects within the extended enterprise network;

•  Ease of deployment and integration — Traditional approaches to enterprise mobility require a number of changes to the underlying network infrastructure. We have designed our architecture as a non-disruptive overlay to existing enterprise networks, allowing quick deployment and preserving existing infrastructure investments. In addition, we have integrated all of the disparate elements of enterprise mobility — security, application, network and radio frequency (RF) management services — into a single architecture, making it easy for IT departments to integrate our solution with existing networks and security infrastructure;

•  Cost-effective scalability — We believe our architecture provides industry leading scalability, designed to support up to 100,000 concurrent users from a centralized point of control. In addition, our integrated

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solution reduces the number of network elements required to enable mobility within a given location. As a result, our architecture enhances management efficiency and reduces personnel costs, allowing enterprise IT managers to scale their enterprise mobility solution in a cost-effective manner; and

•  Flexible platform for emerging mobile applications — Our mobility solution architecture combines the flexibility of modular software with high performance, programmable hardware. This combination enables us to rapidly introduce new applications, such as E-FMC and location-based services, as well as new features to support other mobile enterprise applications.

Our goal is to establish our solution as the standard approach to enabling secure mobility for global enterprises. We believe that our products can provide significant benefits to mobile enterprise users across every major industry and geography. We have over 2,000 end-customers, including some of the largest and most complex global organizations, such as Burlington Northern Santa Fe, Google, Guangzhou Metro, NTT Data Corporation, The Ohio State University, Pu Dong International Airport (Shanghai), SAP, Saudi Aramco, United States Air Force and University of Washington. We sell our products and support services directly through our own sales force and indirectly through our VARs and distributors, as well as OEMs. We also have a significant number of technology partners with whom we are collaborating to provide new solutions and increase demand for our products.

Aruba was founded in February 2002 and is headquartered in Sunnyvale, California. We began commercial shipments of our products in June 2003.

Industry Background

Demand for Enterprise Mobility

Enterprises are becoming more geographically dispersed and their users are becoming increasingly mobile. As a result, enterprises are being driven to invest in enterprise mobility infrastructure to provide their users with secure mobility. IDC, an independent research firm, estimates that there were 744 million mobile workers worldwide in 2006. IDC defines mobile workers as employees who are mobile within an office or campus environment, home-based workers and workers whose jobs require them to travel outside their primary office. Further, the market for enterprise mobility infrastructure solutions, which we define to include both enterprise-class WLAN solutions and VPN/firewall solutions, is large and growing. According to IDC, the market for enterprise-class WLAN solutions is expected to grow from $1.3 billion in 2006 to $3.0 billion in 2010. According to Gartner, an independent research firm, worldwide end-user spending for VPN/firewall equipment is expected to grow from $5.0 billion in 2006 to $6.4 billion in 2010. Key trends driving the growth in these markets and increased deployment of secure enterprise mobility solutions include:

•  End-user demand — End-users are increasingly mobile and are dependent on having access to their enterprise network in order to perform their jobs effectively regardless of their location. In addition, they are becoming increasingly accustomed to the conveniences of personalized mobile computing and communications through the frequent use of devices such as mobile phones and laptop computers, and are demanding a similar mobile experience with regard to enterprise resources;

•  Business needs — Enterprises are deploying wireless networks to maintain their competitiveness, increase productivity and improve resource management. Industries that have led in the deployment of mobility solutions include healthcare, retail and education. In healthcare, medical personnel use mobility solutions to remotely access medical records and monitor mobile medical equipment. The retail industry uses mobile point-of-sale terminals to enable businesses to sell their products wherever the consumers are located. Finally, mobile solutions are being widely adopted in education, where campus-wide WLANs are becoming integrated into the educational experience;

•  Mobile applications — Several new applications are being introduced that will require enterprise mobility solutions to operate effectively. These applications include E-FMC, which provides seamless handoff of voice calls between cellular and enterprise VoIP networks, and location-based services such as asset tracking and inventory management; and

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•  Network economics — Enterprise mobility solutions today can offer reduced IT support costs relative to fixed networks in areas such as employee moves, adds and changes. Further, the prospect of all-wireless buildings can significantly reduce costs of new network infrastructure such as cabling, LAN switches and individual appliances or blades within a switch that separately manage security and application delivery functions.

The Challenges of Providing Secure Mobile Access

Enterprises attempting to deliver secure enterprise mobility solutions are faced with the following challenges:

•  Integrating security and mobility — Security remains one of the largest hurdles to widespread deployment of enterprise mobility solutions. Wireless airwaves cannot be confined to within a building’s walls, and thus, traditional physical security models are challenged with the increasing demand and deployment of mobility solutions. Network access privileges and permissions must be clearly defined on a per-user basis to enable secure access and application delivery policies. Finally, unauthorized, or rogue, access points deployed by employees can lead to a breakdown of network security and must be actively monitored and prevented;

•  Delivering applications in a mobile environment — Most applications are designed for delivery over a fixed network and perform sub-optimally in a mobile environment. Enterprise mobility solutions must ensure application persistence for mission-critical data, as well as for latency sensitive voice and video applications. Introducing application awareness to enterprise mobility solutions ensures more effective delivery of data, voice and video by prioritizing traffic on a per-user basis;

•  System integration — Enterprise mobility solutions require more than basic wireless access. Security, application, network and RF management services are required for comprehensive enterprise mobility and are implemented in separate elements in most existing networks. This increases the complexity of deployment and integration, limits scalability and requires expensive upgrades to the existing infrastructure;

•  Scalability and management — Due to the increasing mobility of enterprise users, enterprise mobility solutions need to cost-effectively scale to support thousands of concurrent users. Enterprise IT departments want centralized management and control, which allows them to reduce personnel and other support costs associated with enterprise mobility solutions; and

•  Support for emerging mobile applications — Enterprise mobility solutions need to be highly flexible and adaptable to support emerging mobile applications, such as E-FMC and location-based services, without degradation of performance or significant disruption to existing operations.

Limitations of Alternative Approaches

To date, enterprises have responded to the increasing demands for mobility by deploying WLANs, enabling open access on wired network ports and/or providing VPN solutions. All of these solutions extend the fixed edge of the existing network on a limited basis and can often result in reduced security and sub-optimal application performance.

WLAN Access

Traditional WLANs are fundamentally designed for extending the wired ports within an office building and assume the wired network within an office building is secured using physical building security. Similar to a cordless phone, which is port-centric and does not allow the user to carry the phone to a location outside the home environment and maintain access to the original number or services, traditional WLANs extend fixed network services over the air as opposed to adapting them to roam with the user. Network services such as access control and application delivery are still governed by the port to which the WLAN service connects. Traditional WLANs also lack application awareness. This approach leads to the following limitations:

•  Inconsistent user access as security, application delivery and network services do not roam with the user, requiring the user to log in multiple times as the user roams a campus network;

•  Need for additional security infrastructure such as access control firewalls;

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•  Poor performance for latency-sensitive applications such as voice and video;

•  Complex integration process that increases the costs of deployment and limits the ability to cost-effectively scale to extended enterprise networks; and

•  Inability to accommodate new applications such as E-FMC, Mobile VoIP and location-based services without significant disruption.

Open Access for Wired Network Ports

Many enterprises provide their users with only wired network access. In these environments, when users move away from the network port at their desk to a different location within their office (such as a conference room or lobby) or a different office within the enterprise network, they must find a port and cable to connect to the network. This approach has the following limitations:

•  Higher potential for unauthorized access to the network through physical network ports, unless protected with expensive security infrastructure;

•  Limited number of physical ports prevents network access for a large number of employees gathered in a conference or meeting room within an office; and

•  No access to enterprise applications while away from a physical network port within an enterprise office location.

VPN Solutions for Secure Mobility

Enterprises have deployed hardware- and software-based VPNs in an effort to offer employees secure mobile access to the enterprise network. This approach has the following limitations:

•  Requirements to install, configure and maintain client software on the end-user’s machine;

•  Costly and complex to administer on a per-user basis;

•  Incomplete support for mobile devices such as PDAs, smart phones, etc.; and

•  Complex access procedures and restricted application functionality, which meaningfully degrade user experience.

In order to provide secure mobility, enterprises must deploy a solution that integrates security with mobility, is easy to deploy and scale, and is based on an architecture that delivers improved application performance with the ability to support new applications.

The Aruba Solution

Our Aruba Mobile Edge Architecture is a flexible, high-performance solution that delivers secure, mobile access to enterprise data, voice and video applications. Our architecture enables a user-centric approach to enterprise mobility where IT departments can centrally control network access and prioritize application delivery on a per-user basis. These access control and application delivery policies follow the user wherever the user connects to the network through our Aruba Mobile Edge Architecture, ensuring a consistent, secure mobility experience for end-users. In addition, we have integrated all security, application delivery, network and RF management services required for an effective enterprise mobility solution into a single, scalable architecture. This integrated architecture enables enterprises to easily deploy and scale our enterprise mobility solution in a cost-effective manner. Our architecture is currently deployed in large global organizations in every major industry, in a number of instances with thousands of access points and tens of thousands of users.

Key differentiators of our Aruba Mobile Edge Architecture include:

•  Secure mobility — Our architecture integrates user-based security and mobility in a single solution enabling secure roaming across an extended enterprise network, including the headquarters or main campus, remote office locations and home offices. End-users at any of these locations experience the same login procedure

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and network access rights while IT departments are assured of a consistent security and application delivery policy applied to individual user traffic. Our architecture enables this capability without requiring IT departments to deploy additional services such as VPNs or access control firewalls. Our architecture establishes and enforces user-based access controls that provide the ability to differentiate among various classes of users (employees, contractors, guests) and to apply appropriate policies depending on the individual user;

•  Improved application performance in a mobile environment — Most existing enterprise applications are designed for delivery in a fixed, port-centric network, which typically provides dedicated bandwidth to each user. The performance of these applications often degrades in most mobile environments where bandwidth is shared among a group of users. Our architecture is user-centric and application-aware, which improves the performance of applications delivered in a mobile enterprise environment. IT managers can use our architecture to implement policies that prioritize and optimize data, voice and video services based on the specific user and/or the application being delivered. These application delivery policies follow the user ensuring a consistent user experience wherever a user connects within the extended enterprise network;

•  Ease of deployment and integration — Traditional approaches to enterprise mobility require a number of changes to the underlying network infrastructure. We have designed our system as an overlay to existing enterprise networks, allowing our customers to quickly deploy our solution and cause no disruption to existing network operations. In addition, we have integrated all of the disparate elements of enterprise mobility — security, application, network and radio frequency (RF) management services — into a single architecture, making it easier for IT departments to integrate our solution with existing networks and security infrastructure. Additionally, implementing a mobility solution typically requires a number of changes to many underlying network elements, such as local area network configurations, authentication servers and IP address management systems. We have designed our architecture to integrate with these elements without requiring any changes, while at the same time enhancing their ability to accommodate increased numbers of mobile users and devices;

•  Cost-effective scalability — We believe our architecture provides industry-leading scalability, designed to support up to 100,000 concurrent users from a centralized point-of-control. In addition, our integrated solution reduces the number of network elements required to enable mobility within a given location. These features simplify tasks that are typically labor-intensive, such as system deployment, configuration, maintenance and troubleshooting. As a result, our architecture enhances management efficiency and reduces personnel costs, allowing enterprise IT managers to scale their mobile enterprise networks in a cost-effective manner; and

•  Flexible platform for emerging mobile applications — Our mobility solution architecture combines the flexibility of modular software with high-performance, programmable hardware. Our modular software architecture enables us to rapidly introduce new applications such as E-FMC and location-based services, as well as new features to support other mobile enterprise applications. Our high-performance programmable hardware ensures that these new applications and services cause no degradation to system performance or disruption to existing operations.

The Aruba Strategy

Our goal is to establish our solution as the standard approach to enable secure mobility for global enterprises. We believe that the following key elements of our strategy will help us maintain our competitive advantage:

•  Drive adoption across the enterprise — Most enterprises initially deploy our solutions at corporate headquarters or main campus locations. Our strategy is to drive further penetration and deployment of our solutions to extended enterprise locations, across corporate, government or educational campuses, as well as branch and home offices. We intend to do so by emphasizing the scalability and cost-efficiency of our approach. We also expect to achieve greater penetration into enterprises by supporting new mobile devices, such as dual-mode handsets, as these devices are increasingly adopted by enterprise users;

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•  Maintain and extend our software offerings — We believe that our software technology is a key competitive differentiator. We intend to continue enhancing our ArubaOS operating software and centralized mobility management system to maintain our position as a technology innovator. We are also developing additional software modules to extend the functionality and performance of our ArubaOS operating software. These new modules include Mobile VoIP and location-based services, as well as additional security modules;

•  Utilize channel partners to expand our global market penetration — We intend to increase our market penetration and extend our geographic reach through our network of channel partners. As of December 2006, we had over 200 VARs, distributors and OEMs worldwide. We plan to expand this network and to add additional sales personnel to support this growing channel footprint. We will continue to provide training and support to our channel partners to help drive this expansion;

•  Realize increased operating efficiencies — We currently outsource our hardware manufacturing to Flextronics, an overseas contract manufacturer, and have established our own offshore research and development and customer support capabilities. We plan to continue to realize increased operating efficiencies by growing these offshore operations and by establishing additional offshore capabilities for certain general and administrative functions; and

•  Expand our base of technology partners — The enterprise mobility market is a complex value chain that includes security solutions, management tools, connectivity devices and mobility applications. We will continue to work with technology companies who are developing leading-edge solutions in these areas to enhance the functionality and drive adoption of our Aruba Mobile Edge Architecture within the enterprise.

Products

The Aruba Mobile Edge Architecture integrates our proprietary ArubaOS operating software, a number of optional value-add software modules, a centralized mobility management system, a series of high-performance programmable mobility controllers and a line of wired and wireless access points. Our products are typically deployed as an overlay on the existing network architecture, minimizing the need to replace or reconfigure existing IT equipment.

ArubaOS Operating System

ArubaOS is a modular and flexible operating system that forms the core of our Aruba Mobile Edge Architecture. This proprietary software, which is installed on our mobility controllers, brings together network, security, application and RF management services to give network managers a centralized point-of-control over the access points, mobile users and mobile devices. ArubaOS enables the hardware capabilities found in our mobility controllers, including high-speed authentication, scalable encryption and decryption, and dedicated packet processing. The functionality of ArubaOS can be further extended using a number of additional licensed software modules.

Additional Software Modules for ArubaOS

To extend the base capabilities of ArubaOS, we offer a number of licensed software modules for ArubaOS. These software modules unlock additional functionality of ArubaOS, including:

•  Policy enforcement firewall — delivers user and group policy enforcement. Policies can be centrally defined and enforced on a per-user or per-group basis, following users as they move throughout the enterprise network;

•  Wireless intrusion protection — identifies and protects against malicious attacks on wireless networks, as well as vulnerabilities caused by unauthorized access points and client devices;

•  Remote AP — extends the enterprise network to small branch offices and home offices that have a wired Internet connection. Remote AP software, coupled with any Aruba access point, allows seamless connectivity at home or other remote locations;

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•  VPN server — extends the mobile enterprise network to large branch offices and individual users over the public Internet, eliminating the need for separate external VPN equipment;

•  External services interface — delivers a set of control and management interfaces to seamlessly integrate third-party network devices, incremental software modules and services into the Aruba Mobile Edge Architecture;

•  Client integrity module — provides integrated on-demand security by automatically detecting, quarantining, and repairing infected or misconfigured devices before network access is granted; and

•  xSec — provides wired and wireless Federal Information Processing Standard (FIPS) 140-2 validated encryption technology designed for high-security government networks.

Aruba Mobility Management System

The Aruba Mobility Management System, or MMS, reduces total cost of ownership by reducing the need for additional personnel to manage our solution. The MMS automatically discovers, monitors and manages hundreds of controllers and thousands of access points and users simultaneously from a single console. It complements the centralized management capabilities built into our mobility controllers and provides a single reference point to track users and client devices, identify rogue devices, plan new deployments, enable rapid troubleshooting of client issues and visualize RF coverage patterns across the entire network. The MMS software can be deployed on any PC platform or optionally purchased as a network appliance system.

Aruba Mobility Controllers

Our high-performance mobility controllers are built specifically to scale ArubaOS and additional software module capabilities to large networks. All of our mobility controllers share a common hardware architecture which includes a dedicated control processor, a high-performance programmable network processor unit and a unique programmable encryption engine. Mobility controllers aggregate network traffic from access points, process it using our software controls and deliver it to the network.

Our line of mobility controllers includes multiple models, sized and priced to support the varying requirements of different sizes of mobile enterprise networks from large campuses to small branch offices.

	Aruba 6000	Aruba 2400	Aruba 800	Aruba 200
Maximum Number of Access Points	512	48	16	6
Maximum Number of Users	8,192	768	256	100
Typical Deployment	Headquarters/ Large Campus	Regional Office	Branch Office	Small Office/ Retail Store

Wireless Access Points and Wired Access Concentrators

Our wireless access points and wired access concentrators serve as on-ramps that aggregate user traffic onto the enterprise network and direct this traffic to mobility controllers. In addition to providing network access, our wireless access points provide security monitoring services for wireless networks. Wireless access points, available in indoor and outdoor versions, provide connectivity to clients based on the 802.11 “Wi-Fi” standard, which is supported by a broad array of consumer and commercial devices.

We provide a line of wired access concentrators for conference rooms, auditoriums and other public areas where a high number of wired connections is required. Wired access concentrators connect to client devices using standard Ethernet protocol and forward network traffic to an Aruba mobility controller where identity-based security and mobility policies may be applied.

The Aruba Mobile Edge Architecture also enables secure mobility over third-party wireless access points and wired network switches.

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Technology

Our Aruba Mobile Edge Architecture integrates our proprietary software and specialized hardware. ArubaOS is a set of modular software components built to integrate all processing and control capabilities required for enterprise mobility into a single architecture. Management components provide configuration, user management and tracking, accounting, and other operational and maintenance functions. For traffic forwarding and policy enforcement, ArubaOS contains proprietary real-time software that runs on a dedicated network processor in the mobility controller to maximize the performance of these functions. All manipulation of network packets is done through this combination of modular software and high-performance, programmable hardware. The software is flexible so that new features can be quickly added, while the network processor allows us to achieve high performance. This hardware/software combination is also applied to encryption services. A dedicated encryption processor, built into each mobility controller, is programmed through microcode software contained within ArubaOS. Through programming, we can add or modify encryption protocols as needed, or change the allocation of processor cores to favor one encryption type over another. Once the hardware is programmed by the microcode, it enables high-performance for all encryption standards supported by ArubaOS.

Our solution is deployed by placing access points and access concentrators at the network edge. Mobility controllers are placed inside the enterprise network, close to network services. The two components communicate across an IP (Internet Protocol) network using tunneling protocols — GRE (Generic Routing Encapsulation) for deploying across enterprise-controlled networks, and IPsec (IP security) for deploying across untrusted networks such as the Internet. Network traffic originated by the user is processed by the mobility controller, where ArubaOS provides centralized services for the mobility network. These services include security services that authenticate the users and determine what network resources a user may access, application services that ensure higher-layer mobile applications receive the performance and quality required for optimal behavior, network services that determine operational characteristics of the mobility network, and RF management services that optimize the behavior of wireless networks. The integration of these services into a single cohesive system is what enables the power and flexibility of our solution.

Security Services

Mobility introduces a number of new security requirements. Core to these requirements are determining who the user is, controlling what the user is allowed to do, and providing for secure delivery of network traffic to and from the user.

•  Authentication — Mobile users and devices, by definition, do not connect to the network through a single fixed port. For this reason, our architecture must identify every user and device that connects to the network. To identify who the user is, our architecture must first authenticate the user — asking the user to supply identity credentials such as a username and password, and then verifying those credentials with a backend database. The form of authentication depends on the access method, with the most common forms being web-based through a portal page, and the IEEE 802.1X protocol. When using 802.1X, ArubaOS provides hardware acceleration of the encrypted exchange to allow better scaling of the backend database. The backend database contains a listing of authorized users, their credentials, and information on the role of the user — such as employee, contractor, supplier, or guest. Through the authentication process, ArubaOS learns the username and role of each user, collectively known as the user’s identity. Identity is independent of access method, physical location, hardware device, or IP address; it is tied to the user and follows the user anywhere in the mobile enterprise network;

•  Access control — Once identity has been learned through authentication, we perform identity-based access control for the user’s traffic using built-in, ICSA-certified stateful firewall software. Role information is mapped to existing security policies that determine what types of traffic are permissible, to what destinations, from what physical locations, at what time of day and at what speed. A typical set of policies would permit employees to have full network access 24 hours a day from all office locations, contractors to have access to a specific set of servers only during normal working hours, and guests to have only restricted Internet access. Unlike traditional security solutions such as standalone firewalls, ArubaOS does not tie security policies to identifiers such as IP addresses or hardware addresses, since these identifiers can be

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forged and may naturally change in a mobile enterprise network. ArubaOS ties all network traffic to the identity of the user associated with that traffic, with the authenticity of that traffic guaranteed through encryption;

•  Encryption — Encryption is required in an enterprise mobility solution to ensure secure delivery of traffic to and from the user. Encryption provides confidentiality to prevent outsiders from eavesdropping on communications, as well as integrity to prevent attackers from modifying network traffic in-transit. To support a wide variety of applications and end-device capabilities, we include support for a number of encryption algorithms including RSA (Rivest-Shamir-Adleman), Triple DES (Data Encryption Standard), AES (Advanced Encryption Standard), WEP (Wired Equivalent Privacy), TKIP (Temporal Key Integrity Protocol) and RC4 (Rivest Cipher 4). Encryption may be used over wireless access, wired access and remote access using VPN protocols. All encryption algorithms are processed by the mobility controller in hardware to achieve high performance. We centralize encryption functions in the mobility controller, while most other solutions in the market distribute their wireless encryption capabilities to wireless access points, where the encryption is hardcoded into the wireless chipset. We believe our centralized encryption architecture provides a competitive advantage because it provides greater security, permits our product to perform encryption for wired traffic as well as wireless, and is programmable for future expansion instead of being hardwired into a chipset;

•  Integrated security — Our solution combines the point of encryption, authentication, and access control into a single integrated architecture. Alternative solutions typically consist of separate devices for encryption, authentication and access control. This separation makes the firewall in alternative solutions vulnerable to manipulation because it is not identity-aware. Our integrated security approach makes it safe to process employee and guest traffic over the same network, with no compromise in security; and

•  Wireless intrusion protection — To protect enterprise networks against wireless threats, our wireless intrusion protection technology monitors the RF environment for threats from uncontrolled wireless devices, such as unauthorized wireless access points installed by employees or misconfigured wireless clients that bridge together wired and wireless networks. Our system finds and classifies such threats by monitoring and correlating traffic seen on the wired network as well as the wireless network. When threats are found, the system has the ability to automatically shut down these threats, while notifying administrators of the problem. Besides monitoring for wireless threats, the system also monitors for malicious attacks against wireless networks, including “denial of service” attacks, jamming, attempted encryption cracking, and network probing.

Application Services

Different applications have unique network requirements. In particular, voice and video services have stricter requirements for reliable, timely delivery of traffic. Our ArubaOS operating system is application-aware, allowing us to optimize application performance. Our operating system can determine, for example, whether a voice device is currently placing a phone call or if it is idle. During the voice call, voice traffic is given priority over best-effort traffic. Our operating system can determine factors such as round-trip delay, jitter, and perceived call quality and if sub-optimal conditions exist, the system can take actions such as controlling bandwidth, altering RF management scanning, or load-balancing clients to other nearby access points.

Network Services

Network services include the traditional networking services that must be provided by a network infrastructure device, such as routing, redundancy, traffic forwarding, protocol manipulation, and network topology management, and advanced services to enable mobility. Mobility starts with ensuring that the mobile device has a consistent view of the network, and the network has a consistent view of the mobile device, no matter where the mobile device roams. When a user joins the network, the user’s mobile device is mapped to a Virtual Local Area Network (VLAN) and is assigned an IP address. As the user roams throughout the network, our operating system ensures that the address and VLAN assignment do not change, resulting in a consistent network topology. If the user roams to another mobility controller, we implement Proxy Mobile IP to ensure that the network’s view of the mobile device

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does not change. The end result is that, assuming proper wireless coverage, a user can move throughout a building or campus without interrupting applications.

RF Management Services

To ensure proper wireless coverage and performance, we provide a number of services to manage the RF domain. Deploying wireless networks was once a manual process — a physical site survey was required that measured interference and signal propagation, followed by manual tuning of radio power levels and channels one access point at a time. Post-deployment, changes in the physical environment, such as new furniture or installation of a cordless phone, could lead to performance degradation. To correct the problem, a new site survey followed by additional manual tuning was required. Our RF Plan application eliminates the manual site survey by instead generating a three-dimensional RF model of a building, and then determining optimal AP locations. Once the access points are deployed, our Adaptive Radio Management (ARM) technology automates RF management by having each of our wireless access points serve as both a sensor as well as a traffic delivery device. Each access point listens for wireless traffic and interference from other nearby devices and feeds this information into a proprietary algorithm that allows the mobility controller to build a real-time RF coverage and interference map of the building. Using the outputs of this algorithm, the system self-tunes channel and power settings to maximize coverage while minimizing interference.

Customers

Our products have been sold to over 2,000 end-customers worldwide in every major industry, including finance, technology, manufacturing, media, healthcare, education, utilities, telecom, government, transportation, engineering and construction. Our products are deployed in a wide range of organizations from small organizations to large multinational corporations, including:

•  Burlington Northern Santa Fe

•  Google

•  Guangzhou Metro

•  NTT Data Corporation

•  The Ohio State University

•  Pu Dong International Airport (Shanghai)

•  SAP

•  Saudi Aramco

•  United States Air Force

•  University of Washington

These end customers purchase our products directly from us and through our VARs, distributors and OEMs.

Technology Partners

Our ability to effectively partner with vendors delivering additional pieces of the enterprise mobility value chain enables us to provide more complete and integrated solutions to our customers. Our partner relationships span a variety of competencies, including:

•  Security — These relationships provide benefits to our customers in the areas of confidentiality, access control, authentication, and security monitoring. For example, we are collaborating across many areas in mobility, security and wireless technology. Our solution is fully interoperable with Microsoft’s wireless client, including tested interoperability with WPA, WPA2, and Microsoft’s opportunistic key caching for fast and secure WPA2 roaming. Our identity-based security technology leverages Microsoft’s IAS authentication server to provide role-based access control for mobile clients. Additionally, we are also a technology partner for Microsoft’s Network Access Protection (NAP) architecture for next-generation client security;

•  Management — These relationships enhance our customers’ ability to troubleshoot, monitor, and maintain their networks. For example, by collecting data from our mobility controllers and APs, the AirMagnet Enterprise Analyzer product enables our customers to remotely troubleshoot devices and other sources of Wi-Fi performance issues from one central location without the need for any additional hardware;

•  Applications — These relationships provide business applications that deliver unique benefits when deployed on an enterprise mobility solution. Our relationships with AeroScout, Alcatel-Lucent and

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Spectralink are examples of relationships that we have in this area. For example, AeroScout’s products provide active Real Time Location Service (RTLS) capabilities that work over standard Wi-Fi networks. We have implemented recognition for AeroScout location tracking tags and are able to communicate tag location information to AeroScout servers; and

•  Connectivity — These relationships provide alternative means of getting user traffic from the edge of the network to an Aruba mobility controller, other than through an Aruba access point. For example, we are engaged with Ortronics to enable interoperability with the Ortronics’ Wi-Jack Duo, a family of wired and wireless access points, within our architecture. The Wi-Jack family of products fits into a standard in-wall junction box, is connected to standard Category 5 cabling, and provides wired and wireless transport for user traffic to an Aruba mobility controller.

Sales and Marketing

We sell our products and support directly through our sales force and indirectly through our VARs, distributors and OEMs:

•  Aruba sales force — As of December 2006, we have a sales force consisting of over 100 representatives in the Americas, Europe, Middle East and Africa (EMEA) and the Asia Pacific (APAC) region who are responsible for managing all direct as well as channel business within a geographic territory.

•  VARs, distributors and OEMs — As of December 2006, we had over 200 channel partners worldwide. These VARs, distributors and OEMs market and sell our products to a broad array of organizations. Some of these VARs also purchase our solutions and offer them to their end-customers as a managed service.

Our marketing activities include lead generation, tele-sales, advertising, website operations, direct marketing, and public relations, as well as participation at technology conferences, and trade shows.

Customer Service, Support and Training

We offer tiered customer service and support programs depending upon the needs of our customers’ deployments. Our customer service and support programs involve hardware support, software support, and access to future software upgrades on a when-and-if available basis for our Aruba Mobile Edge Architecture. In order to serve our customers better, we have support centers in Sunnyvale, California and Chennai, India available to respond 24x7x365. Service and support for end customers of our VARs, distributors and OEMs typically are provided by these channel partners, while we provide backup support. Our training department conducts basic and advanced courses onsite at customer locations or at our training facility in Sunnyvale, California. As part of our training program, we offer the Aruba Certified Expert (ACE) program, which certifies participants as successfully completing the program and passing exams covering Aruba products and networking and wireless technologies.

Research and Development

Continued investment in research and development is critical to our business. To this end, we have assembled a team of engineers with expertise in various fields, including networking, security and RF. Our research and development efforts are currently focused in Sunnyvale, California, and we are expanding our research and development team in Bangalore, India. We have invested significant time and financial resources into the development of our Aruba Mobile Edge Architecture including our ArubaOS software platform. We will continue to expand our product offerings and solutions capabilities in the future and plan to dedicate significant resources to these continued research and development efforts. We are developing additional software modules to enhance the functionality and performance of our ArubaOS operating software. These new modules include Mobile VoIP and location-based services, as well as additional security modules. We also intend to continue to enhance our ArubaOS operating software.

Manufacturing

We outsource the manufacture of our hardware products to a leading contract manufacturer, Flextronics, which helps us to optimize our operations by lowering costs and reducing time to market.

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Our products are primarily manufactured in Flextronics’ Shanghai, China facility. We also utilize Flextronics’ facility in Singapore for some manufacturing production as well as a fulfillment and logistics hub for all customer shipments destined for APAC and EMEA locations. We operate a logistics center in California for all customer shipments destined to locations in the Americas. We also perform rigorous in-house quality control inspection and testing at our Sunnyvale, California facilities to ensure the quality and reliability of all hardware components of the Aruba Mobile Edge Architecture once deployed.

We utilize components from many suppliers. Whenever possible, we strive to have multiple sources for these components to ensure continuous supply. We work in conjunction with the extensive supply chain management organization at Flextronics to select and utilize suppliers with established delivery and quality track records. We source a limited number of components that are technically unique and only available from specific suppliers. In these cases, we typically maintain a close direct relationship with these suppliers to ensure supply meets our requirements.

Although the contract manufacturing services required to manufacture and assemble our products may be readily available from a number of established manufacturers, it is time consuming and costly to qualify and implement contract manufacturer relationships. Therefore, if Flextronics, our contract manufacturer, or sole source suppliers suffer an interruption in their businesses, or experience delays, disruptions or quality control problems in their manufacturing operations, or we have to change or add additional contract manufacturers or suppliers of our sole sourced components, our ability to ship products to our customers would be delayed, and our business, operating results and financial condition would be adversely affected.

Competition

The market for secure mobility products is highly competitive and continually evolving. We believe that we compete primarily on the basis of providing a comprehensive solution that enables mobility, security and converged application delivery services. We believe other principal competitive factors in our market include total cost of ownership, software and hardware product performance, ability to deploy easily into existing networks, interoperability with other devices, ability to easily scale, ability to provide secure mobile access to the network, speed of mobile connectivity offering and ability to allow centralized management of products. We believe that we compete favorably in each of these areas. Our competitive position also depends on our continuous technology innovation and our meeting the evolving needs of our customers.

Our primary competitors include Cisco Systems, primarily through its Wireless Networking Business Unit, and Symbol Technologies (which recently announced that it will be acquired by Motorola). We also face competition from a number of smaller private companies and new market entrants.

Intellectual Property

Our success as a company depends critically upon our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of intellectual property rights, including patents, trade secrets, copyrights and trademarks, as well as customary contractual protections.

We have been granted one United States patent for a system and a method for monitoring and enforcing policy within a wireless network, which issued in October 2005, and have also received a notice of allowance in the United States for a patent relating to RF management techniques. Our issued patent will expire in 2022. We have over 20 provisional and non-provisional patent applications pending in the United States. We intend to file counterparts for these patents and patent applications in other jurisdictions around the world.

Our registered trademarks in the United States are “Aruba Wireless Networks” and “Aruba Networks.” We also have United States trademark applications pending to register “Aruba The Mobile Edge Company,” “Aruba Mobility Management Systems,” “Mobile Edge Architecture” and “People Move. Networks Must Follow.” We have European Union, Japanese and Indian trademark applications pending for the marks “Aruba Networks” and “Aruba The Mobile Edge Company.”

In addition to the foregoing protections, we generally control access to and use of our proprietary software and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers and partners, and our software is protected by United States and

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international copyright laws. We also incorporate certain generally available software programs into our Aruba Mobile Edge Architecture pursuant to license agreements with third parties.

Employees

As of December 1, 2006 we had approximately 315 employees in offices in North America, Europe, the Middle East and the Asia Pacific region, of which approximately 165 were engaged in sales and marketing, approximately 100 were engaged in research and development, approximately 30 were engaged in general and administrative functions and approximately 20 were engaged in operations. None of our employees are represented by labor unions, and we consider current employee relations to be good.

Facilities

We have approximately 52,325 square feet of office space in Sunnyvale, California pursuant to a lease that expires in May 2007. We also lease approximately 43,500 square feet of warehouse space in Sunnyvale, California pursuant to a lease that expires in September 2010. We also maintain customer service centers and sales offices in multiple locations worldwide. We believe that our current facilities are suitable and adequate to meet our current needs, and we intend to add new facilities or expand existing facilities as we add employees. We believe that suitable additional or substitute space will be available as needed to accommodate expansion of our operations.

Legal Proceedings

We are not a party to any material legal proceedings. We could become involved in litigation from time to time relating to claims arising out of our ordinary course of business.

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MANAGEMENT

Executive Officers and Directors

The following table provides information regarding our executive officers and directors as of December 13, 2006:

Executive Officers and Directors	Age		Position(s)
Executive Officers and Directors:
Dominic P. Orr		55	President, Chief Executive Officer and Chairman of the Board of Directors
Steffan Tomlinson		35	Chief Financial Officer
Keerti Melkote		36	Co-Founder, Vice President, Products and Partnerships and Director
Sriram Ramachandran		43	Vice President, Engineering
Richard Wilmer		44	Vice President, Operations
Non-Employee Directors:
Bernard Guidon(1)		60	Director
Emmanuel Hernandez(1)		51	Director
Doug Leone(2)		49	Director
Shirish S. Sathaye(2)(3)		45	Director
Daniel Warmenhoven(3)		56	Director

(1)	Member of the audit committee
(2)	Member of the compensation committee
(3)	Member of the nominating and corporate governance committee

Dominic P. Orr has served as our president and chief executive officer since April 2006 and as a director since October 2002. Mr. Orr was President, Content Networking Business Unit at Nortel Networks, a global supplier of communication equipment, from October 2000 to October 2001, and continued as a consultant to Nortel Networks until October 2002. Prior to joining Nortel Networks, Mr. Orr served as the president and chief executive officer of Alteon WebSystems from August 1996 until its acquisition by Nortel Networks in October 2000. Mr. Orr has more than 20 years of experience in the computer systems and communication networking industry and has held senior positions at Bay Networks, Hewlett-Packard and Hughes Aircraft. Mr. Orr is a member of the Sciences Board of Visitors at the University of California, Los Angeles. Mr. Orr also serves on the boards of directors of several private companies. Mr. Orr received his B.S. in physics from City University of New York and his M.S. and Ph.D. from California Institute of Technology.

Steffan Tomlinson has served as our chief financial officer since September 2005. Prior to joining us, Mr. Tomlinson was the chief financial officer of Peribit Networks, a provider of WAN optimization technology, from November 2000 until its acquisition by Juniper Networks in July 2005. Prior to joining Peribit, Mr. Tomlinson was the director of financial planning and analysis for the Subscriber Networks Division at Excite@Home. Mr. Tomlinson has also held various finance and financial analyst positions at Oracle, spanning both domestic and international business units. Mr. Tomlinson received his B.A., with honors, from Trinity College in Hartford, Connecticut and his M.B.A. from Santa Clara University.

Keerti Melkote is a co-founder and has served as our vice president and a director since February 2002. He has held numerous operating roles including product management, marketing and business development and currently serves as the vice president of product and partnerships. In 2001, Mr. Melkote was at Tahoe Networks, a cellular mobile data networking company, where he served as the senior director of product management and marketing. Prior to joining Tahoe Networks, Mr. Melkote was director of product management at the Shasta IP Services division of Nortel Network from 1999 to 2001. Mr. Melkote has also held various product management, technical

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marketing and engineering positions at Cisco Systems and Intel Corporation. Mr. Melkote received his M.S.E.E. from Purdue University with an emphasis on distributed systems and TCP/IP networking.

Sriram Ramachandran has served as our vice president, engineering since August 2006. From April 2004 to July 2006, Mr. Ramachandran served as vice president of engineering in the Security Products Group at Juniper Networks, Inc., a provider of IP networking solutions. Prior to joining Juniper, Mr. Ramachandran was vice president, engineering at Neoteris from January 2002 until its acquisition by Netscreen Technologies in November 2003. Mr. Ramachandran continued to serve as vice president, engineering at Netscreen until its acquisition by Juniper in April 2004. He previously co-founded and ran engineering at Respond Networks and led engineering as an early employee of WebMD (formerly Healtheon). Mr. Ramachandran has also held senior positions with Catapult Entertainment and Sun Microsystems. Mr. Ramachandran received his B.E. in Electronics and Communication Engineering from the University of Madras, India and his M.S. in Electrical and Computer Engineering from the University of Texas.

Richard Wilmer has served as our vice president, operations since June 2004. From January 2002 to June 2004, Mr. Wilmer was the vice president of operations at Procket Networks, a developer of concurrent services routers. Prior to joining Procket Networks, Mr. Wilmer was the vice president of operations at 2Wire Inc., a provider of broadband services platforms for global telecom carriers, from June 1999 to January 2002. Mr. Wilmer has also held various vice president roles at Maxtor, Solectron, Seagate and Terastor. Mr. Wilmer is a published author of papers and patents and received his B.S. in Chemistry from the University of California, Berkeley.

Bernard Guidon has served as a director since July 2006. Mr. Guidon has been an executive management consultant since February 2002. Mr. Guidon serves on the boards of directors of InfoGain Corporation and StarView Technology, both privately held companies. Mr. Guidon is also a member of the advisory board of Volubill, a mobile phone software company located in France. Mr. Guidon received his M.S. in Electrical Engineering from the Ecole Nationale Supérieure d’Electrotechnique, d’Electronique, d’Informatique, d’Hydraulique et des Télécommunications in France.

Emmanuel Hernandez has served as a director since December 2006. Mr. Hernandez has served as chief financial officer of SunPower Corporation since April 2005. Prior to joining SunPower, Mr. Hernandez served more than 11 years as the executive vice president of finance and administration and chief financial officer at Cypress Semiconductor Corporation. Mr. Hernandez currently serves on the boards of directors of ON Semiconductor and Integration Associates. Mr. Hernandez received his B.S. in Accounting from the University of Nueva Caceres in the Philippines, his CPA license from the Philippine Institute of Certified Public Accountants and his M.S. in Finance from Golden Gate University in San Francisco.

Doug Leone has served as a director since April 2002. Mr. Leone has been at Sequoia Capital, L.P., a venture capital firm, since July 1988 and has been a general partner since 1993. Mr. Leone also serves on the boards of directors of several private companies. Mr. Leone received his B.S. in Mechanical Engineering from Cornell University, his M.S. in Industrial Engineering from Columbia University and his M.S. in Management from the Massachusetts Institute of Technology.

Shirish S. Sathaye has served as a director since April 2002. Mr. Sathaye has been a general partner at Matrix Partners, a venture capital firm, since May 2001. Prior to joining Matrix Partners, Mr. Sathaye was first the vice president of engineering and then the chief technology officer at Alteon WebSystems. Prior to Alteon WebSystems, Mr. Sathaye was the director of the ATM Switch Product Group at FORE Systems. Mr. Sathaye also serves on the boards of directors of several private companies. Mr. Sathaye received his M.S. in Electrical Engineering from Virginia Tech and his Ph.D. in Electrical and Computer Engineering from Carnegie Mellon University.

Daniel Warmenhoven has served as a director since July 2006. Mr. Warmenhoven served as president and chief executive officer of Network Appliance, Inc., from October 1994 to May 2000, when he resigned the role of president. He currently serves as chief executive officer and is a member of the board of directors of Network Appliance. Prior to joining Network Appliance, Mr. Warmenhoven served in various capacities, including president, chief executive officer, and chairman of the board of directors of Network Equipment Technologies, Inc., a telecommunications company, from November 1989 to January 1994. Prior to Network Equipment Technologies, Mr. Warmenhoven held executive and managerial positions at Hewlett-Packard from 1985 to

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1989 and IBM Corporation from 1972 to 1985. Mr. Warmenhoven also serves on the boards of directors of Stoke, Inc. and PowerFile, Inc., both privately held companies. Mr. Warmenhoven received his B.S. in electrical engineering from Princeton University.

Our executive officers are appointed by our board of directors and serve until their successors have been duly elected and qualified. There are no family relationships among any of our directors or executive officers.

Board of Directors

Our bylaws provide that the authorized size of our board of directors is to be determined from time to time by resolution of the board of directors or by the stockholders at the annual meeting of the stockholders. Our current directors were elected in the manner described in our certificate of incorporation. The holders of a majority of our Series A preferred stock, voting as a single class, elected Doug Leone and Shirish Sathaye to the board of directors. The holders of a majority of our common stock, voting as a single class, elected Keerti Melkote and Dominic P. Orr to the board of directors. The holders of a majority of the preferred stock and common stock, voting together as a single class, elected Bernard Guidon, Emmanuel Hernandez and Daniel Warmenhoven to the board of directors.

Director Independence

In December 2006, our board of directors undertook a review of the independence of the directors and considered whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. As a result of this review, our board of directors determined that Messrs. Guidon, Hernandez, Leone, Sathaye and Warmenhoven, representing five of our seven directors, are “independent directors” as defined under the rules of the Nasdaq Global Market.

Committees of the Board of Directors

Our board of directors has an audit committee, a compensation committee, and a corporate governance and nominating committee, each of which will have the composition and responsibilities described below as of the completion of this offering.

Audit Committee

Messrs. Guidon and Hernandez, each of whom is a non-employee member of our board of directors, comprise our audit committee. Mr. Hernandez is the chairman of our audit committee. Our board of directors has determined that each of the members of our audit committee satisfy the requirements for independence and financial literacy under the current requirements of the Nasdaq Global Market and SEC rules and regulations. The board of directors has also determined that Mr. Hernandez is an “audit committee financial expert” as defined in SEC rules and satisfies the financial sophistication requirements of the Nasdaq Global Market. This designation does not impose on Mr. Hernandez any duties, obligations or liabilities that are greater than is generally imposed on him as a member of our audit committee and our board of directors. The audit committee is responsible for, among other things:

•  Overseeing the accounting and financial reporting processes and audits of our financial statements;

•  Selecting and hiring our independent registered public accounting firm, and approving the audit and non-audit services to be performed by our independent registered public accounting firm;

•  Assisting the board of directors in monitoring the integrity of our financial statements, our internal accounting and financial controls, our compliance with legal and regulatory requirements, the performance of our internal audit function, and our independent registered public accounting firm’s qualifications, independence and performance;

•  Providing to the board of directors information and materials to make the board of directors aware of significant financial and audit-related matters that require the attention of the board of directors;

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•  Overseeing our risk management and significant financial policies, including our investment policies, credit policies, capital expenditure policies and foreign exchange and hedging policies; and

•  Preparing the audit committee report that the SEC requires in our annual proxy statement.

Compensation Committee

Messrs. Leone and Sathaye, each of whom is a non-employee member of our board of directors, comprise our compensation committee. Mr. Leone is the chairman of our compensation committee. Our board of directors has determined that each member of our compensation committee meets the requirements for independence under the current requirements of the Nasdaq Global Market, the non-employee director definition of Rule 16b-3 promulgated under the Exchange Act and the outside director definition of Section 162(m) of the Internal Revenue Code of 1986, as amended. The compensation committee is responsible for, among other things:

•  Overseeing our compensation policies, plans and benefit programs and making recommendations to the board of directors with respect to improvements or changes to the plans and adoption of other plans;

•  Reviewing and approving with respect to our chief executive officer and other executive officers: annual base salaries, annual incentive bonuses, including the specific goals and amounts, equity compensation, employment agreements, severance arrangements and change of control agreements/provisions, signing bonuses or payments of relocation costs, and any other benefits, compensation or arrangements;

•  Evaluating and approving the corporate goals and objectives relevant to the compensation of our chief executive officer;

•  Administering our equity compensation plans; and

•  Preparing the compensation committee report that the SEC requires in our annual proxy statement.

Corporate Governance and Nominating Committee

Messrs. Sathaye and Warmenhoven, each of whom is a non-employee member of our board of directors, comprise our corporate governance and nominating committee. Mr. Warmenhoven is the chairman of our corporate governance and nominating committee. Our board of directors has determined that each member of our corporate governance and nominating committee meets the requirements for independence under the current requirements of the Nasdaq Global Market. The corporate governance and nominating committee is responsible for, among other things:

•  Assisting the board in identifying prospective director nominees and recommending to the board director nominees for each annual meeting of stockholders;

•  Evaluating the performance of current members of the board of directors eligible for reelection;

•  Developing principles of corporate governance and recommending them to the board of directors;

•  Overseeing compliance by the board of directors and its committees with applicable laws and regulations, including those promulgated by the SEC and the Nasdaq Rules;

•  Evaluating director compensation;

•  Recommending to the board persons to be members of each board committee; and

•  Overseeing the evaluation of the board of directors and management.

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Director Compensation

We have granted options to purchase shares of our common stock to our non-employee directors as follows:

		Number of
		Shares				Vesting
	Date of	Underlying		Exercise		Commencement
Name	Grant	Option		Price		Date	Vesting Schedule
Bernard Guidon	07/14/06		287,000	$	2.33	5/1/06	25% after 1 year of service and 1/48th per month thereafter(2)
	10/30/06		20,000	$	3.63	10/27/06	25% after 1 year of service and 1/48th per month thereafter
	11/17/06		20,000	$	4.94	11/17/06	25% after 1 year of service and 1/48th per month thereafter
Emmanuel Hernandez	12/08/06		120,000	$	5.12	12/08/06	25% after 1 year of service and 1/48th per month thereafter(2)
Doug Leone	12/08/06		50,000	$	5.12	(1)	1/36th per month(2)
Shirish Sathaye	12/08/06		50,000	$	5.12	(1)	1/36th per month(2)
Daniel Warmenhoven	07/14/06		410,000	$	2.33	7/11/06	25% after 1 year of service and 1/48th per month thereafter(2)

(1)	Upon the effectiveness of the registration statement relating to this offering.
(2)	Upon a change of control of our company, any such then-unvested shares shall become fully exercisable.

Our non-employee directors are also reimbursed for reasonable out-of-pocket expenses incurred in connection with attending board and committee meetings.

Each non-employee director appointed to the board of directors after the closing of this offering will receive an initial option to purchase 50,000 shares of our common stock upon such appointment. In addition, beginning in 2007, non-employee directors who have been directors for at least six months will receive a subsequent option to purchase 15,000 shares of our common stock on the date of each annual meeting of our stockholders. In addition, on the date of each annual meeting beginning in 2007, each non-employee director will receive an option to purchase 10,000 shares for each committee of the board of directors on which he or she serves as chairman, as well as an option to purchase 5,000 shares for each committee of the board of directors on which he or she serves as a non-chairman member. All awards granted under the automatic grant provisions will have a term of ten years and an exercise price equal to the fair market value on the date of grant. In addition, all such awards will be scheduled to vest in equal monthly installments over three years. For further information regarding the equity compensation of our non-employee directors, see “Management — Equity Benefit Plans — 2007 Equity Incentive Plan.”

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee is an officer or employee of our company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

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Executive Compensation

The following table provides information regarding the compensation of our chief executive officer, one other individual who served as our chief executive officer during a portion of fiscal 2006, and each of our four other most highly compensated executive officers during the fiscal year ended July 31, 2006. We refer to these executive officers as our named executive officers. In accordance with SEC rules, the compensation described in this table does not include medical, group life insurance or other benefits that are available generally to all of our salaried employees and certain perquisites and other personal benefits received by a named executive officer that do not exceed the lesser of $50,000 or 10% of that officer’s salary and bonus as disclosed in this table.

Summary Compensation Table

								Long Term
								Compensation
			Annual Compensation					Securities
			Salary		Bonus			Underlying
Name and Principal Position	Year		($)		($)			Options (#)
Dominic P. Orr(1)		2006		97,885		—			6,659,143
President and Chief Executive Officer
Steffan Tomlinson(2)		2006		174,167		22,368			500,000
Chief Financial Officer
Keerti Melkote		2006		175,000		21,875			60,000
Co-Founder and Vice President, Products and Partnerships
Richard Wilmer		2006		175,000		21,875			60,000
Vice President, Operations
David Butler(3)		2006		175,000		179,327	(4)		60,000
Former Vice President, Worldwide Sales and
Business Development
Donald LeBeau(5)		2006		150,000		31,250			24,337
Former Chief Executive Officer

(1)	Mr. Orr was appointed President and Chief Executive Officer in April 2006. Mr. Orr’s annual base salary is $300,000.
(2)	Mr. Tomlinson was appointed Chief Financial Officer in September 2005.
(3)	Mr. Butler resigned as an executive officer and employee in September 2006.
(4)	Consists of amounts paid in sales commissions.
(5)	Mr. LeBeau resigned as an executive officer and employee in April 2006. Mr. LeBeau’s annual base salary was $200,000.

Stock Option Grants in Last Fiscal Year

The following table provides information regarding grants of stock options to each of our named executive officers during the fiscal year ended July 31, 2006. The percentage of total options set forth below is based on options to purchase an aggregate of 12,319,043 shares of our common stock granted to our employees during such fiscal year. All options were granted at the fair market value of our common stock, as determined by the board of directors on the date of grant.

These options were granted under our 2002 Stock Plan. Except as noted in the table below, the options vest over a four-year period, at a rate of 25% upon the first anniversary of the vesting commencement date and then at a rate of 1/48th per month thereafter. See “Employee Benefit Plans — 2002 Stock Plan” for a further description of certain terms relating to these options.

The amounts shown in the table as potential realizable value represent hypothetical gains that could be achieved if options are exercised at the end of the option term. The assumed 5% and 10% rates of stock price

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appreciation are provided in accordance with SEC rules based on an assumed initial public offering price of $      per share, and do not represent our estimate or projection of the future stock price. Potential realizable values are net of exercise price.

Individual Grants											Potential Realizable
	Number of			Percent of Total							Value at Assumed
	Securities			Options							Annual Rates of Stock
	Underlying			Granted to			Exercise				Price Appreciation for
	Options			Employees in			Price per		Expiration		Option Term
Name	Granted			Fiscal Year			Share		Date		5%	10%
Dominic P. Orr		6,659,143			54.06	%	$	2.25		04/17/16	$	$
Steffan Tomlinson		500,000			4.06	%	$	1.25		10/05/15	$	$
Keerti Melkote		60,000			0.49	%	$	1.25		10/05/15	$	$
Richard Wilmer		60,000			0.49	%	$	1.25		10/05/15	$	$
David Butler		60,000			0.49	%	$	1.25		10/05/15	$	$
Donald LeBeau		24,337	(1)		0.20	%	$	2.33		07/13/16	$	$

(1) All such shares were vested in full on the date of grant.

Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

The following table provides information regarding the exercise of stock options by our named executive officers during the fiscal year ended July 31, 2006, and the value of securities underlying unexercised options held by our named executive officers as of July 31, 2006.

There was no public trading market for our common stock as of July 31, 2006. The value realized and the value of unexercised in-the-money options at fiscal year-end have been calculated based on an assumed initial public offering price of $      per share, less the applicable exercise price, in accordance with SEC rules.

	Number of				Number of Securities
	Shares				Underlying Unexercised Options					Value of Unexercised In-the-
	Acquired		Value		at Fiscal Year-End					Money Options
Name	on Exercise		Realized		Exercisable(1)			Unexercisable		Exercisable	Unexercisable
Dominic P. Orr		—		—		6,659,143	(2)		—	$		—
Steffan Tomlinson		100,000	$			400,000	(2)		—	$		—
Keerti Melkote		—		—		60,027	(2)		—	$		—
Richard Wilmer		—		—		510,000	(3)		—	$		—
David Butler		—		—		214,167	(4)		—	$		—
Donald LeBeau		—		—		24,337	(5)		—	$		—

(1)	Options granted to our named executive officers are immediately exercisable in full at any time, but the shares received upon exercise before vesting are subject to repurchase restrictions that lapse over time.
(2)	All such shares were unvested.
(3)	Represents 234,375 vested shares and 275,625 unvested shares.
(4)	Represents 105,991 vested shares and 108,176 unvested shares.
(5)	All such shares were vested.

Employment Agreements and Change of Control Arrangements

Employment Agreements and Offer Letters

Dominic P. Orr, our president and chief executive officer, entered into an employment agreement in April 2006. The employment agreement has no specific term, constitutes at-will employment and provides for an annual base salary of $300,000. In addition, Mr. Orr received a stock option grant of 6,659,143 shares of common stock with an exercise price equal to the fair market value of our common stock on the date of such grant. In the event

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Mr. Orr’s employment is terminated by us without cause or Mr. Orr resigns for good reason, as such terms are defined in the employment agreement, Mr. Orr will be entitled to receive acceleration of his unvested stock options in an amount equal to the number of shares that would have vested had Mr. Orr’s employment with us continued for an additional six (6) months. Such accelerated vesting is subject to Mr. Orr signing and not revoking a general release of claims. If a change of control, as such term is defined in the employment agreement, occurs prior to April 10, 2007, Mr. Orr will receive acceleration of his unvested stock options in an amount equal to the number of shares that would have vested over the 18-month period immediately following the change of control. If a change of control occurs on or after April 10, 2007, Mr. Orr will receive acceleration of his unvested stock options in an amount equal to the number of shares that would have vested over the 12-month period immediately following the change of control.

Steffan Tomlinson, our chief financial officer, executed an offer letter in July 2005 with a start date in September 2005. The offer letter has no specific term, constitutes at-will employment and provides for an annual base salary of $190,000, which is subject to adjustment pursuant to our employee compensation policies in effect from time to time. Mr. Tomlinson’s current annual base salary is $210,000. Pursuant to the offer letter, Mr. Tomlinson received a stock option grant of 500,000 shares of common stock with an exercise price equal to the fair market value of our common stock on the date of such grant. In the event Mr. Tomlinson’s employment is involuntarily terminated without cause within 12 months following a change of control, as such terms are defined in the offer letter, Mr. Tomlinson will receive accelerated vesting of 50% of any then unvested shares, options and other equity he holds at the time.

Keerti Melkote, our vice president, products and partnerships, executed an offer letter in April 2002. The offer letter has no specific term and constitutes at-will employment. Mr. Melkote’s current annual base salary is $195,000. In addition, the terms of Mr. Melkote’s stock option agreements provide that in the event Mr. Melkote’s employment is involuntarily terminated within 12 months following a change of control, as such terms are defined in the stock option agreements, Mr. Melkote will receive accelerated vesting of 50% of any then unvested options.

Sriram Ramachandran, our vice president, engineering, executed an offer letter in July 2006. The offer letter has no specific term, constitutes at-will employment and provides for an annual base salary of $195,000, which is subject to adjustment pursuant to our employee compensation policies in effect from time to time. Pursuant to the offer letter, Mr. Ramachandran received a stock option grant of 1,025,000 shares of common stock with an exercise price equal to the fair market value of our common stock on the date of such grant. If a change of control, as such term is defined in the offer letter, occurs prior to August 14, 2007, Mr. Ramachandran will receive acceleration of his unvested stock options in an amount equal to the number of shares that would have vested over the 18-month period immediately following the change of control. If a change of control occurs on or after August 14, 2007, Mr. Ramachandran will receive acceleration of his unvested stock options in an amount equal to the number of shares that would have vested over the 12-month period immediately following the change of control.

Richard Wilmer, our vice president, operations, executed an offer letter in June 2004. The offer letter has no specific term, constitutes at-will employment and provides for an annual base salary of $175,000, which is subject to adjustment pursuant to our employee compensation policies in effect from time to time. Mr. Wilmer’s current annual base salary is $195,000. Pursuant to the offer letter, Mr. Wilmer received a stock option grant of 450,000 shares of common stock with an exercise price equal to the fair market value of our common stock on the date of such grant. In the event Mr. Wilmer’s employment is involuntarily terminated without cause within 12 months following a change of control, as such terms are defined in the offer letter, Mr. Wilmer will receive accelerated vesting of 50% of any then unvested shares, options and other equity he holds at the time.

David Butler, our former vice president, worldwide sales and business development, entered into a separation agreement in August 2006. Pursuant to the separation agreement, we accelerated the vesting of all of Mr. Butler’s unvested shares that were subject to an option granted in May 2003 and 25% of his unvested shares that were subject to an option granted in October 2005, in exchange for a general release of claims and other customary terms and conditions. We also extended the post-termination exercise period of certain options that were granted to Mr. Butler until January 31, 2007. Mr. Butler is subject to a non-solicitation covenant for 12 months following his termination date.

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Donald LeBeau, our former chief executive officer, entered into a separation agreement in April 2006. Pursuant to the separation agreement, we accelerated the vesting of 30% of Mr. LeBeau’s unvested shares that were subject to options granted in January 2004, in exchange for a general release of claims and other customary terms and conditions.

Change of Control Arrangements

Our 2002 Stock Plan and 2007 Equity Incentive Plan provide for the acceleration of vesting of awards in certain circumstances in connection with or following a change of control of our company. See “Employee Benefit Plans.”

Employee Benefit Plans

2007 Equity Incentive Plan

Our board of directors adopted our 2007 Equity Incentive Plan in December 2006, to be effective upon the completion of this offering, and we expect our stockholders will approve the plan prior to the completion of this offering. The plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, to our employees and any parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance shares and deferred stock units to our employees, directors, consultants and our parent and subsidiary corporations’ employees and consultants.

Share Reserve

We have reserved a total of           shares of our common stock for issuance under the 2007 Equity Incentive Plan. The number of shares reserved for issuance under this plan includes           shares of common stock from the 2002 Stock Plan, which includes:

•  all shares of our common stock reserved under our 2002 Stock Plan which have been reserved but are not issued or subject to outstanding grants, up to a maximum of           shares; and

•  any shares of our common stock issued under our 2002 Stock Plan that are returned to the 2002 Stock Plan as a result of termination of options or that are repurchased by us pursuant to the terms of the plan, up to a maximum of           shares.

In addition, our 2007 Equity Incentive Plan provides for annual increases in the number of shares available for issuance thereunder on the first day of each year, beginning with fiscal 2008, equal to the lesser of:

•  5% of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year; or

•            shares.

Administration of Awards

The 2007 Equity Incentive Plan provides that our board of directors or a committee of our board of directors will be the plan administrator. Our compensation committee will be responsible for administering our 2007 Equity Incentive Plan after the completion of this offering. In the case of awards intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, the committee will consist of two or more “outside directors” within the meaning of Section 162(m).

The plan administrator has the power to determine the terms and conditions of the awards, including the grant date, the exercise price, the number of shares subject to each award, the exercisability of the award, any vesting acceleration and the form of consideration payable upon exercise. The plan administrator also has the authority to institute an exchange program whereby the exercise prices of outstanding awards may be reduced, outstanding awards may be surrendered in exchange for different awards, which may have a lower exercise price, or cash or outstanding awards may be transferred to a financial institution or other person or entity selected by the plan administrator.

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Stock Options

The plan administrator will determine the exercise price of options granted under our 2007 Equity Incentive Plan, but the exercise price generally must be at least equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed 10 years. With respect to any participant who owns 10% or more of the voting power of all classes of our outstanding stock as of the grant date, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. The plan administrator determines the term of all other options.

After termination of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in the option agreement. Generally, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, the option will generally remain exercisable for three months. However, no option may be exercised after the expiration of its term.

Restricted Stock

We are authorized to grant restricted stock awards under our 2007 Equity Incentive Plan. Restricted stock awards are shares of our common stock that vest in accordance with terms and conditions established by the plan administrator. The plan administrator will determine the number of shares of restricted stock granted to any employee, director or consultant. The plan administrator may impose whatever conditions to vesting it determines to be appropriate. For example, the plan administrator may set restrictions based on the achievement of specific performance goals or continuation of service. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.

Restricted Stock Units

Restricted stock units may be granted under our 2007 Equity Incentive Plan. Restricted stock units are awards that will result in a payment to a participant only if performance goals established by the plan administrator are achieved or the awards otherwise vest. The plan administrator will determine the terms and conditions of restricted stock units, including the vesting criteria and the form and timing of payment. Payment for restricted stock units will be made in shares of our common stock.

Stock Appreciation Rights

We are authorized to grant stock appreciation rights under our 2007 Equity Incentive Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. The plan administrator determines the terms and conditions of stock appreciation rights, including when these rights become exercisable. Payment for stock appreciation rights will be made in shares of our common stock. The exercise price of a stock appreciation right generally must be at least 100% of the fair market value on the grant date, except that stock appreciation rights may be granted at an exercise price less than 100% of the fair market value pursuant to a transaction in, and in a manner consistent with, Section 424(a) of the Internal Revenue Code, as amended. Stock appreciation rights expire under the same rules that apply to stock options.

Performance Shares

We are authorized to grant performance shares under our 2007 Equity Incentive Plan. Performance shares are awards that will result in a payment to a participant only if performance goals established by the plan administrator are achieved or the awards otherwise vest. The plan administrator shall determine the number of shares and the conditions that must be satisfied, which typically are based principally on achievement of performance milestones, but may include a service-based component.

Deferred Stock Units

We are authorized to grant restricted stock, restricted stock unit or performance share awards that are paid out in installments or on a deferred basis, in accordance with rules established by the plan administrator.

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Automatic Grants

Our 2007 Equity Incentive Plan also provides for the automatic grant of nonstatutory options to our non-employee directors. Each non-employee director appointed to the board of directors after the closing of this offering will receive an initial option to purchase 50,000 shares of our common stock upon such appointment. In addition, beginning in 2007, non-employee directors who have been directors for at least six months will receive a subsequent option to purchase 15,000 shares of our common stock on the date of each annual meeting of our stockholders. In addition, on the date of each annual meeting beginning in 2007, each non-employee director will receive an option to purchase 10,000 shares for each committee of the board of directors on which he or she serves as chairman, as well as an option to purchase 5,000 shares for each committee of the board of directors on which he or she serves as a non-chairman member. All awards granted under the automatic grant provisions will have a term of ten years and an exercise price equal to the fair market value on the date of grant. In addition, all such awards will be scheduled to vest in equal monthly installments over three years.

Change of Control Transactions

Our 2007 Equity Incentive Plan provides that, in the event of our “change of control,” the successor corporation or its parent or subsidiary will assume, or substitute an equivalent award for, each outstanding award. If there is no assumption or substitution of outstanding awards, the plan administrator will determine the treatment of awards and, if accelerating the awards, will provide notice to the recipient that he or she has the right to exercise the option or stock appreciation right as to all of the shares subject to the award, that all restrictions on restricted stock, restricted stock units and deferred stock units will lapse, that all performance goals or other vesting requirements for performance shares will be deemed achieved, and that all other terms and conditions will be deemed met. The option or stock appreciation right will terminate upon the expiration of the period of time the plan administrator provides in the notice. In the event the service of an outside director is terminated on or following a change of control, other than pursuant to a voluntary resignation, his or her options and stock appreciation rights will fully vest and become immediately exercisable, all restrictions on restricted stock will lapse, all performance goals or other vesting requirements for performance shares will be deemed achieved, and all other terms and conditions will be deemed met.

Plan Amendments

Our plan will automatically terminate in 2016, unless we terminate it sooner. In addition, our board of directors has the authority to amend, suspend or terminate the plan provided such action does not impair the rights of any participant.

Employee Stock Purchase Plan

Concurrently with this offering, we intend to establish the Employee Stock Purchase Plan. Our board of directors adopted the Employee Stock Purchase Plan in December 2006, and we expect our stockholders will approve the plan prior to the completion of this offering.

Share Reserve

A total of           shares of our common stock will be made available for sale. In addition, our Employee Stock Purchase Plan provides for annual increases in the number of shares available for issuance under the Employee Stock Purchase Plan on the first day of each fiscal year, beginning with our 2008 fiscal year, equal to the lesser of:

•             shares; or

•  2% of the outstanding shares of our outstanding common stock on the last day of the immediately preceding Company fiscal year.

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Administration

Our board of directors or a committee of our board administers the Employee Stock Purchase Plan. Our compensation committee will be responsible for administering all of our equity compensation plans. Our board of directors or its committee has full and exclusive authority to interpret the terms of the Employee Stock Purchase Plan and determine eligibility.

Eligibility

All employees of the Company are eligible to participate if they are customarily employed by us or any participating subsidiary for at least 15 hours per week and more than five months in any calendar year. However, an employee may not be granted rights to purchase stock if such employee:

•  immediately after the grant would own stock possessing 5% or more of the total combined voting power or value of all classes of our capital stock, or

•  has rights to purchase stock under all of our employee stock purchase plans that would accrue at a rate that exceeds $25,000 worth of our stock for each calendar year in which such rights are outstanding.

Offering Periods

Our Employee Stock Purchase Plan is intended to qualify under Section 423 of the Internal Revenue Code of 1986, as amended, and provides for consecutive, overlapping 24-month offering periods. The offering periods generally start on the first trading day on or after March 1 and September 1 of each year, except for the first such offering period which will commence on the first trading day on or after the effective date of this registration statement and will end on the earlier of (i) the first trading day on or after March 1, 2009 or (ii) twenty-seven (27) months from the beginning of the first offering period. Typically, each offering period includes four six-month purchase periods. The first purchase period of this offering period will end on the first trading day on or after September 1, 2007, which may result in a purchase period longer or shorter than six months.

Limitations

Our Employee Stock Purchase Plan permits participants to purchase common stock through payroll deductions of up to 15% of their eligible compensation which includes a participant’s base straight time gross earnings, commissions, overtime and shift premium, incentive compensation and bonuses, but exclusive of other compensation. A participant may purchase a maximum of 2,000 shares of common stock during a 6-month purchase period.

Purchase of Shares

Amounts deducted and accumulated by the participant are used to purchase shares of our common stock at the end of each 6-month purchase period. The purchase price is 85% of the fair market value of our common stock at the lesser of such price on the exercise date or the first day of the applicable offering period. If the fair market value at the end of a purchase period is less than the fair market value at the beginning of the offering period, participants will be withdrawn from the current offering period following their purchase of shares on the purchase date and will be automatically re-enrolled in a new offering period. Participants may end their participation at any time during an offering period, and will be paid their payroll deductions to date. Participation ends automatically upon termination of employment with us.

Transferability

A participant may not transfer rights granted under the Employee Stock Purchase Plan other than by will, the laws of descent and distribution or as otherwise provided under the Employee Stock Purchase Plan.

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Change of Control Transactions

In the event of our “change of control,” a successor corporation may assume or substitute each outstanding purchase right. If the successor corporation refuses to assume or substitute for the outstanding purchase rights, the offering period then in progress will be shortened, and a new exercise date will be set.

Plan Amendments and Termination

Our Employee Stock Purchase Plan will automatically terminate in 2026, unless we terminate it sooner. In addition, our board of directors has the authority to amend, suspend or terminate our Employee Stock Purchase Plan, except that, subject to certain exceptions described in the Employee Stock Purchase Plan, no such action may adversely affect any outstanding rights to purchase stock under our Employee Stock Purchase Plan.

2002 Stock Plan

Our 2002 Stock Plan was adopted by our board of directors in April 2002 and approved by our stockholders in April 2002. Our 2002 Stock Plan Provides for the grant of incentive stock options to our employees and any parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options to our employees, outside directors and consultants and any parent and subsidiary corporation’s employees and consultants. The administration and features of the 2002 Stock Plan and the terms of the options granted thereunder are substantially similar to the corresponding features of the 2007 Equity Incentive Plan.

We have reserved a total of           shares of our common stock for issuance pursuant to the 2002 Stock Plan. As of November   , 2006, options to purchase           shares of our common stock were outstanding and           shares were available for future grant under this plan. Our board of directors has decided not to grant any additional options or other awards under the plan following the completion of this offering. However, the plan will continue to govern the terms and conditions of the outstanding awards previously granted under the plan.

Retirement Plans

401(k) Plan.  We maintain a tax-qualified retirement plan that provides eligible employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to participate in the 401(k) plan as of the first day of the month on or following the date they begin employment and participants are able to defer up to 100% of their eligible compensation subject to applicable annual Internal Revenue Code limits. The 401(k) plan permits us to make profit sharing contributions to eligible participants, although we have not made any such contributions to date. Pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. The 401(k) plan is intended to qualify under Sections 401(a) and 501(a) of the Internal Revenue Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan and all contributions are deductible by us when made.

Limitation on Liability and Indemnification Matters

Our certificate of incorporation contains provisions that limit the personal liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:

•  any breach of the director’s duty of loyalty to us or our stockholders;

•  any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

•  unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

•  any transaction from which the director derived an improper personal benefit.

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Our certificate of incorporation provides that we are required to indemnify our directors and our bylaws provide that we are required to indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. Our bylaws also provide that we shall advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. We have entered and expect to continue to enter into agreements to indemnify our directors. With certain exceptions, these agreements provide for indemnification for related expenses including, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by any of our directors in any action or proceeding. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance.

The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty of care. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Since August 1, 2003, we have not been a party to, and we have no plans to be a party to, any transaction or series of similar transactions in which the amount involved exceeded or will exceed $60,000 and in which any current director, executive officer or holder of more than 5% of our capital stock, or entities affiliated with any of them, had or will have a material interest, other than as described above in “Management” and in the transactions described below.

Preferred Stock Sales

The following table summarizes purchases of our preferred stock since August 1, 2003 by our directors, executive officers and holders of more than 5% of our capital stock and their affiliated entities. Each outstanding share of our preferred stock will be converted automatically into one share of our common stock upon the completion of this offering.

	Shares of Preferred Stock				Aggregate
Purchasers	Series B		Series C	Series D	Purchase Price
Executive Officers and Directors:
Dominic P. Orr(1)					$	780,758
5% Stockholders:
Entities affiliated with Matrix Partners					$	17,375,555
Entities affiliated with Sequoia Capital, L.P.					$	15,132,422
Entities affiliated with Trinity Ventures					$	17,150,497
Entities affiliated with WK Technology		—			$	12,985,779
Total					$	63,425,011

(1) Including immediate family members of, and entities affiliated with, Mr. Orr.

Registration Rights Agreement

Holders of our preferred stock are entitled to certain registration rights with respect to the common stock issued or issuable upon conversion of the preferred stock. See “Description of Capital Stock — Registration Rights” for additional information.

Stock Option Grants

Certain stock option grants to our directors and related option grant policies are described in this prospectus under the caption “Management — Director Compensation.”

Employment Arrangements and Indemnification Agreements

We have entered into employment arrangements with certain of our executive officers. See “Management — Employment Agreements and Change of Control Arrangements.”

As of the closing of the offering, we expect to enter into indemnification agreements with each of our directors. The indemnification agreements and our certificate of incorporation and bylaws require us to indemnify our directors to the fullest extent permitted by Delaware law. See “Management — Limitations on Liability and Indemnification Matters.”

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PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the beneficial ownership of our common stock at December 13, 2006, as adjusted to reflect the sale of common stock offered by us in this offering, for:

•  each person who we know beneficially owns more than five percent of our common stock;

•  each of our directors;

•  each of our named executive officers; and

•  all of our directors and executive officers as a group.

We have determined beneficial ownership in accordance with SEC rules. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.

Applicable percentage ownership is based on           shares of common stock outstanding at December 13, 2006. For purposes of the table below, we have assumed that           shares of common stock will be outstanding upon completion of this offering, including           shares of common stock that we will issue to Microsoft based upon an assumed initial public offering price of $      per share. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to options, warrants or other convertible securities held by that person or entity that are currently exercisable or exercisable within 60 days of December 13, 2006. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Beneficial ownership representing less than one percent is denoted with an “*.”

Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Aruba Networks, Inc., 1322 Crossman Ave., Sunnyvale, CA 94089-1113.

	Shares Beneficially Owned
	Number	Percent
		Before			After
		Offering			Offering
5% Stockholders:
Entities affiliated with Matrix Partners(1)			22.6	%
Entities affiliated with Sequoia Capital, L.P.(2)			20.6	%
Entities affiliated with Trinity Ventures(3)			15.5	%
Entities affiliated with WK Technology(4)			7.8	%
Directors and Named Executive Officers:
Dominic P. Orr(5)			10.6	%
Steffan Tomlinson(6)			*
David Butler(7)			*
Donald LeBeau			3.9	%
Keerti Melkote(8)			3.5	%
Richard Wilmer(9)			*
Bernard Guidon(10)			*
Emmanuel Hernandez			*
Doug Leone(2)			20.6	%
Shirish S. Sathaye(1)			22.6	%
Daniel Warmenhoven(11)			*
All directors and executive officers as a group (10 persons)(12)			55.4	%

* Less than one percent.

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(1)	Consists of (i)           shares held of record by Matrix Partners VII, L.P., and (ii)           shares held of record by Weston & Co. VII LLC, as Nominee. Shirish Sathaye is a Managing Member of Matrix VII Management Co., L.L.C., the general partner of Matrix Partners VII, L.P. Mr. Sathaye, by virtue of his management position in Matrix VII Management Co., L.L.C., has sole voting and dispositive power with respect to these shares. Mr. Sathaye disclaims beneficial ownership of these shares, except to the extent of his pecuniary interest in such shares. Weston & Co. VII LLC (“Weston”) is nominee for certain beneficial owners. Mr. Sathaye is authorized by the sole member of Weston to take any action with respect to such shares as directed by the underlying beneficial owners, and Mr. Sathaye disclaims beneficial ownership of these shares. Mr. Sathaye does not have sole or shared voting or investment control with respect to any of the shares held by Weston. The address of the entities affiliated with Matrix Partners and Mr. Sathaye is Bay Colony Corporate Center, 1000 Winter Street, Suite 4500, Waltham, Massachusetts 02451.
(2)	Consists of (i)           shares held of record by Sequoia Capital X, (ii)           shares held of record by Sequoia Technology Partners X, (iii)           shares held of record by Sequoia Capital X Principals Fund, (iv)           shares held of record by Sequoia Capital Growth Fund III, (v)           shares held of record by Sequoia Capital Growth Partners III, and (vi)           shares held of record by Sequoia Capital Growth III Principals Fund. Doug Leone is one of the managing members of SC X Management, L.L.C. and SCGF III Management, L.L.C., which are the general partners of these Sequoia funds, and exercises voting and investment power over the shares held by the Sequoia entities. Mr. Leone disclaims beneficial ownership of the shares held by the Sequoia entities except to the extent of his pecuniary interest in these entities. The address of the entities affiliated with Sequoia Capital L.P. and Mr. Leone is 3000 Sand Hill Road, Bldg. 4, Suite 180, Menlo Park, California 94025.
(3)	Consists of (i)           shares held of record by Trinity Ventures VIII, L.P., (ii)           shares held of record by Trinity VIII Side-by-Side Fund, L.P., (iii)           shares held of record by Trinity VIII Entrepreneurs’ Fund, L.P., (iv)           shares held of record by Trinity Ventures VII, L.P., and (v)           shares held of record by Trinity VII Side-by-Side Fund, L.P. The address of the entities affiliated with Trinity Ventures is 3000 Sand Hill Road, Bldg. 4, Suite 160, Menlo Park, California 94025.
(4)	Consists of (i)           shares held of record by WK Technology Fund, (ii)           shares held of record by WK Technology Fund IV, (iii)           shares held of record by WK Technology Fund V, (iv)           shares held of record by WK Technology Fund VI, (v)           shares held of record by WK Technology Fund VII, (vi)           shares held of record by WK Technology Fund VIII, (vii)           shares held of record by WK Global Investment Limited, (viii)           shares held of record by WK Global Investment II Limited, and (ix)           shares held of record by WK Global Investment III Limited. The address of the entities affiliated with WK Technology is 2880 Lakeside Drive, Suite. 130, Santa Clara, California 95054.
(5)	Consists of (i)           shares held of record by Mr. Orr, (ii)           shares held of record by Ardmore Ventures, (iii)            shares held of record by D. Orr Management Company, LLC, (iv)            shares held of record by Praia Grande Ventures, LP, and (v) options to purchase           shares of common stock that are immediately exercisable. As of February 11, 2007,           of the shares underlying these options will be subject to vesting restrictions that lapse over time.
(6)	Consists of (i)            shares held of record by the Tomlinson Family Trust U/A dtd 12/10/03, and (ii) options to purchase           shares of common stock that are immediately exercisable. As of February 11, 2007,           of the shares underlying these options will be subject to vesting restrictions that lapse over time. Voting and investment power over the shares held by the Tomlinson Family Trust U/A dtd 12/10/03 is shared by Mr. and Mrs. Tomlinson, its co-trustees.
(7)	Consists of (i)            shares held of record by The Plascassier Trust, and (ii) options to purchase           shares of common stock that are immediately exercisable and fully vested. Voting and investment power over the shares held by The Plascassier Trust is exercised by Mr. Butler, its trustee.
(8)	Consists of (i)            shares held of record, and (ii) options to purchase           shares of common stock that are immediately exercisable. As of February 11, 2007,           of the shares underlying these options will be subject to vesting restrictions that lapse over time.

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(9)	Consists of options to purchase           shares of common stock that are immediately exercisable. As of February 11, 2007,           of the shares underlying these options will be subject to vesting restrictions that lapse over time.
(10)	Consists of options to purchase           shares of common stock that are immediately exercisable. As of February 11, 2007,           of the shares underlying these options will be subject to vesting restrictions that lapse over time.
(11)	Consists of options to purchase           shares of common stock that are immediately exercisable. As of February 11, 2007,           of the shares underlying these options will be subject to vesting restrictions that lapse over time.
(12)	Includes options to purchase           shares of common stock that are immediately exercisable. As of February 11, 2007,           of the shares underlying these options will be subject to vesting restrictions that lapse over time. Excludes shares of common stock and options to purchase shares of common stock held by Donald LeBeau and David Butler, both of whom are not current executive officers.

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DESCRIPTION OF CAPITAL STOCK

General

The following is a summary of the rights of our common stock and preferred stock and certain provisions of our restated certificate of incorporation and amended and restated bylaws, as they will be in effect upon the completion of this offering. For more detailed information, please see our restated certificate of incorporation and amended and restated bylaws, which are filed as exhibits to the registration statement of which this prospectus is part.

Immediately following the completion of this offering, our authorized capital stock will consist of           shares, with a par value of $0.0001 per share, of which:

•            shares will be designated as common stock; and

•            shares will be designated as preferred stock.

At          , 2006, we had outstanding no shares of preferred stock and           shares of common stock, held of record by           stockholders, assuming the automatic conversion of all outstanding shares of our preferred stock into          shares of common stock and the issuance of shares of our common stock upon the consummation of this offering with an aggregate value of $3.5 million (based upon the actual initial public offering price) to Microsoft in a private placement in which we will receive no cash consideration at the time such shares are issued. In addition, as of          , 2006,          shares of our common stock were subject to outstanding options, and           shares of our capital stock were subject to outstanding warrants that do not expire upon the completion of this offering. For more information on our capitalization, see “Capitalization.”

Common Stock

The holders of our common stock are entitled to one vote per share on all matters to be voted on by our stockholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common stock are entitled to receive ratably such dividends as may be declared by the board of directors out of funds legally available therefor. In the event of our liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and distribution of the liquidation preferences of any then outstanding shares of preferred stock. Holders of common stock have no preemptive, conversion or subscription rights. There are no redemption or sinking fund provisions applicable to the common stock.

Preferred Stock

After the consummation of this offering and the filing of our restated certificate of incorporation, our board of directors will have the authority, without further action by our stockholders, to designate and issue up to           shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions granted to or imposed upon each such series of preferred stock, including dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption, redemption prices, liquidation preference and sinking fund terms, any or all of which may be greater than or senior to the rights of the common stock. The issuance of preferred stock could adversely affect the voting power of holders of common stock and reduce the likelihood that such holders will receive dividend payments or payments upon liquidation. Such issuance could have the effect of decreasing the market price of the common stock. The issuance of preferred stock or even the ability to issue preferred stock could also have the effect of delaying, deterring or preventing a change of control or other corporate action. Immediately after the completion of this offering, no shares of preferred stock will be outstanding, and we currently have no plans to issue any shares of preferred stock.

Warrants

At          , 2006, we had warrants outstanding to purchase          shares of our common stock, assuming the automatic conversion of our preferred stock into common stock, at exercise prices ranging from $      to $      per share. These warrants will expire at various times between March 2010 and May 2011. Each warrant

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contains provisions for the adjustment of the exercise price and the number of shares issuable upon exercise in the event of stock dividends, stock splits, reorganizations, and reclassifications, consolidations and the like.

Private Placement with Microsoft

On July 15, 2005, we entered into a stock issuance agreement with Microsoft under which we agreed to issue shares of our common stock to Microsoft upon the consummation of this offering with an aggregate value of $3.5 million (based upon the actual initial public offering price) in a private placement in which we will receive no cash consideration at the time such shares are issued. Further, under this agreement, Microsoft has agreed that such shares of common stock issued to it shall be subject to the standard restrictions applicable to a private placement of securities under applicable state and federal securities laws, and such other restrictions on transferability as may be required by any underwriters and applicable to all of our stockholders in connection with the offering.

If, within 12 months following this offering, we propose to register any shares of our common stock under the Securities Act and we include any other shares held by any of our stockholders in such subsequent offering, Microsoft will be entitled to notice of the registration and to include half of the shares issued to it pursuant to the stock issuance agreement.

Registration Rights

The holders of an aggregate of           shares of our common stock, including shares of common stock issuable upon the automatic conversion of our preferred stock, are entitled to the following rights with respect to registration of the resale of such shares under the Securities Act pursuant to an investors’ rights agreement by and among us and certain of our stockholders. In addition, the holders of an additional           shares of registrable securities issued or issuable upon exercise of warrants are also entitled to the rights described under “Piggyback Registration Rights” below. We refer to these shares collectively as registrable securities.

Registration of shares of common stock in response to exercise of the following rights would result in the holders being able to trade these shares without restriction under the Securities Act when the applicable registration statement is declared effective. We generally must pay all expenses, other than underwriting discounts and commissions, related to any registration effected pursuant to the exercise of these registration rights.

The registration rights terminate upon the earlier of five years after completion of this offering, or with respect to the registration rights of an individual holder, when the holder of one percent or less of our outstanding common stock can sell all of such holder’s registrable securities in any three-month period without registration, in compliance with Rule 144 of the Securities Act or another similar exemption.

Demand Registration Rights

If, at any time after          , 2007, the holders of at least a majority of the registrable securities request in writing that an amount of securities having a proposed aggregate offering price of at least $10,000,000 be registered, we may be required to register their shares. We are only obligated to effect two registrations in response to these demand registration rights for the holders of registrable securities. Depending on certain conditions, however, we may defer such registration for up to 120 days. The underwriters of any underwritten offering have the right to limit the number of shares registered by these holders for marketing reasons.

Piggyback Registration Rights

If at any time we propose to register any shares of our common stock under the Securities Act after this offering, subject to certain exceptions, the holders of registrable securities will be entitled to notice of the registration and to include their share of registrable securities in the registration. The underwriters of any underwritten offering have the right to limit the number of shares registered by these holders for marketing reasons, subject to certain limitations.

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Form S-3 Registration Rights

The holders of at least a majority of the registrable securities may request in writing that we effect a registration on Form S-3 under the Securities Act, when registration of our shares under Form S-3 becomes possible, and when the proposed aggregate offering price of the shares to be registered by the holders requesting registration is at least $3,000,000, subject to certain exceptions. Depending on certain conditions, however, we may defer such registration for up to 120 days.

Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws

Certain provisions of Delaware law, our restated certificate of incorporation and our amended and restated bylaws to become effective upon completion of this offering contain provisions that could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which are summarized below, are expected to discourage certain types of coercive takeover practices and inadequate takeover bids. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging such proposals, including proposals that are priced above the then-current market value of our common stock, because, among other reasons, the negotiation of such proposals could result in an improvement of their terms.

Certificate of Incorporation and Bylaws

Our restated certificate of incorporation and amended and restated bylaws to become effective upon completion of this offering include provisions that:

•  authorize the board of directors to issue, without further action by the stockholders, up to           shares of undesignated preferred stock;

•  require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

•  specify that special meetings of our stockholders can be called only by the board of directors, the chairman of the board, the chief executive officer or the president;

•  establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors;

•  provide that directors may be removed only for cause; and

•  provide that vacancies on our board of directors may be filled only be a majority of directors then in office, even though less than a quorum.

Delaware Anti-Takeover Statute

We are subject to the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:

•  prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

•  upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

78

•  at or subsequent to the date of the transaction, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662/3% of the outstanding voting stock which is not owned by the interested stockholder.

Generally, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may discourage business combinations or other attempts that might result in a premium over the market price for the shares of common stock held by our stockholders.

The provisions of Delaware law, our restated certificate of incorporation and our amended and restated bylaws to become effective upon completion of this offering could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is          . The transfer agent’s address is          , and its telephone number is          .

Nasdaq Global Market Listing

We expect to apply to have our common stock listed on the Nasdaq Global Market under the symbol “ARUN.”

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SHARES ELIGIBLE FOR FUTURE SALE

Before this offering, there has not been a public market for shares of our common stock. Future sales of substantial amounts of shares of our common stock, including shares issued upon the exercise of outstanding options, in the public market after this offering, or the possibility of these sales occurring, could cause the prevailing market price for our common stock to fall or impair our ability to raise equity capital in the future.

Upon the completion of this offering, a total of           shares of common stock will be outstanding, assuming that there are no exercises of options after          , 2006. Of these shares, all           shares of common stock sold in this offering by us, plus any shares sold upon exercise of the underwriters’ option to purchase additional shares, will be freely tradable in the public market without restriction or further registration under the Securities Act, unless these shares are held by “affiliates,” as that term is defined in Rule 144 under the Securities Act.

The remaining           shares of common stock will be “restricted securities,” as that term is defined in Rule 144 under the Securities Act. These restricted securities are eligible for public sale only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which are summarized below.

Subject to the lock-up agreements described below and the provisions of Rules 144 and 701 under the Securities Act, these restricted securities will be available for sale in the public market as follows:

	Number of
Date	Shares
On the date of this prospectus
Between 90 and 180 days after the date of this prospectus
At various times beginning more than 180 days after the date of this prospectus

In addition, of the           shares of our common stock that were subject to stock options outstanding as of          , 2006, options to purchase           shares of common stock were vested as of          , 2006 and will be eligible for sale 180 days following the effective date of this offering.

Rule 144

In general, under Rule 144 as currently in effect, a person who owns shares that were acquired from us or an affiliate of us at least one year prior to the proposed sale is entitled to sell upon the expiration of the lock-up agreements described below, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:

•  1% of the number of shares of common stock then outstanding, which will equal approximately           shares immediately after the offering; or

•  the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

Rule 144(k)

Under Rule 144(k), a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than our affiliates, is entitled to sell such shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

Rule 701

In general, under Rule 701 as currently in effect, any of our employees, consultants or advisors who purchase shares from us in connection with a compensatory stock or option plan or other written agreement in a transaction before the effective date of this offering that was completed in reliance on Rule 701 and complied with the

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requirements of Rule 701 will, subject to the lock-up restrictions described below, be eligible to resell such shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with certain restrictions, including the holding period, contained in Rule 144.

Lock-Up Agreements

We and our officers, directors, and holders of all of our common stock have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our common stock or securities convertible into or exchangeable for shares of common stock, file or cause to be filed a registration statement covering shares of common stock or any securities that are convertible into, exchangeable for, or represent the right to receive, common stock or any substantially similar securities, or publicly disclose the intention to do any of the foregoing restrictions, during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Goldman, Sachs & Co. and Lehman Brothers Inc. This agreement does not apply to the issuance by us of shares under any existing employee benefit plans. This agreement is subject to certain exceptions, and is also subject to extension for up to an additional 34 days, as set forth in “Underwriting.”

Registration Rights

Upon completion of this offering, the holders of           shares of common stock or their transferees will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates. See “Description of Capital Stock — Registration Rights” for additional information.

Registration Statements

We intend to file a registration statement on Form S-8 under the Securities Act covering all of the shares of common stock subject to options outstanding or reserved for issuance under our stock plans. We expect to file this registration statement as soon as practicable after this offering. However, none of the shares registered on Form S-8 will be eligible for resale until the expiration of the lock-up agreements to which they are subject.

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UNDERWRITING

We and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co. and Lehman Brothers Inc. are acting as the joint book-running managers for this offering and are the representatives of the underwriters.

Underwriters	Number of Shares
Goldman, Sachs & Co.
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
RBC Capital Markets Corporation
Total

The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an additional           shares from us to cover such sales. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase           additional shares.

	No Exercise	Full Exercise
Per Share	$	$
Total	$	$

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $      per share from the initial public offering price. Any such securities dealers may resell any shares purchased from the underwriters to certain other brokers or dealers at a discount of up to $      per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms.

We and our officers, directors, and holders of all of our common stock have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our common stock or securities convertible into or exchangeable for shares of common stock, file or cause to be filed a registration statement covering shares of common stock or any securities that are convertible into, exchangeable for, or represent the right to receive, common stock or any substantially similar securities, or publicly disclose the intention to do any of the foregoing restrictions, during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Goldman, Sachs & Co. and Lehman Brothers Inc. This agreement does not apply to the issuance by us of shares under any existing employee benefit plans. See “Shares Available for Future Sale” for a discussion of certain transfer restrictions.

The 180-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the 180-day restricted period we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release of the announcement of the material news or material event.

Prior to the offering, there has been no public market for the shares. The initial public offering price will be negotiated among us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance,

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estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

We will make an application to quote our common stock on the Nasdaq Global Market under the symbol “ARUN.”

In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Shorts sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares from us. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. “Naked” short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our common stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the Nasdaq Global Market or otherwise.

The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.

We estimate that the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $     .

We have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

Certain of the underwriters and their respective affiliates may in the future perform, various financial advisory and investment banking services for us, for which they will receive customary fees and expenses.

A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by one or more of the underwriters and/or selling group members participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter or selling group member, prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the representatives on the same basis as other allocations.

Other than the prospectus in electronic format, the information on any underwriter’s or selling group member’s web site and any information contained in any other web site maintained by an underwriter or selling group member is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter or selling group member in its capacity as underwriter or selling group member and should not be relied upon by investors.

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If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

United Kingdom

Each of the underwriters has represented and agreed that:

(a) it has not made or will not make an offer of shares to the public in the United Kingdom within the meaning of section 102B of the Financial Services and Markets Act 2000 (as amended) (FSMA) except to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities or otherwise in circumstances which do not require the publication by us of a prospectus pursuant to the Prospectus Rules of the Financial Services Authority (“FSA”);

(b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA does not apply to us; and

(c) it has complied with, and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of Shares to the public in that Relevant Member State at any time:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

(c) in any other circumstances which do not require the publication by the issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

Hong Kong

The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong

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Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

Japan

The securities have not been and will not be registered under the Securities and Exchange Law of Japan (the “Securities and Exchange Law”) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California. Simpson Thacher & Bartlett LLP, Palo Alto, California is acting as counsel to the underwriters.

EXPERTS

The consolidated financial statements as of July 31, 2005 and 2006 and for each of the three years in the period ended July 31, 2006 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

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WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith. For further information about us and the common stock offered hereby, we refer you to the registration statement and the exhibits and schedules filed thereto. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. Upon completion of this offering, we will be required to file periodic reports, proxy statements, and other information with the SEC pursuant to the Securities Exchange Act of 1934. You may read and copy this information at the Public Reference Room of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that site is www.sec.gov.

We intend to provide our stockholders with annual reports containing financial statements that have been audited by an independent registered public accounting firm, and to file with the SEC quarterly reports containing unaudited financial data for the first three quarters of each year.

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ARUBA NETWORKS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Aruba Networks, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, redeemable convertible preferred stock and stockholders’ equity (deficit) and cash flows present fairly, in all material respects, the financial position of Aruba Networks, Inc. and its subsidiaries at July 31, 2005 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended July 31, 2006, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 16(b) presents fairly, in all material respects, the information set forth therein when read in conjunction with the accompanying consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated financial statements, the Company adopted FASB Staff Position 150-5 (“FSP 150-5”), Issuer’s Accounting under FASB Statement No. 150 for Freestanding Warrants and Other Instruments on Shares that are Redeemable, during the year ended July 31, 2006.

/s/ PricewaterhouseCoopers LLP

San Jose, California

December 13, 2006

F-2

ARUBA NETWORKS, INC.

CONSOLIDATED BALANCE SHEETS

										Pro Forma
										Stockholders’
										Equity
										October 31,
	July 31,			July 31,			October 31,			2006
	2005			2006			2006			(See Note 1)
							(Unaudited)
	(In thousands, except per share data)
ASSETS
Current assets
Cash and cash equivalents	$	4,293		$	9,263		$	17,908
Short-term investments		899			—			—
Accounts receivable, net		8,814			13,296			13,898
Inventory		3,922			6,093			7,423
Deferred costs		6,659			3,360			2,418
Prepaids and other		1,011			1,758			2,078
Total current assets		25,598			33,770			43,725
Property and equipment, net		1,437			1,971			2,224
Deferred costs		3,140			1,960			1,588
Other assets		162			316			455
Total assets	$	30,337		$	38,017		$	47,992
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	4,239		$	4,385		$	3,243
Accrued liabilities		5,246			6,694			10,344		$	8,619
Income taxes payable		16			216			247
Equipment loans payable		1,188			613			432
Deposit for Series D redeemable convertible preferred stock		—			19,329			29,930
Deferred revenue		15,194			11,637			10,658
Total current liabilities		25,883			42,874			54,854
Equipment loans payable		679			—			—
Deferred revenue		7,166			6,803			6,062
Other long-term liabilities		460			1,963			3,115
Total liabilities		34,188			51,640			64,031
Commitments and contingencies (Note 12)
Redeemable convertible preferred stock: $0.0001 par value;
46,445 shares authorized; 45,108 shares issued and outstanding at July 31, 2005 and 2006 and at October 31, 2006 (unaudited); liquidation preference: $58,213 at July 31, 2005, 2006 and October 31, 2006 (unaudited); no shares issued and outstanding pro forma (unaudited)		58,009			58,009			58,009			—
Stockholders’ equity (deficit)
Common stock: $0.0001 par value; 75,000 shares authorized; 14,723, 15,257 and 15,500 shares issued and outstanding at July 31, 2005 and 2006 and at October 31, 2006 (unaudited), respectively, and 60,608 shares issued and outstanding pro forma (unaudited)		2			2			2			6
Additional paid-in capital		5,428			7,443			7,173			66,903
Deferred stock-based compensation		(2,586	)		(2,364	)		—			—
Accumulated deficit		(64,704	)		(76,713	)		(81,223	)		(81,223	)
Total stockholders’ equity (deficit)		(61,860	)		(71,632	)		(74,048	)	$	(14,314	)
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)	$	30,337		$	38,017		$	47,992

The accompanying notes are an integral part of the consolidated financial statements.

F-3

ARUBA NETWORKS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended July 31,									Three Months Ended October 31,
	2004			2005			2006			2005			2006
										(Unaudited)
	(In thousands, except per share data)
Revenues
Product	$	—		$	—		$	43,171		$	—		$	19,106
Professional services and support		—			—			2,985			—			2,121
Ratable product and related professional services and support		1,147			12,043			26,347			6,775			3,278
Total revenues		1,147			12,043			72,503			6,775			24,505
Cost of revenues
Product		—			—			16,904			—			7,301
Professional services and support		—			—			2,409			—			1,174
Ratable product and related professional services and support		2,696			9,077			10,572			3,794			1,186
Total cost of revenues		2,696			9,077			29,885			3,794			9,661
Gross profit (loss)		(1,549	)		2,966			42,618			2,981			14,844
Operating expenses
Research and development		6,982			9,353			14,130			3,273			5,091
Sales and marketing		11,277			22,369			33,765			7,149			10,808
General and administrative		2,531			3,576			5,963			1,116			2,613
Total operating expenses		20,790			35,298			53,858			11,538			18,512
Operating loss		(22,339	)		(32,332	)		(11,240	)		(8,557	)		(3,668	)
Other income (expense), net
Interest income		158			350			551			121			112
Interest expense		(285	)		(443	)		(315	)		(93	)		(35	)
Other expense, net		(2	)		(54	)		(765	)		(70	)		(831	)
Total other income (expense), net		(129	)		(147	)		(529	)		(42	)		(754	)
Loss before provision for income taxes and cumulative effect of change in accounting principle		(22,468	)		(32,479	)		(11,769	)		(8,599	)		(4,422	)
Provision for income taxes		34			156			306			—			88
Loss before cumulative effect of change in accounting principle		(22,502	)		(32,635	)		(12,075	)		(8,599	)		(4,510	)
Cumulative effect of change in accounting principle		—			—			66			66			—
Net loss	$	(22,502	)	$	(32,635	)	$	(12,009	)	$	(8,533	)	$	(4,510	)
Net loss per common share, basic and diluted	$	(6.35	)	$	(4.66	)	$	(1.07	)	$	(0.88	)	$	(0.34	)
Shares used in computing basic and diluted net loss per common share		3,546			6,999			11,211			9,660			13,279
Pro forma net loss per common share, basic and diluted (unaudited)							$	(0.21	)				$	(0.08	)
Shares used in computing pro forma basic and diluted net loss per common share (unaudited)								56,319						58,387
Stock-based compensation expense included in above:
Cost of revenues	$	5		$	23		$	34		$	6		$	47
Research and development		42			179			259			52			226
Sales and marketing		272			678			749			156			888
General and administrative		71			194			213			48			653

The accompanying notes are an integral part of the consolidated financial statements.

F-4

ARUBA NETWORKS, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND

STOCKHOLDERS’ EQUITY (DEFICIT)

	Redeemable Convertible									Additional			Deferred
	Preferred Stock				Common Stock					Paid-in			Stock-Based			Accumulated
	Shares		Amount		Shares			Amount		Capital			Compensation			Deficit			Total
	(In thousands)
Balance at July 31, 2003		14,263	$	9,450		8,268		$	1	$	356		$	—		$	(9,567	)	$	(9,210	)
Repurchase of common stock from founders of the Company		—		—		(406	)		—		—			—			—			—
Issuance of Series B redeemable convertible preferred stock, net of issuance costs of $43		18,333		21,957		—			—		—			—			—			—
Issuance of Series C redeemable convertible preferred stock, net of issuance costs of $67		11,701		24,903		—			—		—			—			—			—
Issuance of preferred stock warrants in connection with leases		—		—		—			—		264			—			—			264
Fair value of shares issued to employees		—		—		10			—		1			—			—			1
Fair value of shares issued to non-employees		—		—		40			—		8			—			—			8
Fair value of stock options issued to non-employees		—		—		—			—		206			—			—			206
Exercise of common stock options		—		—		6,900			1		769			—			—			770
Repurchase of common stock		—		—		(226	)		—		(14	)		—			—			(14	)
Deferred compensation related to issuance of common stock options, net		—		—		—			—		1,484			(1,484	)		—			—
Amortization of deferred stock-based compensation		—		—		—			—		—			175			—			175
Net loss		—		—		—			—		—			—			(22,502	)		(22,502	)
Balance at July 31, 2004		44,297		56,310		14,586			2		3,074			(1,309	)		(32,069	)		(30,302	)
Issuance of Series C redeemable convertible preferred stock, net of issuance costs of $31		811		1,699		—			—		—			—			—			—
Fair value of shares issued to employees		—		—		31			—		8			—			—			8
Fair value of stock options issued to non-employees		—		—		—			—		327			—			—			327
Exercise of common stock options		—		—		761			—		184			—			—			184
Repurchase of common stock						(655	)		—		(77	)								(77	)
Deferred compensation related to issuance of common stock options, net		—		—		—			—		1,912			(1,912	)		—			—
Amortization of deferred stock-based compensation		—		—		—			—		—			635			—			635
Net loss		—		—		—			—		—			—			(32,635	)		(32,635	)
Balance at July 31, 2005		45,108		58,009		14,723			2		5,428			(2,586	)		(64,704	)		(61,860	)
Fair value of shares issued to employees		—		—		3			—		2			—			—			2
Fair value of shares issued to non-employees		—		—		16			—		24			—			—			24
Fair value of stock options issued to non-employees		—		—		—			—		306			—			—			306
Exercise of common stock options		—		—		1,896			—		1,381			—			—			1,381
Repurchase of common stock		—		—		(1,381	)		—		(162	)		—			—			(162	)
Deferred compensation related to issuance of common stock options, net		—		—		—			—		804			(804	)		—			—
Amortization of deferred stock-based compensation		—		—		—			—		—			1,026			—			1,026
Reclassification of preferred stock warrants to liability		—		—		—			—		(340	)		—			—			(340	)
Cumulative effect of change in accounting principle related to preferred stock warrants		—		—		—			—		—			—			66			66
Net loss		—		—		—			—		—			—			(12,075	)		(12,075	)
Balance at July 31, 2006		45,108		58,009		15,257			2		7,443			(2,364	)		(76,713	)		(71,632	)
Fair value of shares issued to employees (unaudited)		—		—		21			—		50			—			—			50
Fair value of shares issued to non-employees (unaudited)		—		—		24			—		73			—			—			73
Fair value of stock options issued to non-employees (unaudited)		—		—		—			—		24			—			—			24
Exercise of common stock options (unaudited)		—		—		253			—		289			—			—			289
Repurchase of common stock (unaudited)		—		—		(55	)		—		(9	)		—			—			(9	)
Deferred compensation related to issuance of common stock options, net (unaudited)		—		—		—			—		(2,364	)		2,364			—			—
Stock-based compensation expense related to stock options (unaudited)		—		—		—			—		1,667			—			—			1,667
Net loss (unaudited)		—		—		—			—		—			—			(4,510	)		(4,510	)
Balance at October 31, 2006 (unaudited)		45,108	$	58,009		15,500		$	2	$	7,173		$	—		$	(81,223	)	$	(74,048	)

The accompanying notes are an integral part of the consolidated financial statements.

F-5

ARUBA NETWORKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

										Three Months Ended
	Years Ended July 31,									October 31,
	2004			2005			2006			2005			2006
										(Unaudited)
	(In thousands)
Cash flows from operating activities
Net loss	$	(22,502	)	$	(32,635	)	$	(12,009	)	$	(8,533	)	$	(4,510	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		902			1,156			1,549			329			396
Provision for (reduction in) doubtful accounts		26			164			435			34			(65	)
Write downs for excess and obsolete inventory		267			1,313			314			76			153
Compensation related to stock options and share awards		390			1,074			1,255			262			1,814
Net realized gains on short-term investments		(17	)		(37	)		(1	)		(1	)		—
Non-cash interest expense		139			180			167			45			16
Change in carrying value of preferred stock warrant liability		—			—			601			1			784
Loss on disposal of fixed assets		—			—			6			—			—
Changes in operating assets and liabilities
Accounts receivable		(2,385	)		(6,565	)		(4,918	)		773			(536	)
Inventory		(2,800	)		(2,234	)		(2,485	)		(671	)		(1,482	)
Prepaids and other		(446	)		(352	)		(650	)		(206	)		(290	)
Deferred costs		(2,363	)		(7,389	)		4,479			(2,688	)		1,315
Other assets		—			(96	)		(216	)		(62	)		(142	)
Accounts payable		526			3,222			147			(1,409	)		(1,143	)
Deferred revenue		5,775			16,508			(3,921	)		9,575			(1,720	)
Other current and noncurrent liabilities		2,158			3,129			759			(1,362	)		3,083
Income taxes payable		14			(5	)		200			127			31
Net cash used in operating activities		(20,316	)		(22,567	)		(14,288	)		(3,710	)		(2,296	)
Cash flows from investing activities
Purchases of short-term investments		(4,986	)		(7,874	)		—			—			—
Proceeds from sales and maturities of short-term investments		4,004			8,012			900			900			—
Purchases of property and equipment		(1,274	)		(1,332	)		(2,092	)		(830	)		(650	)
Net cash (used in) provided by investing activities		(2,256	)		(1,194	)		(1,192	)		70			(650	)
Cash flows from financing activities
Proceeds from equipment financing		2,237			—			—			—			—
Repayments on equipment loan obligations		(740	)		(1,132	)		(1,358	)		(301	)		(195	)
Deposit for Series D redeemable convertible preferred stock, net (Note 8)		—			—			19,232			19,232			10,571
Cash received under stock issuance agreement (Note 9)		—			—			1,354			449			934
Proceeds from issuance of redeemable convertible preferred stock, net		46,786			1,699			—			—			—
Proceeds from issuance of common stock		769			184			1,381			205			289
Repurchases of unvested common stock		(14	)		(77	)		(162	)		(18	)		(9	)
Net cash provided by financing activities		49,038			674			20,447			19,567			11,590
Effect of exchange rate changes on cash and cash equivalents		9			(10	)		3			(3	)		1
Net increase (decrease) in cash and cash equivalents		26,475			(23,097	)		4,970			15,924			8,645
Cash and cash equivalents, beginning of period		915			27,390			4,293			4,293			9,263
Cash and cash equivalents, end of period	$	27,390		$	4,293		$	9,263		$	20,217		$	17,908
Supplemental disclosures of cash flow information
Income taxes paid	$	1		$	96		$	161		$	25		$	60
Interest paid		155			254			136			46			17
Supplemental disclosure of non-cash investing and financing activities
Reclassification of preferred stock warrants to liability		—			—			340			340			—

The accompanying notes are an integral part of the consolidated financial statements.

F-6

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   The Company and its Significant Accounting Policies

The Company

Aruba Networks, Inc. (the “Company”) was incorporated in the state of Delaware on February 11, 2002. The Company markets and sells its Aruba Mobile Edge Architecture, which allows end-users to roam to different locations within an enterprise campus or office building while maintaining secure and consistent access to their network resources. This architecture also enables network access and prioritized application delivery based on an end-user’s organizational role and authorization level. The Aruba Mobile Edge Architecture consists of the ArubaOS modular operating system, optional value-added software modules, a centralized mobility management system, high performance programmable mobility controllers, and wired and wireless access points.

The Company manufactures and markets controllers, wired and wireless access points, and an advanced mobility software suite and began shipping its first products in June 2003. The Company has offices in North America, Europe, the Middle East and the Asia Pacific region and employs staff around the world.

Significant Accounting Policies

Basis of Presentation and Liquidity

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

The Company has a limited operating history and at July 31, 2006 has an accumulated deficit of approximately $76.7 million. Management believes it has sufficient cash and liquid resources to meet its obligations over the next 12 months. Failure to generate sufficient revenue, raise additional capital or reduce discretionary spending could affect the Company’s ability to achieve its intended business objectives.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Unaudited Interim Financial Information

The accompanying consolidated balance sheet as of October 31, 2006, the consolidated statements of operations and of cash flows for the three months ended October 31, 2005 and 2006 and the consolidated statement of redeemable convertible preferred stock and stockholders’ equity for the three months ended October 31, 2006 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position as of October 31, 2006 and results of operations and cash flows for the three months ended October 31, 2005 and 2006. The financial data and other information disclosed in these notes to the financial statements related to the three month periods are unaudited. The results of the three months ended October 31, 2006 are not necessarily indicative of the results to be expected for the year ending July 31, 2007 or for any other interim period or for any other future year.

Unaudited Pro Forma Stockholders’ Equity

If the offering contemplated by this prospectus is consummated, all of the outstanding shares of redeemable convertible preferred stock will automatically convert into 45,108,000 shares of common stock based on the shares of redeemable convertible preferred stock outstanding at October 31, 2006. In addition, the preferred stock warrant liability of $1.7 million at October 31, 2006 would be reclassified to additional paid-in capital. Unaudited pro forma stockholders’ equity as of October 31, 2006, excludes the 4,573,296 shares of Series D redeemable convertible preferred stock issued on December 13, 2006 in full satisfaction of the Company’s obligations under the Series D

F-7

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

preferred stock purchase agreement. See Note 8 of Notes to Consolidated Financial Statements. Unaudited pro forma stockholders’ equity, as adjusted for the assumed conversion of the redeemable convertible preferred stock and the reclassification of the preferred stock warrant liability to additional paid-in capital, is set forth on the consolidated balance sheet.

Use of Estimates

The preparation of these financial statements requires that the Company make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to provisions for doubtful accounts, inventory, useful lives of property and equipment, income taxes, the valuation of equity instruments and contingencies, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ significantly from the estimates made by management with respect to these and other items.

Foreign Currency Accounting

While the majority of the Company’s contracts are denominated in United States dollars, the Company has operating expenses in various foreign currencies. The functional currency of the Company’s subsidiaries in the United Kingdom, India, Singapore and Japan is the U.S. dollar. Monetary assets and liabilities are translated using the current exchange rate at the balance sheet date. Nonmonetary assets and liabilities and capital accounts are translated using historical exchange rates. Revenues and expenses are translated using the average exchange rates in effect during the period. Foreign currency translation gains and losses, which have not been material to date, are included in the consolidated statements of operations.

Risks and Uncertainties

The Company is subject to all of the risks inherent in an early stage business operating in the networking and communications industry. These risks include, but are not limited to, a limited operating history, new and rapidly evolving markets, a lengthy sales cycles, dependence on the development of new products and services, unfavorable economic and market conditions, competition from larger and more established companies, limited management resources, dependence on a limited number of contract manufacturers and suppliers, and the changing nature of the networking and communications industry. Failure by the Company to anticipate or to respond adequately to technological developments in its industry, changes in customer or supplier requirements, or changes in regulatory requirements or industry standards, or any significant delays in the development or introduction of products and services, would have a material adverse effect on the Company’s business and operating results.

Fair Value of Financial Instruments

The reported amounts of the Company’s financial instruments including cash and cash equivalents, short-term investments, accounts receivable and accounts payable approximate fair value due to their short maturities. The reported amounts of equipment loan obligations approximate fair value as the interest rates on these instruments approximate borrowing rates available to the Company for loans with similar terms.

Cash and Cash Equivalents

The Company considers all highly liquid marketable securities purchased with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents comprise commercial paper, demand deposits and money market funds and are stated at cost, which approximates fair value. The Company deposits cash and cash equivalents with high credit quality financial institutions.

F-8

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Short-Term Investments

Investments comprise marketable securities that consist primarily of commercial paper, corporate bonds, and municipal bonds with original maturities beyond 90 days. As the Company views all securities as representing the investment of funds available for current operations, the short-term investments are classified as current assets. The Company’s policy is to protect the value of its investment portfolio and minimize principal risk by earning returns based on current interest rates. All of the Company’s marketable securities are classified as available-for-sale securities in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 115, Accounting For Certain Investments in Debt and Equity Securities and are carried at fair market value with unrealized gains and losses, net of taxes, reported as a separate component of stockholders’ equity. Realized gains and losses and declines in value of securities judged to be other than temporary are included in interest income, net, based on the specific identification method.

At July 31, 2005, all of the Company’s short-term investments consisted solely of municipal bonds held in the Company’s name at one major financial institution. There were no unrealized gains or losses associated with these short-term investments as of July 31, 2005. The Company did not hold any short-term investments as of July 31, 2006 and October 31, 2006.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents and short-term investments. The Company has not experienced any losses on its deposits of its cash and cash equivalents, and its short-term investments.

The Company’s accounts receivable are derived from revenue earned from customers located in the Americas, Europe, the Middle East, Africa and Asia Pacific. The Company performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral from its customers. The Company maintains a provision for doubtful accounts receivable based upon the expected collectibility of accounts receivable and to date such losses have been within management’s expectations. One customer accounted for 32% of accounts receivable at July 31, 2005. No customer accounted for more than 10% of revenues in the years ended July 31, 2004 and 2005. One customer accounted for 22% and 15% (unaudited) of accounts receivable at July 31, 2006 and October 31, 2006, respectively, and 15%, 15% (unaudited) and 18% (unaudited) of revenues in the year ended July 31, 2006 and the three months ended October 31, 2005 and 2006, respectively.

Provision for Doubtful Accounts

The Company records a provision for doubtful accounts based on historical experience and a detailed assessment of the collectibility of its accounts receivable. In estimating the allowance for doubtful accounts, management considers, among other factors, (i) the aging of the accounts receivable, including trends within and ratios involving the age of the accounts receivable, (ii) the Company’s historical write-offs, (iii) the credit-worthiness of each customer, (iv) the economic conditions of the customer’s industry, and (v) general economic conditions. In cases where the Company is aware of circumstances that may impair a specific customer’s ability to meet their financial obligations to it, the Company records a specific allowance against amounts due from the customer, and thereby reduces the net recognized receivable to the amount it reasonably believes will be collected.

Inventory

Inventory consists of hardware and related component parts and is stated at the lower of cost or market. Cost is computed using the standard cost, which approximates actual cost, on a first-in, first-out basis. The Company records inventory write-downs for potentially excess inventory based on forecasted demand, economic trends and technological obsolescence of its products. At the point of loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or

F-9

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

increase in that newly established cost basis. Inventory write-downs are reflected as cost of product revenues and amounted to approximately $552,000, $1.2 million, and $939,000 for the years ended July 31, 2004, 2005, and 2006, respectively and $248,000 (unaudited) and $338,000 (unaudited) for the three months ended October 31, 2005 and 2006, respectively.

Deferred Costs

When the Company’s products have been delivered, but the product revenue associated with the arrangement has been deferred as a result of not meeting the revenue recognition criteria in SOP 97-2 (see “Revenue Recognition” below), the Company also defers the related inventory costs for the delivered items.

Property and Equipment, Net

Property and equipment, net are stated at historical cost less accumulated depreciation. Depreciation is computed using the straight-line method over the shorter of the estimated useful lives of the respective assets, generally two to five years, or the lease term, if applicable. Leasehold improvements are recorded at cost with any reimbursement from the landlord being accounted for as part of rent expense using the straight-line method over the lease term.

Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to operations. Expenditures for maintenance and repairs are charged to expense as incurred.

The Company accounts for impairment of property and equipment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated undiscounted future net cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The carrying value of property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company did not recognize impairment charges in any of the periods presented.

Revenue Recognition

The Company’s networking and communications products are integrated with software that is essential to the functionality of the equipment. Further, the Company provides unspecified software upgrades and enhancements related to the equipment through support agreements. Accordingly, the Company accounts for revenue in accordance with Statement of Position No. 97-2, Software Revenue Recognition, and all related amendments and interpretations (“SOP 97-2”).

The Company’s revenue is derived primarily from two sources: (i) product revenue, including hardware and software products, and (ii) related professional services and support revenue. Product support typically includes software updates, on a when and if available basis, telephone and internet access to technical support personnel, and hardware support. Software updates provide customers with rights to unspecified software product upgrades and to maintenance releases and patches released during the term of the support period. Revenue for support services is recognized on a straight-line basis over the support period, which typically ranges from one year to five years.

Typically, the Company’s sales involve multiple elements, such as sales of products that include support. When a sale involves multiple elements, the Company allocates the entire fee from the arrangement to each respective element based on its Vendor Specific Objective Evidence (“VSOE”) of fair value and recognizes revenue when each element’s revenue recognition criteria are met. VSOE of fair value for each element is established based on the price charged when the same element is sold separately. If VSOE of fair value cannot be established for the undelivered element of an agreement and the only undelivered element is support, the entire amount of revenue from the

F-10

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

arrangement is deferred and recognized ratably over the period that the support is delivered. Prior to the second quarter of fiscal 2006, the Company had not established VSOE of fair value in accordance with SOP 97-2 at the outset of its arrangements. Accordingly, the Company recognized revenue on its transactions during this period ratably over the support period, as the only undelivered element was support.

Beginning in the second quarter of fiscal 2006, the Company established VSOE of fair value at the outset of its arrangements as it established a new support and services pricing policy, with different service and support offerings than were previously sold and began selling support services separately from its arrangements in the form of support renewals. Accordingly, beginning in the second quarter of fiscal 2006, the Company recognizes product revenue upon delivery using the residual method, assuming that all other revenue recognition criteria were met. As the Company had not been able to establish VSOE on its previous services and support offerings, all transactions prior to the second quarter of fiscal 2006 continue to be recognized ratably over the support period.

The Company recognizes revenue only when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectibility is probable. The Company evaluates each of these criteria as follows:

•  Evidence of an arrangement:  Contracts and/or customer purchase orders are used to determine the existence of an arrangement.

•  Delivery:  Delivery is considered to occur when the ordered equipment and the media containing the licensed programs are provided to a common carrier and title has transferred or, in the case of electronic delivery of the licensed programs, the customer is given access to download the programs. The Company recognizes revenue from indirect sales channels upon persuasive evidence provided by the reseller of a sale to the end customer.

•  Fixed or determinable fee:  The Company assesses whether fees are fixed or determinable at the time of sale. The Company only considers the fee to be fixed or determinable if the fee is not subject to refund or adjustment. The Company’s standard payment terms may vary based on the country in which the agreement is executed and the credit standing of the individual customer, among other factors. If the arrangement fee is not fixed or determinable, revenue is recognized as amounts become due and payable. In instances where final acceptance of the product, system, or solution is specified by the customer, revenue is deferred until all acceptance criteria have been met.

•  Collection is deemed probable:  Collection is deemed probable if the Company expects that the customer will be able to pay amounts under the arrangement as payments become due. If the Company determines that collection is not probable, it defers the revenue and recognizes the revenue upon cash collection.

Shipping charges billed to customers are included in product revenues and the related shipping costs are included in cost of product revenues.

Stock-Based Compensation

Prior to August 1, 2006, the Company accounted for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), Financial Accounting Standards Board’s (“FASB”) Interpretation No. 44 Accounting for Certain Transactions Involving Stock Compensation, an Interpretation of APB Opinion No. 25 (“FIN 44”) and FIN 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans, and had adopted the disclosure provisions of Statement of Financial Accounting Standards (“SFAS”) SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS 123”) and SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure (“SFAS 148”).

F-11

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value of the options at the grant date of the awards consistent with the provisions of SFAS 123, the Company’s net loss would have been increased to the pro forma amounts indicated below:

	Years Ended July 31,									Three Months Ended
	2004			2005			2006			October 31, 2005
										(Unaudited)
	(In thousands, except per share data)
Net loss, as reported	$	(22,502	)	$	(32,635	)	$	(12,009	)	$	(8,533	)
Add: Employee stock-based compensation expense included in reported net loss		176			644			1,028			232
Less: Total employee stock-based compensation expense determined under the fair value method		(337	)		(984	)		(2,642	)		(370	)
Pro forma, net loss	$	(22,663	)	$	(32,975	)	$	(13,623	)	$	(8,671	)
Basic and diluted net loss per share
As reported	$	(6.35	)	$	(4.66	)	$	(1.07	)	$	(0.88	)
Pro forma	$	(6.39	)	$	(4.71	)	$	(1.22	)	$	(0.90	)

Adoption of SFAS 123R (unaudited)

Effective August 1, 2006, the Company adopted SFAS No. 123R, Share-Based Payment (“SFAS 123R”), using the modified prospective transition method, which requires the measurement and recognition of compensation expense beginning August 1, 2006 for all share-based payment awards made to employees and directors to be recognized based on estimated fair values. Under SFAS 123R, the Company estimated the fair value of stock options granted using the Black-Scholes option-pricing formula and a single option award approach. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. This model also utilizes the estimated fair value of common stock and requires that, at the date of grant, the Company use the expected term of the stock-based award, the expected volatility of the price of its common stock, risk free interest rates and expected dividend yield of its common stock to determine the estimated fair value. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company determined the amount of stock-based compensation expense recognized in the three months ended October 31, 2006 based on awards ultimately expected to vest, and has reduced the amount of the expense for estimated option forfeitures. Compensation expense includes awards granted prior to, but not yet vested as of July 31, 2006, based on the grant date fair value estimated in accordance with the pro forma provisions of SFAS 123 and compensation expense for awards granted subsequent to July 31, 2006 based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. For purposes of SFAS 123R, employee stock based compensation related to both unvested awards granted prior to August 1, 2006 and awards granted on or after August 1, 2006 are being amortized on a straight-line basis, which is consistent with the methodology used historically for pro forma purposes under SFAS 123.

The expected term represents the period of time that stock-based awards are expected to be outstanding, giving consideration to the contractual terms of the awards, vesting schedules and expectations of future employee behavior. For the three months ended October 31, 2006, the Company gave consideration to its historical exercises, the vesting term of the Company’s options, the cancellation history of the Company’s options and the options’ contractual term of 10 years. Given the Company’s limited operating history, it then compared this estimated term to those of comparable companies from a representative peer group selected on industry data to determine the expected term. The computation of expected volatility for the three months ended October 31, 2006 was based on the historical volatility of comparable companies from a representative peer group selected based on industry data. As required by SFAS 123R, management made an estimate of expected forfeitures and is recognizing stock-based

F-12

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

compensation costs only for those equity awards that the Company expects to vest. The risk-free rate for the expected term of the option is based on the U.S. Treasury Constant Maturity rate as of the date of grant.

The assumptions used to value options granted during the three months ended October 31, 2006 were as follows:

	October 31,
	2006
	(Unaudited)
Assumptions
Risk-free interest rates		4.74	%
Expected term (in years)		4.3
Dividend yield		0	%
Volatility		56	%

The weighted average fair value of options granted during the years ended July 31, 2004, 2005 and 2006 and the three months ended October 31, 2005 was $0.30, $0.80, $1.20 and $1.01 (unaudited), respectively. The fair value of each option grant was estimated on the date of grant using the Black-Scholes model with the following average assumptions:

	July 31,									October 31,
	2004			2005			2006			2005
										(Unaudited)
Assumptions
Risk-free interest rates		2.94	%		3.56	%		4.58	%		4.13	%
Expected term (in years)		4.0			4.0			4.0			4.0
Dividend yield		0	%		0	%		0	%		0	%
Volatility		100	%		100	%		70	%		100	%

Total stock based compensation in the three months ended October 31, 2006 was $1.8 million (unaudited). As a result of adopting SFAS 123R on August 1, 2006, during the three months ended October 31, 2006, the Company’s net loss was $930,000 (unaudited) greater than if the Company had continued to account for stock-based compensation under APB 25 and its basic and diluted net loss per share for the three months ended October 31, 2006 was decreased by $0.07 (unaudited). At October 31, 2006, the Company had $15.4 million (unaudited) of total unrecognized compensation expense under SFAS 123R, net of estimated forfeitures, related to stock option plans that the Company will recognize over a weighted average period of 3.3 years.

In the first quarter of 2007, the Company accelerated the vesting of 231,417 unvested shares held by two former employees. As a result of the modification to the terms of their stock awards, the Company recognized additional compensation expense of $519,000 (unaudited) for the three months ended October 31, 2006.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from non-employees in accordance with the consensus reached by the Emerging Issues Task Force (“EITF”) in Issue No. 96-18, Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. Costs are measured at the fair market value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of the date on which there first exists a firm commitment for performance by the provider of goods or services or on the date performance is complete, using the Black-Scholes pricing model.

F-13

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Capitalized Software Development Costs

The Company accounts for software development costs intended for sale in accordance with SFAS No. 86, Accounting for Costs of Computer Software to be Sold, Leased, or Otherwise Marketed (“SFAS 86”). SFAS 86 requires product development costs to be charged to expense as incurred until technological feasibility is attained and all other research and development activities for the hardware components of the product have been completed. Technological feasibility is attained when the Company’s software has completed the planning, design and testing phase of development and has been determined viable for its intended use, which typically occurs when beta testing commences. The time between the attainment of technological feasibility and the completion of software development has historically been relatively short with immaterial amounts of development costs incurred during this period. Accordingly, the Company has not capitalized any software development costs.

Advertising

All advertising costs are expensed as incurred. Advertising expenses were $5,000, $97,000 and $200,000 for the years ended July 31, 2004, 2005 and 2006, respectively, and $0 (unaudited) and $73,000 (unaudited) for the three months ended October 31, 2005 and 2006, respectively.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with FASB Statement No. 109, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for deductible temporary differences, along with net operating loss carryforwards, if it is more likely than not that the tax benefits will be realized. To the extent a deferred tax asset cannot be recognized under the preceding criteria, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of other comprehensive income (loss) and net loss. Other comprehensive income (loss) consists of gains and losses that are not recorded in the statements of operations, but instead are recorded directly to stockholders’ equity (deficit). To date, there have been no differences between net loss and comprehensive loss.

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment (“SFAS 123R”), which replaces SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS 123”) and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The Company is required to adopt SFAS 123R effective August 1, 2006. The pro forma disclosures previously permitted under SFAS 123, no longer will be an alternative to financial statement recognition. Under SFAS 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods include either prospective or retroactive adoption. Under the retroactive method, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS 123R, while the retroactive method would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated.

F-14

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Effective August 1, 2006, the Company adopted SFAS 123R using the modified prospective transition method, which requires the measurement and recognition of compensation expense beginning August 1, 2006 for all share-based payment awards made to employees and directors to be recognized based on estimated fair values. Under SFAS 123R, the Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula and a single option award approach. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. This model also utilizes the estimated fair value of common stock and requires that, at the date of grant, the Company use the expected term of the option, the expected volatility of the price of its common stock, risk free interest rates and expected dividend yield of its common stock. Employee stock-based compensation expense recognized in the three months ended October 31, 2006 was calculated based on awards ultimately expected to vest, reduced for estimated forfeitures and includes compensation expense for awards granted prior to, but not yet vested as of July 31, 2006, based on the grant date fair value estimated in accordance with the pro forma provisions of SFAS 123 and compensation expense for awards granted subsequent to July 31, 2006 based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. For purposes of SFAS 123R employee stock-based compensation related to both unvested awards granted prior to August 1, 2006 and awards granted on or after August 1, 2006 are being amortized on a straight-line basis, which is consistent with the methodology used historically for pro-forma purposes under FAS 123.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, a replacement of Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements (“SFAS 154”). SFAS 154 changes the requirements for the accounting for, and reporting of, a change in accounting principle. Previously, voluntary changes in accounting principles were generally required to be recognized by way of a cumulative effect adjustment within net income during the period of the change. SFAS 154 requires retrospective application to prior periods’ financial statements, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005; however, the statement does not change the transition provisions of any existing accounting pronouncements. The adoption of SFAS 154 on August 1, 2006 did not have a material effect on the Company’s financial position, cash flows or results of operations.

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for the Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109 (“FIN 48”), which clarifies the accounting for uncertainty in tax positions. This interpretation requires that the Company recognize in its financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective as of the beginning of the Company’s 2008 fiscal year, with the cumulative effect, if any, of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently assessing the impact, if any, of adopting this standard on the Company’s financial position, cash flows and results of operations.

In September 2006, the Staff of the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of determining whether the current year’s financial statements are materially misstated. SAB 108 is effective for fiscal years ending after November 15, 2006. The adoption of SAB 108 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”), which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles. As a result of SFAS 157 there is now a common

F-15

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

definition of fair value to be used throughout GAAP. The FASB believes that the new standard will make the measurement of fair value more consistent and comparable and improve disclosures about those measures. The Company is required to adopt SFAS 157 effective August 1, 2008. The Company does not believe the adoption of SFAS 157 will have a material effect on its financial position, cash flows or results of operations.

2.   Change in Accounting Principle

On June 29, 2005, the FASB issued Staff Position 150-5, Issuer’s Accounting under FASB Statement No. 150 (“SFAS 150”) for Freestanding Warrants and Other Similar Instruments on Shares That Are Redeemable (“FSP 150-5”). FSP 150-5 requires the Company to classify its outstanding preferred stock warrants as liabilities on its balance sheet and record adjustments to the value of its preferred stock warrants in its statements of operations to reflect their fair value at each reporting period. The Company previously accounted for such warrants in accordance with EITF Issue No. 96-18, Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services (“EITF 96-18”).

The Company adopted FSP 150-5 in the first quarter of 2006 and recorded the cumulative effect of the change in accounting principle as of August 1, 2005, which resulted in a gain of $66,000, or $0.01 per share. In fiscal 2006, the Company also recorded $667,000 of additional expense as other expense, net to reflect the increase in fair value between August 1, 2005 and July 31, 2006. In the three months ended October 31, 2006, the Company recorded $784,000 (unaudited) of additional expense as other expense, net to reflect the further increase in fair value between August 1, 2006 and October 31, 2006.

The pro forma effect of the adoption SFAS 150 on the Company’s results of operations for 2004 and 2005, if applied retroactively, assuming SFAS 150 had been adopted in those years, has not been disclosed, as these amounts would not be materially different from the reported amounts.

3.   Net Loss Per Common Share

The Company applies the provisions of EITF Issue No. 03-6, Participating Securities and the Two — Class Method under FASB Statement 128 (“EITF No. 03-6”), which established standards regarding the computation of earnings per share by companies with participating securities or multiple classes of common stock. The Company’s Series A through C redeemable convertible preferred stock are participating securities due to their participation rights related to cash dividends declared by the Company as described in Note 8.

EITF No. 03-6 requires net loss attributable to common stockholders for the period to be allocated to common stock and participating securities to the extent that the securities are required to share in the losses. The Company’s Series A through C redeemable convertible preferred stock do not have a contractual obligation to share in losses of the Company. As a result, basic net loss per share is calculated by dividing net loss by the weighted average shares of common stock outstanding during the period that are not subject to vesting provisions.

F-16

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the computation of net loss per common share:

										Three Months Ended
	Years Ended July 31,									October 31,
	2004			2005			2006			2005			2006
										(Unaudited)
	(In thousands, except per share data)
Net loss	$	(22,502	)	$	(32,635	)	$	(12,009	)	$	(8,533	)	$	(4,510	)
Weighted-average common shares outstanding net of weighted-average common shares subject to repurchase		3,546			6,999			11,211			9,660			13,279
Basic and diluted net loss per common share	$	(6.35	)	$	(4.66	)	$	(1.07	)	$	(0.88	)	$	(0.34	)
Basic and diluted weighted-average shares used above								11,211						13,279
Pro forma adjustments to reflect assumed conversion of redeemable convertible preferred stock (unaudited)								45,108						45,108
Shares used in computing pro forma net loss per common share (unaudited)								56,319						58,387
Pro forma net loss per common share, basic and diluted (unaudited)							$	(0.21	)				$	(0.08	)

The following outstanding options, common stock subject to repurchase and redeemable convertible preferred stock were excluded from the computation of diluted net loss per common share for the periods presented because including them would have had an antidilutive effect:

							Three Months Ended
	Years Ended July 31,						October 31,
	2004		2005		2006		2005		2006
							(Unaudited)
Options to purchase common stock		2,060,195		4,500,883		14,992,764		6,613,634		16,633,584
Common stock subject to repurchase		9,604,050		5,463,848		2,245,686		4,779,314		1,676,701
Redeemable convertible preferred stock (as converted basis)		44,297,216		45,107,887		45,107,887		45,107,887		45,107,887
Convertible preferred stock warrants (as converted basis)		677,106		677,106		677,106		677,106		677,106

The above table does not include any shares ultimately issuable to a customer as described in Note 9 of Notes to Consolidated Financial Statements because the number of shares is not currently determinable.

Pro forma basic and diluted net loss per common share have been computed to give effect to the conversion of the Company’s convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred on the original dates of issuance.

F-17

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4.   Balance Sheet Components

The following tables provide details of selected balance sheet items:

	July 31,						October 31,
	2005			2006			2006
							(Unaudited)
	(In thousands)
Accounts Receivable, Net
Trade accounts receivable	$	8,978		$	13,648		$	14,263
Less: Allowance for doubtful accounts		(164	)		(352	)		(365	)
Total	$	8,814		$	13,296		$	13,898

	July 31,				October 31,
	2005		2006		2006
					(Unaudited)
	(In thousands)
Inventory
Raw materials	$	299	$	449	$	524
Work in process		96		9		25
Finished goods		3,527		5,635		6,874
Total	$	3,922	$	6,093	$	7,423

	July 31,				October 31,
	2005		2006		2006
					(Unaudited)
	(In thousands)
Accrued Liabilities
Compensation and benefits	$	1,925	$	2,427	$	2,708
Inventory		1,642		755		2,269
Preferred stock warrants		274		941		1,725
Other		1,405		2,571		3,642
Total	$	5,246	$	6,694	$	10,344

F-18

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5.  Property and Equipment, Net

Property and equipment, net consists of the following:

			July 31,						October 31,
	Estimated Useful Lives		2005			2006			2006
						(Unaudited)
	(In thousands)
Property and Equipment, Net
Computer equipment		2 years	$	1,382		$	2,093		$	2,453
Computer software		2 years		530			830			854
Machinery and equipment		2 years		1,591			2,562			2,745
Furniture and fixtures		5 years		130			223			232
Leasehold improvements		2-5 years		114			106			167
				3,747			5,814			6,451
Less: Accumulated depreciation and amortization				(2,310	)		(3,843	)		(4,227	)
Total			$	1,437		$	1,971		$	2,224

Depreciation and amortization expense totaled $902,000, $1.2 million and $1.5 million for the years ended July 31, 2004, 2005 and 2006, respectively and $329,000 (unaudited) and $396,000 (unaudited) for the three months ended October 31, 2005 and 2006, respectively.

6.   Deferred Revenue

Deferred revenue consists of the following:

	July 31,				October 31,
	2005		2006		2006
					(Unaudited)
	(In thousands)
Deferred Revenue
Product	$	—	$	1,108	$	1,211
Professional services and support		—		3,674		4,794
Ratable product and related services and support		15,194		6,855		4,653
Total deferred revenue, current		15,194		11,637		10,658
Professional services and support, long-term		—		1,175		1,444
Ratable product and related services and support, long-term		7,166		5,628		4,618
Total deferred revenue, long-term		7,166		6,803		6,062
Total deferred revenue	$	22,360	$	18,440	$	16,720

Deferred product revenue relates to arrangements where not all revenue recognition criteria have been met. Deferred professional services and support revenue primarily represents customer payments made in advance for support contracts. Support contracts are typically billed on an annual basis in advance and revenue is recognized ratably over the support period. Deferred ratable product and related services and support revenue consists of revenue on transactions where VSOE of fair value of support has not been established and the entire arrangement is being recognized ratably over the support period.

F-19

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7.   Income Taxes

The components of the provision for income taxes for the years ended July 31, 2004, 2005 and 2006 are as follows:

	July 31,
	2004		2005		2006
	(In thousands)
Current
State	$	6	$	9	$	10
Foreign		28		147		296
Total provision for income taxes	$	34	$	156	$	306

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities as of July 31, 2005 and 2006 are as follows:

	July 31,
	2005			2006
	(In thousands)
Deferred tax assets
Net operating loss carryforwards	$	18,118		$	21,539
Research and development credits		1,825			2,245
Accruals and reserves		5,640			6,190
Depreciation and amortization		614			688
Total deferred tax assets		26,197			30,662
Valuation allowance		(26,197	)		(30,662	)
Net deferred tax assets	$	—		$	—

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Based on the available objective evidence, including the fact that the Company has generated losses since inception, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, management has applied a full valuation allowance against its net deferred tax assets as of the fiscal years ended July 31, 2005 and 2006. The valuation allowance increased approximately $8.9 million, $12.6 million and $4.5 million during the years ended July 31, 2004, 2005 and 2006, respectively.

F-20

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The differences between the provision for (benefit from) income taxes computed at the federal statutory rate of 34% and the Company’s actual provision for income taxes for 2004, 2005 and 2006, are as follows:

	July 31,
	2004			2005			2006
Federal income tax expense (benefit)		(34.0	)%		(34.0	)%		(34.0	)%
State income tax (benefit), net of federal benefit		(5.4	)%		(4.5	)%		(6.2	)%
Foreign taxes		—			—			0.6	%
Non-deductible expenses		1.0	%		1.5	%		5.2	%
Research and developments credits		(1.2	)%		(1.3	)%		(2.8	)%
Change in valuation allowance		39.8	%		38.8	%		39.8	%
Total provision for income taxes		0.2	%		0.5	%		2.6	%

As of the fiscal years ended 2004, 2005 and 2006, the Company had $27.1 million, $46.7 million and $55.4 million, respectively, of Federal and $22.5 million, $41.4 million and $50.3 million, respectively, of state net operating loss carryforwards available to reduce future taxable income which will begin to expire in 2022 and 2013 for Federal and state tax purposes, respectively.

The Company has research credit carryforwards for the fiscal years ended 2004, 2005 and 2006 of approximately $716,000, $1.2 million and $1.5 million, respectively, for Federal and $581,000, $932,000 and $1.1 million, respectively, for state income tax purposes. If not utilized, the Federal carryforward will expire in various amounts beginning in 2022. The California credit can be carried forward indefinitely.

Deferred tax liabilities have not been recognized for undistributed earnings for foreign subsidiaries because it is management’s intention to reinvest such undistributed earnings outside the U.S.

The Internal Revenue Code limits the use of net operating loss and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company. In the event the Company has had a change in ownership, utilization of the carryforwards could be restricted.

8.   Redeemable Convertible Preferred Stock

The Company’s Certificate of Incorporation, as amended and restated, authorizes the issuance of 46,444,551 shares of redeemable convertible preferred stock, with $0.0001 par value. Redeemable convertible preferred stock at July 31, 2006 consists of the following:

	Shares
			Issued and		Liquidation		Proceeds Net of
Series	Authorized		Outstanding		Preference		Issuance Costs
					(In thousands)
A		14,444,551		14,262,748	$	9,513	$	9,450
B		19,000,000		18,333,333		22,000		21,957
C		13,000,000		12,511,806		26,700		26,602
		46,444,551		45,107,887	$	58,213	$	58,009

In September 2005 and September 2006, the Company entered into Series D preferred stock purchase agreements with various purchasers in which the Company agreed to issue 4,573,296 shares of Series D redeemable convertible preferred stock. The Company recently determined that it inadvertently did not receive all requisite stockholder approvals for the issuance of the shares and subsequently obtained stockholder approvals in December 2006, at which time the Company issued a total of 4,573,296 shares at $6.5443 per share. Total cash consideration for the Series D redeemable convertible preferred stock was $29.9 million, of which $19.3 million and $10.6 million

F-21

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

was received in September 2005 and September 2006, respectively. The Company recorded the gross proceeds received as a deposit for Series D redeemable convertible preferred stock within current liabilities on the balance sheets. The Company also recorded deferred issuance costs of $97,000 and $127,000 (unaudited) as of July 31, 2006 and October 31, 2006, respectively, within prepaids and other on the balance sheets.

The rights, preferences and privileges of the holders of redeemable convertible preferred stock, including the Series D redeemable convertible preferred stock issued in December 2006, are as follows:

Dividend Rights

The holders of Series A, Series B, Series C and Series D redeemable convertible preferred stock are entitled to receive noncumulative dividends out of any assets legally available prior and in preference to any declaration or payment of any dividend on the common stock at the rate of $0.0533, $0.096, $0.1707 and $0.5235 per share per annum, respectively, when and if declared by the Board of Directors. As of July 31, 2006, no dividends had been declared or paid.

No change to the dividend rate for the Series B redeemable convertible preferred stock may be effected without the approval of the holders of at least 662/3% of the then outstanding shares of Series B redeemable convertible preferred stock.

If the Board of Directors declares a dividend among the holders of the redeemable convertible preferred stock in an aggregate amount that is insufficient to permit the payment to such holders of the full dividend rates, then such amount shall be distributed ratably among the holders of the redeemable convertible preferred stock in proportion to the full amount that each such holder would receive if the full dividend rate were received.

After payment of such dividends, any additional dividends or distributions shall be distributed among all holders of common stock and redeemable convertible preferred stock in proportion to the number of shares of common stock that would be held by each such holder if all shares of redeemable convertible preferred stock were converted to common stock at the then effective conversion rate.

Liquidation Rights

In the event of any liquidation, dissolution, or winding up of the Company either voluntary or involuntary, the holders of Series A, Series B, Series C and Series D redeemable convertible preferred stock will be entitled to receive, prior and in preference to any distribution of any assets of the Company to the holders of common stock, an amount per share equal to the sum of the original purchase price of $0.667, $1.20, $2.134 and $6.5443 per share, respectively, plus any declared but unpaid dividends. If, upon the occurrence of such event, the assets and funds available for distribution among the holders of redeemable convertible preferred stock are insufficient to permit the payment of these preferential amounts in full, the entire assets and funds legally available for distribution will be distributed ratably among the holders of the redeemable convertible preferred stock in proportion to the aggregate liquidation preference for the shares of such stock owned by each holder.

The treatment of any liquidation event may be waived by the vote or written consent of the holders of (i) a majority of the outstanding redeemable convertible preferred stock (voting together as a single class on an as-converted basis) and (ii) at least 662/3% of the then outstanding shares of the Series B redeemable convertible preferred stock.

After completion of distribution to the preferred stockholders, the remaining assets of the Company will be distributed to the holders of preferred stock and common stock together in proportion to the number of shares of common stock held by each, assuming conversion into common stock of all shares of redeemable convertible preferred stock.

F-22

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Conversion

Each share of redeemable convertible preferred stock is convertible, at the option of the holder, at any time after the date of issuance of such share, to common stock using a conversion rate determined based on the original issuance price, subject to certain dilution adjustments.

Each share of redeemable convertible preferred stock will automatically convert into shares of common stock at the conversion rate then in effect immediately upon the Company’s sale of its common stock in a firmly committed underwritten public offering with gross offering proceeds of at least $20,000,000. In addition, (i) each share of Series A redeemable convertible preferred stock will automatically convert into shares of common stock at the conversion rate then in effect for the Series A redeemable convertible preferred stock upon the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of Series A redeemable convertible preferred stock (voting as a separate class), (ii) each share of Series B redeemable convertible preferred stock will automatically convert into shares of common stock at the conversion rate then in effect for the Series B redeemable convertible preferred stock upon the date specified by written consent or agreement of the holders of at least 662/3% of the then outstanding shares of Series B redeemable convertible preferred stock (voting as a separate class), (iii) each share of Series C redeemable convertible preferred stock will automatically convert into shares of common stock at the conversion rate then in effect for the Series C redeemable convertible preferred stock upon the date specified by written consent or agreement of the holders of at least 662/3% of the then outstanding shares of Series C redeemable convertible preferred stock (voting as a separate class) and (iv) each share of Series D redeemable convertible preferred stock will automatically convert into shares of common stock at the conversion rate then in effect for the Series D redeemable convertible preferred stock upon the date specified by written consent or agreement of the holders of at least 662/3% of the then outstanding shares of Series D redeemable convertible preferred stock (voting as a separate class).

Voting Rights

Each holder of Series A, Series B, Series C and Series D redeemable convertible preferred stock is entitled to one vote for each share of common stock into which such share of redeemable preferred stock is convertible on the record date for any vote, or effective date of any written consent, as applicable.

As long as at least twenty five percent (25%) of the shares of Series A redeemable convertible preferred stock originally issued remain outstanding, the holders of such shares of Series A redeemable convertible preferred stock shall be entitled to elect two (2) directors of the Company at any election of directors. The holders of outstanding common stock shall be entitled to elect two (2) directors of the Company at any election of directors. The holders of redeemable convertible preferred stock and common stock (voting together as a single class and not as separate series, and on an as-converted basis) shall be entitled to elect any remaining directors of the Company.

So long as at least twenty five percent (25%) of the redeemable convertible preferred stock originally issued remains outstanding, the Company must obtain the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of redeemable convertible preferred stock (voting together as a single class and not as separate series, and on an as-converted basis) to:

•  consummate a liquidation event or any other merger of the Company with or into another entity;

•  alter or change the rights, preferences or privileges of the shares of redeemable convertible preferred stock so as to affect adversely the shares;

•  redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any share or shares of redeemable convertible preferred stock or common stock; provided, however, that this restriction shall not apply to (i) the repurchase of shares of common stock at cost from employees, officers, directors, consultants or other persons performing services for the Company pursuant to agreements under

F-23

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

which the Company has the option to repurchase such shares upon the termination of employment or service or (ii) the exercise by the Company of contractual rights of first refusal over shares of common stock;

•  amend the Company’s Certificate of Incorporation;

•  declare or pay any cash dividends; or

•  increase or decrease the authorized number of members of the Company’s Board of Directors.

In addition to the foregoing, so long as at least twenty five percent (25%) of the Series B, Series C and Series D redeemable convertible preferred stock originally issued remains outstanding, the Company must obtain the approval (by vote or written consent, as provided by law) of the holders of at least 662/3% of the then outstanding shares of Series B, Series C and Series D redeemable convertible preferred stock (voting as separate classes), to (i) increase the authorized number of shares of Series B redeemable convertible preferred stock or (ii) alter or change the rights, preferences or privileges of the shares of Series B, Series C and Series D redeemable convertible preferred stock if such alteration or change would affect such shares adversely and in a different manner than other series of preferred stock.

Warrants for Redeemable Convertible Preferred Stock

During 2003, in connection with equipment loan agreements (Note 12), the Company issued two lessors fully vested warrants to purchase a total of 181,784 shares of Series A redeemable convertible preferred stock at an exercise price of $0.667 per share and fully vested warrants to purchase a total of 62,500 shares of Series B redeemable convertible preferred stock at an exercise price of $1.20 per share. These warrants may be exercised at any time prior to seven years from the issuance date.

During 2004, in connection with equipment loan agreements (Note 12), the Company issued two lessors fully vested warrants to purchase a total of 284,722 shares of Series B redeemable convertible preferred stock at an exercise price of $1.20 per share and fully vested warrants to purchase a total of 148,100 shares of Series C redeemable convertible preferred stock at an exercise price of $2.134 per share. These warrants may be exercised at any time prior to seven years from the issuance date.

The estimated fair value of these warrants, measured on the date of grant, using the Black-Scholes option pricing model, with a contractual life of seven years, volatility of 100% and risk-free interest rates of 3.6% — 4.55%, was $76,000 and $264,000 in 2003 and 2004, respectively. The fair value was recorded as a discount to the equipment loan obligations and is being amortized to interest expense over the terms of the agreements.

The total amount of unamortized warrant obligation was $41,000 as of July 31, 2006. The total amount of warrant amortization expense was $72,000, $113,000 and $105,000 for the years ended July 31, 2004, 2005 and 2006, respectively.

As of July 31, 2006, outstanding preferred stock warrants consisted of:

			Redeemable				Number of Shares
			Convertible		Exercise		Outstanding		Fair Value at
Issue Date	Term		Preferred Stock		Price		Underlying Warrant		July 31, 2006
March 3, 2003		7 years		Series A	$	0.67		144,303	$	259,745
July 31, 2003		7 years		Series A		0.67		37,481		67,466
July 31, 2003		7 years		Series B		1.20		62,500		88,125
April 30, 2004		7 years		Series B		1.20		20,833		29,375
May 18, 2004		7 years		Series B		1.20		263,889		372,083
May 18, 2004		7 years		Series C		2.13		148,100		124,404

F-24

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As discussed in Note 2, in 2006 the Company reclassified the carrying value of the preferred stock warrants as a liability and began adjusting the warrants to fair value at each reporting period with any increase or decrease in fair value reported in other expense, net.

9.   Common Stock

The Company’s Certificate of Incorporation, as amended and restated as of July 31, 2006, authorized the issuance of 75,000,000 shares of common stock with $0.0001 par value. A total of 3,900,000 shares of common stock were initially issued to the Company’s founders. These shares are subject to a right of repurchase by the Company at the original issue price, if the founders terminate their employment with the Company. The repurchase right lapses over a four-year period. As of July 31, 2005, a total of approximately 436,719 of the founders’ shares were subject to repurchase by the Company. As of July 31, 2006, the founders’ shares were fully vested.

Certain common stock option holders have the right to exercise unvested options, subject to a repurchase right held by the Company, in the event of a voluntary or involuntary termination of employment of the shareholder. These exercises are held within stockholders’ equity on the balance sheet. As of July 31, 2005 and 2006 and October 31, 2006, a total of 5,345,934, 2,245,686 and 1,676,701 (unaudited), respectively, shares of common stock were subject to repurchase by the Company at the original exercise price of the common stock. The corresponding exercise value of $599,000, $1.4 million and $1.2 million (unaudited) as of July 31, 2005 and 2006 and October 31, 2006, respectively, was recorded in stockholders’ equity.

The activity of non-vested shares for the three months ended October 31, 2006 as a result of early exercise of options granted to employees is as follows:

Non-Vested Shares	Shares
Non-vested as of July 31, 2006		2,245,686
Early exercise of options (unaudited)		72,896
Vested (unaudited)		(586,861	)
Forfeited (unaudited)		(55,020	)
Non-vested as of October 31, 2006 (unaudited)		1,676,701

In July 2005, the Company entered into a Stock Issuance Agreement with a customer pursuant to which the Company agreed to issue the customer the number of shares of its common stock determined by dividing up to $3.5 million by the actual per share public offering price in the event of a firmly underwritten initial public offering (“IPO”) or up to $5.0 million of consideration in connection with a change of control that occurs prior to an IPO. As of July 31, 2005 and 2006 and October 31, 2006, the Company has recorded a liability of $460,000, $2.0 million and $3.1 million (unaudited), which represents the aggregate sales to this customer as of these dates and is the minimum amount that would either be paid out in shares or cash. Since the aggregate sales to this customer are less than $5.0 million through October 31, 2006, the Company has not recorded any revenue on these sales.

The Company has reserved shares of common stock for the following:

	As of July 31,
	2006
Stock option plans		29,165,837
Conversion of Series A redeemable convertible preferred stock		14,262,748
Conversion of Series B redeemable convertible preferred stock		18,333,333
Conversion of Series C redeemable convertible preferred stock		12,511,806
		74,273,724

F-25

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10.   Stock Option and Other Benefit Plans

During 2002, the Company’s Board of Directors adopted the 2002 Stock Plan (the “2002 Plan”). The 2002 Plan authorizes the Board of Directors to grant incentive and nonstatutory stock options to employees and consultants of the Company. As of July 31, 2004, 2005 and 2006 and October 31, 2006, a total of 14,318,576, 16,818,576 29,165,837 and 29,165,837 (unaudited) shares, respectively, were reserved for issuance under the 2002 Plan.

These incentive and nonstatutory stock options may be granted at prices not less than 100% and 85%, respectively, of the estimated fair value of the stock at the date of grant, as determined by the Board of Directors. For options granted to an employee who owns more than 10% of the voting power of all classes of stock of the Company, the exercise price shall be no less than 110% of the estimated value of the stock at the date of grant. Options generally vest over a four year period and expire no later than ten years after the date of grant.

During 2004, the Company granted to one of its board members 601,849 nonstatutory stock options under a separate agreement (the “Agreement”). The nonstatutory stock option was issued at a price less than the estimated fair value at the date of grant. The difference between the estimated fair value of the stock on the date of grant and the option’s exercise price was $156,000 and is being amortized on a straight line basis to compensation expense over the options four year vesting period.

A summary of the option activity under the 2002 Plan and the Agreement during the years ended 2004, 2005 and 2006 and the three months ended October 31, 2006 (unaudited), including the effect of the reassessed fair values, is as follows:

				Options Outstanding
							Weighted		Weighted		Weighted
	Shares						Average		Average		Average	Aggregate
	Available for			Number of			Exercise		Fair Value		Contractual	Intrinsic
	Grant			Shares			Price		per Share		Term (Years)	Value
Balance at July 31, 2003		3,688,672			701,547		$	0.06
Issuance of share awards		(49,500	)		—			—
Options authorized for grant		6,161,982			—			—
Options granted
— At fair value(1)		(760,617	)		760,617			0.12	$	0.08
— At less than fair value(2)		(7,871,912	)		7,871,912			0.12		0.26
Options exercised		—			(6,900,367	)		0.12
Options repurchased		225,834			—			0.06
Options cancelled		373,514			(373,514	)		0.11
Balance at July 31, 2004		1,767,973			2,060,195			0.13
Issuance of share awards		(31,250	)		—			—
Options authorized for grant		2,500,000			—			—
Options granted — At less than fair value(2)		(3,668,479	)		3,668,479			0.35		0.80
Options exercised		—			(761,124	)		0.24
Options repurchased		655,468			—			0.12
Options cancelled		466,667			(466,667	)		0.24
Balance at July 31, 2005		1,690,379			4,500,883			0.28

F-26

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

				Options Outstanding
							Weighted		Weighted		Weighted
	Shares						Average		Average		Average		Aggregate
	Available for			Number of			Exercise		Fair Value		Contractual		Intrinsic
	Grant			Shares			Price		per Share		Term (Years)		Value
Issuance of share awards		(17,550	)		—			—
Options authorized for grant		12,347,261			—			—
Options granted
— At fair value(1)		(9,381,580	)		9,381,580			2.26		1.27
— At less than fair value(2)		(3,456,000	)		3,456,000			1.20		1.01
— In excess of fair value(3)		(252,800	)		252,800			2.65		1.09
Options exercised		—			(1,896,082	)		0.73
Options repurchased		1,381,480			—			0.12
Options cancelled		702,417			(702,417	)		0.53
Balance at July 31, 2006		3,013,607			14,992,764			1.70
Issuance of share awards (unaudited)		(45,300	)		—			—
Options granted — At fair value(1) (unaudited)		(2,350,600	)		2,350,600			2.78		1.40
Options exercised (unaudited)		—			(253,535	)		1.13
Options repurchased (unaudited)		55,020			—			0.16
Options cancelled (unaudited)		456,245			(456,245	)		1.15
Balance at October 31, 2006 (unaudited)		1,128,972			16,633,584		$	1.88
Options vested as of October 31, 2006 (unaudited)					2,008,634		$	0.50	$	0.60		7.90	$	1,703,054
Options vested and expected to vest as of October 31, 2006(4) (unaudited)					15,010,466			1.85				9.16		26,757,720
Options exercisable as of October 31, 2006 (unaudited)					2,008,634			0.50				7.89		6,288,630

(1)	Options granted at fair value represent options whose exercise price equals the estimated fair value of the common stock on the date of the grant.
(2)	Options granted at less than fair value represent options whose exercise price is less than the estimated fair value of the common stock on the date of the grant.
(3)	Options granted in excess of fair value represent options whose exercise price is greater than the estimated fair value of the common stock on the date of the grant.
(4)	Options expected to vest are the result of applying the pre-vesting forfeiture rate assumption to total outstanding options.

The total intrinsic value of options exercised in the three months ended October 31, 2006 was $727,000 (unaudited). Cash received from option exercises during the three months ended October 31, 2006 was $289,000 (unaudited).

F-27

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes information about stock options outstanding and exercisable at July 31, 2006:

	Options Outstanding
			Weighted				Options Vested and Exercisable
			Average		Weighted				Weighted
			Remaining		Average				Average
	Number		Contractual		Exercise		Number of		Exercise
Exercise Price	Outstanding		Life (Years)		Price		Shares		Price
$0.06 - $0.21		1,960,759		7.6	$	0.16		1,132,440	$	0.15
$0.22 - $0.75		871,125		8.8		0.62		269,762		0.60
$0.76 - $1.25		2,532,500		9.1		1.17		30,625		1.00
$1.26 - $2.00		547,000		9.4		1.81		—		—
$2.25		6,659,143		9.7		2.25		—		—
$2.33		2,194,437		10.0		2.33		24,962		2.33
$2.65		227,800		9.5		2.65		1,042		2.65
$0.06 - $2.65		14,992,764		9.3	$	1.70		1,458,831	$	0.29

The following table summarizes information about stock options outstanding and exercisable at October 31, 2006 (unaudited):

	Options Outstanding
			Weighted				Options Vested and Exercisable
			Average		Weighted				Weighted
			Remaining		Average				Average
	Number		Contractual		Exercise		Number of		Exercise
Exercise Price	Outstanding		Life (Years)		Price		Shares		Price
$0.06 - $0.21		1,835,482		7.4	$	0.16		1,179,107	$	0.15
$0.22 - $0.75		818,937		8.6		0.63		296,764		0.62
$0.76 - $1.25		2,163,772		8.8		1.19		507,596		1.18
$1.26 - $2.00		527,000		9.1		1.81		15,000		1.50
$2.01 - $2.25		6,659,143		9.5		2.25		—		—
$2.26 - $2.33		3,617,850		9.7		2.33		8,500		2.33
$2.34 - $3.63		1,011,400		9.9		3.44		1,667		2.65
$0.06 - $3.63		16,633,584		9.2	$	1.88		2,008,634	$	0.50

Fair Value Disclosures

The weighted average fair value of options granted during the years ended July 31, 2004, 2005 and 2006 was $0.30, $0.80 and $1.20, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes model with the following average assumptions:

	July 31,
	2004			2005			2006
Assumptions
Risk-free interest rates		2.94	%		3.56	%		4.58	%
Expected term (in years)		4.0			4.0			4.0
Dividend yield		0	%		0	%		0	%
Volatility		100	%		100	%		70	%

F-28

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock-Based Compensation

In accordance with APB 25, stock-based compensation expense resulted from stock options that were granted with exercise prices that, for financial reporting purposes, were deemed to be below the estimated fair value of the underlying common stock on the date of grant. During 2004, 2005, and 2006, the Company estimated the fair value of the underlying common stock on the date of grant. During this period the Company estimated the fair value of its common stock based upon several factors, including progress and milestones attained in its business and subsequent rounds of financing. During this period, the Company granted certain options to employees to purchase shares of common stock at exercise prices ranging from $0.12 to $1.50 per share. Prior to February 2006, the Company did not obtain contemporaneous valuations from an unrelated valuation specialist.

During fiscal 2006, the Company reassessed the value of its common stock and performed detailed analysis for the years ended July 31, 2004, 2005 and 2006 based upon the factors noted above, together with discounted cash flows analysis. These internal valuations resulted in reassessed common stock valuations between $0.14 and $1.70 per share, as follows:

	Number of				Fair Value		Intrinsic
	Options				Estimate		Value per
Date of Issuance	Granted		Exercise Price		per Share		Share
Oct - Nov 2003		1,635,549	$	0.12	$	0.14	$	0.02
Jan - Mar 2004		4,923,363		0.12		0.32		0.20
May - Jun 11 2004		809,000		0.12		0.50		0.38
Jun 29 2004		470,000		0.21		0.50		0.29
Aug 2004		1,138,750		0.21		0.68		0.47
Nov 2004		784,500		0.21		0.86		0.65
Jan - Feb 2005		615,000		0.30		1.04		0.74
Apr 2005		150,000		0.30		1.22		0.92
May 2005		172,000		0.50		1.22		0.72
Jul 2005		611,000		0.75		1.40		0.65
Aug 2005		965,500		1.00		1.40		0.40
Oct 2005		2,223,500		1.25		1.70		0.45
Nov 2005		252,000	$	1.50	$	1.70	$	0.20

As a result of the reassessed fair value of options granted, and in accordance with the requirements of APB 25, the Company recorded deferred stock-based compensation for the difference between the options’ exercise price and the deemed fair market value of the Company’s stock at the date of grant. This deferred stock-based compensation is amortized to expense on a straight-line basis over the period during which the options vest, which is generally four years. During the years ended July 31, 2004, 2005 and 2006, the Company recorded deferred stock-based compensation, net related to these options of $1.5 million, $1.9 million and $804,000, respectively.

During the years ended July 31, 2004, 2005 and 2006 and the three months ended October 31, 2006, the Company issued fully vested stock awards of 9,500, 31,250, 3,500, and 21,500 shares (unaudited), respectively, to employees. The estimated fair value of the awards measured on the award date was $1,000, $8,000, $2,000 and $50,000 (unaudited) for the years ended July 31, 2004, 2005 and 2006 and the three months ended October 31, 2006, respectively.

During the years ended July 31, 2004, 2005 and 2006 and the three months ended October 31, 2006, the Company issued fully vested stock awards of 40,000, 0, 16,050 and 23,800 (unaudited) shares, respectively, to consultants. The estimated fair value of the awards measured on the date of the awards was $8,000, $0, $24,000 and $73,000 (unaudited) for the awards granted during the years ended July 31, 2004, 2005 and 2006 and the three months ended October 31, 2006, respectively.

F-29

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the years ended July 31, 2004, 2005 and 2006 and the three months ended October 31, 2006, the Company issued fully vested stock options to purchase 34,000, 74,479, 15,000 and 2,000 (unaudited) shares of common stock, respectively, to consultants of the Company at exercise prices ranging from $0.12 to $2.65 per share. The estimated fair value of the options measured on the date of grant, using the Black-Scholes option pricing model with a contractual life of 10 years, volatility of 100%, 100%, 70% and 56% (unaudited), respectively, and risk-free interest rates of 3.83% - 4.99% was $11,000, $88,000, $19,000 and $4,000 (unaudited), for options issued during the years ended July 31, 2004, 2005 and 2006 and the three months ended October 31, 2006, respectively. Since the stock options were fully vested, they were expensed in full at the time of grant.

During the years ended July 31, 2004, 2005 and 2006 and the three months ended October 31, 2006, the Company issued stock options for the right to purchase 104,000, 25,000, 35,000 and 10,000 shares (unaudited), respectively, to consultants in exchange for services. These options vest over a period of up to four years and have an exercise price ranging from $0.12 to $2.65 per share. The Company recognizes stock compensation expense on a straight line basis over the vesting periods of the underlying awards based on an estimate of their fair value using the Black-Scholes option pricing model with a contractual life of 10 years, volatility of 100%, 100%, 70% and 56% (unaudited), respectively, and risk-free interest rates of 2.40% - 5.08%. The fair value of stock options granted to non-employees is re-measured at each reporting date. The stock-based compensation expense related to these grants will fluctuate as the estimated fair value of the common stock fluctuates over the period from the grant date to the vesting date. The Company recorded stock-based compensation expense related to these awards which continue to vest of $195,000, $239,000, $287,000 and $20,000 (unaudited) during the years ended July 31, 2004, 2005 and 2006 and the three months ended October 31, 2006, respectively.

401(k) Defined Contribution Plan

The Company sponsors a 401(k) defined contribution plan covering all employees. Matching contributions to the plan are at the discretion of the Company. To date, there have been no employer contributions under this plan.

11.   Segment Information

The Company operates in one industry segment selling fixed and modular mobility controllers, wired and wireless access points, and related software and services.

FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company’s Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the consolidated unit level. Accordingly, the Company reports as a single operating segment. The Company and its Chief Executive Officer evaluate performance based primarily on revenue in the geographic locations in which the Company operates. Revenue is attributed by geographic location based on the ship-to location of the Company’s customers. The Company’s assets are primarily located in the United States of America and not allocated to any specific region. Therefore, geographic information is presented only for total revenue.

F-30

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following presents total revenue by geographic region (in thousands):

	Years Ended July 31,						Three Months Ended
	2004		2005		2006		October 31, 2006
							(Unaudited)
United States	$	803	$	8,791	$	53,132	$	16,794
Europe, Middle East and Africa		138		1,325		7,711		3,300
Asia Pacific		195		1,566		7,232		2,304
Rest of World		11		361		4,428		2,107
Total	$	1,147	$	12,043	$	72,503	$	24,505

12.   Commitments and Contingencies

Legal Matters

From time to time, third parties assert claims against the Company arising from the normal course of business activities. There are no claims as of July 31, 2006 that, in the opinion of management, might have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Equipment Loans

In March 2003, the Company entered into an equipment loan and security agreement with a financial institution for borrowings of up to $1.8 million. Borrowings under this loan bear interest annually at 7.50%. The Company is required to repay the borrowings under this loan in three consecutive interest-only monthly payments, followed by 36 equal monthly installments of principal plus interest.

The Company is also required to pay an additional payment in the amount of 12.5% of the draw-down amount, at the end of the term of each borrowing under the equipment loan line. This loan is secured by various new and used equipment including computers, peripherals, lab equipment and evaluation equipment.

In connection with the agreement, the Company also issued the lender warrants to purchase 37,481 shares of Series A redeemable convertible preferred stock and 83,333 shares of Series B redeemable convertible preferred stock (Note 8).

In July 2003, the Company entered into a second equipment loan and security agreement with a financial institution for borrowings of up to $2.0 million. Borrowings under this loan bear interest annually at 12.25%. The Company is required to repay the borrowings under this loan in equal monthly installments of principal plus interest over 39 months. The loan is secured by various new and used equipment including computers, peripherals, lab equipment and evaluation equipment.

In connection with the agreement, the Company also issued the lender warrants to purchase 144,303 shares of Series A redeemable convertible preferred stock, 263,889 shares of Series B redeemable convertible preferred stock and 148,100 shares of Series C redeemable convertible preferred stock (Note 8).

Lease Obligations

The Company leases office space under noncancelable operating leases with various expiration dates through August 2012. The terms of certain operating leases provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the respective lease periods and has accrued for rent expense incurred but not paid. Rent expense for the years ended July 31, 2004, 2005 and 2006 was $400,000, $621,000 and $849,000, respectively and $177,000 (unaudited) and $342,000 (unaudited) for the three months ended October 31, 2005 and 2006, respectively.

F-31

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Future minimum lease payments under noncancelable operating leases, including lease commitments entered into as of to July 31, 2006, and payments on equipment loans, are as follows:

	Equipment			Operating
Year Ending July 31,	Loans			Leases
	(In thousands)
2007	$	649		$	677
2008		—			312
2009		—			255
2010		—			264
2011		—			209
Thereafter		—			12
Total minimum payments		649		$	1,729
Less: Amount representing interest		(36	)
Present value of minimum loan payments		613
Less: Current portion		(613	)
Long-term portion	$	—

Employee Agreements

The Company has signed various employment agreements with certain executives pursuant to which if their employment is terminated without cause, the executives are entitled to receive certain benefits, including, but not limited to, accelerated stock option vesting.

Warranties

The Company provides for future warranty costs upon product delivery. The specific terms and conditions of those warranties vary depending upon the product sold and country in which the Company does business. In the case of hardware, the warranties are generally for 12-15 months from the date of purchase.

The Company warrants that any media on which its software products are recorded will be free from defects in materials and workmanship under normal use for a period of 90 days from the date the products are delivered to the end customer. In addition, the Company warrants that its hardware products will substantially conform to the Company’s published specifications.

Historically, the Company has experienced minimal warranty costs. Factors that affect the Company’s warranty liability include the number of installed units, historical experience and management’s judgment regarding anticipated rates of warranty claims and cost per claim. The Company assesses the adequacy of its recorded warranty liabilities every period and makes adjustments to the liability as necessary.

F-32

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The warranty liability is included as a component of accrued liabilities on the balance sheet. Changes in the warranty liability are as follows:

	Warranty Amount
	(In thousands)
Balance as of July 31, 2004	$	67
Provision		46
Settlements made during the year		(46	)
Balance as of July 31, 2005		67
Provision		15
Changes in estimates for pre-existing warranties		(42	)
Settlements made during the year		(5	)
Balance as of July 31, 2006		35
Provision (unaudited)		5
Settlements made during the quarter (unaudited)		—
Balance as of October 31, 2006 (unaudited)	$	40

Guarantees and Indemnifications

The Company outsources the production of its hardware to a third-party contract manufacturer. In addition, the Company enters into various inventory related purchase commitments with this contract manufacturer and a supplier. The Company had $5.3 million, $4.6 million and $6.1 million (unaudited) in noncancelable purchase commitments with these providers as of July 31, 2005, 2006 and October 31, 2006, respectively. The Company expects to sell all products which it has committed to purchase from these providers.

The Company also indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that limits its exposure and enables it to recover a portion of any future amounts paid. The Company is unable to reasonably estimate the maximum amount that could be payable under these arrangements since these obligations are not capped but are conditional to the unique facts and circumstances involved. Accordingly, the Company has no liabilities recorded for these agreements as of July 31, 2005, 2006 and October 31, 2006 (unaudited).

In its sales agreements, the Company may agree to indemnify its indirect sales channels and end-user customers for any expenses or liability resulting from claimed infringements of patents, trademarks or copyrights of third parties. The terms of these indemnification agreements are generally perpetual any time after execution of the agreement. The maximum amount of potential future indemnification is unlimited. To date the Company has not paid any amounts to settle claims or defend lawsuits. The Company is unable to reasonably estimate the maximum amount that could be payable under these arrangements since these obligations are not capped but are conditional to the unique facts and circumstances involved. Accordingly, the Company has no liabilities recorded for these agreements as of July 31, 2005, 2006 and October 31, 2006 (unaudited).

F-33

ARUBA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

13.   Subsequent Events

On November 22, 2006, the Company’s Board of Directors approved the filing of an amendment to the Company’s Restated Certificate of Incorporation (the “Amendment”) to increase the number of authorized shares of common stock by 3,800,000 shares, subject to stockholder approval. The Company’s stockholders approved the Amendment on December 3, 2006, and the Company filed the Amendment on December 4, 2006.

On December 4, 2006, the Company increased the number of shares of common stock to be issued under the 2002 Stock Plan by an additional 3,800,000 shares.

On December 8, 2006, the Company’s Board of Directors approved an additional 6,000,000 shares of common stock to be issued under the 2002 Stock Plan.

On December 8, 2006, the Company’s Board of Directors adopted the 2007 Equity Incentive Plan and the Employee Stock Purchase Plan, subject to stockholder approval.

On December 10, 2006, the Company’s Board of Directors approved the filing of a Restated Certificate of Incorporation (the “Restated Certificate”) to create and authorize the issuance of up to 4,640,000 shares of Series D redeemable convertible preferred stock and increase the number of authorized shares of common stock to 95,440,000 shares, subject to stockholder approval. On December 13, 2006, the Company’s stockholders approved, and the Company filed, the Restated Certificate. At that time, the Company issued 4,573,296 shares of Series D redeemable convertible preferred stock at $6.5443 per share. These shares were issued in full satisfaction of the Company’s obligations under the Series D preferred stock purchase agreement entered into in September 2005 and September 2006. The $19.3 million and $10.6 million (unaudited) that the Company received in September 2005 and September 2006, respectively, in connection with the Series D preferred stock purchase agreement has been recorded as a deposit for the Series D redeemable convertible preferred stock. The Company will record the gain or loss arising from the difference, if any, between the fair value of the shares issued and the carrying value of the deposit for Series D redeemable convertible preferred stock in its Statement of Operations for the three months ending January 31, 2007. See Note 8 of Notes to Consolidated Financial Statements.

On December 11, 2006, the Company’s Board of Directors approved the filing of a registration statement with the Securities and Exchange Commission for an initial public offering of the Company’s common stock.

F-34

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.   OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses to be paid by the registrant, other than estimated underwriting discounts and commissions, in connection with this offering. All amounts shown are estimates except for the SEC registration fee, the NASD filing fee and the Nasdaq Global Market listing fee.

SEC registration fee	$	10,700
NASD filing fee	$	10,500
Nasdaq Global Market listing fee		*
Printing and engraving		*
Legal fees and expenses		*
Accounting fees and expenses		*
Blue sky fees and expenses (including legal fees)		*
Transfer agent and registrar fees		*
Miscellaneous		*
Total	$	*

* To be completed by amendment

ITEM 14.   INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law authorizes a corporation’s board of directors to grant, and authorizes a court to award, indemnity to officers, directors and other corporate agents.

As permitted by Section 102(b)(7) of the Delaware General Corporation Law, the registrant’s certificate of incorporation includes provisions that eliminate the personal liability of its directors for monetary damages for breach of their fiduciary duty as directors.

In addition, as permitted by Section 145 of the Delaware General Corporation Law, the bylaws of the registrant provide that:

•  The registrant shall indemnify its directors for serving the registrant in those capacities or for serving other business enterprises at the registrant’s request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful.

•  The registrant may, in its discretion, indemnify employees and agents in those circumstances where indemnification is not required by law.

•  The registrant is required to advance expenses, as incurred, to its directors and officers in connection with defending a proceeding, except that such director or officer shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.

•  The registrant will not be obligated pursuant to the bylaws to indemnify a person with respect to proceedings initiated by that person, except with respect to proceedings authorized by the registrant’s board of directors or brought to enforce a right to indemnification.

•  The rights conferred in the bylaws are not exclusive, and the registrant is authorized to enter into indemnification agreements with its directors, officers, employees and agents and to obtain insurance to indemnify such persons.

II-1

•  The registrant may not retroactively amend the bylaw provisions to reduce its indemnification obligations to directors, officers, employees and agents.

The registrant’s policy is to enter into separate indemnification agreements with each of its directors that provide the maximum indemnity allowed to directors by Section 145 of the Delaware General Corporation Law and also provides for certain additional procedural protections. The registrant also maintains directors and officers insurance to insure such persons against certain liabilities.

These indemnification provisions and the indemnification agreements entered into between the registrant and its directors may be sufficiently broad to permit indemnification of the registrant’s officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act.

The underwriting agreement filed as Exhibit 1.1 to this registration statement provides for indemnification by the underwriters of the registrant and its officers and directors for certain liabilities arising under the Securities Act and otherwise.

ITEM 15.   RECENT SALES OF UNREGISTERED SECURITIES.

Since our inception in February 2002, we have sold unregistered securities to a limited number of persons as described below.

1. Sales of Preferred Stock

•  In April 2002, the registrant sold an aggregate of           shares of the registrant’s Series A preferred stock to a total of 10 accredited investors at $      per share, for aggregate proceeds of $9,420,000.

•  In August 2003, the registrant sold an aggregate of           shares of the registrant’s Series B preferred stock to a total of 14 accredited investors at $      per share, for aggregate proceeds of $19,999,998.

•  In October 2003, the registrant sold an aggregate of           shares of the registrant’s Series B preferred stock to a total of 11 accredited investors at $      per share, for aggregate proceeds of $2,000,003.

•  In June 2004, the registrant sold an aggregate of           shares of the registrant’s Series C preferred stock to a total of 20 accredited investors at $      per share, for aggregate proceeds of $23,970,221.

•  In July 2004, the registrant sold an aggregate of           shares of the registrant’s Series C preferred stock to a total of 2 accredited investors at $      per share, for aggregate proceeds of $1,000,001.

•  In August 2004, the registrant sold an aggregate of           shares of the registrant’s Series C preferred stock to a total of 8 accredited investors at $      per share, for aggregate proceeds of $1,729,972.

•  In September 2005, the registrant sold an aggregate of           shares of the registrant’s Series D preferred stock to a total of 30 accredited investors at $      per share, for aggregate proceeds of $19,329,054.

•  In September 2006, the registrant sold an aggregate of           shares of the registrant’s Series D preferred stock to a total of 31 accredited investors at $      per share, for aggregate proceeds of $10,599,985.

2. Warrants

•  In March 2003, the registrant issued warrants to purchase an aggregate of           shares of the registrant’s preferred stock to an accredited investor at an exercise price of $      per share.

•  In July 2003, the registrant issued warrants to purchase an aggregate of           shares of the registrant’s preferred stock to an accredited investor at an exercise price of $      per share.

•  In April 2004, the registrant issued warrants to purchase an aggregate of           shares of the registrant’s preferred stock to an accredited investor at an exercise price of $      per share.

•  In May 2004, the registrant issued warrants to purchase an aggregate of           shares of the registrant’s preferred stock to an accredited investor at an exercise price of $      per share.

II-2

3. Options

•  From February 11, 2002 through October 31, 2006, the registrant issued and sold an aggregate of           shares of common stock upon the exercise of options issued to certain employees, directors and consultants under the registrant’s 2002 Stock Plan at exercise prices ranging from $0.06 to $3.63 per share, for an aggregate consideration of $2,923,215.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and the registrant believes each transaction was exempt from the registration requirements of the Securities Act in reliance on Section 4(2) thereof and Regulation D promulgated thereunder, with respect to items (1) and (2) above, as transactions by an issuer not involving a public offering, and Rule 701 promulgated thereunder, with respect to item (3) above, as transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under such Rule 701. The recipients of securities in such transactions represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and instruments issued in such transactions. All recipients either received adequate information about the registrant or had access, through their relationships with the registrant, to such information.

ITEM 16.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.  The following exhibits are included herein or incorporated herein by reference:

Exhibit
Number			Description
	1	.1*	Form of Underwriting Agreement
	3	.1A*	Amended and Restated Certificate of Incorporation of Registrant
	3	.1B*	Form of Restated Certificate of Incorporation of Registrant, to be in effect upon the completion of this offering
	3	.2A	Bylaws of Registrant
	3	.2B*	Form of Amended and Restated Bylaws of Registrant, to be in effect upon the completion of this offering
	4	.1*	Specimen common stock certificate
	4	.2	Amended and Restated Investors’ Rights Agreement
	4	.3	Warrants to purchase preferred stock of Registrant, issued to Lighthouse Capital Partners
	4	.4	Warrants to purchase preferred stock of Registrant, issued to Costella Kirsch Venture Partners
	4	.5	Stock Issuance Agreement, dated July 15, 2005, between Registrant and Microsoft Corporation
	5	.1*	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
	10	.1*	Form of Indemnification Agreement between Registrant and its directors
	10	.2A	2002 Stock Plan of Registrant, as amended
	10	.2B	Forms of Stock Option Agreements under the 2002 Stock Plan
	10	.3A*	2007 Equity Incentive Plan of Registrant, to be in effect upon the completion of this offering
	10	.3B*	Forms of Stock Option Agreements under the 2007 Equity Incentive Plan
	10	.4A*	Employee Stock Purchase Plan, to be in effect upon the completion of this offering
	10	.4B*	Form of Subscription Agreement under the Employee Stock Purchase Plan
	10	.5	Executive Employment Agreement, dated April 4, 2006, between Registrant and Dominic P. Orr
	10	.6	Employment offer letter, dated April 12, 2002, between Registrant and Keerti Melkote
	10	.7	Employment offer letter, dated July 18, 2006, between Registrant and Sriram Ramachandran
	10	.8	Employment offer letter, dated July 14, 2005, between Registrant and Steffan Tomlinson
	10	.9	Employment offer letter, dated June 2, 2004, between Registrant and Richard Wilmer
	10	.10	Separation Agreement, dated April 6, 2006, between Registrant and Donald LeBeau

II-3

Exhibit
Number			Description
	10	.11	Separation Agreement, dated August 30, 2006, between Registrant and David Butler
	10	.12	Loan and Security Agreement, dated March 3, 2003, between Registrant and Lighthouse Capital Partners
	10	.13	Master Loan and Security Agreement, dated July 31, 2003, between Registrant and Costella Kirsch Venture Partners
	10	.14	Sublease Agreement, dated September 10, 2004, for 1322 Crossman Ave., Sunnyvale, Califonia
	10	.15*	Flextronics Manufacturing Services Agreement, dated January 1, 2005
	21	.1	List of subsidiaries of Registrant
	23	.1	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
	23	.2*	Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.1)
	24	.1	Power of Attorney (see page II-6 to this registration statement on Form S-1)

* To be filed by amendment.

(b) Financial Statement Schedules.  The following financial statement schedule is included herewith:

Schedule II — Valuation and Qualifying Accounts

All other schedules have been omitted because the information required to be presented in them is not applicable or is shown in the consolidated financial statements or related notes.

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

	Balance at							Balance at
	Beginning							End of
Allowance for Doubtful Accounts	of Year		Additions		Deductions			Year
	(In thousands)
Year ended July 31, 2004	$	—	$	26	$	—		$	26
Year ended July 31, 2005	$	26	$	138	$	—		$	164
Year ended July 31, 2006	$	164	$	254	$	(66	)	$	352

ITEM 17.   UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-4

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Sunnyvale, State of California, on the fifteenth day of December, 2006.

ARUBA NETWORKS, INC.

By:  /s/  Dominic P. Orr

Dominic P. Orr

President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Dominic P. Orr and Steffan Tomlinson, and each of them, as his true and lawful attorney-in-fact and agent with full power of substitution, for him in any and all capacities, to sign any and all amendments to this registration statement (including post-effective amendments or any abbreviated registration statement and any amendments thereto filed pursuant to Rule 462(b) increasing the number of securities for which registration is sought), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the fifteenth day of December, 2006.

Signature	Title
/s/  Dominic P. Orr Dominic P. Orr	President, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)
/s/  Steffan Tomlinson Steffan Tomlinson	Chief Financial Officer (Principal Accounting and Financial Officer)
/s/  Keerti Melkote Keerti Melkote	Co-Founder, Vice President, Products and Partnerships and Director
/s/  Bernard Guidon Bernard Guidon	Director
/s/  Emmanuel Hernandez Emmanuel Hernandez	Director
/s/  Doug Leone Doug Leone	Director
/s/  Shirish S. Sathaye Shirish S. Sathaye	Director
/s/  Daniel Warmenhoven Daniel Warmenhoven	Director

II-6

EXHIBIT INDEX

Exhibit
Number			Description
	1	.1*	Form of Underwriting Agreement
	3	.1A*	Amended and Restated Certificate of Incorporation of Registrant
	3	.1B*	Form of Restated Certificate of Incorporation of Registrant, to be in effect upon the completion of this offering
	3	.2A	Bylaws of Registrant
	3	.2B*	Form of Amended and Restated Bylaws of Registrant, to be in effect upon the completion of this offering
	4	.1*	Specimen common stock certificate
	4	.2	Amended and Restated Investors’ Rights Agreement
	4	.3	Warrants to purchase preferred stock of Registrant, issued to Lighthouse Capital Partners
	4	.4	Warrants to purchase preferred stock of Registrant, issued to Costella Kirsch Venture Partners
	4	.5	Stock Issuance Agreement, dated July 15, 2005, between Registrant and Microsoft Corporation
	5	.1*	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
	10	.1*	Form of Indemnification Agreement between Registrant and its directors
	10	.2A	2002 Stock Plan of Registrant, as amended
	10	.2B	Forms of Stock Option Agreements under the 2002 Stock Plan
	10	.3A*	2007 Equity Incentive Plan of Registrant, to be in effect upon the completion of this offering
	10	.3B*	Forms of Stock Option Agreements under the 2007 Equity Incentive Plan
	10	.4A*	Employee Stock Purchase Plan, to be in effect upon the completion of this offering
	10	.4B*	Form of Subscription Agreement under the Employee Stock Purchase Plan
	10	.5	Executive Employment Agreement, dated April 4, 2006, between Registrant and Dominic P. Orr
	10	.6	Employment offer letter, dated April 12, 2002, between Registrant and Keerti Melkote
	10	.7	Employment offer letter, dated July 18, 2006, between Registrant and Sriram Ramachandran
	10	.8	Employment offer letter, dated July 14, 2005, between Registrant and Steffan Tomlinson
	10	.9	Employment offer letter, dated June 2, 2004, between Registrant and Richard Wilmer
	10	.10	Separation Agreement, dated April 6, 2006, between Registrant and Donald LeBeau
	10	.11	Separation Agreement, dated August 30, 2006, between Registrant and David Butler
	10	.12	Loan and Security Agreement, dated March 3, 2003, between Registrant and Lighthouse Capital Partners
	10	.13	Master Loan and Security Agreement, dated July 31, 2003, between Registrant and Costella Kirsch Venture Partners
	10	.14	Sublease Agreement, dated September 10, 2004, for 1322 Crossman Ave., Sunnyvale, California
	10	.15*	Flextronics Manufacturing Services Agreement, dated January 1, 2005
	21	.1	List of subsidiaries of Registrant
	23	.1	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
	23	.2*	Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.1)
	24	.1	Power of Attorney (see page II-6 to this registration statement on Form S-1)

* To be filed by amendment.

EX-3.2A

Exhibit 3.2A

BYLAWS OF

ARUBA NETWORKS, INC.

(A DELAWARE CORPORATION)

TABLE OF CONTENTS

		Page
ARTICLE I.	OFFICES		1
ARTICLE II.	MEETINGS OF STOCKHOLDERS		1
ARTICLE III.	DIRECTORS		4
ARTICLE IV.	NOTICES		7
ARTICLE V.	OFFICERS		8
ARTICLE VI.	CERTIFICATE OF STOCK		10
ARTICLE VII.	GENERAL PROVISIONS		11
ARTICLE VIII.	AMENDMENTS		13
ARTICLE IX.	LOANS TO OFFICERS		14

BYLAWS
OF
ARUBA NETWORKS, INC.

ARTICLE I
OFFICES

          1.1 The registered office shall be in the City of Dover, County of Kent, State of Delaware.

          1.2 The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.

ARTICLE II
MEETINGS OF STOCKHOLDERS

          2.1 All meetings of the stockholders for the election of directors shall be held in the City of San Jose, State of California, at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting; provided, however, that the Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211 of the Delaware General Corporations Law (“DGCL”). Meetings of stockholders for any other purpose may be held at such time and place, if any, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof, or a waiver by electronic transmission by the person entitled to notice.

          2.2 Annual meetings of stockholders, commencing with the year 2002, shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting.

          2.3 Written notice of any stockholder meeting stating the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given to each stockholder entitled to vote at such meeting not fewer than ten (10) nor more than sixty (60) days before the date of the meeting.

          2.4 The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address (but not the electronic address or other electronic contact information) of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a

period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the corporation. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

          2.5 Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning at least fifty percent (50%) in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.

          2.6 Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not fewer than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. The means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting shall also be provided in the notice.

          2.7 Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

          2.8

               (a) The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

               (b) If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and

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proxyholders not physically present at a meeting of stockholders may, by means of remote communication:

                    (1) participate in a meeting of stockholders; and

                    (2) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (ii) the corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.

          2.9 When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question.

          2.10 Unless otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote by such stockholder or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period.

          2.11 (a) Unless otherwise provided by the certificate of incorporation, any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed in a manner permitted by law by the holders of outstanding stock having not less than the number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Written stockholder consents shall bear the date of signature of each stockholder who signs the consent in the manner permitted by law and shall be delivered to the corporation as provided in subsection (b) below. No written consent shall be effective to take the action set forth therein unless, within sixty (60) days of the earliest dated consent delivered to the corporation in the manner provided above, written consents signed by a sufficient number of stockholders to take the action set forth therein are delivered to the corporation in the manner provided above.

(b) A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this section, provided that any such telegram,

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cablegram or other electronic transmission sets forth or is delivered with information from which the corporation can determine (i) that the telegram, cablegram or other electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (ii) the date on which such stockholder or proxyholder or authorized person or persons transmitted such telegram, cablegram or electronic transmission. The date on which such telegram, cablegram or electronic transmission is transmitted shall be deemed to be the date on which such consent was signed. No consent given by telegram, cablegram or other electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested. Notwithstanding the foregoing limitations on delivery, consents given by telegram, cablegram or other electronic transmission may be otherwise delivered to the principal place of business of the corporation or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded if, to the extent and in the manner provided by resolution of the Board of Directors of the corporation.

(c)

Prompt notice of any action taken pursuant to this Section 2.11 shall be provided to the stockholders in accordance with Section 228(e) of the Delaware General Corporation Law.

ARTICLE III
DIRECTORS

          3.1 The number of directors that shall constitute the whole Board of Directors shall be determined by resolution of the Board of Directors or by the stockholders at the annual meeting of the stockholders, except as provided in Section 3.2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders.

          3.2 Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole Board of Directors (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such

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directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

          3.3 The business of the corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders.

MEETINGS OF THE BOARD OF DIRECTORS

          3.4 The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.

          3.5 The first meeting of each newly elected Board of Directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected Board of Directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.

          3.6 Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors.

          3.7 Special meetings of the Board of Directors may be called by the president on two (2) days’ notice to each director by mail or forty-eight (48) hours’ notice to each director either personally or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two (2) directors unless the Board of Directors consists of only one director, in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director.

          3.8 At all meetings of the Board of Directors a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

          3.9 Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing, writings, electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee.

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          3.10 Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or other means of communication of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

COMMITTEES OF DIRECTORS

          3.11 The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.

          In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

          Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing any provision of these bylaws.

          3.11 Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.

COMPENSATION OF DIRECTORS

          3.12 Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

REMOVAL OF DIRECTORS

          3.13 Unless otherwise provided by the certificate of incorporation or these bylaws, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors.

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ARTICLE IV
NOTICES

          4.1 Whenever, under the provisions of the statutes or of the certificate of incorporation or of these bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram.

          4.2 Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

          4.3

               (a) Without limiting the manner by which notice otherwise may be given effectively to stockholders and directors, any notice to stockholders and directors given by the corporation under any provision of the DGCL, the certificate of incorporation, or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder or director to whom the notice is given. Any such consent shall be revocable by the stockholder or director by written notice to the corporation. Any such consent shall be deemed revoked if (1) the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent and (2) such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

               (b) Notice given pursuant to subsection (a) of this section shall be deemed given: (1) if by facsimile telecommunication, when directed to a number at which the stockholder or director has consented to receive notice; (2) if by electronic mail, when directed to an electronic mail address at which the stockholder or director has consented to receive notice; (3) if by a posting on an electronic network together with separate notice to the stockholder or director of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (4) if by any other form of electronic transmission, when directed to the stockholder or director. An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

               (c) For purposes of these bylaws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

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ARTICLE V
OFFICERS

          5.1 The officers of the corporation shall be chosen by the Board of Directors and shall be a president, treasurer and a secretary. The Board of Directors may elect from among its members a Chairman of the Board and a Vice-Chairman of the Board. The Board of Directors may also choose one or more vice-presidents, assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these bylaws otherwise provide.

          5.2 The Board of Directors at its first meeting after each annual meeting of stockholders shall choose a president, a treasurer, and a secretary and may choose vice-presidents.

          5.3 The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

          5.4 The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors.

          5.5 The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.

THE CHAIRMAN OF THE BOARD

          5.6 The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he shall be present. He shall have and may exercise such powers as are, from time to time, assigned to him by the Board of Directors and as may be provided by law.

          5.7 In the absence of the Chairman of the Board, the Vice-Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he shall be present. He shall have and may exercise such powers as are, from time to time, assigned to him by the Board of Directors and as may be provided by law.

THE PRESIDENT AND VICE-PRESIDENTS

          5.8 The president shall be the chief executive officer of the corporation; and in the absence of the Chairman and Vice-Chairman of the Board he shall preside at all meetings of the stockholders and the Board of Directors; he shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect.

          5.9 He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise

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signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation.

          5.10 In the absence of the president or in the event of his inability or refusal to act, the vice-president, if any, (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

THE SECRETARY AND ASSISTANT SECRETARY

          5.11 The secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature.

          5.12 The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

THE TREASURER AND ASSISTANT TREASURERS

          5.13 The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors.

          5.14 He shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation.

          5.15 If required by the Board of Directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and

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for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation.

          5.16 The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

ARTICLE VI
CERTIFICATE OF STOCK

          6.1 Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the Chairman or Vice-Chairman of the Board of Directors, or the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, certifying the number of shares owned by him in the corporation.

          Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor, and the amount paid thereon shall be specified.

          If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

          6.2 Any of or all the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

LOST CERTIFICATES

          6.3 The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person

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claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

TRANSFER OF STOCK

          6.4 Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

FIXING RECORD DATE

          6.5 In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholder or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

REGISTERED STOCKHOLDERS

          6.6 The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS

          7.1 Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation.

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          7.2 Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

CHECKS

          7.3 All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

FISCAL YEAR

          7.4 The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

SEAL

          7.5 The Board of Directors may adopt a corporate seal having inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

INDEMNIFICATION

          7.6 The corporation shall, to the fullest extent authorized under the laws of the State of Delaware, as those laws may be amended and supplemented from time to time, indemnify any director made, or threatened to be made, a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of being a director of the corporation or a predecessor corporation or, at the corporation’s request, a director or officer of another corporation; provided, however, that the corporation shall indemnify any such agent in connection with a proceeding initiated by such agent only if such proceeding was authorized by the Board of Directors of the corporation. The indemnification provided for in this Section 7.6 shall: (i) not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement or vote of stockholders or disinterested directors or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office, (ii) continue as to a person who has ceased to be a director, and (iii) inure to the benefit of the heirs, executors and administrators of such a person. The corporation’s obligation to provide indemnification under this Section 7.6 shall be offset to the extent of any other source of indemnification or any otherwise applicable insurance coverage under a policy maintained by the corporation or any other person.

          Expenses incurred by a director of the corporation in defending a civil or criminal action, suit or proceeding by reason of the fact that he is or was a director of the corporation (or was serving at the corporation’s request as a director or officer of another corporation) shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon

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receipt of an undertaking by or on behalf of such director to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized by relevant sections of the General Corporation Law of Delaware. Notwithstanding the foregoing, the corporation shall not be required to advance such expenses to an agent who is a party to an action, suit or proceeding brought by the corporation and approved by a majority of the Board of Directors of the corporation that alleges willful misappropriation of corporate assets by such agent, disclosure of confidential information in violation of such agent’s fiduciary or contractual obligations to the corporation or any other willful and deliberate breach in bad faith of such agent’s duty to the corporation or its stockholders.

          The foregoing provisions of this Section 7.6 shall be deemed to be a contract between the corporation and each director who serves in such capacity at any time while this bylaw is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.

          The Board of Directors in its discretion shall have power on behalf of the corporation to indemnify any person, other than a director, made a party to any action, suit or proceeding by reason of the fact that he, his testator or intestate, is or was an officer or employee of the corporation.

          To assure indemnification under this Section 7.6 of all directors, officers and employees who are determined by the corporation or otherwise to be or to have been “fiduciaries” of any employee benefit plan of the corporation that may exist from time to time, Section 145 of the General Corporation Law of Delaware shall, for the purposes of this Section 7.6, be interpreted as follows: an “other enterprise” shall be deemed to include such an employee benefit plan, including without limitation, any plan of the corporation that is governed by the Act of Congress entitled “Employee Retirement Income Security Act of 1974,” as amended from time to time; the corporation shall be deemed to have requested a person to serve an employee benefit plan where the performance by such person of his duties to the corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to such Act of Congress shall be deemed “fines.”

CERTIFICATE OF INCORPORATION GOVERNS

          7.7 In the event of any conflict between the provisions of the Corporation’s Certificate of Incorporation and Bylaws, the provisions of the Certificate of Incorporation shall govern.

ARTICLE VIII
AMENDMENTS

          8.1 These bylaws may be altered, amended or repealed or new bylaws may be adopted by the stockholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the certificate of incorporation at any regular meeting of the stockholders

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or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new bylaws be contained in the notice of such special meeting. If the power to adopt, amend or repeal bylaws is conferred upon the Board of Directors by the certificate or incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal bylaws.

ARTICLE IX
LOANS TO OFFICERS

          9.1 The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a Director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.

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CERTIFICATE OF SECRETARY OF

ARUBA NETWORKS, INC.

          The undersigned, Keerti Melkote, hereby certifies that he is the duly elected and acting Secretary of Aruba Networks, Inc., a Delaware corporation (the “Corporation”), and that the Bylaws attached hereto constitute the Bylaws of said Corporation as duly adopted by Action by Written Consent in Lieu of Organizational Meeting by the Directors on February 13, 2002.

          IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name this 12th day of April, 2002.

/s/ Keerti Melkote Secretary

CERTIFICATE OF AMENDMENT
OF
THE BYLAWS OF
ARUBA WIRELESS NETWORKS, INC.,
a Delaware corporation

          The undersigned, Keerti Melkote, hereby certifies that:

     1. He is the duly elected Secretary of Aruba Wireless Networks, Inc., a Delaware corporation (the “Company”).

     2. Effective as of July 31, 2003, the Company’s Bylaws were amended as follows:

Section 2.5 of the Company’s Bylaws was amended in its entirety to read as follows:

     “Section 2.5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning at least twenty-five percent (25%) in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.”

          IN WITNESS HEREOF, the undersigned has set his hand hereto this 4th day of August, 2003.

/s/ Keerti Melkote Keerti Melkote, Secretary

EX-4.2

Exhibit 4.2

ARUBA WIRELESS NETWORKS, INC.

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

Initial Closing: September 6, 2005

Subsequent Closing: September 30, 2005

Second Subsequent Closing: September 30, 2006

TABLE OF CONTENTS

	Page
1. Registration Rights		1
1.1 Definitions		1
1.2 Request for Registration		2
1.3 Company Registration		4
1.4 Form S-3 Registration		5
1.5 Obligations of the Company		6
1.6 Information from Holder		8
1.7 Expenses of Registration		9
1.8 Delay of Registration		9
1.9 Indemnification		9
1.10 Reports Under the 1934 Act		11
1.11 Assignment of Registration Rights		12
1.12 Limitations on Subsequent Registration Rights		12
1.13 “Market Stand-Off” Agreement		13
1.14 Termination of Registration Rights		14
2. Covenants of the Company		14
2.1 Delivery of Financial Statements		14
2.2 Inspection		15
2.3 Termination of Covenants		15
2.4 Right of First Offer		15
2.5 Proprietary Information and Inventions Agreements		17
2.6 Employee Agreements		17
2.7 Compensation Committee		17
2.8 Qualified Small Business Stock Status		17
2.9 Observer Rights		17
2.10 Director Meetings		19
3. Miscellaneous		19
3.1 Successors and Assigns		19
3.2 Governing Law		19
3.3 Counterparts		19
3.4 Titles and Subtitles		19
3.5 Notices		19
3.6 Expenses		19
3.7 Entire Agreement; Amendments and Waivers		19
3.8 Severability		20
3.9 Aggregation of Stock		21
3.10 Additional Investors		21
3.11 Amendment and Restatement of Prior Agreement		21

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AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT

          THIS AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (the “Agreement”) is made as of the 6th day of September, 2005, by and among Aruba Wireless Networks, Inc., a Delaware corporation (the “Company”), and the investors listed on Schedule A hereto, each of which is herein referred to as an “Investor.”

RECITALS

          WHEREAS, certain of the Investors (the “Existing Investors”) hold shares of the Company’s Series A Preferred Stock (the “Series A Preferred Stock”) and/or Series B Preferred Stock (the “Series B Preferred Stock”) and/or Series C Preferred Stock (the “Series C Preferred Stock”) and/or shares of Common Stock issued upon conversion thereof, and possess registration rights, information rights, rights of first offer and other rights pursuant to an Amended and Restated Investors’ Rights Agreement dated as of June 24, 2004 by and among the Company and such Existing Investors (the “Prior Agreement”);

          WHEREAS, the Prior Agreement may be amended, and any provision therein waived, with the consent of the Company and the holders of a majority of the outstanding Registrable Securities (as such term is defined in the Prior Agreement);

          WHEREAS, the Existing Investors as holders of a majority of the outstanding Registrable Securities (as such term is defined in the Prior Agreement) of the Company desire to amend and restate the Prior Agreement and to accept the rights created pursuant hereto in lieu of the rights granted to them under the Prior Agreement; and

          WHEREAS, certain Investors are parties to the Series D Preferred Stock Purchase Agreement of even date herewith by and among the Company and certain of the Investors (the “Series D Agreement”), which provides that as a condition to the closing of the sale of the Series D Preferred Stock (the “Series D Preferred Stock” and, collectively with the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock, the “Preferred Stock”), this Agreement must be executed and delivered by such Investors, Existing Investors holding a majority of the outstanding Registrable Securities (as such term is defined in the Prior Agreement) of the Company and the Company.

          NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Existing Investors and the Company hereby agree that the Prior Agreement shall be superseded and replaced in its entirety by this Agreement, and the parties hereto further agree as follows:

          1. Registration Rights. The Company covenants and agrees as follows:

               1.1 Definitions. For purposes of this Section 1:

                    (a) The term “Act” means the Securities Act of 1933, as amended.

                    (b) The term “Form S-3” means such form under the Act as in effect on the date hereof or any registration form under the Act subsequently adopted by the SEC that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

                    (c) The term “Holder” means any person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 1.11 hereof.

                    (d) The term “Initial Offering” means the Company’s first firm commitment underwritten public offering of its Common Stock pursuant to a registration statement on Form S-1 (or any successor registration form) under the Act, with gross offering proceeds of not less than $20,000,000 in the aggregate.

                    (e) The term “1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

                    (f) The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement or document.

                    (g) The term “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Preferred Stock, and (ii) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend or other distribution with respect to, or in exchange for, or in replacement of, the shares referenced in (i) above, excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which his rights under this Section 1 are not assigned.

                    (h) The number of shares of “Registrable Securities” outstanding shall be determined by the number of shares of Common Stock outstanding that are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities that are, Registrable Securities.

                    (i) The term “Rule 144” shall mean Rule 144 under the Act.

                    (j) The term “Rule 144(k)” shall mean subsection (k) of Rule 144 under the Act.

                    (k) The term “SEC” shall mean the Securities and Exchange Commission.

               1.2 Request for Registration.

                    (a) Subject to the conditions of this Section 1.2, if the Company shall receive at any time after the earlier of (i) three (3) years after the date of this Agreement or (ii) six (6) months after the effective date of the Initial Offering, a written request

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from the Holders of fifty percent (50%) or more of the Registrable Securities then outstanding (for purposes of this Section 1.2, the “Initiating Holders”) that the Company file a registration statement under the Act covering the registration of Registrable Securities with an anticipated aggregate offering price of at least $10,000,000, then the Company shall, within ten (10) days of the receipt thereof, give written notice of such request to all Holders, and subject to the limitations of this Section 1.2, use all commercially reasonable efforts to effect, as soon as practicable, the registration under the Act of all Registrable Securities that the Holders request to be registered in a written request received by the Company within twenty (20) days of the mailing of the Company’s notice pursuant to this Section 1.2(a).

                    (b) If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 1.2 and the Company shall include such information in the written notice referred to in Section 1.2(a). In such event the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company (which underwriter or underwriters shall be reasonably acceptable to a majority in interest of the Initiating Holders). Notwithstanding any other provision of this Section 1.2, if the underwriter advises the Company that marketing factors require a limitation of the number of securities underwritten (including Registrable Securities), then the Company shall so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such Registrable Securities on a pro rata basis based on the number of Registrable Securities held by all such Holders (including the Initiating Holders). In no event shall any Registrable Securities be excluded from such underwriting unless all other securities are first excluded. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration.

                    (c) The Company shall not be required to effect a registration pursuant to this Section 1.2:

                         (i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, unless the Company is already subject to service in such jurisdiction and except as may be required under the Act; or

                         (ii) after the Company has effected two (2) registrations pursuant to this Section 1.2, and such registrations have been declared or ordered effective; or

                         (iii) during the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred eighty (180) days following the effective date of, a Company-initiated registration

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subject to Section 1.3 below, provided that the Company is actively employing in good faith all commercially reasonable efforts to cause such registration statement to become effective; or

                         (iv) if the Initiating Holders propose to dispose of Registrable Securities that may be registered on Form S-3 pursuant to Section 1.4 hereof; or

                         (v) if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 1.2, a certificate signed by the Company’s Chief Executive Officer or Chairman of the Board stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than one hundred twenty (120) days after receipt of the request of the Initiating Holders, provided that such right shall be exercised by the Company not more than once in any twelve (12)-month period.

               1.3 Company Registration.

                    (a) If the Company proposes to register (including for this purpose a registration effected pursuant to Section 1.2 or by the Company for stockholders other than the Holders) any of its stock or other securities under the Act in connection with the public offering of such securities (other than a registration relating solely to the sale of securities to participants in a Company stock plan, a registration relating to a corporate reorganization or transaction under Rule 145 of the Act, a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities, or a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within twenty (20) days after mailing of such notice by the Company in accordance with Section 3.5, the Company shall, subject to the provisions of Section 1.3(c), use all commercially reasonable efforts to cause to be registered under the Act all of the Registrable Securities that each such Holder has requested to be registered.

                    (b) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company in accordance with Section 1.7 hereof.

                    (c) Underwriting Requirements. In connection with any offering involving an underwriting of shares of the Company’s capital stock, the Company shall not be required under this Section 1.3 to include any of the Holders’ securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters) and enter into an underwriting agreement in customary form with such underwriters, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities,

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including Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, that the underwriters determine in their sole discretion will not jeopardize the success of the offering. In no event shall any Registrable Securities be excluded from such offering unless all other stockholders’ securities are first excluded. In the event that the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be apportioned pro rata among the selling Holders based on the number of Registrable Securities held by all selling Holders or in such other proportions as shall mutually be agreed to by all such selling Holders. Notwithstanding the foregoing, in no event shall the amount of securities of the selling Holders included in the offering be reduced below twenty-five percent (25%) of the total amount of securities included in such offering, unless such offering is the initial public offering of the Company’s securities, in which case the selling Holders may be excluded if the underwriters make the determination described above and no other stockholder’s securities are included. For purposes of the preceding sentence concerning apportionment, for any selling stockholder that is a Holder of Registrable Securities and that is a venture capital or other investment fund, partnership or corporation, the affiliated venture capital or other investment funds, partners, retired partners and stockholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate amount of Registrable Securities owned by all such related entities and individuals.

               1.4 Form S-3 Registration. In case the Company shall receive from the Holders of at least fifty percent (50%) of the Registrable Securities (for purposes of this Section 1.4, the “Initiating Holders”) a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company shall:

                    (a) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and

                    (b) use all commercially reasonable efforts to effect, as soon as practicable, such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company, provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this section 1.4:

                         (i) if Form S-3 is not available for such offering by the Holders;

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                         (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters’ discounts or commissions) of less than $3,000,000;

                         (iii) if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 1.4, a certificate signed by the Company’s Chief Executive Officer or Chairman of the Board stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than one hundred twenty (120) days after receipt of the request of the Initiating Holders, provided that such right shall be exercised by the Company not more than once in any twelve (12)-month period;

                         (iv) if the Company has, within the twelve (12) month period preceding the date of such request, already effected two (2) registrations on Form S-3 for the Holders pursuant to this Section 1.4; or

                         (v) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

                    (c) If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 1.4 and the Company shall include such information in the written notice referred to in Section 1.4(a). The provisions of Section 1.2(b) shall be applicable to such request (with the substitution of Section 1.4 for references to Section 1.2).

                    (d) Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Initiating Holders. Registrations effected pursuant to this Section 1.4 shall not be counted as requests for registration or registrations effected pursuant to Sections 1.2 or 1.3, respectively.

               1.5 Obligations of the Company. Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

                    (a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all commercially reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the Registration Statement has been completed;

                    (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such

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registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement;

                    (c) furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them;

                    (d) use all commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;

                    (e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering;

                    (f) notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;

                    (g) cause all such Registrable Securities registered pursuant to this Section 1 to be listed on a national exchange or trading system and on each securities exchange and trading system on which similar securities issued by the Company are then listed;

                    (h) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration; and

                    (i) use its best efforts to furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 1, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 1, if such securities are being sold through underwriters, or if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to the Holders of a majority of the Registrable Securities being registered, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities.

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          Notwithstanding the provisions of this Section 1, the Company shall be entitled to defer, for a period of one hundred twenty (120) days (but not more than once in any twelve (12) month period), the filing, effectiveness or use of, or trading under, any registration statement if the Company shall determine (and shall provide a certificate of the Company’s Chief Executive Officer confirming such determination) that any such filing or the sale of any securities pursuant to such registration statement would:

                         (i) in the good faith judgment of the Board of Directors of the Company, materially impede, delay or interfere with any material pending or proposed financing, acquisition, corporate reorganization or other similar transaction involving the Company for which the Board of Directors of the Company has authorized negotiations;

                         (ii) in the good faith judgment of the Board of Directors of the Company, materially adversely impair the consummation of any pending or proposed material offering or sale of any class of securities by the Company; or

                         (iii) in the good faith judgment of the Board of Directors of the Company, require disclosure of material nonpublic information that, if disclosed at such time, would be materially harmful to the interests of the Company and its stockholders; provided, however, that during any period referenced in the immediately preceding subsections (i) and (ii) above and this subsection (iii), all executive officers and directors of the Company are also prohibited from selling securities of the Company (or any security of any of the Company’s subsidiaries or affiliates).

          In the event of the suspension of effectiveness of any registration statement pursuant to this Section 1.5, the applicable time period during which such registration statement is to remain effective shall be extended by that number of days equal to the number of days during which the effectiveness of such registration statement was suspended.

          If the Company shall exercise its deferral right under this Section 1.5, such deferral (i) shall be counted for the purposes of determining whether such right has been exercised under Section 1.2(c)(v) during any twelve (12)-month period if such registration was initiated pursuant to Section 1.2 or (ii) shall be counted for the purposes of determining whether such right has been exercised under Section 1.4(b)(iii) during any twelve (12)-month period if such registration was initiated pursuant to Section 1.4. Such deferral right under this Section 1.5 shall not be utilized by the Company during any twelve (12)-month period if a deferral right has already been exercised by the Company pursuant to Section 1.2(c)(v) (during any applicable twelve (12)-month period), provided that such registration was initiated pursuant to Section 1.2. In addition, such deferral right under this Section 1.5 shall not be utilized by the Company during any twelve (12)-month period if a deferral right has already been exercised by the Company pursuant to Section 1.4(b)(iii) (during any applicable twelve (12)-month period), provided that such registration was initiated pursuant to Section 1.4.

               1.6 Information from Holder. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of

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disposition of such securities as shall be reasonably required to effect the registration of such Holder’s Registrable Securities.

               1.7 Expenses of Registration. All0 expenses other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Sections 1.2, 1.3 and 1.4, including (without limitation) all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company and the reasonable fees and disbursements of one counsel for the selling Holders (not to exceed $25,000) shall be borne by the Company. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 1.2 or Section 1.4 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all participating Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless, in the case of a registration requested under Section 1.2, the Holders of a majority of the Registrable Securities agree to forfeit their right to one demand registration pursuant to Section 1.2 and provided, however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness following disclosure by the Company of such material adverse change, then the Holders shall not be required to pay any of such expenses and shall retain their rights pursuant to Section 1.2 or 1.4.

               1.8 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1.

               1.9 Indemnification. In the event any Registrable Securities are included in a registration statement under this Section 1:

                    (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, officers, directors and stockholders of each Holder, legal counsel and accountants for each Holder, any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Act or the 1934 Act, against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the Act, the 1934 Act, any other federal securities law, any state securities laws or any rule or regulation promulgated under the Act, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Act, the 1934 Act, any state securities laws or any rule or regulation promulgated under the Act; the 1934 Act or any state securities laws, and the Company will reimburse each such Holder, underwriter,

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controlling person or other aforementioned person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the indemnity agreement contained in this subsection l.9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter, controlling person or other aforementioned person; provided further, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Holder or underwriter or other aforementioned person, or any person controlling such Holder or underwriter, from whom the person asserting any such losses, claims, damages or liabilities purchased shares in the offering, if a copy of the most current prospectus was not sent or given by or on behalf of such Holder or underwriter or other aforementioned person to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the shares to such person, and if the prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage or liability.

                    (b) To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, legal counsel and accountants for the Company, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act, any other federal securities law, any state securities laws or any rule or regulation promulgated under the Act, the 1934 Act, any other federal securities law, or any state securities laws, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any person intended to be indemnified pursuant to this subsection l.9(b) for any legal or other expenses reasonably incurred by such person in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the indemnity agreement contained in this subsection l.9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder (which consent shall not be unreasonably withheld), and provided that in no event shall any indemnity under this subsection l.9(b) exceed the net proceeds from the offering received by such Holder.

                    (c) Promptly after receipt by an indemnified party under this Section 1.9 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.9, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in and, to

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the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of liability to the indemnified party under this Section 1.9 to the extent of such prejudice, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.9.

                    (d) If the indemnification provided for in this Section 1.9 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations; provided, however, that no contribution by any Holder, when combined with any amounts paid by such Holder pursuant to Section 1.9(b), shall exceed the net proceeds from the offering received by such Holder. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

                    (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

                    (f) The obligations of the Company and Holders under this Section 1.9 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise.

               1.10 Reports Under the 1934 Act. With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to:

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                    (a) make and keep public information available, as those terms are understood and defined in Rule 144, at all times after the effective date of the Initial Offering;

                    (b) take such action, including the voluntary registration of its Common Stock under Section 12 of the Exchange Act, as is necessary to enable the Holders to utilize Form S-3 for the sale of their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first registration statement filed by the Company for the offering of its securities to the general public is declared effective;

                    (c) file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the 1934 Act; and

                    (d) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company), the Act and the 1934 Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form.

               1.11 Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such securities that (i) is an affiliate of a Holder or a subsidiary, parent, partner, limited partner, retired partner, member, retired member or stockholder of a Holder, (ii) is a Holder’s family member or trust for the benefit of an individual Holder, or (iii) after such assignment or transfer, holds at least 375,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations and other recapitalizations) (or if the transferring Holder owns less than 375,000 shares of such securities, then all Registrable Securities held by the transferring Holder), provided: (a) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including, without limitation, the provisions of Section 1.13 below; and (c) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Act.

               1.12 Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder (a) to include such securities in any registration filed under Section 1.2, Section 1.3 or Section 1.4 hereof, unless under the terms of such agreement, such holder or

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prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the amount of the Registrable Securities of the Holders that are included or (b) to demand registration of their securities.

               1.13 “Market Stand-Off” Agreement.

                    (a) Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company’s Initial Offering and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (l80) days) (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing provisions of this Section 1.13 (W) shall apply only to the Company’s initial public offering of equity securities, (X) shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement or to any shares registered in the Initial Offering or purchased in the after market or any other shares or other securities purchased after the Initial Offering that are not otherwise subject to similar restrictions, and (Y) shall only be applicable to the Holders if all officers and directors and greater than one percent (1%) stockholders of the Company enter into similar agreements, provided that if any such persons or entities are released from the restrictions of such agreements, all Holders shall be similarly released, pro rata, based on the number of shares subject to such agreements. The underwriters in connection with the Company’s Initial Offering are intended third party beneficiaries of this Section 1.13 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in the Company’s Initial Offering that are consistent with this Section 1.13 or that are necessary to give further effect thereto.

          In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period.

                    (b) Each Holder agrees that a legend reading substantially as follows shall be placed on all certificates representing all Registrable Securities of each Holder (and the shares or securities of every other person subject to the restriction contained in this Section 1.13):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP PERIOD OF UP TO 180 DAYS AFTER THE EFFECTIVE DATE OF THE ISSUER’S REGISTRATION STATEMENT FILED UNDER THE ACT, AS AMENDED, AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL HOLDER OF THESE SECURITIES,

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A COPY OF WHICH MAY BE OBTAINED AT THE ISSUER’S PRINCIPAL OFFICE. SUCH LOCK-UP PERIOD IS BINDING ON TRANSFEREES OF THESE SHARES.

               1.14 Termination of Registration Rights. No Holder shall be entitled to exercise any right provided for in this Section 1 (a) after five (5) years following the consummation of the Initial Offering, (b) as to any Holder, such earlier time after the Initial Offering at which such Holder (i) can sell all shares held by it in compliance with Rule 144(k) or (ii) holds one percent (1%) or less of the Company’s outstanding Common Stock and all Registrable Securities held by such Holder (together with any affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144) can be sold in any three (3)-month period without registration in compliance with Rule 144.

          2. Covenants of the Company.

               2.1 Delivery of Financial Statements. The Company shall, upon request, deliver to each Investor (or transferee of an Investor) that holds at least 375,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations and other recapitalizations) (a “Major Investor”):

                    (a) as soon as practicable, but in any event within ninety (90) days after the end of each fiscal year of the Company, an income statement for such fiscal year, a balance sheet of the Company and statement of stockholders’ equity as of the end of such year, and a statement of cash flows for such year, such year-end financial reports to be in reasonable detail, prepared in accordance with generally accepted accounting principles (“GAAP”), and audited and certified by independent public accountants of nationally recognized standing selected by the Company;

                    (b) as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, an unaudited income statement, statement of cash flows for such fiscal quarter and an unaudited balance sheet as of the end of such fiscal quarter.

                    (c) within thirty (30) days of the end of each month, an unaudited income statement and statement of cash flows and balance sheet for and as of the end of such month, in reasonable detail;

                    (d) as soon as practicable, but in any event at least thirty (30) days prior to the end of each fiscal year, a budget and business plan for the next fiscal year, prepared on a monthly basis, including balance sheets, income statements and statements of cash flows for such months and, as soon as prepared, any other budgets or revised budgets prepared by the Company;

                    (e) with respect to the financial statements called for in subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief Financial Officer or President of the Company certifying that such financials were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (with the exception of footnotes that may be required by GAAP) and fairly present the financial condition of the

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Company and its results of operation for the period specified, subject to year-end audit adjustment, provided that the foregoing shall not restrict the right of the Company to change its accounting principles consistent with GAAP, if the Board of Directors determines that it is in the best interest of the Company to do so; and

                    (f) such other information relating to the financial condition, business or corporate affairs of the Company as the Major Investor may from time to time request, provided, however, that the Company shall not be obligated under this subsection (f) or any other subsection of Section 2.1 to provide information that it deems in good faith to be a trade secret or similar confidential information.

               2.2 Inspection. The Company shall permit each Major Investor, at such Major Investor’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Major Investor; provided, however, that the Company shall not be obligated pursuant to this Section 2.2 to provide access to any information that it reasonably considers to be a trade secret or similar confidential information.

               2.3 Termination of Covenants. The covenants set forth in Sections 2.1, 2.2, 2.5 and 2.6 shall terminate and be of no further force or effect (a) upon the consummation of the Company’s Initial Offering or (b) when the Company first becomes subject to the periodic reporting requirements of Sections 12(g) or 15(d) of the 1934 Act, whichever event shall first occur. The Covenants set forth in Sections 2.7, 2.8 and 2.9 shall terminate and be of no further force or effect upon the consummation of the Company’s Initial Offering.

               2.4 Right of First Offer. Subject to the terms and conditions specified in this Section 2.4, the Company hereby grants to each Major Investor a right of first offer with respect to future sales by the Company of its Shares (as hereinafter defined). For purposes of this Section 2.4, the term “Major Investor” includes any general partners and affiliates of a Major Investor. A Major Investor shall be entitled to apportion the right of first offer hereby granted it among itself and its partners and affiliates in such proportions as it deems appropriate.

          Each time the Company proposes to offer any shares of, or securities convertible into or exchangeable or exercisable for any shares of, any class of its capital stock (“Shares”), the Company shall first make an offering of such Shares to each Major Investor in accordance with the following provisions:

                    (a) The Company shall deliver a notice in accordance with Section 3.5 (“Notice”) to the Major Investors stating (i) its bona fide intention to offer such Shares, (ii) the number of such Shares to be offered, and (iii) the price and terms upon which it proposes to offer such Shares.

                    (b) By written notification received by the Company within twenty (20) calendar days after receipt of the Notice, each Major Investor may elect to purchase or obtain, at the price and on the terms specified in the Notice, up to that portion of such Shares that equals the proportion that the number of shares of Common Stock issued and held, or

15

issuable upon conversion and exercise of all convertible or exercisable securities then held by such Major Investor, bears to the total number of shares of Common Stock of the Company then outstanding (assuming full conversion and exercise of all convertible and exercisable securities then outstanding). Such purchase shall be completed at the same closing as that of any third party purchasers or at an additional closing thereunder. The Company shall promptly, in writing, inform each Major Investor that purchases all the shares available to it (each, a “Fully-Exercising Investor”) of any other Major Investor’s failure to do likewise. During the 10-day period commencing after receipt of such information, each Fully-Exercising Investor shall be entitled to obtain that portion of the Shares for which Major Investors were entitled to subscribe but which were not subscribed for by the Major Investors that is equal to the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion and exercise of all convertible or exercisable securities then held, by such Fully-Exercising Investor bears to the total number of shares of Common Stock then outstanding (assuming full conversion and exercise of all convertible or exercisable securities then outstanding).

                    (c) If all Shares that Major Investors are entitled to obtain pursuant to subsection 2.4(b) are not elected to be obtained as provided in subsection 2.4(b) hereof, the Company may, during the ninety (90) day period following the expiration of the period provided in subsection 2.4(b) hereof, offer the remaining unsubscribed portion of such Shares to any person or persons at a price not less than that, and upon terms no more favorable to the offeree than those, specified in the Notice. If the Company does not enter into an agreement for the sale of the Shares within such period, or if such agreement is not consummated within sixty (60) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such Shares shall not be offered unless first reoffered to the Major Investors in accordance herewith.

                    (d) The right of first offer in this Section 2.4 shall not be applicable to (i) the issuance or sale of shares of Common Stock (or options therefor) to employees, directors, consultants and other service providers pursuant to plans or agreements approved by the Company’s Board of Directors; (ii) the issuance of securities pursuant the Company’s Initial Offering, (iii) the issuance of securities pursuant to the conversion or exercise of convertible or exercisable securities, (iv) the issuance of securities in connection with a bona fide business acquisition of or by the Company, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise, (v) the issuance and sale of Series D Preferred Stock pursuant to the Series D Agreement, (vi) the issuance of stock, warrants or other securities to banks or similar financial institutions, provided such issuances are for other than primarily equity financing purposes or (vii) the issuance of stock, warrants or other securities in connection with strategic transactions, provided such issuances are for other than primarily equity financing purposes. In addition to the foregoing, the right of first offer in this Section 2.4 shall not be applicable with respect to any Major Investor and any subsequent offering of Shares if (i) at the time of such offering, the Major Investor is not an “accredited investor,” as that term is then defined in Rule 501(a) of the Act and (ii) such offering of Shares is otherwise being offered only to accredited investors.

                    (e) The rights provided in this Section 2.4 may not be assigned or transferred by any Major Investor; provided, however, that a Major Investor that is a venture

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capital or other investment fund may assign or transfer such rights to an affiliated venture capital or other investment fund.

                    (f) The covenants set forth in this Section 2.4 shall terminate and be of no further force or effect upon the consummation of the Company’s Initial Offering.

               2.5 Proprietary Information and Inventions Agreements. The Company shall require all employees and consultants with access to confidential information to execute and deliver at the commencement of such person’s relationship with the Company a Proprietary Information and Inventions Agreement or a Consulting Agreement (as applicable), in substantially the forms approved by the Company’s Board of Directors.

               2.6 Employee Agreements. Unless approved by the Board of Directors of the Company, all future employees of the Company who shall purchase, or receive options to purchase, shares of the Company’s Common Stock following the date hereof shall be required to execute stock purchase or option agreements providing for (i) vesting of shares over a four-year period with the first 25% of such shares vesting following twelve (12) months of continued employment or services, and the remaining shares vesting in equal monthly installments over the following 36 months thereafter and (ii) a 180-day lockup period in connection with the Company’s initial public offering. The Company shall retain a right of first refusal on transfers until the Company’s initial public offering and the right to repurchase unvested shares at cost.

               2.7 Compensation Committee. The compensation for the officers and other key management of the Company will be determined by a compensation committee of the Board of Directors, which committee shall include the two (2) members of the Board of Directors nominated by the holders of Series A Preferred Stock.

               2.8 Qualified Small Business Stock Status. The Company shall submit to the Internal Revenue Service, and upon request shall submit to the Investors, any reports that may be required under Section 1202(d)(1)(C) of the Code and any related Treasury Regulations. In addition, within ten (10) days after any Investor has delivered to the Company a written request therefor, the Company shall deliver to such Investor a written statement informing the Investor whether, in the Company’s good-faith judgment after a reasonable investigation, such Investor’s interest in the Company constitutes “qualified small business stock” as defined in Section 1202(c) of the Code, or would constitute “qualified small business stock,” if determination of whether stock constitutes “qualified small business stock” were made by taking into account the modifications set forth in Section 1045(b)(4) of the Code. Notwithstanding the foregoing, the Company shall incur no liability to the Investors (or otherwise) as a result of having furnished such written statement (including in the event that such written statement is inaccurate in any respect) provided that such written statement is provided in good faith. The Company’s obligation to furnish a written statement pursuant to this Section 2.9 shall continue notwithstanding the fact that a class of the Company’s stock may be traded on an established securities market.

               2.9 Observer Rights.

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                    (a) As long as Trinity Ventures VIII, L.P. and its affiliates (“Trinity Ventures”) own not less than fifty percent (50%) of the shares of Series B Preferred Stock it originally purchased pursuant to the Series B Preferred Stock Purchase Agreement, dated as of August 4, 2003, between the Company and each of the other parties thereto, the Company shall invite a representative of Trinity Ventures to attend all meetings of its Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and, provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or would result in disclosure of trade secrets to such representative or if such Investor or its representative is or is affiliated with a direct competitor of the Company. The Company agrees to reimburse such representative for its reasonable expenses incurred in connection with attending meetings of the Board of Directors.

                    (b) As long as WK Technology Fund and its affiliates (“WK Technology Fund”) own not less than fifty percent (50%) of the shares of Series C Preferred Stock it originally purchased pursuant to the Series C Preferred Stock Purchase Agreement, dated as of June 24, 2004, between the Company and each of the other parties thereto, the Company shall invite a representative of WK Technology Fund to attend all meetings of its Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and, provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or would result in disclosure of trade secrets to such representative or if such Investor or its representative is or is affiliated with a direct competitor of the Company. The Company agrees to reimburse such representative for its reasonable expenses incurred in connection with attending meetings of the Board of Directors.

                    (c) As long as Artis Capital Management, LLC and its affiliates (“Artis”) own not less than fifty percent (50%) of the shares of Series D Preferred Stock it originally purchased pursuant to the Series D Agreement, the Company shall invite a representative of Artis to attend all meetings of its Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and, provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or would result in disclosure of trade secrets to such representative or if such Investor or its representative is or is affiliated with

18

a direct competitor of the Company. The Company agrees to reimburse such representative for its reasonable expenses incurred in connection with attending meetings of the Board of Directors.

               2.10 Director Meetings. Unless otherwise determined by the Board of Directors, the Board of Directors shall meet at least once per month at such times to be determined by the Board of Directors.

          3. Miscellaneous.

               3.1 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

               3.2 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California.

               3.3 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

               3.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

               3.5 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the addresses set forth on the signature pages attached hereto (or at such other addresses as shall be specified by notice given in accordance with this Section 3.5).

               3.6 Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

               3.7 Entire Agreement; Amendments and Waivers. This Agreement (including the Exhibits hereto, if any) constitutes the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof. Any term of this Agreement (other than Section 2.1, Section 2.2, Section 2.3 and Section 2.4) may be amended and the

19

observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the Registrable Securities; provided, however, that (a) the written consent of Trinity Ventures shall be necessary for any amendment or waiver of Section 2.9(a) (but only for so long as Trinity Ventures has an observation right pursuant to Section 2.9(a)); provided further, that the immediately preceding clause (a) shall be amended only with the written consent of Trinity Ventures; (b) the written consent of WK Technology Fund shall be necessary for any amendment or waiver of Section 2.9(b) (but only for so long as WK Technology Fund has an observation right pursuant to Section 2.9(b)); provided further, that the immediately preceding clause (b) shall be amended only with the written consent of WK Technology Fund; and (c) the written consent of Artis shall be necessary for any amendment or waiver of Section 2.9(c) (but only for so long as Artis has an observation right pursuant to Section 2.9(c)); provided further, that the immediately preceding clause (c) shall be amended only with the written consent of Artis. The provisions of Section 2.1, Section 2.2, Section 2.3 and Section 2.4 may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the Registrable Securities that are held by Major Investors. Notwithstanding the foregoing, (i) in the event that any amendment or waiver adversely affects the obligations or rights of the holders of Series B Preferred Stock in a different manner than the other Holders, such amendment or waiver shall also require the written consent of the holders of at least 66 2/3 % (sixty-six and two-thirds percent) of the then outstanding shares of Series B Preferred Stock (voting as a separate class); provided, however, that the immediately preceding clause shall be amended only with the written consent of the holders of at least 66 2/3 % (sixty-six and two-thirds percent) of the then outstanding shares of Series B Preferred Stock (voting as a separate class); (ii) in the event that any amendment or waiver adversely affects the obligations or rights of the holders of Series C Preferred Stock in a different manner than the other Holders, such amendment or waiver shall also require the written consent of the holders of at least 66 2/3 % (sixty-six and two-thirds percent) of the then outstanding shares of Series C Preferred Stock (voting as a separate class); provided, however, that the immediately preceding clause shall be amended only with the written consent of the holders of at least 66 2/3 % (sixty-six and two-thirds percent) of the then outstanding shares of Series C Preferred Stock (voting as a separate class); and (iii) in the event that any amendment or waiver adversely affects the obligations or rights of the holders of Series D Preferred Stock in a different manner than the other Holders, such amendment or waiver shall also require the written consent of the holders of at least 66 2/3 % (sixty-six and two-thirds percent) of the then outstanding shares of Series D Preferred Stock (voting as a separate class); provided, however, that the immediately preceding clause shall be amended only with the written consent of the holders of at least 66 2/3 % (sixty-six and two-thirds percent) of the then outstanding shares of Series D Preferred Stock (voting as a separate class). Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Regist rable Securities, each future holder of all such Registrable Securities, and the Company.

          3.8 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.

20

          3.9 Aggregation of Stock. All shares of Registrable Securities held or acquired by affiliated entities (including affiliated venture capital or other investment funds) or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

          3.10 Additional Investors. Notwithstanding Section 3.7, no consent shall be necessary to add additional Investors as signatories to this Agreement, provided that such Investors have purchased Series D Preferred Stock pursuant to the subsequent closing provisions of Section 1.3 of the Series D Agreement.

          3.11 Amendment and Restatement of Prior Agreement. Upon the effectiveness of this Agreement, the Prior Agreement shall be amended and restated and be of no further force and effect, and shall be superseded and replaced in its entirety by this Agreement.

21

          IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors’ Rights Agreement as of the date first above written.

	ARUBA WIRELESS NETWORKS, INC.
	/s/ Don LeBeau
	By: Don LeBeau, President and Chief Executive Officer
Address:	1322 Crossman Ave.
	Sunnyvale, CA 94089-1113

SIGNATURE PAGE TO ARUBA WIRELESS NETWORKS, INC.
AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

INVESTOR:

By:  

Name:  

Title:  

Address:  

SIGNATURE PAGE TO ARUBA WIRELESS NETWORKS, INC.
AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

SCHEDULE A

Investors

Investor
Adria Orr
Alex Liu
Alvin Orr
Amy Liu
Angie Yee
Ardmore Ventures
Artis Microcap Fund, L.P.
Artis Microcap Master Fund, L.P.
Artis Technology 2X Ltd.
Artis Technology 2X, L.P.
Artis Technology Partners Ltd.
Artis Technology Partners, L.P.
Artis Technology Qualified 2X, L.P.
Artis Technology Qualified Partners, L.P.
Bernard Liu
CLEF Fund II, L.P.
CLEF, LP
Costella Kirsch Venture Partners I, L.P. (An
“Investor” only for purposes of Section 1 of
this Agreement, and specifically not for
Section 2 of this Agreement)
D. Orr Management Company, LLC
Dominic P. Orr Living Trust
Focus Ventures III, LP
François Bellini
FV Investors III, LP
G&H Partners
Itochu Corporation
John H. Cayton
Karyn Mashima
Kirby Family Foundation
Kishore Seshadri
Lighthouse Capital Partners IV, L.P. (An
“Investor” only for purposes of Section 1 of
this Agreement, and specifically not for
Section 2 of this Agreement)
Lorraine Chow
Lory Hopkins
Lucille Woo
Lucy Orr

Mak Kit-Ying
Matrix Partners VII, L.P.
Melvin Orr
Mike Kirby
Mitsui & Co., Ltd.
Mitsui Comtek Corp.
Moonlight LLC
MVC Global Japan Fund II
Nancy and Andrew Kessler Living Trust
Newton Management LLC
Praia Grande Ventures L.P.
Ruth Orr
Sequoia Capital Growth Fund III
Sequoia Capital X
Sequoia Capital X Principals Fund
Sequoia Technology Partners X
Six Rivers Group Limited
Susan Chiu
Take Sugimoto
Technology Ventures I Venture Capital
Investment Limited Partnership
The Board of Trustees of the Leland Stanford
Junior University (SEVF II)
The Kolluri Living Trust dated 11/05/1999,
Trustee Krishna Swaroop Kolluri
Trinity Ventures VII, L.P.
Trinity Ventures VIII, L.P.
Trinity VII Side-by-Side Fund, L.P.
Trinity VIII Entrepreneurs’ Fund, L.P.
Trinity VIII Side-by-Side Fund, L.P.
Vivien Li
Walter Foss
Watanabe Susumu
Weston & Co. VII LLC
WK Global Investment II Limited
WK Global Investment III Limited
WK Global Investment Limited
WK Technology Fund
WK Technology Fund IV
WK Technology Fund V
WK Technology Fund VI
WK Technology Fund VII
WK Technology Fund VIII
Wong Chat Shum

EX-4.3

Exhibit 4.3

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.

PREFERRED STOCK PURCHASE WARRANT

Warrant No. A-1 Number of Shares: 144,303
Series A Preferred Stock

Aruba Wireless Networks, Inc.

Effective as of March 3, 2003

Void after March 3, 2010

     1. Issuance. This Preferred Stock Purchase Warrant (the “Warrant”) is issued to Lighthouse Capital Partners IV, L.P. by Aruba Wireless Networks, Inc., a Delaware corporation (hereinafter with its successors called the “Company”).

     2. Purchase Price; Number of Shares. The registered holder of this Warrant (the “Holder”), commencing on the date hereof, is entitled upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a price per share of $0.667 (the “Purchase Price”), 144,303 fully paid and nonassessable shares of the Company’s Series A Preferred Stock, $0.0001 par value (the “Preferred Stock”).

Until such time as this Warrant is exercised in full or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided. The person or persons in whose name or names any certificate representing shares of Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed.

     3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash or by check, (ii) by the surrender by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Purchase Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, or (iii) by any combination of the foregoing.

     4. Net Issue Election. Notwithstanding any provisions herein to the contrary, if the fair market value of one share of the Company’s Preferred Stock is greater than the Purchase Price (at the date of calculation as set forth below), the Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the principal office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula:

1.

X₌ Y(A-B)
A

where:	X	=	the number of shares of Preferred Stock to be issued to the Holder pursuant to this Section 4.
	Y	=	the number of shares of Preferred Stock covered by this Warrant in respect of which the net issue election is made pursuant to this Section 4.
	A	=	the Fair Market Value (defined below) of one share of Preferred Stock, as determined at the time the net issue election is made pursuant to this Section 4.
	B	=	the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 4.

          “Fair Market Value” of a share of Preferred Stock (or fully paid and nonassessable shares of the Company’s common stock, $0.0001 par value (the “Common Stock”) if the Preferred Stock has been automatically converted into Common Stock) as of the date that the net issue election is made (the “Determination Date”) shall mean:

          (i) If the net issue election is made in connection with and contingent upon the closing of the sale of the Company’s Common Stock to the public in a public offering pursuant to a Registration Statement under the 1933 Act (a “Public Offering”), and if the Company’s Registration Statement relating to such Public Offering (“Registration Statement”) has been declared effective by the Securities and Exchange Commission, then the initial “Price to Public” specified in the final prospectus with respect to such offering multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible.

          (ii) If the net issue election is not made in connection with and contingent upon a Public Offering, then as follows:

               (a) If traded on a securities exchange or the Nasdaq National Market, the fair market value of the Common Stock shall be deemed to be the average of the closing or last reported sale prices of the Common Stock on such exchange or market over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible;

               (b) If otherwise traded in an over-the-counter market, the fair market value of the Common Stock shall be deemed to be the average of the closing ask prices of the Common Stock over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible; and

               (c) If there is no public market for the Common Stock, then fair market value shall be determined in good faith by the Company’s Board of Directors.

     5. Partial Exercise. This Warrant may be exercised in part, and the Holder shall be entitled to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised.

     6. Fractional Shares. In no event shall any fractional share of Preferred Stock be issued upon any exercise of this Warrant. If, upon exercise of this Warrant in its entirety, the Holder would, except as provided in

2.

this Section 6, be entitled to receive a fractional share of Preferred Stock, then the Company shall issue the next higher number of full shares of Preferred Stock, issuing a full share with respect to such fractional share.

     7. Expiration Date; Automatic Exercise. This Warrant shall expire upon the earlier of (i) the close of business on March 3, 2010, (ii) three (3) years following the closing of the initial Public Offering of the Company or (iii) upon the closing of a sale of all or substantially all of the Company’s assets, or the merger or consolidation of the Company with or into another corporation (other than a merger or consolidation for the principle purpose of changing the domicile of the Company) that results in the transfer of fifty percent (50%) or more of the outstanding voting power of the Company (collectively a “Merger”) where the sole consideration issued to stockholders of the Company is cash and shall be void thereafter (the “Expiration Date”). Notwithstanding the term of this Warrant fixed pursuant to this Section 7 and provided Holder has received advance notice of at least twenty (20) days and has not earlier converted, this Warrant shall automatically be converted pursuant to Section 4 hereof, without any action by Holder upon a Merger where the consideration issued to the stockholders of the Company is stock, except to the extent assumed by the successor corporation (or parent thereof) in connection with such Merger. In the event that any outstanding warrants to purchase equity securities of the Company are assumed, this Warrant shall also be similarly assumed. Notwithstanding anything to the contrary in this Warrant, the Holder may rescind any exercise of its purchase rights after such notice of termination of the proposed transaction if the exercise was otherwise precipitated by such proposed Merger. In the event of such rescission, this Warrant will continue to be exercisable on the same terms and conditions. and shall be void thereafter (the “Expiration Date”). Notwithstanding the foregoing, this Warrant shall automatically be deemed to be exercised in full pursuant to the provisions of Section 4 hereof, without any further action on behalf of the Holder, immediately prior to the time this Warrant would otherwise expire pursuant to this Section 7. Notwithstanding the foregoing, in the event the Warrant would automatically be deemed to be exercised pursuant to this Section 7, the Company shall not be required to surrender the certificate representing the Shares until such time as the Holder surrenders the Warrant.

     8. Reserved Shares; Valid Issuance. The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Preferred Stock and Common Stock free from all preemptive or similar rights therein, as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common Stock of all shares of Preferred Stock receivable upon such exercise. The Company further covenants that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.

     9. Stock Splits and Dividends. If after the date hereof the Company shall subdivide the Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, the number of shares of Preferred Stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of a combination.

     10. Adjustments for Diluting Issuances. The other antidilution rights applicable to the Preferred Stock and the Common Stock of the Company are set forth in the Amended and Restated Certificate of Incorporation, as amended from time to time (the “Certificate”), a true and complete copy in its current form which is attached hereto as Exhibit A. Such rights shall not be restated, amended or modified in any manner which affects the Holder differently than the holders of Preferred Stock without such Holder’s prior written consent. The Company shall promptly provide the Holder hereof with any restatement, amendment or modification to the Certificate promptly after the same has been made.

     11. Mergers and Reclassifications. If after the date hereof the Company shall enter into any Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property receivable upon such Reorganization by a holder of the number of shares of Preferred Stock which might have been

3.

purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including without limitation, provisions for the adjustment of the Purchase Price and the number of shares issuable hereunder and the provisions relating to the net issue election) shall thereafter be applicable in relation to any shares of stock or other securities and property thereafter deliverable upon exercise hereof. For the purposes of this Section 11, the term “Reorganization” shall include without limitation any reclassification, capital reorganization or change of the Preferred Stock (other than as a result of a subdivision, combination or stock dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding Preferred Stock), or any sale or conveyance to another corporation or other business organization of all or substantially all of the assets of the Company.

     12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as herein provided, the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial officer setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

     13. Notices of Record Date, Etc. In the event of:

          (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any shares of stock of any class or any other securities or property, or to receive any other right;

          (b) any reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets; or

          (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then in each such event the Company will provide or cause to be provided to the Holder a written notice thereof. Such notice shall be provided at least twenty (20) business days prior to the date specified in such notice on which any such action is to be taken.

     14. Representations, Warranties and Covenants. This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company:

          (a) The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder. This Warrant has been duly authorized issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms.

          (b) The shares of Preferred Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.

          (c) The issuance, execution and delivery of this Warrant do not, and the issuance of the shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company’s Certificate or by-laws, or any law, statute, regulation, rule, judgment or order applicable to the Company, (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound or (iii) require the consent or approval of or the filing of any notice or registration with any person or entity.

          (d) As long as this Warrant is, or any shares of Preferred Stock issued upon exercise of this Warrant or any shares of Common Stock issued upon conversion of such shares of Preferred Stock are, issued and

4.

outstanding, the Company will provide to the Holder the financial and other information described in that certain Loan and Security Agreement No. 352040201 between the Company and Lighthouse Capital Partners IV, L.P. dated as of March 3, 2003.

          (e) So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive under the Rights Agreement applicable to the Preferred Stock if Holder were a holder of that number of shares issuable upon full exercise of this Warrant.

          (f) As of the date hereof, the authorized capital stock of the Company consists of (i) 45,000,000 shares of Common Stock, of which 4,943,997 shares are issued and outstanding and 144,303 shares are reserved for issuance upon the exercise of this Warrant with respect to Common Stock and the conversion of the Preferred Stock into Common Stock if this Warrant is exercised with respect to Preferred Stock, and (ii) 14,700,000 shares of Series A Preferred Stock, of which 14,262,748 are issued and outstanding shares. Attached hereto as Exhibit B is a capitalization table summarizing the capitalization of the Company. Once per calendar quarter, the Company will provide Holder with a current capitalization table indicating changes, if any, to the number of outstanding shares of common stock and preferred stock.

     15. Registration Rights. Upon the earlier of (x) when the Company next amends its Investors’ Rights Agreement, dated as of April 19, 2002, as it may be amended from time to time (the “Rights Agreement”), or (y) when the Company consummates its initial public offering, the Company will grant to the Holder all the rights of a “Holder” under the Company’s Rights Agreement, including, without limitation, the registration rights contained therein, and agrees to amend the Rights Agreement so that (i) the shares of Common Stock issuable upon conversion of the shares of Preferred Stock issuable upon exercise of this Warrant shall be “Registrable Securities,” and (ii) the Holder shall be a “Holder” and an “Investor” for the purposes of Section 1 of such Rights Agreement.

     16. No Stockholder Rights. Except as provided in this Warrant, the Holder will not have any rights as a stockholder of the Company until the exercise of this Warrant.

     17. Amendment. The terms of this Warrant may be amended, modified or waived only with the written consent of the Holder and the Company.

     18. Representations and Covenants of the Holder. This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder, which by its execution hereof the Holder hereby confirms:

          (a) Investment Purpose. The right to acquire Preferred Stock or the Preferred Stock issuable upon exercise of the Holder’s rights contained herein will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

          (b) Accredited Investor. Holder is an “accredited investor” within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

          (c) Private Issue. The Holder understands (i) that the Preferred Stock issuable upon exercise of the Holder’s rights contained herein is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 18.

          (d) Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investment.

5.

          (e) Disclosure of Information. The Holder acknowledges that it has received all the information it considers necessary or appropriate for deciding whether to acquire the Preferred Stock or the Preferred Stock issuable upon exercise. The Holder further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Preferred Stock or the Preferred Stock issuable upon exercise.

          (f) Authorization. Holder represents that it has full power and authority to enter into this Warrant. This Warrant constitutes the Holder’s valid and legally binding obligation, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

          (g) Market Stand-Off Provision. The Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company’s Initial Public Offering and ending on the date specified by the Company and the underwriter (such period not to exceed one hundred eighty (180) days) (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing provisions of this Section 18(g) shall apply only to the Company’s initial public offering of equity securities, and shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement. The underwriters in connection with the Company’s initial public offering are intended third party beneficiaries of this Section 18(g) and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. In order to enforce the foregoing covenant, the Company may impose stop transfer instructions with respect to the Preferred Stock or the Preferred Stock issuable upon exercise until the end of such period.

     19. Notices, Transfers, Etc.

          (a) Any notice or written communication required or permitted to be given to the Holder may be given by certified mail or delivered to the Holder at the address most recently provided by the Holder to the Company.

          (b) Subject to compliance with applicable federal and state securities laws (including, without limitation, the deliver of investment representation letters and legal opinions reasonably requested by the Company) and upon written notice to the Company, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder to an affiliate of Holder, or to any other transferee by providing to the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable). The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder or if there is any other affiliate of Holder or if there is no material question as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company is provided with a copy of Holder’s notice of proposed sale. Upon surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new warrant to the assignee, in such denomination as shall be requested by the Holder hereof, and shall issue to such Holder a new warrant covering the number of shares in respect of which this Warrant shall not have been transferred. Notwithstanding the foregoing, the Holder shall not be permitted to transfer this Warrant (i) to more than ten (10)

6.

persons or entities or (ii) to a direct competitor of the Company (as defined in good faith by the Company’s Board or Directors).

          (c) In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant

     20. No Impairment. Unless otherwise consented to pursuant to the terms of this Warrant, the Company will not, by amendment of its Certificate or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance of performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

     21. Governing Law. The provisions and terms of this Warrant shall be governed by and construed in accordance with the internal laws of the State of California without giving effect to its principles regarding conflicts of laws.

     22. Successors and Assigns. This Warrant shall be binding upon the Company’s successors and assigns and shall inure to the benefit of the Holder’s successors, legal representatives and permitted assigns.

     23. Business Days. If the last or appointed day for the taking of any action required or the expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in California, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday.

     24. Qualifying Public Offering. If the Company shall effect a firm commitment underwritten public offering of shares of Common Stock which results in the conversion of the Preferred Stock into Common Stock pursuant to the Company’s Certificate in effect immediately prior to such offering, then, effective upon such conversion, this Warrant shall change from the right to purchase shares of Preferred Stock to the right to purchase shares of Common Stock, and the Holder shall thereupon have the right to purchase, at a total price equal to that payable upon the exercise of this Warrant in full, the number of shares of Common Stock which would have been receivable by the Holder upon the exercise of this Warrant for shares of Preferred Stock immediately prior to such conversion of such shares of Preferred Stock into shares of Common Stock, and in such event appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including, without limitation, the provisions for the adjustment of the Purchase Price and of the number of shares purchasable upon exercise of this Warrant and the provisions relating to the net issue election) shall thereafter be applicable to any shares of Common Stock deliverable upon the exercise hereof.

     25. Value. The Company and the Holder agree that the value of this Warrant on the date of grant is $100.

Dated: March 10, 2003	Aruba Wireless Networks, Inc.
	By:	/s/ Pankaj Manglik
	Name: Pankaj Manglik
	Title: CEO

7.

Subscription

To: 

Date: 

The undersigned hereby subscribes for                                             shares of Preferred Stock covered by this Warrant. The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below:

Signature

Name for Registration

Mailing Address

1.

Net Issue Election Notice

To:  Date: 

The undersigned hereby elects under Section 4 to surrender the right to purchase shares of Preferred Stock pursuant to this Warrant. The certificate(s) for such shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below:

Signature

Name for Registration

Mailing Address

1.

Assignment

For value received                                              hereby sells, assigns and transfers unto                                                                                           

[Please print or typewrite name and address of Assignee]

the within Warrant, and does hereby irrevocably constitute and appoint                                                                   its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises.

Dated:

Signature

Name for Registration

In the Presence of:

1.

Exhibit C

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Lighthouse Capital Partners IV, L.P.
500 Drake’s Landing Road
Greenbrae, CA 94904-3011
Attn.: Contract Administration

CONSENT TO REMOVAL OF PERSONAL PROPERTY

KNOW ALL PERSONS BY THESE PRESENTS:

     (a) The undersigned has an interest as owner and landlord in that certain real property (the “Real Property”) in the County of Santa Clara, State of California, described as: See Exhibit 1 Attached Hereto For Full Legal Description, and commonly known as 180 Great Oaks Blvd., Suite B, San Jose, California (Parcel No.                    ).

     (b) ARUBA WIRELESS NETWORKS, INC., a Delaware corporation (“Borrower”), has entered into or will enter into a Loan and Security Agreement No. 352040201 with LIGHTHOUSE CAPITAL PARTNERS IV, L.P. (“Lender”) (as amended and supplemented from time to time, the “Agreement”).

     (c) Lender, as a condition to entering into the Agreement, requires that the undersigned consent to the removal by Lender of the equipment and other assets covered by the Agreement (hereinafter the “Equipment”) from the Real Property, no matter how it is affixed thereto, and to the other matters set forth below.

NOW, THEREFORE, for good and sufficient consideration, receipt of which is hereby acknowledged, the undersigned consents to the placing of the Equipment on the Real Property, and agrees with Lender as follows:

     1. The undersigned waives and releases each and every right which undersigned now has, under the laws of the State of California or by virtue of the lease for the Real Property now in effect, to levy or distrain upon for rent, in arrears, in advance or both, or to claim or assert title to the Equipment that is already on said Real Property, or may hereafter be delivered or installed thereon.

     2. The Equipment shall be considered to be personal property and shall not be considered part of the Real Property regardless of whether or by what means it is or may become attached or affixed to the Real Property.

     3. The undersigned will permit Lender, or its agent or representative, to enter upon the Real Property for the purpose of exercising any right it may have under the terms of the Lease Agreement or otherwise, including, without limitation, the right to remove the Equipment; provided, however, that if Lender, in removing the Equipment damages any improvements of the undersigned on the Real Property, Lender will, at its expense, cause same to be repaired, normal wear and tear excepted. The right of Lender to enter the Real Property shall not terminate until thirty (30) days after Lender receives written notice from the undersigned of the termination of the Lease.

     4. This agreement shall be binding upon the heirs, successors and assigns of the undersigned and shall inure to the benefit of Lender and its successors and assigns.

1

IN WITNESS WHEREOF, the undersigned has executed this instrument this                     day of                                      ,                      .

LANDLORD	Notarial Acknowledgment required.
By:
Name:
Title:
Company Name:
Street Address:
City, State, Zip:
Phone:
Fax:
E-mail:

Attach Legal Description of the Real Property

2

Exhibit D

LOAN AGREEMENT SUPPLEMENT NO.01

     LOAN AGREEMENT SUPPLEMENT NO.       , dated                                  (“Supplement”), to the Loan and Security Agreement No. 352040201 dated as of March 3, 2003 (the “Agreement”) by and between ARUBA WIRELESS NETWORKS, INC., a Delaware corporation (the “Borrower”), and LIGHTHOUSE CAPITAL PARTNERS IV, L.P. (the “Lender”).

     Capitalized terms used herein but not otherwise defined herein are used with the respective meanings given to such terms in the Agreement.

     The amount being advanced under this Supplement is $                     . The Loan Commencement Date is                     . The Funding Date shall be the date the amount to be advanced hereunder is disbursed to the Borrower and shall be set forth in the Summary of Loan Agreement Supplement.

     Attached as Annex A hereto is a list of equipment added to the Collateral financed under the Agreement. This Collateral is located at:                    .

     Attached as Annex B hereto is the Stipulated Loan Value Table which sets forth the schedule of Stipulated Loan Values with respect to the Loan.

     Attached as Annex C hereto is the Summary of Loan Agreement Supplement.

     Borrower hereby certifies that (a) the foregoing information is true and correct and authorizes Lender to endorse in its books and records, the Loan Factor applicable to the Loan contemplated in this Loan Agreement Supplement and the principal amount set forth in the Summary of Loan Agreement Supplement; (b) the representations and warranties made by Borrower in Section 5 of the Loan Agreement and in the other Loan Documents are true and correct on the date hereof and will be true and correct on the Funding Date; (c) Borrower has met or will by the Funding Date (except to the extent they relate specifically to any earlier date, in which case such representations and warranties shall continue to have been true and correct as of such date) meet all conditions set forth in Section 3 of the Loan Agreement; (d) Borrower is now, and on the Funding Date will be, in compliance with the covenants and the requirements contained in Sections 6 and 7 of the Loan Agreement; and (e) no Default or Event of Default has occurred and is continuing under the Loan Agreement.

     This Supplement is being delivered in the State of California.

     This Supplement may be executed by Borrower and Lender in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

     IN WITNESS WHEREOF, Borrower and Lender have caused this Supplement to be duly executed and delivered as of this day and year first above written.

BORROWER:	LENDER:
ARUBA WIRELESS NETWORKS, INC.	LIGHTHOUSE CAPITAL PARTNERS IV, L.P.
By:	By:	LIGHTHOUSE MANAGEMENT
		PARTNERS IV, L.L.C., its general partner
Name:
	By:
Title:
	Name:
Annex A- List of Collateral

Annex B — Stipulated Loan Value	Title:
Annex C — Summary of Loan Agreement Supplement

Annex A

     The following represent further specific descriptions of the Collateral:

List of Collateral

Annex B

STIPULATED LOAN VALUE TABLE
TO
LOAN AGREEMENT SUPPLEMENT NO.         
To LOAN AND SECURITY AGREEMENT NO. 352040201, dated March 3, 2003 (“Agreement”),
by and between LIGHTHOUSE CAPITAL PARTNERS W, L.P., a Delaware limited partnership (“Lends”),
and ARUBA WIRELESS NETWORKS, INC., a Delaware corporation (“Borrower”).

(All capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Agreement.)

     Stipulated Loan Value. The Stipulated Loan Value for each item of Equipment is the Stated Cost for the item(s) multiplied by Stipulated Loan Value Percentage for the appropriate Payment Number.

	Stipulated		Stipulated
Rent	Loss	Rent	Loss
Payment	Value	Payment	Value
Number	Percentage	Number	Percentage
1-4	112.00%	22	60.83%
5	109.16%	23	57.99%
6	106.31%	24	55.14%
7	103.47%	25	52.30%
8	100.63%	26	49.46%
9	97.79%	27	46.61%
10	94.94%	28	43.77%
11	92.10%	29	40.93%
12	89.26%	30	38.09%
13	86.41%	31	35.24%
14	83.57%	32	32.40%
15	80.73%	33	29.56%
16	77.89%	34	26.71%
17	75.04%	35	23.87%
18	72.20%	36	21.03%
19	69.36%	37	18.19%
20	66.51%	38	15.34%
21	63.67%	39 and thereafter	12.50%

* Each Stipulated Loan Value amount assumes payment of all Scheduled Payments due on or before the indicated Payment Date.

Borrower’s Initials: Lender’s Initials:

Annex C

SUMMARY OF LOAN AGREEMENT SUPPLEMENT NO.          ; to
LOAN AND SECURITY AGREEMENT NO. 352040201 dated March 3, 2003 (“Agreement”),
by and between LIGHTHOUSE CAPITAL PARTNERS IV, L.P. (“Lender”) and
ARUBA WIRELESS NETWORKS, INC., a Delaware corporation (“Borrowed”)

(All capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Agreement.)

Funding Date:	, 200
Loan Commencement Date:	, 200
Original Loan Amount:	$
Interim Payment:	$
Loan Factor:	Months 1-3:                                               %
	Months 4-39:                                               %
Scheduled Payments*:	3 payments of $                    each, payable monthly in advance, followed by 36 payments of $                     each, payable monthly in advance.

Final Payment*: An additional amount equal to the Final Payment Percentage multiplied by the original Loan Amount then in effect, shall be paid on the Maturity Date with respect to such Loan.

LENDER:
LIGHTHOUSE CAPITAL PARTNERS IV, L.P.
By:	LIGHTHOUSE MANAGEMENT
	PARTNERS IV, L.L.C., its general partner
By:
Name:
Title:

Exhibit E

ANCILLARY DOCUMENTS

Officer’s Certificate

Insurance Request form

ArubaWireless Networks, Inc.

OFFICER’S CERTIFICATE

     The undersigned,                                    , hereby certifies that:

     1. He/She is the duly elected and acting                                     of Aruba Wireless Networks, Inc., a Delaware corporation (the “Company”).

     2. That on the date hereof, each person listed below holds the office in the Company indicated opposite his or her name and that the signature appearing thereon is the genuine signature of each such person:

NAME OFFICE SIGNATURE

     3. Attached hereto as Exhibit A is a true and correct copy of the Amended and Restated Certificate of Incorporation of the Company, as amended, as in effect as of the date hereof.

     4. Attached hereto as Exhibit B is a true and correct copy of the Bylaws of the Company, as amended, as in effect as of the date hereof.

     5. Attached hereto as Exhibit C is a copy of the resolutions of the Board of Directors of the Company authorizing and approving the Company’s execution, delivery and performance of a loan facility with Lighthouse Capital Partners IV, L.P.

     IN WITNESS WHEREOF, the undersigned has executed this Officer’s Certificate on                     .

ArubaWireless Networks, Inc.

By:

Name:

Title:

     I, the                                     of the Company, do hereby certify that           is the duly qualified, elected and acting                                     of the Company and that the above signature is his or her genuine signature.

     IN WITNESS WHEREOF, the undersigned has executed and delivered this Officer’s Certificate on                     .

ArubaWireless Networks, Inc.

By:

Name:

Title:

EVIDENCE OF INSURANCE

RE: Loan and Security Agreement No. 352040201 (“Agreement”)

Please submit the attached Certificate of Insurance to your Insurance Broker as soon as possible.

Please note that the Certificate of Insurance is required prior to funding.

To:	Broker: Please prepare a Certificate of Insurance as described and
From: Aruba Wireless Networks, Inc.	send to Certificate Holder via fax and regular mail below.

CERTIFICATE OF INSURANCE		DATE (MM/DD/YY
PRODUCER	THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
	INSURERS AFFORDING COVERAGE
INSURED	INSURER A:
	INSURER B:
Aruba Wireless Networks, Inc.	INSURER C:

     COVERAGES

THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAYBE ISSUED OR MAY PERTAIN. THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
INSR			EFFECTIVE	EXPIRATION DATE
I.TR	TYPE OF INSURANCE	POLICY NUMBER	DATE(MM/DD/YY)	(MM/DD/YY)	LIMITS
	X GENERAL LIABILITY				EACH OCCURRENCE	$2,000,000
	COMMERCIAL GENERAL LIABILITY				FIRE DAMAGE (Any one fire)	$included
	CLAIMS MADE    X OCCUR				MED EXP (Any one Person)	$10,000
					PERSONAL &ADV INJURY	$1,000,000
A	GEN’L AGGREGATE LIMIT APPLIES PER				GENERAL AGGREGATE	$2,000,000
	POLICY     PROJECT     LOC				PRODUCTS-COM/OP AGG	$2,000,000
	AUTOMOBILE LIABILITY ANY AUTO				COMBINED SINGLE LIMIT (Ea accident)	$
	ALL OWNED AUTOS SCHEDULED AUTOS				BODILY INJURY (Per person)	$
	HIRED AUTOS NON OWNED AUTOS				BODILY INJURY (Per accident)	$
					PROPERTY DAMAGE (Per accident	$
					OTHER THAN     EA OCC	$
					AUTOONLY     AGG	$
	EXCESS LIABILITY				EACH OCCURRENCE
	OCCUR CLAIMS MADE				AGGREGATE
	DEDUCTIBLE					$
A	RETENTION $					$
						$
A	OTHER Business Personal Properly				Limit: $1,750,000	“All Risk” of Direct Physical Loss or Damage( Subject to Policy Exclusions & Terms)
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/EXCLUSIONS ADDED BY ENDORSEMENT/SPECIAL PROVISIONS
Lighthouse Capital Partners is named as Additional Insured and Loss Payee.
CERTIFICATE HOLDER
Lighthouse Capital Partners 500 Drake’s Landing Road Greenbrae, CA. 94904-3011 Attn: Contract Administration Fax: 415-925-3387 Phone: 415-464-5900		SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TOMAIL 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT. BUT FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES.

SCHEDULE 1

EXISTING LIENS

[TO BE PROVIDED BY BORROWER]

SCHEDULE 2

SUBSIDIARIES

[TO BE PROVIDED BY BORROWER]

THIS WARRANT AND THE SECURITIES ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.

PREFERRED STOCK PURCHASE WARRANT

Warrant No. B-3 Number of Shares: 41,667
Series B Preferred Stock

Aruba Wireless Networks, Inc.

Effective as of May 18, 2004

Void after May 18, 2011

     1. Issuance. This Preferred Stock Purchase Warrant (the “Warrant”) is issued to Lighthouse Capital Partners IV, L.P. (“Lighthouse”) by Aruba Wireless Networks, Inc., a Delaware corporation (hereinafter with its successors called the “Company”). All capitalized terms used herein, but not defined herein, shall have the meaning ascribed to such terms under that certain Loan and Security Agreement No.3522 between Company and Lighthouse of even date herewith (the “Agreement”).

     2. Purchase Price; Number of Shares. The registered holder of this Warrant (the “Holder”), commencing on the date hereof, is entitled upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a price per share of $1.20 (the “Purchase Price”), 41,667 fully paid and nonassessable shares of the Company’s Series B Preferred Stock, $0.0001 par value (the “Preferred Stock”).

Until such time as this Warrant is exercised in full or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided. The person or persons in whose name or names any certificate representing shares of Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed.

     3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash or by check, (ii) by the surrender by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Purchase Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, or (iii) by any combination of the foregoing.

     4. Net Issue Election. The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the principal office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula:

1.

X=	Y(A-B)
	A

where:	X =	the number of shares of Preferred Stock to be issued to the Holder pursuant to this Section 4.
	Y =	the number of shares of Preferred Stock in respect of which the net issue election is made pursuant to this Section 4.
	A =	the Fair Market Value (defined below) of one share of Preferred Stock, as determined at the time the net issue election is made pursuant to this Section 4.
	B =	the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 4.

          “Fair Market Value” of a share of Preferred Stock (or fully paid and nonassessable shares of the Company’s common stock, $0.0001 par value (the “Common Stock”) if the Preferred Stock has been automatically converted into Common Stock) as of the date that the net issue election is made (the “Determination Date”) shall mean:

          (i) If the net issue election is made in connection with and contingent upon the closing of the sale of the Company’s Common Stock to the public in a public offering pursuant to a Registration Statement under the 1933 Act (a “Public Offering”), and if the Company’s Registration Statement relating to such Public Offering (“Registration Statement”) has been declared effective by the Securities and Exchange Commission, then the initial “Price to Public” specified in the final prospectus with respect to such offering multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible.

          (ii) If the net issue election is not made in connection with and contingent upon a Public Offering, then as follows:

               (a) If traded on a securities exchange or the Nasdaq National Market, the fair market value of the Common Stock shall be deemed to be the average of the closing or last reported sale prices of the Common Stock on such exchange or market over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible;

               (b) If otherwise traded in an over-the-counter market, the fair market value of the Common Stock shall be deemed to be the average of the closing ask prices of the Common Stock over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible; and

               (c) If there is no public market for the Common Stock, then fair market value shall be determined in good faith by the Company’s Board of Directors.

     5. Partial Exercise. This Warrant may be exercised in part, and the Holder shall be entitled to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised.

     6. Fractional Shares. In no event shall any fractional share of Preferred Stock be issued upon any exercise of this Warrant, but in lieu of any such fractional shares the Company shall make a cash payment therefor on the basis of the Purchase Price.

2.

     7. Expiration Date; Automatic Exercise. This Warrant shall expire on the first to occur of (i)the close of business on May 18, 2011, and (ii) the third anniversary of the initial Public Offering of the Company’s securities, and shall be void thereafter (the “Expiration Date”). Notwithstanding the foregoing, this Warrant shall automatically be deemed to be exercised in full pursuant to the provisions of Section 4 hereof, without any further action on behalf of the Holder, immediately prior to the time this Warrant would otherwise expire pursuant to the preceding sentence. Notwithstanding the term of this Warrant fixed pursuant to this Section 7 and provided Holder has received advance notice of at least twenty (20) days and has not earlier converted, this Warrant shall automatically be converted pursuant to Section 4 hereof, without any action by Holder, upon the closing of a sale of all or substantially all of the Company’s assets, or the merger or consolidation of the Company with or into another corporation (other than a merger or consolidation for the principal purpose of changing the domicile of the Company) that results in the transfer of fifty percent (50%) or more of the outstanding voting power of the Company (a "Merger”), except to the extent assumed by the successor corporation (or parent thereof) in connection with such Merger. In the event that any outstanding warrants to purchase equity securities of the Company are assumed, this Warrant shall also be similarly assumed. Notwithstanding anything to the contrary in this Warrant, the holder may rescind any exercise of its purchase rights after any notice of termination of the proposed transaction if the exercise of this Warrant occurred after the Company notified the Holder that the Merger was proposed or if the exercise was otherwise precipitated by such proposed Merger. In the event of such rescission, this Warrant will continue to be exercisable on the same terms and conditions. Notwithstanding the foregoing, in the event the Warrant is automatically deemed to be exercised pursuant to this Section 7, the Company shall not be required to surrender the certificate representing the Preferred Stock until such time as the Holder surrenders the Warrant.

     8. Reserved Shares; Valid Issuance. The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Preferred Stock and Common Stock free from all preemptive or similar rights therein, as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common Stock of all shares of Preferred Stock receivable upon such exercise. The Company further covenants that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.

     9. Stock Splits and Dividends. If after the date hereof the Company shall subdivide the Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, the number of shares of Preferred Stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of a combination.

     10. Adjustments for Diluting Issuances. The antidilution rights applicable to the Preferred Stock of the Company are set forth in the Company’s Certificate of Incorporation, as amended from time to time (the “Articles”), a true and complete current copy of which is attached hereto as Exhibit A. The Company shall promptly provide the Holder hereof with any restatement, amendment or modification to the Articles promptly after the same has been made.

     11. Mergers and Reclassifications. If after the date hereof the Company shall enter into any Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property receivable upon such Reorganization by a holder of the number of shares of Preferred Stock which might have been purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including without limitation, provisions for the adjustment of the Purchase Price and the number of shares issuable hereunder and the provisions relating to the net issue election) shall thereafter be applicable in relation to any shares of stock or other securities and property thereafter deliverable upon exercise hereof. For the purposes of this Section 11, the term “Reorganization” shall include without limitation any reclassification, capital reorganization or change of the

3.

Preferred Stock (other than as a result of a subdivision, combination or stock dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding Preferred Stock and other than any Merger that results in the automatic exercise of this Warrant pursuant to Section 7 hereof), or any sale or conveyance to another corporation or other business organization of all or substantially all of the assets of the Company.

     12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as herein provided, the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial officer setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

     13. Notices of Record Date, Etc. In the event of:

          (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any shares of stock of any class or any other securities or property, or to receive any other right;

          (b) any reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets; or

          (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then in each such event the Company will provide or cause to be provided to the Holder a written notice thereof. Such notice shall be provided at least twenty (20) business days prior to the date specified in such notice on which any such action is to be taken.

     14. Representations, Warranties and Covenants. This Warrant is issued and delivered by the Company and accepted by the Holder on the basis of the following representations, warranties and covenants made by the Company:

          (a) The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder. This Warrant has been duly authorized issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

          (b) The shares of Preferred Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.

          (c) The issuance, execution and delivery of this Warrant do not, and the issuance of the shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company’s Articles or by-laws, or any law, statute, regulation, rule, judgment or order applicable to the Company, (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound or (iii) require the consent or approval of or the filing of any notice or registration with any person or entity (other than any applicable consents, approvals or securities laws filings, which will be obtained or filed in a timely manner).

          (d) So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive under Section 2.1 of the Amended and Restated Investor Rights Agreement (the “Amended Rights Agreement”) applicable to the Preferred Stock if Holder

4.

were a holder of that number of shares issuable upon full exercise of this Warrant; provided the rights under this Section 14(d) shall terminate upon the initial Public Offering of the Company’s securities.

          (e) So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive under the Stock Purchase Agreement applicable to the Preferred Stock if Holder were a holder of that number of shares issuable upon full exercise of this Warrant.

          (f) As of the date hereof, the authorized capital stock of the Company consists of (i) 55,000,000 shares of Common Stock, of which 8,891,051 shares are issued and outstanding, (ii) 14,444,551 shares of Series A Preferred Stock, of which 14,262,748 are issued and outstanding shares and (iii) 19,000,000 shares of Series B Preferred Stock, of which 18,333,333 are issued and outstanding. Attached hereto as Exhibit B is a capitalization table summarizing the capitalization of the Company. Once per calendar quarter, the Company will provide Holder with a current summary capitalization table indicating changes, if any, to the number of outstanding shares of common stock and preferred stock.

     15. Registration Rights. As soon as reasonably practicable, the Company shall cause the Holder to become party to the Company’s Amended Rights Agreement, such that Holder shall be entitled to all rights and privileges under Section 1 only of the Amended Rights Agreement as a “Holder” and “Investor” thereunder and the Preferred Stock issuable upon exercise of this Warrant (and Common Stock issued upon conversion of such Preferred Stock) shall be “Registrable Securities,” under the Amended Rights Agreement.

     16. Amendment. The terms of this Warrant may be amended, modified or waived only with the written consent of the Holder and the Company.

     17. Representations and Covenants of the Holder. This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder, which by its execution hereof the Holder hereby confirms:

          (a) Authorization. The Holder represents that it has full power and authority to enter into this Warrant. This Warrant constitutes the Holder’s valid and legally binding obligation, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

          (b) Investment Purpose. This Warrant and the Preferred Stock issuable upon exercise of the Warrant is and will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

          (c) Accredited Investor. Holder is an “accredited investor” within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

          (d) Private Issue. The Holder understands (i) that the Preferred Stock issuable upon exercise of the Holder’s rights contained herein is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 17.

          (e) Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investment.

5.

     18. Notices, Transfers, Etc.

          (a) All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the following addresses (or at such other addresses as shall be specified by notice given in accordance with this Section 18): If to the Company:

Aruba Wireless Networks, Inc.
180 Great Oaks Boulevard
San Jose, CA 95119
Attention: Duston Williams

If to Holder:

Lighthouse Capital Partners IV, L.P.
500 Drake’s Landing Road
Greenbrae, CA 94904-3011
Attn: Contract Administration

          (b) Subject to compliance with applicable federal and state securities laws, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder. Upon surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new warrant to the assignee, in such denomination as shall be requested by the Holder hereof, and shall issue to such Holder a new warrant covering the number of shares in respect of which this Warrant shall not have been transferred.

          (c) In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant

     19. No Impairment. The Company will not, by amendment of its Articles or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance of performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

     20. No Voting or Dividend Rights. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent or to receive notice as a stockholder of the Company or any other matters or any rights whatsoever as a stockholder (except as provided herein) of the Company. No dividends (except a stock dividend) or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder, until, and only to the extent that, this Warrant shall have been exercised.

     21. Governing Law. The provisions and terms of this Warrant shall be governed by and construed in accordance with the internal laws of the State of California without giving effect to its principles regarding conflicts of laws.

6.

     22. Successors and Assigns. This Warrant shall be binding upon the Company’s successors and assigns and shall inure to the benefit of the Holder’s successors, legal representatives and permitted assigns.

     23. Business Days. If the last or appointed day for the taking of any action required or the expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in California, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday.

     24. Conversion to Common Stock. If prior to the exercise in full of this Warrant, all of the Preferred Stock shall have been converted into Common Stock pursuant to the Company’s Articles in effect immediately prior to such conversion, then, effective upon such conversion, this Warrant shall be exercisable only for shares of Common Stock, and the Holder shall thereupon have the right to purchase, at a total price equal to that payable upon the exercise of this Warrant in full, the number of shares of Common Stock which would have been receivable by the Holder if the Holder had exercised this Warrant for shares of Preferred Stock immediately prior to such conversion of such shares of Preferred Stock into shares of Common Stock, and in such event appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including, without limitation, the provisions for the adjustment of the Purchase Price and of the number of shares purchasable upon exercise of this Warrant and the provisions relating to the net issue election) shall thereafter be applicable to any shares of Common Stock deliverable upon the exercise hereof.

     25. Market Stand-Off. The Holder hereby agrees that, to the extent requested by the Company or an underwriter of securities of the Company and provided all officers and directors of Company enter into similar agreements, it shall not sell or otherwise transfer or dispose of any Preferred Stock or Common Stock (other than to donees or partners of the Holder who agree to be similarly bound) for up to one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act; provided, however, that such agreement shall be applicable only to the first such registration statement of the Company which covers securities to be sold on its behalf to the public in an underwritten offering but not to Common Stock sold pursuant to such registration statement. In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the Preferred Stock issuable upon exercise of this Warrant (and Common Stock issued upon conversion of such Preferred Stock) and to impose stop transfer instructions with respect to such Preferred Stock and Common Stock.

7.

     26. Value. The Company and the Holder agree that the value of this Warrant on the date of grant is $100.

     Dated: May 18, 2004

Aruba Wireless Networks, Inc.
By:	/s/ Duston Williams
Name:	Duston Williams
Title:	CFO

Agreed and Accepted:

Lighthouse Capital Partners IV, L.P.

By: Lighthouse Management Partners IV, L.L.C.,
      its general partner

By: /s/ Thomas Conneely            
Name: Thomas Conneely
Title: Vice President

8.

Subscription

To:                                         

Date:                                         

The undersigned hereby represents and warrants that the Representations and Warranties in Section 17 hereof are true and correct as of the date hereof. The undersigned hereby subscribes for _________ shares of Preferred Stock covered by this Warrant. The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below:

                                                            
Signature

                                                            
Name for Registration

                                                            
Mailing Address

1.

Net Issue Election Notice

To:                                          Date:                                         

The undersigned hereby elects under Section 4 to surrender the right to purchase shares of Preferred Stock pursuant to this Warrant.

Net Exercise the attached Warrant with respect to __________ shares of Preferred Stock.

The undersigned hereby represents and warrants that the Representations and Warranties in Section 17 hereof are true and correct as of the date hereof. The certificate(s) for such shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below:

                                                            
Signature

                                                            
Name for Registration

                                                            
Mailing Address

1.

Assignment

For value received                                              hereby sells, assigns and transfers unto                                                                                           

[Please print or typewrite name and address of Assignee]

the within Warrant, and does hereby irrevocably constitute and appoint                                             its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises.

Dated:

Signature

Name for Registration

In the Presence of:

1.

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.

PREFERRED STOCK PURCHASE WARRANT

Warrant No. B-4	Number of Shares: 222,222
	Series B Preferred Stock

Aruba Wireless Networks, Inc.

Effective as of May 18, 2004

Void after May 18, 2011

     1. Issuance. This Preferred Stock Purchase Warrant (the “Warrant”) is issued to Lighthouse Capital Partners IV, L.P. (“Lighthouse”) by Aruba Wireless Networks, Inc., a Delaware corporation (hereinafter with its successors called the “Company”). All capitalized terms used herein, but not defined herein, shall have the meaning ascribed to such terms under that certain Loan and Security Agreement No.3522 between Company and Lighthouse of even date herewith (the “Agreement”).

     2. Purchase Price; Number of Shares. The registered holder of this Warrant (the “Holder”), commencing on the date hereof, is entitled upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a price per share of $1.20 (the “Purchase Price”), 222,222 fully paid and nonassessable shares of the Company’s Series B Preferred Stock, $0.0001 par value (the “Preferred Stock”).

Until such time as this Warrant is exercised in full or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided. The person or persons in whose name or names any certificate representing shares of Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed.

     3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash or by check, (ii) by the surrender by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Purchase Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, or (iii) by any combination of the foregoing.

     4. Net Issue Election. The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the principal office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula:

1.

X₌ Y(A-B)

     A

where:	X =	the number of shares of Preferred Stock to be issued to the Holder pursuant to this Section 4.
	Y =	the number of shares of Preferred Stock covered by this Warrant in respect of which the net issue election is made pursuant to this Section 4.
	A =	the Fair Market Value (defined below) of one share of Preferred Stock, as determined at the time the net issue election is made pursuant to this Section 4.
	B =	the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 4.

               “Fair Market Value” of a share of Preferred Stock (or fully paid and nonassessable shares of the Company’s common stock, $0.0001 par value (the “Common Stock”) if the Preferred Stock has been automatically converted into Common Stock) as of the date that the net issue election is made (the “Determination Date”) shall mean:

               (i) If the net issue election is made in connection with and contingent upon the closing of the sale of the Company’s Common Stock to the public in a public offering pursuant to a Registration Statement under the 1933 Act (a “Public Offering”), and if the Company’s Registration Statement relating to such Public Offering (“Registration Statement”) has been declared effective by the Securities and Exchange Commission, then the initial “Price to Public” specified in the final prospectus with respect to such offering multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible.

               (ii) If the net issue election is not made in connection with and contingent upon a Public Offering, then as follows:

                    (a) If traded on a securities exchange or the Nasdaq National Market, the fair market value of the Common Stock shall be deemed to be the average of the closing or last reported sale prices of the Common Stock on such exchange or market over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible;

                    (b) If otherwise traded in an over-the-counter market, the fair market value of the Common Stock shall be deemed to be the average of the closing ask prices of the Common Stock over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible; and

                    (c) If there is no public market for the Common Stock, then fair market value shall be determined in good faith by the Company’s Board of Directors.

     5. Partial Exercise. This Warrant may be exercised in part, and the Holder shall be entitled to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised.

     6. Fractional Shares. In no event shall any fractional share of Preferred Stock be issued upon any exercise of this Warrant, but in lieu of such fractional shares the Company shall make a cash payment therefor on the basis of the Purchase Price.

2.

     7. Expiration Date; Automatic Exercise. This Warrant shall expire on the earlier to occur of (i) the close of business on May 18, 2011, and (ii) the third anniversary of the initial Public Offering of the Company’s securities, and shall be void thereafter (the “Expiration Date”). Notwithstanding the foregoing, this Warrant shall automatically be deemed to be exercised in full pursuant to the provisions of Section 4 hereof, without any further action on behalf of the Holder, immediately prior to the time this Warrant would otherwise expire pursuant to the preceding sentence. Notwithstanding the term of this Warrant fixed pursuant to this Section 7 and provided Holder has received advance notice of at least twenty (20) days and has not earlier converted, this Warrant shall automatically be converted pursuant to Section 4 hereof, without any action by Holder, upon the closing of a sale of all or substantially all of the Company’s assets, or the merger or consolidation of the Company with or into another corporation (other than a merger or consolidation for the principal purpose of changing the domicile of the Company) that results in the transfer of fifty percent (50%) or more of the outstanding voting power of the Company (a “Merger”), except to the extent assumed by the successor corporation (or parent thereof) in connection with such Merger. In the event that any outstanding warrants to purchase equity securities of the Company are assumed, this Warrant shall also be similarly assumed. Notwithstanding anything to the contrary in this Warrant, the holder may rescind any exercise of its purchase rights after any notice of termination of the proposed transaction if the exercise was otherwise precipitated by such proposed Merger. In the event of such recission, this Warrant will continue to be exercisable on the same terms and conditions. Notwithstanding the foregoing, in the event the Warrant is automatically deemed to be exercised pursuant to this Section 7, the Company shall not be required to surrender the certificate representing the Preferred Stock until such time as the Holder surrenders the Warrant.

     8. Reserved Shares; Valid Issuance. The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Preferred Stock and Common Stock, free from all preemptive or similar rights therein, as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common Stock of all shares of Preferred Stock receivable upon such exercise. The Company further covenants that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.

     9. Stock Splits and Dividends. If after the date hereof the Company shall subdivide the Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, the number of shares of Preferred Stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of a combination.

     10. Adjustments for Diluting Issuances. The other antidilution rights applicable to the Preferred Stock and the Common Stock of the Company are set forth in the Certificate of Incorporation, as amended from time to time (the “Articles”), a true and complete copy of which, in their current form, are attached hereto as Exhibit A. The Company shall promptly provide the Holder hereof with any restatement, amendment or modification to the Articles promptly after the same has been made.

     11. Mergers and Reclassifications. If after the date hereof the Company shall enter into any Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property receivable upon such Reorganization by a holder of the number of shares of Preferred Stock which might have been purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including without limitation, provisions for the adjustment of the Purchase Price and the number of shares issuable hereunder and the provisions relating to the net issue election) shall thereafter be applicable in relation to any shares of stock or other securities and property thereafter deliverable upon exercise hereof. For the purposes of this Section 11, the term “Reorganization” shall include without limitation any reclassification, capital reorganization or change of the

3.

Preferred Stock (other than as a result of a subdivision, combination or stock dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding Preferred Stock and other than any Merger that results in the automatic exercise of this Warrant pursuant to Section 7 hereof), or any sale or conveyance to another corporation or other business organization of all or substantially all of the assets of the Company.

     12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as herein provided, the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial officer setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

     13. Notices of Record Date, Etc. In the event of:

          (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any shares of stock of any class or any other securities or property, or to receive any other right;

          (b) any reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets; or

          (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then in each such event the Company will provide or cause to be provided to the Holder a written notice thereof. Such notice shall be provided at least twenty (20) business days prior to the date specified in such notice on which any such action is to be taken.

     14. Representations, Warranties and Covenants. This Warrant is issued and delivered by the Company and accepted by the Holder on the basis of the following representations, warranties and covenants made by the Company:

          (a) The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder. This Warrant has been duly authorized, issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

          (b) The shares of Preferred Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.

          (c) The issuance, execution and delivery of this Warrant do not, and the issuance of the shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company’s Articles or by-laws, or any law, statute, regulation, rule, judgment or order applicable to the Company or (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound or (iii) require the consent or approval of or the filing of any notice or registration with any person or entity (other than any applicable consents, approvals or securities laws filings, which will be obtained or filed in a timely manner).

          (d) So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive under Section 2.1 of the Amended and Restated Investor Rights Agreement (the “Amended Rights Agreement”) applicable to the Preferred Stock if Holder

4.

Were a holder of that number of shares issuable upon full exercise of this Warrant; provided the rights under this Section 14(d) shall terminate upon the initial Public Offering of the Company’s securities.

          (e) So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive under the Stock Purchase Agreement applicable to the Preferred Stock if Holder were a holder of that number of shares issuable upon full exercise of this Warrant.

          (f) As of the date hereof, the authorized capital stock of the Company consists of (i) 55,000,000 shares of Common Stock, of which 8,891,051 shares are issued and outstanding and (ii) 14, 444,551 shares of Series A Preferred Stock, of which 14,262,748 are issued and outstanding shares and (iii) 19,000,000 shares of Series B Preferred Stock, of which 18,333,333 are issued and outstanding. Attached hereto as Exhibit B is a capitalization table summarizing the capitalization of the Company. Once per calendar quarter, the Company will provide Holder with a current capitalization table indicating changes, if any, to the number of outstanding shares of common stock and preferred stock.

     15. Registration Rights. As soon as reasonably practicable, the Company shall cause the Holder to become party to the Company’s Amended Rights Agreement, such that Holder shall be entitled to all rights and privileges under Section 1 only of the Amended Rights Agreement as a “Holder” and “Investor” thereunder and the Preferred Stock issuable upon exercise of this Warrant (and Common Stock issued upon conversion of such Preferred Stock) shall be “Registrable Securities,” under the Amended Rights Agreement.

     16. Amendment. The terms of this Warrant may be amended, modified or waived only with the written consent of the Holder and the Company.

     17. Representations and Covenants of the Holder. This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder, which by its execution hereof the Holder hereby confirms:

          (a) Authorization. The Holder represents that it has full power and authority to enter into this Warrant. This Warrant constitutes the Holder’s valid and legally binding obligation, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

          (b) Investment Purpose. This Warrant and the Preferred Stock issuable upon exercise of the Warrant is and will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

          (c) Accredited Investor. Holder is an “accredited investor” within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

          (d) Private Issue. The Holder understands (i) that the Preferred Stock issuable upon exercise of the Holder’s rights contained herein is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 17.

          (e) Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investment.

5.

     18. Notices, Transfers, Etc.

          (a) All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the following addresses (or at such other addresses as shall be specified by notice given in accordance with this Section 18): If to the Company:

Aruba Wireless Networks, Inc.
180 Great Oaks Boulevard
San Jose, CA 95119
Attention: Duston Williams

If to Holder:

Lighthouse Capital Partners IV, L.P.
500 Drake’s Landing Road
Greenbrae, CA 94904-3011
Attention: Contract Administration

          (b) Subject to compliance with applicable federal and state securities laws, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder. Upon surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new warrant to the assignee, in such denomination as shall be requested by the Holder hereof, and shall issue to such Holder a new warrant covering the number of shares in respect of which this Warrant shall not have been transferred.

          (c) In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant

     19. No Impairment. The Company will not, by amendment of its Articles or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance of performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

     20. No Voting or Dividend Rights. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent or to receive notice as a stockholder of the Company or any other matters or any rights whatsoever as a stockholder (except as provided herein) of the Company. No dividends (except a stock dividend) or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder, until, and only to the extent that, this Warrant shall have been exercised.

6.

     21. Governing Law. The provisions and terms of this Warrant shall be governed by and construed in accordance with the internal laws of the State of California without giving effect to its principles regarding conflicts of laws.

     22. Successors and Assigns. This Warrant shall be binding upon the Company’s successors and assigns and shall inure to the benefit of the Holder’s successors, legal representatives and permitted assigns.

     23. Business Days. If the last or appointed day for the taking of any action required or the expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in California, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday.

     24. Conversion to Common Stock. If prior to the exercise in full of this Warrant, all of the Preferred Stock shall have been converted into Common Stock pursuant to the Company’s Articles in effect immediately prior to such conversion, then, effective upon such conversion, this Warrant shall be exercisable only for shares of Common Stock, and the Holder shall thereupon have the right to purchase, at a total price equal to that payable upon the exercise of this Warrant in full, the number of shares of Common Stock which would have been receivable by the Holder if the Holder had exercised this Warrant for shares of Preferred Stock immediately prior to such conversion of such shares of Preferred Stock into shares of Common Stock, and in such event appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including, without limitation, the provisions for the adjustment of the Purchase Price and of the number of shares purchasable upon exercise of this Warrant and the provisions relating to the net issue election) shall thereafter be applicable to any shares of Common Stock deliverable upon the exercise hereof.

     25. Market Stand-Off. The Holder hereby agrees that, to the extent requested by the company or an underwriter of securities of the Company and provided all officers and directors and greater than one percent (1%) stockholders of Company enter into similar agreements, it shall not sell or otherwise transfer or dispose of any Preferred Stock or Common Stock (other than to donees or partners of the Holder who agree to be similarly bound) for up to one hundred eight (180) days following the effective date of a registration statement of the Company filed under the Securities Act; provided, however, that such agreement shall be applicable only to the first such registration statement of the Company which covers securities to be sold on its behalf to the public in an underwritten offering but not to Common Stock sold pursuant to such registration statement. In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the Preferred Stock issuable upon exercise of this Warrant (and Common Stock issuable upon conversion of such Preferred Stock) and to impose stop transfer instructions with respect to such Preferred Stock and Common Stock.

7.

     26. Value. The Company and the Holder agree that the value of this Warrant on the date of grant is $100.

Dated:  May 18, 2004	Aruba Wireless Networks, Inc.
	By:
	Name:
	Title:

Agreed and Accepted:
Lighthouse Capital Partners IV, L.P.
By:	Lighthouse Management Partners IV, L.L.C., its general partner
By:
Name:
Title:

8.

Subscription

To:

Date:

The undersigned hereby represents and warrants that Representations and Warranties in Section 17 hereof are true and correct as of the date hereof. The undersigned hereby subscribes for                      shares of Preferred Stock covered by this Warrant. The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below:

Signature

Name for Registration

Mailing Address

9.

Net Issue Election Notice

To: Date:

The undersigned hereby elects under Section 4 to surrender the right to purchase shares of Preferred Stock pursuant to this Warrant.

          Net Exercise the attached Warrant with respect to                      shares of Preferred Stock.

The undersigned hereby represents and warrants that Representations and Warranties in Section 17 hereof are true and correct as of the date hereof. The certificate(s) for such shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below:

Signature

Name for Registration

Mailing Address

1.

Assignment

For value received hereby sells, assigns and transfers unto

[Please print or typewrite name and address of Assignee]

the within Warrant, and does hereby irrevocably constitute and appoint                                          its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises.

Dated:

Signature

Name for Registration

Mailing Address

In the Presence of:

1.

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.

PREFERRED STOCK PURCHASE WARRANT

Warrant No. C-1	Number of Shares (As Determined Below)
	Preferred Stock

Aruba Wireless Networks, Inc.

Effective as of May 18, 2004

Void after May 18, 2011

     1. Issuance. This Preferred Stock Purchase Warrant (the “Warrant”) is issued to Lighthouse Capital Partners IV, L.P. (“Lighthouse”) by Aruba Wireless Networks, Inc., a Delaware corporation (hereinafter with its successors called the “Company”). All capitalized terms used herein, but not defined herein, shall have the meaning ascribed to such terms under that certain Loan and Security Agreement No. 3522 between Company and Lighthouse of even date herewith (the “Agreement”).

     2. Purchase Price; Number of Shares. The registered holder of this Warrant (the “Holder”), commencing on the date hereof, is entitled upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a price per share equal to the Purchase Price, that number of fully paid and nonassessable shares of the Company’s Next Round Stock equal to Fifty Thousand Dollars ($50,000), divided by the applicable Purchase Price.

In the event of the consummation by the Company of a Merger (as defined in Section 7) prior to the consummation by the Company of the Next Round Financing (as defined below), the Holder shall have the right, in substitution of the rights granted to Holder above in this Section 2, upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a purchase price per share equal to the Adjusted Purchase Price, that number of shares of the Prior Preferred stock equal to Fifty Thousand Dollars ($50,000), divided by the Adjusted Purchase Price.

In addition to, and without limiting the foregoing, in the event the Company does not consummate a Merger or the Next Round Financing on or before May 18, 2005, then the Holder shall have the right on and after that date, upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a price per share equal to the Fair Market Value (on a per share basis as determined in Section 4 hereof) of the Prior Preferred stock on the date of exercise of this Warrant, that number of shares of the Prior Preferred Stock equal to Fifty Thousand Dollars ($50,000), divided by the Fair Market Value (on a per share basis as determined in Section 4 hereof) of the Prior Preferred Stock on the date of exercise of this Warrant.

In addition to other terms which may be defined herein, the following terms, as used in this Warrant, shall have the following meanings:

          (i) “Adjusted Purchase Price” means the exercise price calculated as follows:

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X(B) + Y(C)

X + Y

     X = The number of months (including fractional months) between (A) date of the closing of the sale of the Prior Preferred Stock and (B) the first to occur of (i) the initial Revolving Advance, or (ii) the date of the consummation of a Merger.

     Y = The number of months (including fractional months) between (A) the later of (i) the date of the execution and delivery of the Agreement and (ii) the initial Revolving Advance, and (B) the date of the consummation of a Merger.

     B = $1.20 (subject to adjustment, if any, under the Company’s Certificate of Incorporation).

     C = The value of the per share consideration paid (or to be paid) in such Merger with respect to the Prior Preferred Stock (with the Merger consideration to be valued in accordance with the provisions set forth in the Company’s Articles (as defined in Section 10).

          (ii) “Common Stock” means fully paid and nonassessable shares of the Company’s common stock, $0.0001 par value.

          (iii) “Next Round Financing” means the Company’s next bona fide round of preferred stock equity financing resulting in net aggregate proceeds to the Company in an amount equal to or in excess of $5,000,000.00

          (iv) “Next Round Stock” means the series of the Company’s preferred equity securities issued in connection with the Next Round Financing.

          (v) “Preferred Stock” means those shares of Next Round Stock or Prior Preferred Stock, as the case may be, issued or issuable upon exercise of this Warrant.

          (vi) “Prior Preferred Stock” means the Company’s Series B Preferred Stock, $0.0001 par value per share.

          (vii) “Purchase Price” means (i) in connection with the exercise of this Warrant with respect to Next Round Stock, the lowest price per share paid by an investor for a share of Next Round Stock in connection with the Next Round Financing or (ii) in connection with the exercise of this Warrant with respect to the Prior Preferred Stock, the Adjusted Purchase Price.

          (viii) “Reorganization” has the meaning ascribed to such term in Section 11.

Until such time as this Warrant is exercised in full or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided. The person or persons in whose name or names any certificate representing shares of Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed.

     3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash or by check, (ii) by the surrender by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Purchase Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, or (iii) by any combination of the foregoing.

     4. Net Issue Election. The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly

2

executed, at the principal office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula:

X₌ Y(A-B)

 A

where:	X	=	the number of shares of Preferred Stock to be issued to the Holder pursuant to this Section 4.
	Y	=	the number of shares of Preferred Stock in respect of which the net issue election is made pursuant to this Section 4.
	A	=	the Fair Market Value (defined below) of one share of Preferred Stock, as determined at the time the net issue election is made pursuant to this Section 4.
	B	=	the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 4.

“Fair Market Value” of a share of Preferred Stock (or Common Stock if the Preferred Stock has been automatically converted into Common Stock) as of the date that the net issue election is made (the “Determination Date”) shall mean:

     (i) If the net issue election is made in connection with and contingent upon the closing of the sale of the Company’s Common Stock to the public in a public offering pursuant to a Registration Statement under the 1933 Act (a “Public Offering”), and if the Company’s Registration Statement relating to such Public Offering (“Registration Statement”) has been declared effective by the Securities and Exchange Commission, then the initial “Price to Public” specified in the final prospectus with respect to such offering multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible.

     (ii) If the net issue election is not made in connection with and contingent upon a Public Offering, then as follows:

                    (a) If traded on a securities exchange or the Nasdaq National Market, the fair market value of the Common Stock shall be deemed to be the average of the closing or last reported sale prices of the Common Stock on such exchange or market over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible;

                    (b) If otherwise traded in an over-the-counter market, the fair market value of the Common Stock shall be deemed to be the average of the closing ask prices of the Common Stock over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible; and

                    (c) If there is no public market for the Common Stock, then fair market value shall be determined in good faith by the Company’s Board of Directors.

     5. Partial Exercise. This Warrant may be exercised in part, and the Holder shall be entitled to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised.

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     6. Fractional Shares. In no event shall any fractional share of Preferred Stock be issued upon any exercise of this Warrant, but in lieu of such fractional shares the Company shall make a cash payment therefore on the basis of the Purchase Price.

     7. Expiration Date; Automatic Exercise. This Warrant shall expire on the earlier to occur of (i) the close of business on May 18, 2011, and (ii) the third anniversary of the initial Public Offering of the Company’s securities, and shall be void thereafter (the “Expiration Date”). Notwithstanding the foregoing, this Warrant shall automatically be deemed to be exercised in full pursuant to the provisions of Section 4 hereof, without any further action on behalf of the Holder, immediately prior to the time this Warrant would otherwise expire pursuant to the preceding sentence. Notwithstanding the term of this Warrant fixed pursuant to this Section 7 and provided Holder has received advance notice of at least twenty (20) days and has not earlier converted, this Warrant shall automatically be converted pursuant to Section 4 hereof, without any action by Holder, upon the closing of a sale of all or substantially all of the Company’s assets, or the merger or consolidation of the Company with or into another corporation (other than a merger or consolidation for the principal purpose of changing the domicile of the Company) that results in the transfer of fifty percent (50%) or more of the outstanding voting power of the Company (a “Merger”), except to the extent assumed by the successor corporation (or parent thereof) in connection with such Merger. In the event that any outstanding warrants to purchase equity securities of the Company are assumed, this Warrant shall also be similarly assumed. Notwithstanding anything to the contrary in this Warrant, the holder may rescind any exercise of its purchase rights after any notice of termination of the proposed transaction if the exercise was otherwise precipitated by such proposed Merger. In the event of such recission, this Warrant will continue to be exercisable on the same terms and conditions. Notwithstanding the foregoing, in the event the Warrant is automatically deemed to be exercised pursuant to this Section 7, the Company shall not be required to surrender the certificate representing the Preferred Stock until such time as the Holder surrenders the Warrant.

     8. Reserved Shares; Valid Issuance. The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Prior Preferred Stock and Common Stock, and will at all times after the Next Round Financing, reserve and keep available such number of shares of Next Round Stock, free from all preemptive or similar rights therein, as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common Stock of all shares of Preferred Stock receivable upon such exercise. The Company further covenants that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.

     9. Stock Splits and Dividends. If after the date hereof the Company shall subdivide the Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, the number of shares of Preferred Stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of a combination. For avoidance of doubt, “Preferred Stock” in this Section 9 means that series of Preferred Stock for which this Warrant is exercised.

     10. Adjustments for Diluting Issuances. The antidilution rights applicable to the Prior Preferred Stock of the Company are set forth in the Company’s Certificate of Incorporation, as amended from time to time (the “Articles”), a true and complete copy of which is attached hereto as Exhibit A. The Company shall promptly provide the Holder hereof with any restatement, amendment or modification to the Articles promptly after the same has been made.

     11. Mergers and Reclassifications. If after the date hereof the Company shall enter into any Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property

4

receivable upon such Reorganization by a holder of the number of shares of Next Round Stock or, at Holder’s option if the Next Round Financing has not closed, the Prior Preferred Stock which might have been purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including without limitation, provisions for the adjustment of the Purchase Price and the number of shares issuable hereunder and the provisions relating to the net issue election) shall thereafter be applicable in relation to any shares of stock or other securities and property thereafter deliverable upon exercise hereof. For the purposes of this Section 11, the term “Reorganization” shall include without limitation any reclassification, capital reorganization or change of the Preferred Stock (other than as a result of a subdivision, combination or stock dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding Preferred Stock and other than any Merger that results in the automatic exercise of this Warrant pursuant to Section 7 hereof), or any sale or conveyance to another corporation or other business organization of all or substantially all of the assets of the Company.

     12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as herein provided, in accordance with the Company’s Certificate of Incorporation, the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial officer setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

     13. Notices of Record Date, Etc. In the event of:

          (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any shares of stock of any class or any other securities or property, or to receive any other right;

          (b) any reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets; or

          (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then in each such event the Company will provide or cause to be provided to the Holder a written notice thereof. Such notice shall be provided at least twenty (20) business days prior to the date specified in such notice on which any such action is to be taken.

     14. Representations, Warranties and Covenants. This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company:

          (a) The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder. This Warrant has been duly authorized, issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

          (b) The shares of Prior Preferred Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable. The shares of Next Round Stock, when authorized, shall be duly authorized and reserved for issuance by Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.

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          (c) The issuance, execution and delivery of this Warrant do not, and the issuance of the shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company’s Articles or by-laws, or any law, statute, regulation, rule, judgment or order applicable to the Company or (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound or (iii) require the consent or approval of or the filing of any notice or registration with any person or entity (other than any applicable consents, approvals or securities laws filings, which will be obtained or filed in a timely manner).

          (d) So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive under Section 2.1 of the Amended and Restated Investor Rights Agreement (the “Amended Rights Agreement”) applicable to the Preferred Stock if Holder were a holder of that number of shares issuable upon full exercise of this Warrant; provided the rights under this Section 14(d) shall terminate upon the initial Public Offering of the Company’s securities.

          (e) So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive under the Stock Purchase Agreement applicable to the Prior Preferred Stock if Holder were a holder of that number of shares issuable upon full exercise of this Warrant.

          (f) As of the date hereof, the authorized capital stock of the Company consists of (i) 55,000,000 shares of Common Stock, of which 8,891,051 shares are issued and outstanding and (ii) 14, 444,551 shares of Series A Preferred Stock, of which 14,262,748 are issued and outstanding shares and (iii) 19,000,000 shares of Series B Preferred Stock, of which 18,333,333 are issued and outstanding. Attached hereto as Exhibit B is a capitalization table summarizing the capitalization of the Company. Once per calendar quarter, the Company will provide Holder with a current capitalization table indicating changes, if any, to the number of outstanding shares of common stock and preferred stock.

     15. Registration Rights. As soon as reasonably practicable, the Company shall cause the Holder to become party to the Company’s Amended Rights Agreement, such that Holder shall be entitled to all rights and privileges under Section 1 only of the Amended Rights Agreement as a “Holder” and “Investor” thereunder and the Preferred Stock issuable upon exercise of this Warrant (and Common Stock issued upon conversion of such Preferred Stock) shall be “Registrable Securities,” under the Amended Rights Agreement.

     16. Amendment. The terms of this Warrant may be amended, modified or waived only with the written consent of the Holder.

     17. Representations and Covenants of the Holder. This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder, which by its execution hereof the Holder hereby confirms:

          (a) Authorization. The Holder represents that it has full power and authority to enter into this Warrant. This Warrant constitutes the Holder’s valid and legally binding obligation, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

          (b) Investment Purpose. This Warrant and the Preferred Stock issuable upon exercise of the Warrant is and will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

          (c) Accredited Investor. Holder is an “accredited investor” within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

6

          (d) Private Issue. The Holder understands (i) that the Preferred Stock issuable upon exercise of the Holder’s rights contained herein is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 17.

          (e) Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investment.

     18. Notices, Transfers, Etc.

          (a) All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the following addresses (or at such other addresses as shall be specified by notice given in accordance with this Section 18): If to the Company:

Aruba Wireless Networks, Inc.
180 Great Oaks Boulevard
San Jose, CA 95119
Attention: Duston Williams

If to Holder:

Lighthouse Capital Partner IV, L.P.
500 Drake’s Landing Road
Greenbrae, CA 94904-3011
Attn: Contract Administration

          (b) Subject to compliance with applicable federal and state securities laws, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder. Upon surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new warrant to the assignee, in such denomination as shall be requested by the Holder hereof, and shall issue to such Holder a new warrant covering the number of shares in respect of which this Warrant shall not have been transferred.

          (c) In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant.

     19. No Impairment. The Company will not, by amendment of its Articles or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance of performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

7

     20. No Voting or Dividend Rights. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent or to receive notice as a stockholder of the Company or any other matters or any rights whatsoever as a stockholder (except as provided herein) of the Company. No dividends (except a stock dividend) or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder, until, and only to the extent that, this Warrant shall have been exercised.

     21. Governing Law. The provisions and terms of this Warrant shall be governed by and construed in accordance with the internal laws of the State of California.

     22. Successors and Assigns. This Warrant shall be binding upon the Company’s successors and assigns and shall inure to the benefit of the Holder’s successors, legal representatives and permitted assigns.

     23. Business Days. If the last or appointed day for the taking of any action required or the expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in California, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday.

     24. Conversion to Common Stock. If prior to the exercise in full of this Warrant, all of the Preferred Stock shall have been converted into Common Stock pursuant to the Company’s Articles in effect immediately prior to such conversion, then, effective upon such conversion, this Warrant shall be exercisable only for shares of Common Stock, and the Holder shall thereupon have the right to purchase, at a total price equal to that payable upon the exercise of this Warrant in full, the number of shares of Common Stock which would have been receivable by the Holder if the Holder had exercised this Warrant for shares of Preferred Stock immediately prior to such conversion of such shares of Preferred Stock into shares of Common Stock, and in such event appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including, without limitation, the provisions for the adjustment of the Purchase Price and of the number of shares purchasable upon exercise of this Warrant and the provisions relating to the net issue election) shall thereafter be applicable to any shares of Common Stock deliverable upon the exercise hereof.

     25. Market Stand-Off. The Holder hereby agrees that, to the extent requested by the company or an underwriter of securities of the Company and provided all officers and directors and greater than one percent (1%) stockholders of Company enter into similar agreements, it shall not sell or otherwise transfer or dispose of any Preferred Stock or Common Stock (other than to donees or partners of the Holder who agree to be similarly bound) for up to one hundred eight (180) days following the effective date of a registration statement of the Company filed under the Securities Act; provided, however, that such agreement shall be applicable only to the first such registration statement of the Company which covers securities to be sold on its behalf to the public in an underwritten offering but not to Common Stock sold pursuant to such registration statement. In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the Preferred Stock issuable upon exercise of this Warrant (and Common Stock issuable upon conversion of such Preferred Stock) and to impose stop transfer instructions with respect to such Preferred Stock and Common Stock.

8

     26. Value. The Company and the Holder agree that the value of this Warrant on the date of grant is $100.

Dated: May 18, 2004	Aruba Wireless Networks, Inc.
	By:	/s/ Duston Williams
	Name:	Duston Williams
	Title:	CFO

Agreed and Accepted:

Lighthouse Capital Partners IV, L.P.

By:	Lighthouse Management Partners IV, L.L.C., its general partner
By: Name:	/s/ Thomas Conneely Thomas Conneely
Title:	Vice President

9

Subscription

To:

Date:

     The undersigned hereby represents and warrants that Representations and Warranties in Section 17 hereof are true and correct as of the date hereof. The undersigned hereby subscribes for                                          shares of Preferred Stock covered by this Warrant. The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below:

Signature

Name for Registration

Mailing Address

1.

Net Issue Election Notice

To: Date:

The undersigned hereby elects under Section 4 to surrender the right to purchase shares of Preferred Stock pursuant to this Warrant.

          Net Exercise the attached Warrant with respect to                      shares of Preferred Stock.

The undersigned hereby represents and warrants that Representations and Warranties in Section 7 hereof are true and correct as of the date hereof. The certificate(s) for such shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below:

Signature

Name for Registration

Mailing Address

1.

Assignment

For value received                                                                                                       hereby sells, assigns and transfers unto

[Please print or typewrite name and address of Assignee]

the within Warrant, and does hereby irrevocably constitute and appoint                                                              its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises.

Dated:

Signature

Name for Registration

Mailing Address

In the Presence of:

1.

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.

PREFERRED STOCK PURCHASE WARRANT

Warrant No. C-2	Number of Shares (As Determined Below)
	Preferred Stock

Aruba Wireless Networks, Inc.

Effective as of May 18, 2004

Void after May 18, 2011

     1. Issuance. This Preferred Stock Purchase Warrant (the “Warrant”) is issued to Lighthouse Capital Partners IV, L.P. (“Lighthouse”) by Aruba Wireless Networks, Inc., a Delaware corporation (hereinafter with its successors called the “Company”). All capitalized terms used herein, but not defined herein, shall have the meaning ascribed to such terms under that certain Loan and Security Agreement No. 3522 between Company and Lighthouse of even date herewith (the “Agreement”).

  2. Purchase Price; Number of Shares. The registered holder of this Warrant (the “Holder”), commencing on the date hereof, is entitled upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a price per share equal to the applicable Purchase Price, that number of fully paid and nonassessable shares of the Company’s Next Round Stock equal to (A) One Hundred Thirty Three Thousand Three Hundred Thirty Three Dollars and Thirty Three Cents ($133,333.33) plus (B) four percent (4%) of the aggregate principal amount of the Working Capital Advances drawn during the Second Borrowing Period, divided by (C) the applicable Purchase Price.

In the event of the consummation by the Company of a Merger (as defined in Section 7) prior to the consummation by the Company of the Next Round Financing (as defined below), the Holder shall have the right, in substitution of the rights granted to Holder in above in this Section 2, upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a price per share equal to the applicable Purchase Price, that number of shares of the Prior Preferred Stock equal to (A) One Hundred Thirty Three Thousand Three Hundred Thirty Three Dollars and Thirty Three Cents ($133,333.33) plus (B) four percent (4%) of the aggregate principal amount of the Working Capital Advances drawn during the Second Borrowing Period, divided by (C) the applicable Purchase Price.

In addition to, and without limiting the foregoing, in the event the Company does not consummate a Merger or the Next Round Financing on or before May 18, 2005, then the Holder shall have the right on and after that date, upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at price per share equal to the Fair Market Value (on a per share basis as determined in Section 4 hereof) of the Prior Preferred Stock on the date of exercise of this Warrant, that number of shares of the Prior Preferred Stock equal to (A) One Hundred Thirty Three Thousand Three Hundred Thirty Three Dollars and Thirty Three Cents ($133,333.33) plus (B) four percent (4%) of the aggregate principal amount of the Working Capital Advances drawn during the Second Borrowing Period, divided by the Fair Market Value (on a per share basis as determined in Section 4 hereof) of the Prior Preferred Stock on the date of exercise of this Warrant.

1.

In addition to other terms which may be defined herein, the following terms, as used in this Warrant, shall have the following meanings:

                                 (i) “Adjusted Purchase Price” means the exercise price calculated as follows:

X(B) + Y(C)

X + Y

     X = The number of months (including fractional months) between (A) date of the last closing of the sale of the Prior Preferred Stock and (B) the first to occur of (i) the initial Working Capital Advance during the Second Borrowing Period, or (ii) the date of the consummation of a Merger.

     Y = The number of months (including fractional months) between (A) the later of (i) the date of the execution and delivery of the Agreement and (ii) the initial Working Capital Advance during the Second Borrowing Period, and (B) the first to occur of (i) the date of the consummation of the sale of the Next Round Stock, (ii) the date of the consummation of a Merger.

     B = $1.20 (subject to adjustment, if any, under the Company’s Certificate of Incorporation).

     C = (A) The Next Round Price (subject to adjustment, if any, under the Company’s Certificate of Incorporation, as amended), or, (B) if any portion of the Warrant is exercised in connection with a Merger prior to the date of the consummation of the sale of the Next Round Stock, C shall equal the value of the per share consideration paid (or to be paid) in such Merger with respect to the Prior Preferred Stock (with the Merger consideration to be valued in accordance with the provisions set forth in the Company’s Articles (as defined in Section 10).

               (ii) “Common Stock” means fully paid and nonassessable shares of the Company’s common stock, $0.0001 par value.

               (iii) “Next Round Financing” means the Company’s next bona fide round of preferred stock equity financing resulting in net aggregate proceeds to the Company in an amount equal to or in excess of $5,000,000.00.

               (iv) “Next Round Stock” means the class or series of the Company’s preferred equity securities issued in connection with the Next Round Financing.

               (v) “Preferred Stock” means those shares of Next Round Stock or Prior Preferred Stock, as the case may be, issued or issuable upon exercise of this Warrant.

               (vi) “Prior Preferred Stock” means the Company’s Series B Preferred Stock, $0.0001 par value per share.

               (vii) “Purchase Price” means (A) in connection with the exercise of this Warrant with respect to Next Round Stock, (i) the lowest price per share paid by an investor for a share of Next Round Stock in connection with the Next Round Financing if the sale of the Next Round Stock is consummated before the initial Working Capital Advance during the Second Borrowing Period is made, and (ii) the Adjusted Purchase Price if the sale of the Next Round Stock is consummated after the initial Working Capital Advance during the Second Borrowing Period is made, or (B) in connection with the exercise of this Warrant with respect to the Prior Preferred Stock in connection with a Merger, the Adjusted Purchase Price.

               (viii) “Reorganization” has the meaning ascribed to such term in Section 11.

2.

Until such time as this Warrant is exercised in full or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided. The person or persons in whose name or names any certificate representing shares of Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed.

     3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash or by check, (ii) by the surrender by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Purchase Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, or (iii) by any combination of the foregoing.

     4. Net Issue Election. The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the principal office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula:

X₌ Y(A-B)

 A 

where:	X =	the number of shares of Preferred Stock to be issued to the Holder pursuant to this Section 4.
	Y =	the number of shares of Preferred Stock in respect of which the net issue election is made pursuant to this Section 4.
	A =	the Fair Market Value (defined below) of one share of Preferred Stock, as determined at the time the net issue election is made pursuant to this Section 4.
	B =	the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 4.

“Fair Market Value” of a share of Preferred Stock (or Common Stock if the Preferred Stock has been automatically converted into Common Stock $0.0001) as of the date that the net issue election is made (the “Determination Date”) shall mean:

     (i) If the net issue election is made in connection with and contingent upon the closing of the sale of the Company’s Common Stock to the public in a public offering pursuant to a Registration Statement under the 1933 Act (a “Public Offering”), and if the Company’s Registration Statement relating to such Public Offering (“Registration Statement”) has been declared effective by the Securities and Exchange Commission, then the initial “Price to Public” specified in the final prospectus with respect to such offering multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible.

     (ii) If the net issue election is not made in connection with and contingent upon a Public Offering, then as follows:

               (a) If traded on a securities exchange or the Nasdaq National Market, the fair market value of the Common Stock shall be deemed to be the average of the closing or last reported sale prices of the Common Stock on such exchange or market over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible;

3.

               (b) If otherwise traded in an over-the-counter market, the fair market value of the Common Stock shall be deemed to be the average of the closing ask prices of the Common Stock over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible; and

               (c) If there is no public market for the Common Stock, then fair market value shall be determined in good faith by the Company’s Board of Directors.

     5. Partial Exercise. This Warrant may be exercised in part, and the Holder shall be entitled to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised.

     6. Fractional Shares. In no event shall any fractional share of Preferred Stock be issued upon any exercise of this Warrant, but in lieu of any Purchase Price.

     7. Expiration Date; Automatic Exercise. This Warrant shall expire on the earlier to occur of (i) the close of business on May 18, 2011, and (ii) the third anniversary of the initial Public Offering of the Company’s securities, and shall be void thereafter (the “Expiration Date”). Notwithstanding the foregoing, this Warrant shall automatically be deemed to be exercised in full pursuant to the provisions of Section 4 hereof, without any further action on behalf of the Holder, immediately prior to the time this Warrant would otherwise expire pursuant to the preceding sentence. Notwithstanding the term of this Warrant fixed pursuant to this Section 7 and provided Holder has received advance notice of at least twenty (20) days and has not earlier converted, this Warrant shall automatically be converted pursuant to Section 4 hereof, without any action by Holder, upon the closing of a sale of all or substantially all of the Company’s assets, or the merger or consolidation of the Company with or into another corporation (other than a merger or consolidation for the principal purpose of changing the domicile of the Company) that results in the transfer of fifty percent (50%) or more of the outstanding voting power of the Company (a “Merger”), except to the extent assumed by the successor corporation (or parent thereof) in connection with such Merger. In the event that any outstanding warrants to purchase equity securities of the Company are assumed, this Warrant shall also be similarly assumed. Notwithstanding anything to the contrary in this Warrant, the holder may rescind any exercise of its purchase rights after any notice of termination of the proposed transaction if the exercise was otherwise precipitated by such proposed Merger. In the event of such recission, this Warrant will continue to be exercisable on the same terms and conditions. Notwithstanding the foregoing, in the event the Warrant is automatically deemed to be exercised pursuant to this Section 7, the Company shall not be required to surrender the certificate representing the Preferred Stock until such time as the Holder surrenders the Warrant.

     8. Reserved Shares; Valid Issuance. The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Prior Preferred Stock and Common Stock, and will at all times after the Next Round Financing, reserve and keep available such number of shares of Next Round Stock, free from all preemptive or similar rights therein, as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common Stock of all shares of Preferred Stock receivable upon such exercise. The Company further covenants that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.

     9. Stock Splits and Dividends. If after the date hereof the Company shall subdivide the Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, the number of shares of Preferred Stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of a combination.

4.

     For avoidance of doubt, “Preferred Stock” in this Section 9 means that series if Preferred Stock for which this Warrant is exercised.

     10. Adjustments for Diluting Issuances. The antidilution rights applicable to the Prior Preferred Stock of the Company are set forth in the Company’s Certificate of Incorporation, as amended from time to time (the “Articles”), a true and complete copy of which is attached hereto as Exhibit A. The Company shall promptly provide the Holder hereof with any restatement, amendment or modification to the Articles promptly after the same has been made.

     11. Mergers and Reclassifications. If after the date hereof the Company shall enter into any Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property receivable upon such Reorganization by a holder of the number of shares of Next Round Stock or, at Holder’s option if the Next Round Financing has not closed, the Prior Preferred Stock which might have been purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including without limitation, provisions for the adjustment of the Purchase Price and the number of shares issuable hereunder and the provisions relating to the net issue election) shall thereafter be applicable in relation to any shares of stock or other securities and property thereafter deliverable upon exercise hereof. For the purposes of this Section 11, the term “Reorganization” shall include without limitation any reclassification, capital reorganization or change of the Preferred Stock (other than as a result of a subdivision, combination or stock dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding Preferred Stock and other than any Merger that results in the automatic exercise of this Warrant pursuant to Section 7 hereof), or any sale or conveyance to another corporation or other business organization of all or substantially all of the assets of the Company.

     12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as herein provided, in accordance with the Company’s Certificate of Incorporation, the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial officer setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

     13. Notices of Record Date, Etc. In the event of:

          (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any shares of stock of any class or any other securities or property, or to receive any other right;

          (b) any reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets; or

          (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then in each such event the Company will provide or cause to be provided to the Holder a written notice thereof. Such notice shall be provided at least twenty (20) business days prior to the date specified in such notice on which any such action is to be taken.

     14. Representations, Warranties and Covenants. This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company:

5.

          (a) The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder. This Warrant has been duly authorized, issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

          (b) The shares of Prior Preferred Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable. The shares of Next Round Stock, when authorized, shall be duly authorized and reserved for issuance by Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.

          (c) The issuance, execution and delivery of this Warrant do not, and the issuance of the shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company’s Articles or by-laws, or any law, statute, regulation, rule, judgment or order applicable to the Company or (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound or (iii) require the consent or approval of or the filing of any notice or registration with any person or entity (other than any applicable consents, approvals or securities laws filings, which will be obtained or filed in a timely manner).

          (d) So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive under Section 2.1 of the Amended and Restated Investor Rights Agreement (the “Amended Rights Agreement”) applicable to the Preferred Stock if Holder were a holder of that number of shares issuable upon full exercise of this Warrant; provided the rights under this Section 14(d) shall terminate upon the initial Public Offering of the Company’s securities.

          (e) So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive under the Stock Purchase Agreement applicable to the Prior Preferred Stock if Holder were a holder of that number of shares issuable upon full exercise of this Warrant.

          (f) As of the date hereof, the authorized capital stock of the Company consists of (i) 55,000,000 shares of Common Stock, of which 8,891,051shares are issued and outstanding and (ii) 14, 444,551 shares of Series A Preferred Stock, of which 14,262,748 are issued and outstanding shares and (iii) 19,000,000 shares of Series B Preferred Stock, of which 18,333,333 are issued and outstanding. Attached hereto as Exhibit B is a capitalization table summarizing the capitalization of the Company. Once per calendar quarter, the Company will provide Holder with a current capitalization table indicating changes, if any, to the number of outstanding shares of common stock and preferred stock.

     15. Registration Rights. As soon as reasonably practicable, the Company shall cause the Holder to become party to the Company’s Amended Rights Agreement, such that Holder shall be entitled to all rights and privileges under Section 1 only of the Amended Rights Agreement as a “Holder” and “Investor” thereunder and the Preferred Stock issuable upon exercise of this Warrant (and Common Stock issued upon conversion of such Preferred Stock) shall be “Registrable Securities,” under the Amended Rights Agreement.

     16. Amendment. The terms of this Warrant may be amended, modified or waived only with the written consent of the Holder and the Company.

     17. Representations and Covenants of the Holder. This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder, which by its execution hereof the Holder hereby confirms:

6.

          (a) Authorization. The Holder represents that it has full power and authority to enter into this Warrant. This Warrant constitutes the Holder’s valid and legally binding obligation, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

          (b) Investment Purpose. This Warrant and the Preferred Stock issuable upon exercise of the Warrant is and will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

          (c) Accredited Investor. Holder is an “accredited investor” within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

          (d) Private Issue. The Holder understands (i) that the Preferred Stock issuable upon exercise of the Holder’s rights contained herein is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 17.

          (e) Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investment.

     18. Notices, Transfers, Etc.

          (a) All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the following addresses (or at such other addresses as shall be specified by notice given in accordance with this Section 18): If to the Company:

Aruba Wireless Networks, Inc.
180 Great Oaks Boulevard
San Jose, CA 95119
Attention: Duston Williams

If to Holder:

Lighthouse Capital Partners IV, L.P.
500 Drake’s Landing Road
Greenbrae, California 94904-3011
Attn: Contract Administration

          (b) Subject to compliance with applicable federal and state securities laws, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder. Upon surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new warrant to the assignee, in such denomination as shall be requested by the Holder hereof,

7.

and shall issue to such Holder a new warrant covering the number of shares in respect of which this Warrant shall not have been transferred.

          (c) In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant.

     19. No Impairment. The Company will not, by amendment of its Articles or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance of performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

     20. No Voting or Dividend Rights. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent or to receive notice as a stockholder of the Company or any other matters or any rights whatsoever as a stockholder (except as provided herein) of the Company. No dividends (except a stock dividend) or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder, until, and only to the extent that, this Warrant shall have been exercised.

     21. Governing Law. The provisions and terms of this Warrant shall be governed by and construed in accordance with the internal laws of the State of California.

     22. Successors and Assigns. This Warrant shall be binding upon the Company’s successors and assigns and shall inure to the benefit of the Holder’s successors, legal representatives and permitted assigns.

     23. Business Days. If the last or appointed day for the taking of any action required or the expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in California, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday.

     24. Conversion to Common Stock. If prior to the exercise in full of this Warrant, all of the Preferred Stock shall have been converted into Common Stock pursuant to the Company’s Articles in effect immediately prior to such conversion, then, effective upon such conversion, this Warrant shall be exercisable only for shares of Common Stock, and the Holder shall thereupon have the right to purchase, at a total price equal to that payable upon the exercise of this Warrant in full, the number of shares of Common Stock which would have been receivable by the Holder if the Holder had exercised this Warrant for shares of Preferred Stock immediately prior to such conversion of such shares of Preferred Stock into shares of Common Stock, and in such event appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including, without limitation, the provisions for the adjustment of the Purchase Price and of the number of shares purchasable upon exercise of this Warrant and the provisions relating to the net issue election) shall thereafter be applicable to any shares of Common Stock deliverable upon the exercise hereof.

     25. Market Stand-Off. The Holder hereby agrees that, to the extent requested by the company or an underwriter of securities of the Company and provided all officers and directors and greater than one percent (1%) stockholders of Company enter into similar agreements, it shall not sell or otherwise transfer or dispose of any Preferred Stock or Common Stock (other than to donees or partners of the Holder who agree to be similarly bound) for up to one hundred eight (180) days following the effective date of a registration statement of the Company filed under the Securities Act; provided, however, that such agreement shall be applicable only to the first such registration statement of the Company which covers securities to be sold on its behalf to the public in an underwritten offering but not to Common Stock sold pursuant to such registration statement. In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the Preferred Stock

8.

issuable upon exercise of this Warrant (and Common Stock issuable upon conversion of such Preferred Stock) and to impose stop transfer instructions with respect to such Preferred Stock and Common Stock.

     26. Value. The Company and the Holder agree that the value of this Warrant on the date of grant is $100.

     Dated: May 18, 2004

Aruba Wireless Networks, Inc.
By:	/s/ Duston Williams
Name:	Duston Williams
Title:	CFO

Agreed and Accepted:

Lighthouse Capital Partners IV, L.P.

By:	Lighthouse Management Partners IV, L.L.C.,
	its general partner
By:	/s/ Thomas Conneely
Name:	Thomas Conneely
Title:	Vice President

9.

Subscription

To:

Date:

The undersigned hereby represents and warrants that Representations and Warranties in Section 17 hereof are true and correct as of the date hereof. The undersigned hereby subscribes for                      shares of Preferred Stock covered by this Warrant. The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below:

Signature

Name for Registration

Mailing Address

10.

Net Issue Election Notice

To: Date:

The undersigned hereby elects under Section 4 to surrender the right to purchase shares of Preferred Stock pursuant to this Warrant.

     Net Exercise the attached Warrant with respect to                      shares of Preferred Stock.

The undersigned hereby represents and warrants that Representations and Warranties in Section 17 hereof are true and correct as of the date hereof. The certificate(s) for such shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below:

Signature

Name for Registration

Mailing Address

1.

Assignment

For value received hereby sells, assigns and transfers unto

[Please print or typewrite name and address of Assignee]

the within Warrant, and does hereby irrevocably constitute and appoint                                                                                 its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises.

Dated:

Signature

Name for Registration

Mailing Address

In the Presence of:

1.

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.

PREFERRED STOCK PURCHASE WARRANT

Warrant No. C-3	Number of Shares (As Determined Below)
	Preferred Stock

Aruba Wireless Networks, Inc.

Effective as of May 18, 2004

Void after May 18, 2011

     1. Issuance. This Preferred Stock Purchase Warrant (the “Warrant”) is issued to Lighthouse Capital Partners IV, L.P. (“Lighthouse”) by Aruba Wireless Networks, Inc., a Delaware corporation (hereinafter with its successors called the “Company”). All capitalized terms used herein, but not defined herein, shall have the meaning ascribed to such terms under that certain Loan and Security Agreement No. 3522 between Company and Lighthouse of even date herewith (the “Agreement”).

     2. Purchase Price; Number of Shares. The registered holder of this Warrant (the “Holder”), commencing on the date hereof, is entitled upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a price per share equal to the applicable Purchase Price, that number of fully paid and nonassessable shares of the Company’s Next Round Stock equal to (A) One Hundred Thirty Three Thousand Three Hundred Thirty Three Dollars and Thirty Three Cents ($133,333.33) plus (B) four percent (4%) of the aggregate principal amount of the Working Capital Advances drawn during the Third Borrowing Period, divided by (C) the applicable Purchase Price.

In the event of the consummation by the Company of a Merger (as defined in Section 7) prior to the consummation by the Company of the Next Round Financing (as defined below), the Holder shall have the right, in substitution of the rights granted to Holder above in this Section 2, upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a purchase price per share equal to the applicable Purchase Price, that number of shares of the Prior Preferred stock equal to (A) One Hundred Thirty Three Thousand Three Hundred Thirty Three Dollars and Thirty Three Cents ($133,333.33) plus (B) four percent (4%) of the aggregate principal amount of the Working Capital Advances drawn during the Third Borrowing Period, divided by (C) the applicable Purchase Price.

In addition to, and without limiting the foregoing, in the event the Company does not consummate a Merger or the Next Round Financing on or before May 18, 2005, then the Holder shall have the right on and after that date, upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a price per share equal to the Fair Market Value (on a per share basis as determined in Section 4 hereof) of the Prior Preferred stock on the date of exercise of this Warrant, that number of shares of the Prior Preferred Stock equal to (A) One Hundred Thirty Three Thousand Three Hundred Thirty Three Dollars and Thirty Three Cents ($133,333.33) plus (B) four percent (4%) of the aggregate principal amount of the Working Capital Advances drawn during the Third Borrowing Period, divided by the Fair Market Value (on a per share basis as determined in Section 4 hereof) of the Prior Preferred Stock on the date of exercise of this Warrant.

1.

In addition to other terms which may be defined herein, the following terms, as used in this Warrant, shall have the following meanings:

                    (i) “Adjusted Purchase Price” means the exercise price calculated as follows:

X(B) + Y(C)

X + Y

     X = The number of months (including fractional months) between (A) date of the closing of the sale of the Prior Preferred Stock and (B) the first to occur of (i) the later of the last Working Capital Advance during the Second Borrowing Period or the first Working Capital Advance during the Third Borrowing Period or (ii) the date of the consummation of a Merger.

     Y = The number of months (including fractional months) between (A) the later of (i) the date of the execution and delivery of the Agreement and (ii) the initial Working Capital Advance during the Third Borrowing Period, and (B) the first to occur of (i) the date of the consummation of the sale of the Next Round Stock, (ii) the date of the consummation of a Merger.

     B = $1.20 (subject to adjustment, if any, under the Company’s Certificate of Incorporation).

     C = (A) The Next Round Price (subject to adjustment, if any, under the Company’s Certificate of Incorporation as amended), or, (B) if any portion of the Warrant is exercised in connection with a Merger prior to the date of the consummation of the sale of the Next Round of Stock, C shall equal the value of the per share consideration to be valued in accordance with the provisions set forth in the Company’s Articles (as defined in Section 10).

          (ii) “Common Stock” means fully paid and nonassessable shares of the Company’s common stock, $0.0001 par value.

          (iii) “Next Round Financing” means the Company’s next bona fide round of preferred stock equity financing resulting in net aggregate proceeds to the Company in an amount equal to or in excess of $5,000,000.00

          (iv) “Next Round Stock” means the class or series of the Company’s preferred equity securities issued in connection with the Next Round Financing.

          (v) “Preferred Stock” means those shares of Next Round Stock or Prior Preferred Stock, as the case may be, issued or issuable upon exercise of this Warrant.

          (vi) “Prior Preferred Stock” means the Company’s Series B Preferred Stock, $0.0001 par value per share.

          (vii) “Purchase Price” means (A) in connection with the exercise of this Warrant with respect to Next Round Stock, (i) the lowest price per share paid by an investor for a share of Next Round Stock in connection with the Next Round Financing if the sale of the Next Round Stock is consummated before the initial Working Capital Advance during the Third Borrowing Period is made, and (ii) the Adjusted Purchase Price if the sale of the Next Round Stock is consummated after the initial Working Capital Advance during the Third Borrowing Period is made, or (B) in connection with the exercise of this Warrant with respect to the Prior Preferred Stock in connection with a Merger, the Adjusted Purchase Price.

          (viii) “Reorganization” has the meaning ascribed to such term in Section 11.

2.

Until such time as this Warrant is exercised in full or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided. The person or persons in whose name or names any certificate representing shares of Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed.

     3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash or by check, (ii) by the surrender by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Purchase Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, or (iii) by any combination of the foregoing.

     4. Net Issue Election. The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the principal office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula:

X=	Y(A-B)
	A

where:	X =	the number of shares of Preferred Stock to be issued to the Holder pursuant to this Section 4.
	Y =	the number of shares of Preferred Stock in respect of which the net issue election is made pursuant to this Section 4.
	A =	the Fair Market Value (defined below) of one share of Preferred Stock, as determined at the time the net issue election is made pursuant to this Section 4.
	B =	the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 4.

“Fair Market Value” of a share of Preferred Stock (or Common Stock if the Preferred Stock has been automatically converted into Common Stock) $0.0001 as of the date that the net issue election is made (the “Determination Date”) shall mean:

     (i) If the net issue election is made in connection with and contingent upon the closing of the sale of the Company’s Common Stock to the public in a public offering pursuant to a Registration Statement under the 1933 Act (a “Public Offering”), and if the Company’s Registration Statement relating to such Public Offering (“Registration Statement”) has been declared effective by the Securities and Exchange Commission, then the initial “Price to Public” specified in the final prospectus with respect to such offering multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible.

     (ii) If the net issue election is not made in connection with and contingent upon a Public Offering, then as follows:

                    (a) If traded on a securities exchange or the Nasdaq National Market, the fair market value of the Common Stock shall be deemed to be the average of the closing or last reported sale prices of the Common Stock on such exchange or market over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible;

3.

               (b) If otherwise traded in an over-the-counter market, the fair market value of the Common Stock shall be deemed to be the average of the closing ask prices of the Common Stock over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible; and

               (c) If there is no public market for the Common Stock, then fair market value shall be determined in good faith by the Company’s Board of Directors.

     5. Partial Exercise. This Warrant may be exercised in part, and the Holder shall be entitled to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised.

     6. Fractional Shares. In no event shall any fractional share of Preferred Stock be issued upon any exercise of this Warrant, but in lieu of such fractional shares the Company shall make a cash payment therefor on the basis of the Purchase Price.

     7. Expiration Date; Automatic Exercise. This Warrant shall expire on the earlier to occur of (i) the close of business on May 18, 2011, and (ii) the third anniversary of the initial Public Offering of the Company’s securities, and shall be void thereafter (the “Expiration Date”). Notwithstanding the foregoing, this Warrant shall automatically be deemed to be exercised in full pursuant to the provisions of Section 4 hereof, without any further action on behalf of the Holder, immediately prior to the time this Warrant would otherwise expire pursuant to the preceding sentence. Notwithstanding the term of this Warrant fixed pursuant to this Section 7 and provided Holder has received advance notice of at least twenty (20) days and has not earlier converted, this Warrant shall automatically be converted pursuant to Section 4 hereof, without any action by Holder, upon the closing of a sale of all or substantially all of the Company’s assets, or the merger or consolidation of the Company with or into another corporation (other than a merger or consolidation for the principal purpose of changing the domicile of the Company) that results in the transfer of fifty percent (50%) or more of the outstanding voting power of the Company (a “Merger”), except to the extent assumed by the successor corporation (or parent thereof) in connection with such Merger. In the event that any outstanding warrants to purchase equity securities of the Company are assumed, this Warrant shall also be similarly assumed. Notwithstanding anything to the contrary in this Warrant, the holder may rescind any exercise of its purchase rights after any notice of termination of the proposed transaction if the exercise was otherwise precipitated by such proposed Merger. In the event of such recission, this Warrant will continue to be exercisable on the same terms and conditions. Notwithstanding the foregoing, in the event the Warrant is automatically deemed to be exercised pursuant to this Section 7, the Company shall not be required to surrender the certificate representing the Preferred Stock until such time as the Holder surrenders the Warrant.

     8. Reserved Shares; Valid Issuance. The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Prior Preferred Stock and Common Stock, and will at all times after the Next Round Financing, reserve and keep available such number of shares of Next Round Stock, free from all preemptive or similar rights therein, as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common Stock of all shares of Preferred Stock receivable upon such exercise. The Company further covenants that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.

     9. Stock Splits and Dividends. If after the date hereof the Company shall subdivide the Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, the number of shares of Preferred Stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of a combination.

4.

     For avoidance of doubt, “Preferred Stock” in this Section 9 means that series of Preferred Stock for which this Warrant is exercised.

     10. Adjustments for Diluting Issuances. The antidilution rights applicable to the Prior Preferred Stock of the Company are set forth in the Company’s Certificate of Incorporation, as amended from time to time (the “Articles”), a true and complete copy of which is attached hereto as Exhibit A. The Company shall promptly provide the Holder hereof with any restatement, amendment or modification to the Articles promptly after the same has been made.

     11. Mergers and Reclassifications. If after the date hereof the Company shall enter into any Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property receivable upon such Reorganization by a holder of the number of shares of Next Round Stock or, at Holder’s option if the Next Round Financing has not closed, the Prior Preferred Stock which might have been purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including without limitation, provisions for the adjustment of the Purchase Price and the number of shares issuable hereunder and the provisions relating to the net issue election) shall thereafter be applicable in relation to any shares of stock or other securities and property thereafter deliverable upon exercise hereof. For the purposes of this Section 11, the term “Reorganization” shall include without limitation any reclassification, capital reorganization or change of the Preferred Stock (other than as a result of a subdivision, combination or stock dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding Preferred Stock and other than any Merger that results in the automatic exercise of this Warrant pursuant to Section 7 hereof), or any sale or conveyance to another corporation or other business organization of all or substantially all of the assets of the Company.

     12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as herein provided, in accordance with the Company’s Certificate of Incorporation, the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial officer setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

     13. Notices of Record Date, Etc. In the event of:

               (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any shares of stock of any class or any other securities or property, or to receive any other right;

               (b) any reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets; or

               (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then in each such event the Company will provide or cause to be provided to the Holder a written notice thereof. Such notice shall be provided at least twenty (20) business days prior to the date specified in such notice on which any such action is to be taken.

     14. Representations, Warranties and Covenants. This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company:

5.

               (a) The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder. This Warrant has been duly authorized, issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

               (b) The shares of Prior Preferred Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable. The shares of Next Round Stock, when authorized, shall be duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.

               (c) The issuance, execution and delivery of this Warrant do not, and the issuance of the shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company’s Articles or by-laws, or any law, statute, regulation, rule, judgment or order applicable to the Company or (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound or (iii) require the consent or approval of or the filing of any notice or registration with any person or entity (other than any applicable consents, approvals or securities laws filings, which will be obtained or filed in a timely manner).

               (d) So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive under Section 2.1 of the Amended and Restated Investor Rights Agreement (the “Amended Rights Agreement”) applicable to the Preferred Stock if Holder were a holder of that number of shares issuable upon full exercise of this Warrant; provided the rights under this Section 14(d) shall terminate upon the initial Public Offering of the Company’s securities.

               (e) So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive under the Stock Purchase Agreement applicable to the Prior Preferred Stock if Holder were a holder of that number of shares issuable upon full exercise of this Warrant.

               (f) As of the date hereof, the authorized capital stock of the Company consists of (i) 55,000,000 shares of Common Stock, of which 8,891,051shares are issued and outstanding and (ii) 14, 444,551 shares of Series A Preferred Stock, of which 14,262,748 are issued and outstanding shares and (iii) 19,000,000 shares of Series B Preferred Stock, of which 18,333,333 are issued and outstanding. Attached hereto as Exhibit B is a capitalization table summarizing the capitalization of the Company. Once per calendar quarter, the Company will provide Holder with a current capitalization table indicating changes, if any, to the number of outstanding shares of common stock and preferred stock.

     15. Registration Rights. As soon as reasonably practicable, the Company shall cause the Holder to become party to the Company’s Amended Rights Agreement, such that Holder shall be entitled to all rights and privileges under Section 1 only of the Amended Rights Agreement as a “Holder” and “Investor” thereunder and the Preferred Stock issuable upon exercise of this Warrant (and Common Stock issued upon conversion of such Preferred Stock) shall be “Registrable Securities,” under the Amended Rights Agreement.

     16. Amendment. The terms of this Warrant may be amended, modified or waived only with the written consent of the Holder and the Company.

     17. Representations and Covenants of the Holder. This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder, which by its execution hereof the Holder hereby confirms:

6.

          (a) Authorization. The Holder represents that it has full power and authority to enter into this Warrant. This Warrant constitutes the Holder’s valid and legally binding obligation, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

          (b) Investment Purpose. This Warrant and the Preferred Stock issuable upon exercise of the Warrant is and will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

          (c) Accredited Investor. Holder is an “accredited investor” within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

          (d) Private Issue. The Holder understands (i) that the Preferred Stock issuable upon exercise of the Holder’s rights contained herein is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 17.

          (e) Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investment.

     18. Notices, Transfers, Etc.

          (a) All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the following addresses (or at such other addresses as shall be specified by notice given in accordance with this Section 18): If to the Company:

Aruba Wireless Networks, Inc.
180 Great Oaks Boulevard
San Jose, CA 95119
Attention: Duston Williams

If to Holder:

Lighthouse Capital Partners IV, L.P.
500 Drake’s Landing Road
Greenbrae, CA 94904-3011
Attn: Contract Administration

          (b) Subject to compliance with applicable federal and state securities laws, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder. Upon surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new warrant to the assignee, in such denomination as shall be requested by the Holder hereof,

7.

and shall issue to such Holder a new warrant covering the number of shares in respect of which this Warrant shall not have been transferred.

          (c) In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant.

     19. No Impairment. The Company will not, by amendment of its Articles or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance of performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

     20. No Voting or Dividend Rights. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent or to receive notice as a stockholder of the Company or any other matters or any rights whatsoever as a stockholder (except as provided herein) of the Company. No dividends (except a stock dividend) or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder, until, and only to the extent that, this Warrant shall have been exercised.

     21. Governing Law. The provisions and terms of this Warrant shall be governed by and construed in accordance with the internal laws of the State of California.

     22. Successors and Assigns. This Warrant shall be binding upon the Company’s successors and assigns and shall inure to the benefit of the Holder’s successors, legal representatives and permitted assigns.

     23. Business Days. If the last or appointed day for the taking of any action required or the expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in California, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday.

     24. Conversion to Common Stock. If prior to the exercise in full of this Warrant, all of the Preferred Stock shall have been converted into Common Stock pursuant to the Company’s Articles in effect immediately prior to such conversion, then, effective upon such conversion, this Warrant shall be exercisable only for shares of Common Stock, and the Holder shall thereupon have the right to purchase, at a total price equal to that payable upon the exercise of this Warrant in full, the number of shares of Common Stock which would have been receivable by the Holder if the Holder had exercised this Warrant for shares of Preferred Stock immediately prior to such conversion of such shares of Preferred Stock into shares of Common Stock, and in such event appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including, without limitation, the provisions for the adjustment of the Purchase Price and of the number of shares purchasable upon exercise of this Warrant and the provisions relating to the net issue election) shall thereafter be applicable to any shares of Common Stock deliverable upon the exercise hereof.

     25. Market Stand-Off. The Holder hereby agrees that, to the extent requested by the company or an underwriter of securities of the Company and provided all officers and directors and greater than one percent (1%) stockholders of Company enter into similar agreements, it shall not sell or otherwise transfer or dispose of any Preferred Stock or Common Stock (other than to donees or partners of the Holder who agree to be similarly bound) for up to one hundred eight (180) days following the effective date of a registration statement of the Company filed under the Securities Act; provided, however, that such agreement shall be applicable only to the first such registration statement of the Company which covers securities to be sold on its behalf to the public in an underwritten offering but not to Common Stock sold pursuant to such registration statement. In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the

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Preferred Stock issuable upon exercise of this Warrant (and Common Stock issuable upon conversion of such Preferred Stock) and to impose stop transfer instructions with respect to such Preferred Stock and Common Stock.

     26. Value. The Company and the Holder agree that the value of this Warrant on the date of grant is $100.

Dated: May 18, 2004	Aruba Wireless Networks, Inc.
	By:	/s/ Duston Williams
	Name:	Duston Williams
	Title:	CFO

Agreed and Accepted:

Lighthouse Capital Partners IV, L.P.

By:	Lighthouse Management Partners IV, L.L.C., its general partner
By:	/s/ Thomas Conneely
Name:	Thomas Conneely
Title:	Vice President

9.

Subscription

To:

Date:

The undersigned hereby represents and warrants that Representations and Warranties in Section 17 hereof are true and correct as of the date hereof. The undersigned hereby subscribes for                      shares of Preferred Stock covered by this Warrant. The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below:

Signature

Name for Registration

Mailing Address

1.

Net Issue Election Notice

To:                                                              Date:                                        

The undersigned hereby elects under Section 4 to surrender the right to purchase shares of Preferred Stock pursuant to this Warrant.

Net Exercise the attached Warrant with respect to                      shares of Preferred Stock.

The undersigned hereby represents and warrants that Representations and Warranties in Section 17 hereof are true and correct as of the date hereof. The certificate(s) for such shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below:

Signature

Name for Registration

Mailing Address

1.

Assignment

For value received hereby sells, assigns and transfers unto

[Please print or typewrite name and address of Assignee]

the within Warrant, and does hereby irrevocably constitute and appoint                                                              its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises.

Dated:

Signature

Name for Registration

Mailing Address

In the Presence of:

1.

EX-4.4

Exhibit 4.4

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS (“BLUE SKY LAWS”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED THEREUNDER OR EXEMPT FROM REGISTRATION.

WARRANT TO PURCHASE SHARES OF PREFERRED STOCK OF
Aruba, Inc. a Delaware corporation
(the “Company”)

located at:
180 Great Oaks Blvd., Suite B
San Jose, CA 95119

Issuance Date: July 31, 2003

     1. Right to Acquire Securities.

     1.1 Price, Quantity and Term.

          (a) Grant. Subject to the terms and conditions hereinafter set forth, this Warrant certifies that for value received Costella Kirsch Venture Partners I, L.P. and its registered assigns (collectively, “Holder”), are entitled at any time, and from time to time, before Expiration (as defined below), to purchase from Company up to that number of shares of Preferred Stock of the Company equal to $25,000 (the “Exercise Quantity”) divided by the Exercise Price (defined below) as constituted on the Warrant Issue Date (the “Preferred Stock”). The series of Preferred Stock for which this Warrant is exercisable shall be (i) Series A Preferred Stock of the Company (“Series A Preferred Stock”) in the event that the Exercise Price is based on the Series A Preferred Stock price or (ii) the next series of Preferred Stock of the Company issued and sold by the Company in an equity financing following the Issuance Date (the “Next Series Preferred Stock”) in the event that the Exercise Price is based on the Next Series Preferred Stock price. As used herein, “Warrant Shares” refers to the shares of Preferred Stock purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, and the shares of any class of securities resulting from any reclassifications of the Preferred Stock, including any conversion thereof to Common Stock, or from any applicable event described in Section 3. References to “Common Stock” include any present or future class of Company’s capital stock whose holders are not limited to a fixed percentage or sum with respect to dividends or liquidation proceeds, unless the context otherwise requires.

          (b) Exercise Price. The purchase price per share for the Preferred Stock, as adjusted from time to time pursuant to Section 3 hereof (the “Exercise Price”), shall be either (i) $0.667 (as adjusted from time to time pursuant to Section 3 hereof) (which is equal to the per share price at which the Company has issued Series A Preferred Stock) or (ii) the per share price at which the Company issues Next Series Preferred Stock, whichever of (i) or (ii) would result in the issuance of a greater number of shares of Common Stock upon exercise of this Warrant (as determined on an as-converted basis at the time of exercise of this Warrant). This Warrant shall be exercisable for Series A Preferred Stock, at a purchase price per share equal to $0.667 (as adjusted from time to time pursuant to Section 3 hereof), upon any exercise of this Warrant prior to the issuance by the Company of Next Series Preferred Stock.

          (c) Expiration. This Warrant shall expire (“Expiration”) at 5:00 p.m., Los Angeles time, on the seventh anniversary of the Issuance Date; provided, however, that in the event of the closing of the acquisition of the Company (“Acquisition”) by another company that is publicly traded on a securities exchange or through the Nasdaq National Market by means of merger, consolidation or other transaction or series of related transactions, resulting in the transfer of 50% or more of the outstanding voting power of the Company and pursuant to which the per share gross proceeds to be distributed to the Company’s stockholders equals or exceeds three (3) times the Exercise Price (such amount calculated based on the number of shares of Common Stock, assuming the exercise and conversion of all then-outstanding

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exercisable and convertible securities outstanding immediately prior to the closing of the Acquisition), this Warrant shall, on the date of such event, be deemed to be exercised in full in the manner set forth in Section 1.3(b). In the event of a proposed Acquisition, the Company shall notify the holder of the Warrant at least twenty (20) days prior to the consummation of such Acquisition. Any exercise of this Warrant made in conjunction with a proposed Acquisition may be made conditional on the actual closing of such Acquisition. Notwithstanding the foregoing, this Warrant shall automatically be converted into Warrant Shares prior to Expiration pursuant to Section 1.3(b) hereof, without any action by Holder, immediately before Expiration.

     1.2 Right to Exercise.

          (a) Notice. Holder may exercise all or a portion of this Warrant at any time, and from time to time, before Expiration, by delivering a written notice of exercise (a form of which is attached hereto as Exhibit A) to Company, specifying (i) the number of Warrant Shares to be purchased, (ii) the proposed registered holders of Warrant Shares and any Related Warrants (as defined in Section 7), and (iii) a date of exercise determined by Holder (the “Exercise Date”) not more than twenty business days after such notice.

          (b) Exercise. On the Exercise Date, (i) Holder will present to Company this Warrant and a check for the aggregate Exercise Price of the Warrant Shares purchased and (ii) as soon as practicable after the Exercise Date, Company will give Holder (A) certificate(s) for the Warrant Shares issuable upon such exercise; (B) any cash and non-cash consideration, including securities, to which Holder is entitled with respect to the Warrant Shares (collectively, “Other Consideration”) and, if applicable, (C) a Related Warrant (as defined in Section 7) representing the unexercised portion hereof.

     1.3 Right to Convert.

          (a) Notice. Holder may require Company to convert all or a portion of this Warrant into Warrant Shares without payment by Holder of any money or other consideration (the “Conversion Right”) at any time, and from time to time, before Expiration, by delivering a written notice of exercise to Company (a form of which is attached hereto as Exhibit A), specifying (i) the proportion of this Warrant to be converted into Warrant Shares (the “Converted Portion”), (ii) the proposed registered holders of Warrant Shares and any Related Warrants and (iii) a date of conversion determined by Holder (the “Conversion Date”) not more than twenty business days thereafter.

          (b) Conversion. On the Conversion Date, Holder will surrender this Warrant and Company will give Holder (i) certificate(s) for that number of Warrant Shares as determined using the following formula:

X =	Y (A - B)
	A

Where	X = The number of shares of Warrant Shares to be issued to the Holder.
	Y = The number of Converted Portion Warrant Shares this Warrant is exercisable for (at the date of such calculation)
	A = The Fair Market Value (as defined below) of one Warrant Share (at the date of such calculation).
	B = The Exercise Price (as adjusted to the date of such calculation);

(ii) any Other Consideration and, if applicable, (iii) a Related Warrant representing the unconverted portion hereof.

          1.4 Fair Market Value. Fair Market Value of a share of Preferred Stock is the Fair Market Value of a share of Common Stock multiplied by the number of shares of Common Stock into which

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Preferred Stock may then be converted. “Fair Market Value” of a share of Common Stock as of a particular date means: (a) if traded on an exchange or quoted on the NASDAQ National Market System, then the prior trading day’s closing price, (b) if conversion or exercise is on a date from the filing of, through to the effective date of, the registration statement for an underwritten public offering registered under the Securities Act, the initial public offering price (before deducting commissions, discounts or expenses) per share sold in such offering, (c) if listed by the National Daily Quotation Service “Pink Sheets,” then the average of the most-recently reported bid and ask prices and (d) otherwise, the price, not less than book value, determined in good faith and in such reasonable manner as prescribed by a majority of Company’s Directors who are not Company officers or employees (the “Outside Directors”); provided, however, that Company will notify Holder of such price within ten business days following receipt of Holder’s notice of exercise.

     1.5 Authorization. Company will at all times reserve and keep available out of its authorized but unissued capital stock, and will take all such action and obtain all such permission necessary to enable Company lawfully to issue, the full number of Warrant Shares deliverable upon exercise or conversion hereof or deliverable upon any permitted conversion into Common Stock of the Warrant Shares, as such number may be adjusted from time to time. Company will not create a Warrant Share with a par value higher than the applicable Exercise Price.

     2. Registration Rights. The Company agrees that upon the earlier of (x) when the Company next amends its Investors’ Rights Agreement, dated April 19, 2002, by and among the Company and certain of its stockholders (the “Investors’ Rights Agreement”), or (y) when the Company consummates its initial public offering, the Holder shall become a party to the Investors’ Rights Agreement and the Warrant Shares or, if the Shares are convertible into common stock of the Company, such common stock, shall be deemed to be “Registrable Securities” and Holder shall be deemed to be a “Holder,” as such terms are defined in the Investors’ Rights Agreement; provided, however, that Holder shall not be entitled to participate in any request for registration submitted to the Company as an Initiating Holder, as such term is defined in Section 1.2(a) of the Investors’ Rights Agreement. In addition, the rights contained in Section 2 of the Investors’ Rights Agreement shall not apply to Holder. The provisions set forth in the Investors’ Right Agreement or similar agreement relating to the above in effect as of the Issue Date may not be amended, modified or waived without the prior written consent of Holder unless such amendment, modification or waiver affects all other shares of the same series and class as the Shares granted to the Holder. Notwithstanding anything to the contrary in the Rights Agreement, all registration rights of Holder shall be fully and completely transferable with this Warrant and the Warrant Shares; provided that such transfer takes place in compliance with Section 7.3 herein. Company shall grant no person or entity other than Holder any rights of first refusal with respect to the purchase, sale or other disposition of this Warrant or the Warrant Shares.

     3. Adjustments. The Exercise Price, the Exercise Quantity and the number of shares of Common Stock issuable upon conversion of the Preferred Stock will be adjusted from time to time as provided herein and by law.

     3.1 Capitalization.

          (a) Subdivision or Combination. If Company subdivides or combines, by reclassification, stock split or dividend, or otherwise, the number of Warrant Shares outstanding into a greater or lesser number, simultaneously in each such case the Exercise Price and the Exercise Quantity shall both be proportionately adjusted.

          (b) Capitalization. If Company recapitalizes, reorganizes or reclassifies its capital stock, this Warrant shall thereafter be exercisable for or convertible into those shares of stock, other securities or property which a Holder of the Exercise Quantity of Warrant Shares would have received upon exercise or conversion of this Warrant, as adjusted according to the terms hereof.

          (c) Distributions. If Company declares, pays or distributes any cash or property dividends on, or rights to acquire, capital stock, or evidences of its indebtedness or assets to holders of shares of its capital stock, Holder shall, without additional cost, be entitled to receive upon conversion or exercise, in

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addition to the Warrant Shares, the cash, property, evidences of indebtedness and rights which Holder could have received had Holder been a record holder of Warrant Shares on the record dates for any such event.

          (d) Merger, Consolidation, or Liquidation.

               (i) If (A) Company (x) consolidates with or merges into another entity and is not the survivor, (y) receives notice that a purchase, tender or exchange offer has been made to the holders of more than 50% of the Company’s outstanding Common Stock (on an as-converted basis), or (z) sells or conveys substantially all of its property, and (B) in connection therewith, shares of stock, other securities, or property, or cash (collectively, “Merger Consideration”) are issuable or deliverable in exchange for Company’s capital stock, then (A) Company will give Holder 20 days prior written notice of the consummation of such transaction and (B) Holder may thereafter acquire immediately prior to the closing of such transaction in lieu of the Exercise Quantity of Warrant Shares the Merger Consideration which Holder could have received had Holder then exercised this Warrant in its entirety pursuant to Section 1.3 (b) hereof.

               (ii) Unless (x) Holder has earlier exercised or converted this Warrant, or (y) this Warrant has terminated pursuant to Section 1.1(c), or (z) Holder has opted to exchange this Warrant for Merger Consideration pursuant to Section 3.1(d)(i) above, Company will, prior to the consummation of any such transaction described in Section 3.1(d)(i) above, cause any successor entity upon consolidation, merger, conveyance of substantially all of Company’s assets, or voting securities exchange to assume by written instrument, in form and substance satisfactory to Holder, Company’s obligations hereunder.

     3.2 Notice of Adjustment. Whenever events require adjustment to the Exercise Price or Exercise Quantity, Company will, at its expense, promptly prepare and mail to Holder a certificate of its chief financial officer calculating the adjusted Exercise Price and Exercise Quantity and fully setting forth in reasonable detail the relevant facts.

     4. Notice of Certain Events. In the event (a “Notice Event”): (a) Company authorizes the distribution to all holders of any class of its capital stock evidences of its indebtedness or assets where all other holders of the Company’s capital stock have the right to receive the notice described below; (b) of any capital reorganization or reclassification of the Warrant Shares or Company’s Common Stock, other than a subdivision or combination of the outstanding Common Stock and other than a change in par value of the Common Stock where all other holders of the Company’s capital stock have the right to receive the notice described below; (c) of any consolidation or merger to which Company is a party and for which approval of any of Company’s stockholders is required, other than a consolidation or merger in which Company is the continuing corporation and that does not result in any reclassification or change of the Warrant Shares or Common Stock outstanding; (d) of the conveyance or transfer of substantially all of Company’s properties and assets; or (e) of Company’s voluntary or involuntary dissolution, liquidation or winding-up; then Company will send by certified mail to Holder, at least 20 days (or 10 days in any case specified in clause (a) above) prior to the applicable record or effective date hereinafter specified, a notice stating the dates as of which (x) the holders of capital stock of record to be entitled to receive any such rights, warrants or distributions are to be determined, (y) such Notice Event is expected to become effective, and (z) it is expected that holders of Warrant Shares or Common Stock of record will be entitled to exchange or sell their Warrant Shares or Common Stock for securities or other property, if any, deliverable upon such Notice Event.

     5. Financial Reporting. Company will deliver to Holder: (a) audited financial statements for each fiscal year within 180 days after such year ends; and (b) unaudited financial statements for each fiscal quarter within 45 days after such quarter ends.

     6. Record Holder. This Warrant will be deemed to have been exercised or converted, as appropriate, and Holder will be the record holder of the Warrant Shares issued thereupon, immediately before the close of business on the Exercise Date or Conversion Date, as applicable. Company may deem and treat the registered holder as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. Other than as set forth herein, this Warrant does not give Holder rights as a Company stockholder.

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     7. Securities Law Matters; Transfers.

     7.1 Securities Act Representations and Warranties of Holder. Holder is experienced in evaluating start-up companies such as the Company, and has such knowledge and experience in financial and business matters that such Holder is capable of evaluating the merits and risks of such Holder’s investment in the Company, and has the ability to bear the economic risks of the investment. Holder is acquiring the Warrant, and upon exercise or conversion hereof would acquire the Warrant Shares, and upon conversion, if any, of the Warrant Shares would acquire the shares of the Company’s Common Stock issuable upon such conversion (the Warrant, Warrant Shares, and such shares of Common Stock issuable upon conversion of the Warrant Shares collectively the “Securities”), for investment for such Holder’s own account and not with the view to, or for resale in connection with, any distribution thereof. If not an individual, the Holder also represents that the Holder has not been formed for the specific purpose of acquiring the Securities. The Holder has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. The Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to the Holder or to which the Holder has access. Holder understands that the Securities have not been registered under the Securities Act by reason of a specific exemption therefrom which depends upon, among other things, the bona fide nature of the investment intent as expressed herein. Holder further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to any third person with respect to any of the Securities. Holder understands and acknowledges that the issuance of Securities has not been and will not be registered under the Securities Act, in reliance upon an exemption from the registration requirements of the Securities Act. Such Holder acknowledges that the Securities must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. Holder is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions. Holder covenants that, in the absence of an effective registration statement covering the Securities in question, such Holder will sell, transfer, or otherwise dispose of the Securities only in a manner consistent with such Holder’s representations and covenants set forth in this paragraph. Holder understands that no public market now exists for any of the Securities issued by the Company, and that there can be no guarantee that a public market will ever exist for any of the Securities. Holder is an “accredited Holder” as defined in Rule 501 of Regulation D promulgated under the Securities Act. Holder’s address indicated on the signature page hereto sets forth, in the case of individuals, the state in which such Holder resides or, in the case of entities, the state of Holder’s principal place of business.

     7.2 Market Stand-Off Provision. Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company’s initial public offering and ending on the date specified by the Company and the underwriter (such period not to exceed one hundred eighty (180) days) (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing provisions of this Section 7.2 shall apply only to the Company’s initial public offering of equity securities, and shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement. The underwriters in connection with the Company’s initial public offering are intended third party beneficiaries of this Section 7.2 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Securities until the end of such period.

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     7.3 Transfer and Exchange. This Warrant and the Warrant Shares issuable upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Warrant Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to any affiliate of Holder or if there is no material question as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company is provided with a copy of Holder’s notice of proposed sale. Provided Holder complies with this Section 7.3, Holder may transfer all or a portion hereof on Company’s books maintained for such purpose. Company will issue and deliver Related Warrants to Holder with respect to the untransferred portion, and to transferee, who thereupon will also become a Holder, with respect to the transferred portion. Holder may exchange or subdivide this Warrant into Related Warrants for the same aggregate number of Warrant Shares, with each new Related Warrant to represent the right to purchase that portion of the Exercise Quantity of Warrant Shares designated by Holder. “Related Warrant” means a new Warrant identical hereto (except for Exercise Quantity and as provided in Section 2(b)) issued to Holder or its transferee in accordance with the terms hereof. Subject to the provisions of Section 7.3, and upon providing Company with written notice, Holder may transfer all or part of this Warrant or the Warrant Shares issuable upon exercise of this Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) to any affiliate of Holder, or to any other transferee by providing to She Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable). The Company may refuse to transfer this Warrant to any person who directly competes with the Company unless the Company’s stock is publicly traded.

     8. Miscellaneous.

     8.1 Warrant Value. The value of this Warrant on the date hereof is $100.

     8.2 Warrant Register. The Company will maintain a register containing the names and addresses of the Holders of this Warrant.

     8.3 Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     8.4 Fractional Shares. If a fractional Warrant Share would be issuable upon exercise or conversion, Company will instead pay in cash a sum equal to the product of such fraction and a full Warrant Share’s Fair Market Value, provided that the product is at least $5.00.

     8.5 Entire Agreement. This Warrant constitutes the entire agreement between the parties with respect to its subject matter and may only be modified in writing. Each provision hereof is severable from every other provision when determining legal enforceability. The terms and conditions hereof will inure to the benefit of and be binding upon the parties’ respective successors and assigns, except as expressly provided otherwise herein. This Warrant has been entered into in Menlo Park, California and is governed by California law.

     8.6 Notices. All notices will be in writing and delivered personally, by telefacsimile confirmed by letter, or by reliable nationally-recognized overnight courier, postage paid at Company’s expense, addressed, until further notice, (a) if to Holder, to Holder’s address and fax of record, attention of Holder, (b) if to Company, to Company’s Office, Attention: Corporate Secretary, or (c) if to a holder of a Related Warrant or Warrant Shares, to the most recent address of which said holder has notified Company, and are effective upon receipt.

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     8.7 Waivers and Amendments. Holder’s remedies hereunder, by law or otherwise, are cumulative and not exclusive. Holder’s delay or omission to exercise any right or remedy does not impair or waive the same. A waiver of one breach or default does not waive any other breach or default. Any waiver, permit, consent or approval is effective only to the extent specifically written. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the party against which enforcement of the amendment or waiver is sought.

     8.8 Legends. This Warrant and the Warrant Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR UNDER ANY APPLICABLE STATE LAWS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THERE OF UNDER SUCH ACT AND AN EXEMPTION UNDER APPLICABLE STATE LAW OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED

     IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its duly authorized officer and issued as of the Issuance Date.

Effective Date of Warrant: June 30, 2003

COMPANY: Aruba, Inc. 180 Great Oaks Blvd., Suite B, San Jose, CA 95119
By: Print Name:	/s/ Pankaj Manglik Pankaj Manglik
Title:	CEO
ACCEPTED AND AGREED:
WARRANTHOLDER: Costella Kirsch Venture Partners I, L.P.; Address: 873 Santa Cruz Ave., Suite 207; Menlo Park, CA 94025
By: Print Name:	/s/ Richard F. Ginn Richard F. Ginn
Title:	Member of the G.P.

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EXHIBIT A

WARRANT CONVERSION EXERCISE AND ASSIGNMENT FORM

CONVERSION OR EXERCISE FORM

The undersigned hereby irrevocably elects to exercise [check where applicable]

                          the Conversion Right set forth in the Warrant to the extent of that number of Warrant Shares (as defined in the Warrant) into which _______% of the Warrant may be converted,

                          the Warrant to the extent of purchasing                      Warrant Shares, and hereby tenders $                     in payment of the exercise price thereof,

to occur on                     .

ASSIGNMENT FORM

     FOR VALUE RECEIVED, Holder hereby sells, assigns and transfers unto                      [name] of                      [address] its right to purchase                      Warrant Shares and does hereby irrevocably constitute and appoint                      attorney, to transfer the same on Company’s books, with full power of substitution in the premises.

INSTRUCTIONS FOR REGISTRATION

OF STOCK OR TRANSFER	OF RELATED WARRANT
Name	Name
Address	Address
Signature	Signature

SIGNATURE OF HOLDER

Date:                                                            , 200_.

Signature

Name

Address

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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS (“BLUE SKY LAWS”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED THEREUNDER OR EXEMPT FROM REGISTRATION.

WARRANT TO PURCHASE SHARES OF PREFERRED STOCK OF
Aruba, Inc. a Delaware corporation
(the “Company”)

located at:
180 Great Oaks Blvd., Suite B
San Jose, CA 95119

Issuance Date: July 31, 2003

     1. Right to Acquire Securities.

     1.1 Price, Quantity and Term.

          (a) Grant. Subject to the terms and conditions hereinafter set forth, this Warrant certifies that for value received Costella Kirsch Venture Partners I, L.P. and its registered assigns (collectively, “Holder”), are entitled at any time, and from time to time, before Expiration (as defined below), to purchase from Company up to that number of shares of Preferred Stock of the Company equal to $75,000 (the “Exercise Quantity”) divided by the Exercise Price (defined below) as constituted on the Warrant Issue Date (the “Preferred Stock”). The series of Preferred Stock for which this Warrant is exercisable shall be (i) the next series of Preferred Stock of the Company issued and sold by the Company in an equity financing following the Issuance Date (the “Next Series Preferred Stock”) or (ii) Series A Preferred stock if the Company has not issued Next Series Preferred Stock by the time of exercise of this Warrant. As used herein, “Warrant Shares” refers to the shares of Preferred Stock purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, and the shares of any class of securities resulting from any reclassifications of the Preferred Stock, including any conversion thereof to Common Stock, or from any applicable event described in Section 3. References to “Common Stock” include any present or future class of Company’s capital stock whose holders are not limited to a fixed percentage or sum with respect to dividends or liquidation proceeds, unless the context otherwise requires.

          (b) Exercise Price. The purchase price per share for the Preferred Stock, as adjusted from time to time pursuant to Section 3 hereof (the “Exercise Price”), shall be equal to either (i) the price per share at which the Next Series Preferred Stock is issued if the Warrant is exercisable for the Next Series Preferred Stock pursuant to Section 1.1(a) hereof or (ii) $0.667 (as adjusted from time to time pursuant to Section 3 hereof) if the Warrant is exercisable for Series A Preferred Stock pursuant to Section 1.1(a) hereof. The Warrant shall be exercisable for Series A Preferred Stock, at a purchase price of $0.667 (as adjusted from time to time pursuant to Section 3 hereof) upon exercise of this Warrant prior to the issuance of the Next Series Preferred Stock.

          (c) Expiration. This Warrant shall expire (“Expiration”) at 5:00 p.m., Los Angeles time, on the seventh anniversary of the Issuance Date; provided, however, that in the event of the closing of the acquisition of the Company (“Acquisition”) by another company that is publicly traded on a securities exchange or through the Nasdaq National Market by means of merger, consolidation or other transaction or series of related transactions, resulting in the transfer of 50% or more of the outstanding voting power of the Company and pursuant to which the per share gross proceeds to be distributed to the Company’s stockholders equals or exceeds three (3) times the Exercise Price (such amount calculated based on the number of shares of Common Stock, assuming the exercise and conversion of all then-outstanding exercisable and convertible securities outstanding immediately prior to the closing of the Acquisition), this Warrant shall, on the date of such event, be deemed to be exercised in full in the manner set forth in

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Section 1.3(b). In the event of a proposed Acquisition, the Company shall notify the holder of the Warrant at least twenty (20) days prior to the consummation of such Acquisition. Any exercise of this Warrant made in conjunction with a proposed Acquisition may be made conditional on the actual closing of such Acquisition. Notwithstanding the foregoing, this Warrant shall automatically be converted into Warrant Shares prior to Expiration pursuant to Section 1.3(b) hereof, without any action by Holder, immediately before Expiration.

     1.2 Right to Exercise.

          (a) Notice. Holder may exercise all or a portion of this Warrant at any time, and from time to time, before Expiration, by delivering a written notice of exercise (a form of which is attached hereto as Exhibit A) to Company, specifying (i) the number of Warrant Shares to be purchased, (ii) the proposed registered holders of Warrant Shares and any Related Warrants (as defined in Section 7), and (iii) a date of exercise determined by Holder (the “Exercise Date”) not more than twenty business days after such notice.

          (b) Exercise. On the Exercise Date, (i) Holder will present to Company this Warrant and a check for the aggregate Exercise Price of the Warrant Shares purchased and (ii) as soon as practicable after the Exercise Date, Company will give Holder (A) certificate(s) for the Warrant Shares issuable upon such exercise; (B) any cash and non-cash consideration, including securities, to which Holder is entitled with respect to the Warrant Shares (collectively, “Other Consideration”) and, if applicable, (C) a Related Warrant (as defined in Section 7) representing the unexercised portion hereof.

     1.3 Right to Convert.

          (a) Notice. Holder may require Company to convert all or a portion of this Warrant into Warrant Shares without payment by Holder of any money or other consideration (the “Conversion Right”) at any time, and from time to time, before Expiration, by delivering a written notice of exercise to Company (a form of which is attached hereto as Exhibit A), specifying (i) the proportion of this Warrant to be converted into Warrant Shares (the “Converted Portion”), (ii) the proposed registered holders of Warrant Shares and any Related Warrants and (iii) a date of conversion determined by Holder (the “Conversion Date”) not more than twenty business days thereafter.

          (b) Conversion. On the Conversion Date, Holder will surrender this Warrant and Company will give Holder (i) certificate(s) for that number of Warrant Shares as determined using the following formula:

X =	Y(A - B)
	A

Where	X = The number of shares of Warrant Shares to be issued to the Holder.
	Y = The number of Converted Portion Warrant Shares this Warrant is exercisable for (at the date of such calculation)
	A = The Fair Market Value (as defined below) of one Warrant Share (at the date of such calculation).
	B = The Exercise Price (as adjusted to the date of such calculation);

(ii) any Other Consideration and, if applicable, (iii) a Related Warrant representing the unconverted portion hereof.

     1.4 Fair Market Value. Fair Market Value of a share of Preferred Stock is the Fair Market Value of a share of Common Stock multiplied by the number of shares of Common Stock into which Preferred Stock may then be converted. “Fair Market Value” of a share of Common Stock as of a particular date means: (a) if traded on an exchange or quoted on the NASDAQ National Market System, then the prior

2

trading day’s closing price, (b) if conversion or exercise is on a date from the filing of, through to the effective date of, the registration statement for an underwritten public offering registered under the Securities Act, the initial public offering price (before deducting commissions, discounts or expenses) per share sold in such offering, (c) if listed by the National Daily Quotation Service “Pink Sheets,” then the average of the most-recently reported bid and ask prices and (d) otherwise, the price, not less than book value, determined in good faith and in such reasonable manner as prescribed by a majority of Company’s Directors who are not Company officers or employees (the “Outside Directors”); provided, however, that Company will notify Holder of such price within ten business days following receipt of Holder’s notice of exercise.

     1.5 Authorization. Company will at all times reserve and keep available out of its authorized but unissued capital stock, and will take all such action and obtain all such permission necessary to enable Company lawfully to issue, the full number of Warrant Shares deliverable upon exercise or conversion hereof or deliverable upon any permitted conversion into Common Stock of the Warrant Shares, as such number may be adjusted from time to time. Company will not create a Warrant Share with a par value higher than the applicable Exercise Price.

     2. Registration Rights. The Company agrees that upon the earlier of (x) when the Company next amends its Investors’ Rights Agreement, dated April 19, 2002, by and among the Company and certain of its stockholders (the “Investors’ Rights Agreement”), or (y) when the Company consummates its initial public offering, the Holder shall become a party to the Investors’ Rights Agreement and the Warrant Shares or, if the Shares are convertible into common stock of the Company, such common stock, shall be deemed to be “Registrable Securities” and Holder shall be deemed to be a “Holder,” as such terms are defined in the Investors’ Rights Agreement; provided, however, that Holder shall not be entitled to participate in any request for registration submitted to the Company as an Initiating Holder, as such term is defined in Section 1.2(a) of the Investors’ Rights Agreement. In addition, the rights contained in Section 2 of the Investors’ Rights Agreement shall not apply to Holder. The provisions set forth in the Investors’ Right Agreement or similar agreement relating to the above in effect as of the Issue Date may not be amended, modified or waived without the prior written consent of Holder unless such amendment, modification or waiver affects all other shares of the same series and class as the Shares granted to the Holder. Notwithstanding anything to the contrary in the Rights Agreement, all registration rights of Holder shall be fully and completely transferable with this Warrant and the Warrant Shares; provided that such transfer takes place in compliance with Section 7.3 herein. Company shall grant no person or entity other than Holder any rights of first refusal with respect to the purchase, sale or other disposition of this Warrant or the Warrant Shares.

     3. Adjustments. The Exercise Price, the Exercise Quantity and the number of shares of Common Stock issuable upon conversion of the Preferred Stock will be adjusted from time to time as provided herein and by law.

     3.1 Capitalization.

          (a) Subdivision or Combination. If Company subdivides or combines, by reclassification, stock split or dividend, or otherwise, the number of Warrant Shares outstanding into a greater or lesser number, simultaneously in each such case the Exercise Price and the Exercise Quantity shall both be proportionately adjusted.

          (b) Capitalization. If Company recapitalizes, reorganizes or reclassifies its capital stock, this Warrant shall thereafter be exercisable for or convertible into those shares of stock, other securities or property which a Holder of the Exercise Quantity of Warrant Shares would have received upon exercise or conversion of this Warrant, as adjusted according to the terms hereof.

          (c) Distributions. If Company declares, pays or distributes any cash or property dividends on, or rights to acquire, capital stock, or evidences of its indebtedness or assets to holders of shares of its capital stock, Holder shall, without additional cost, be entitled to receive upon conversion or exercise, in addition to the Warrant Shares, the cash, property, evidences of indebtedness and rights which Holder could have received had Holder been a record holder of Warrant Shares on the record dates for any such event.

3

          (d) Merger, Consolidation, or Liquidation.

               (i) If (A) Company (x) consolidates with or merges into another entity and is not the survivor, (y) receives notice that a purchase, tender or exchange offer has been made to the holders of more than 50% of the Company’s outstanding Common Stock (on an as-converted basis), or (z) sells or conveys substantially all of its property, and (B) in connection therewith, shares of stock, other securities, or property, or cash (collectively, “Merger Consideration”) are issuable or deliverable in exchange for Company’s capital stock, then (A) Company will give Holder 20 days prior written notice of the consummation of such transaction and (B) Holder may thereafter acquire immediately prior to the closing of such transaction in lieu of the Exercise Quantity of Warrant Shares the Merger Consideration which Holder could have received had Holder then exercised this Warrant in its entirety pursuant to Section 1.3(b) hereof.

               (ii) Unless (x) Holder has earlier exercised or converted this Warrant, or (y) this Warrant has terminated pursuant to Section 1.1 (c), or (z) Holder has opted to exchange this Warrant for Merger Consideration pursuant to Section 3.1(d)(i) above, Company will, prior to the consummation of any such transaction described in Section 3.1(d)(i) above, cause any successor entity upon consolidation, merger, conveyance of substantially all of Company’s assets, or voting securities exchange to assume by written instrument, in form and substance satisfactory to Holder, Company’s obligations hereunder.

     3.2 Notice of Adjustment. Whenever events require adjustment to the Exercise Price or Exercise Quantity, Company will, at its expense, promptly prepare and mail to Holder a certificate of its chief financial officer calculating the adjusted Exercise Price and Exercise Quantity and fully setting forth in reasonable detail the relevant facts.

     4. Notice of Certain Events. In the event (a “Notice Event”): (a) Company authorizes the distribution to all holders of any class of its capital stock evidences of its indebtedness or assets where all other holders of the Company’s capital stock have the right to receive the notice described below; (b) of any capital reorganization or classification of the Warrant Shares or Company’s Common Stock, other than a subdivision or combination of the outstanding Common Stock and other than a change in par value of the Common Stock where all other holders of the Company’s capital stock have the right to receive the notice described below; (c) of any consolidation or merger to which Company is a party and for which approval of any of Company’s stockholders is required, other than a consolidation or merger in which Company is the continuing corporation and that does not result in any reclassification or change of the Warrant Shares or Common Stock outstanding; (d) of the conveyance or transfer of substantially all of Company’s properties and assets; or (e) of Company’s voluntary or involuntary dissolution, liquidation or winding-up; then Company will send by certified mail to Holder, at least 20 days (or 10 days in any case specified in clause (a) above) prior to the applicable record or effective date hereinafter specified, a notice stating the dates as of which (x) the holders of capital stock of record to be entitled to receive any such rights, warrants or distributions are to be determined, (y) such Notice Event is expected to become effective, and (z) it is expected that holders of Warrant Shares or Common Stock of record will be entitled to exchange or sell their Warrant Shares or Common Stock for securities or other property, if any, deliverable upon such Notice Event.

     5. Financial Reporting. Company will deliver to Holder: (a) audited financial statements for each fiscal year within 180 days after such year ends; and (b) unaudited financial statements for each fiscal quarter within 45 days after such quarter ends.

     6. Record Holder. This Warrant will be deemed to have been exercised or converted, as appropriate, and Holder will be the record holder of the Warrant Shares issued thereupon, immediately before the close of business on the Exercise Date or Conversion Date, as applicable. Company may deem and treat the registered holder as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. Other than as set forth herein, this Warrant does not give Holder rights as a Company stockholder.

     7. Securities Law Matters; Transfers.

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     7.1 Securities Act Representations and Warranties of Holder. Holder is experienced in evaluating start-up companies such as the Company, and has such knowledge and experience in financial and business matters that such Holder is capable of evaluating the merits and risks of such Holder’s investment in the Company, and has the ability to bear the economic risks of the investment. Holder is acquiring the Warrant, and upon exercise or conversion hereof would acquire the Warrant Shares, and upon conversion, if any, of the Warrant Shares would acquire the shares of the Company’s Common Stock issuable upon such conversion (the Warrant, Warrant Shares, and such shares of Common Stock issuable upon conversion of the Warrant Shares collectively the “Securities”), for investment for such Holder’s own account and not with the view to, or for resale in connection with, any distribution thereof. If not an individual, the Holder also represents that the Holder has not been formed for the specific purpose of acquiring the Securities. The Holder has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. The Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to the Holder or to which the Holder has access. Holder understands that the Securities have not been registered under the Securities Act by reason of a specific exemption therefrom which depends upon, among other things, the bona fide nature of the investment intent as expressed herein. Holder further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to any third person with respect to any of the Securities. Holder understands and acknowledges that the issuance of Securities has not been and will not be registered under the Securities Act, in reliance upon an exemption from the registration requirements of the Securities Act. Such Holder acknowledges that the Securities must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. Holder is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions. Holder covenants that, in the absence of an effective registration statement covering the Securities in question, such Holder will sell, transfer, or otherwise dispose of the Securities only in a manner consistent with such Holder’s representations and covenants set forth in this paragraph. Holder understands that no public market now exists for any of the Securities issued by the Company, and that there can be no guarantee that a public market will ever exist for any of the Securities. Holder is an “accredited Holder” as defined in Rule 501 of Regulation D promulgated under the Securities Act. Holder’s address indicated on the signature page hereto sets forth, in the case of individuals, the state in which such Holder resides or, in the case of entities, the state of Holder’s principal place of business.

     7.2 Market Stand-Off Provision. Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company’s initial public offering and ending on the date specified by the Company and the underwriter (such period not to exceed one hundred eighty (180) days) (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing provisions of this Section 7.2 shall apply only to the Company’s initial public offering of equity securities, and shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement. The underwriters in connection with the Company’s initial public offering are intended third party beneficiaries of this Section 7.2 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Securities until the end of such period.

     7.3 Transfer and Exchange. This Warrant and the Warrant Shares issuable upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Warrant Shares, if

5

any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to any affiliate of Holder or if there is no material question as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company is provided with a copy of Holder’s notice of proposed sale. Provided Holder complies with this Section 7.3, Holder may transfer all or a portion hereof on Company’s books maintained for such purpose. Company will issue and deliver Related Warrants to Holder with respect to the untransferred portion, and to transferee, who thereupon will also become a Holder, with respect to the transferred portion. Holder may exchange or subdivide this Warrant into Related Warrants for the same aggregate number of Warrant Shares, with each new Related Warrant to represent the right to purchase that portion of the Exercise Quantity of Warrant Shares designated by Holder. “Related Warrant” means a new Warrant identical hereto (except for Exercise Quantity and as provided in Section 2(b)) issued to Holder or its transferee in accordance with the terms hereof. Subject to the provisions of Section 7.3, and upon providing Company with written notice, Holder may transfer all or part of this Warrant or the Warrant Shares issuable upon exercise of this Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) to any affiliate of Holder, or to any other transferee by providing to the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable). The Company may refuse to transfer this Warrant to any person who directly competes with the Company unless the Company’s stock is publicly traded.

     8. Miscellaneous.

     8.1 Warrant Value. The value of this Warrant on the date hereof is $ 100.

     8.2 Warrant Register. The Company will maintain a register containing the names and addresses of the Holders of this Warrant.

     8.3 Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     8.4 Fractional Shares. If a fractional Warrant Share would be issuable upon exercise or conversion, Company will instead pay in cash a sum equal to the product of such fraction and a full Warrant Share’s Fair Market Value, provided that the product is at least $ 5.00.

     8.5 Entire Agreement. This Warrant constitutes the entire agreement between the parties with respect to its subject matter and may only be modified in writing. Each provision hereof is severable from every other provision when determining legal enforceability. The terms and conditions hereof will inure to the benefit of and be binding upon the parties’ respective successors and assigns, except as expressly provided otherwise herein. This Warrant has been entered into in Menlo Park, California and is governed by California law.

     8.6 Notices. All notices will be in writing and delivered personally, by telefacsimile confirmed by letter, or by reliable nationally-recognized overnight courier, postage paid at Company’s expense, addressed, until further notice, (a) if to Holder, to Holder’s address and fax of record, attention of Holder, (b) if to Company, to Company’s Office, Attention: Corporate Secretary, or (c) if to a holder of a Related Warrant or Warrant Shares, to the most recent address of which said holder has notified Company, and are effective upon receipt.

6

     8.7 Waivers and Amendments. Holder’s remedies hereunder, by law or otherwise, are cumulative and not exclusive. Holder’s delay or omission to exercise any right or remedy does not impair or waive the same. A waiver of one breach or default does not waive any other breach or default. Any waiver, permit, consent or approval is effective only to the extent specifically written. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the party against which enforcement of the amendment or waiver is sought.

     8.8 Legends. This Warrant and the Warrant Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR UNDER ANY APPLICABLE STATE LAWS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THERE OF UNDER SUCH ACT AND AN EXEMPTION UNDER APPLICABLE STATE LAW OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED

     IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its duly authorized officer and issued as of the Issuance Date.

Effective Date of Warrant: June 30, 2003

COMPANY: Aruba, Inc. 180 Great Oaks Blvd., Suite B, San Jose, CA 95119
By: Print Name:	/s/ Pankaj Manglik Pankaj Manglik
Title:	CEO
ACCEPTED AND AGREED:
WARRANTHOLDER: Costella Kirsch Venture Partners I, L.P.; Address: 873 Santa Cruz Ave., Suite 207; Menlo Park, CA 94025
By: Print Name:	/s/ Richard F. Ginn Richard F. Ginn
Title:	Member of the G.P.

7

EXHIBIT A

WARRANT CONVERSION, EXERCISE AND ASSIGNMENT FORM

CONVERSION OR EXERCISE FORM

     The undersigned hereby irrevocably elects to exercise [check where applicable]

     ___ the Conversion Right set forth in the Warrant to the extent of that number of Warrant Shares (as defined in the Warrant) into which ___% of the Warrant may be converted,

     ___ the Warrant to the extent of purchasing ___ Warrant Shares, and hereby tenders $___ in payment of the exercise price thereof,

to occur on                     .

ASSIGNMENT FORM

     FOR VALUE RECEIVED, Holder hereby sells, assigns and transfers unto                                          [name] of                                           [address] its right to purchase ___ Warrant Shares and does hereby irrevocably constitute and appoint                      attorney, to transfer the same on Company’s books, with full power of substitution in the premises.

INSTRUCTIONS FOR REGISTRATION

OF STOCK OR TRANSFER	OF RELATED WARRANT
Name	Name
Address	Address
Signature	Signature

SIGNATURE OF HOLDER

Date:	, 200_.
Signature
Name
Address

8

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS (“BLUE SKY LAWS”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED THEREUNDER OR EXEMPT FROM REGISTRATION.

WARRANT TO PURCHASE SHARES OF PREFERRED STOCK OF
Aruba, Inc. a Delaware corporation
(the “Company”)

located at:
180 Great Oaks Blvd., Suite B
San Jose, CA 95119

Issuance Date: July 31, 2003

     1. Right to Acquire Securities.

     1.1 Price, Quantity and Term.

          (a) Grant. Subject to the terms and conditions hereinafter set forth, this Warrant certifies that for value received Costella Kirsch Venture Partners I, L.P. and its registered assigns (collectively, “Holder”), are entitled at any time, and from time to time, before Expiration (as defined below), to purchase from Company up to that number of shares of Preferred Stock of the Company equal to $25,000 (the “Exercise Quantity”) divided by the Exercise Price (defined below) as constituted on the Warrant Issue Date (the “Preferred Stock”). The series of Preferred Stock for which this Warrant is exercisable shall be (i) Series A Preferred Stock of the Company (“Series A Preferred Stock”) in the event that the Exercise Price is based on the Series A Preferred Stock price or (ii) the next series of Preferred Stock of the Company issued and sold by the Company in an equity financing following the Issuance Date (the “Next Series Preferred Stock”) in the event that the Exercise Price is based on the Next Series Preferred Stock price. As used herein, “Warrant Shares” refers to the shares of Preferred Stock purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, and the shares of any class of securities resulting from any reclassifications of the Preferred Stock, including any conversion thereof to Common Stock, or from any applicable event described in Section 3. References to “Common Stock” include any present or future class of Company’s capital stock whose holders are not limited to a fixed percentage or sum with respect to dividends or liquidation proceeds, unless the context otherwise requires.

          (b) Exercise price. The purchase price per share for the Preferred Stock, as adjusted from time to time pursuant to Section 3 hereof (the “Exercise Price”), shall be either (i) $0.667 (as adjusted from time to time pursuant to Section 3 hereof) (which is equal to the per share price at which the Company has issued Series A Preferred Stock) or (ii) the per share price at which the Company issues Next Series Preferred Stock, whichever of (i) or (ii) would result in the issuance of a greater number of shares of Common Stock upon exercise of this Warrant (as determined on an as-converted basis at the time of exercise of this Warrant). This Warrant shall be exercisable for Series A Preferred Stock, at a purchase price per share equal to $0.667 (as adjusted from time to time pursuant to Section 3 hereof), upon any exercise of this Warrant prior to the issuance by the Company of Next Series Preferred Stock.

          (c) Expiration. This Warrant shall expire (“Expiration”) at 5:00 p.m., Los Angeles time, on the seventh anniversary of the Issuance Date; provided, however, that in the event of the closing of the acquisition of the Company (“Acquisition”) by another company that is publicly traded on a securities exchange or through the Nasdaq National Market by means of merger, consolidation or other transaction or series of related transactions, resulting in the transfer of 50% or more of the outstanding voting power of the Company and pursuant to which the per share gross proceeds to be distributed to the Company’s stockholders equals or exceeds three (3) times the Exercise Price (such amount calculated based on the number of shares of Common Stock, assuming the exercise and conversion of all then-outstanding

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exercisable and convertible securities outstanding immediately prior to the closing of the Acquisition), this Warrant shall, on the date of such event, be deemed to be exercised in full in the manner set forth in Section 1.3(b). In the event of a proposed Acquisition, the Company shall notify the holder of the Warrant at least twenty (20) days prior to the consummation of such Acquisition. Any exercise of this Warrant made in conjunction with a proposed Acquisition may be made conditional on the actual closing of such Acquisition. Notwithstanding the foregoing, this Warrant shall automatically be converted into Warrant Shares prior to Expiration pursuant to Section 1.3(b) hereof, without any action by Holder, immediately before Expiration.

     1.2 Right to Exercise.

          (a) Notice. Holder may exercise all or a portion of this Warrant at any time, and from time to time, before Expiration, by delivering a written notice of exercise (a form of which is attached hereto as Exhibit A) to Company, specifying (i) the number of Warrant Shares to be purchased, (ii) the proposed registered holders of Warrant Shares and any Related Warrants (as defined in Section 7), and (iii) a date of exercise determined by Holder (the “Exercise Date”) not more than twenty business days after such notice.

          (b) Exercise. On the Exercise Date, (i) Holder will present to Company this Warrant and a check for the aggregate Exercise Price of the Warrant Shares purchased and (ii) as soon as practicable after the Exercise Date, Company will give Holder (A) certificate(s) for the Warrant Shares issuable upon such exercise; (B) any cash and non-cash consideration, including securities, to which Holder is entitled with respect to the Warrant Shares (collectively, “Other Consideration”) and, if applicable, (C) a Related Warrant (as defined in Section 7) representing the unexercised portion hereof.

     1.3 Right to Convert.

          (a) Notice. Holder may require Company to convert all or a portion of this Warrant into Warrant Shares without payment by Holder of any money or other consideration (the “Conversion Right”) at any time, and from time to time, before Expiration, by delivering a written notice of exercise to Company (a form of which is attached hereto as Exhibit A), specifying (i) the proportion of this Warrant to be converted into Warrant Shares (the “Converted Portion”), (ii) the proposed registered holders of Warrant Shares and any Related Warrants and (iii) a date of conversion determined by Holder (the “Conversion Date”) not more than twenty business days thereafter.

          (b) Conversion. On the Conversion Date, Holder will surrender this Warrant and Company will give Holder (i) certificate(s) for that number of Warrant Shares as determined using the following formula:

		X = Y (A - B)
		A
Where	X =	The number of shares of Warrant Shares to be issued to the Holder.
	Y =	The number of Converted Portion Warrant Shares this Warrant is exercisable for (at the date of such calculation)
	A =	The Fair Market Value (as defined below) of one Warrant Share (at the date of such calculation).
	B =	The Exercise Price (as adjusted to the date of such calculation);

(ii) any Other Consideration and, if applicable, (iii) a Related Warrant representing the unconverted portion hereof.

     1.4 Fair Market Value. Fair Market Value of a share of Preferred Stock is the Fair Market Value of a share of Common Stock multiplied by the number of shares of Common Stock into which

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Preferred Stock may then be converted. “Fair Market Value” of a share of Common Stock as of a particular date means: (a) if traded on an exchange or quoted on the NASDAQ National Market System, then the prior trading day’s closing price, (b) if conversion or exercise is on a date from the filing of, through to the effective date of, the registration statement for an underwritten public offering registered under the Securities Act, the initial public offering price (before deducting commissions, discounts or expenses) per share sold in such offering, (c) if listed by the National Daily Quotation Service “Pink Sheets,” then the average of the most-recently reported bid and ask prices and (d) otherwise, the price, not less than book value, determined in good faith and in such reasonable manner as prescribed by a majority of Company’s Directors who are not Company officers or employees (the “Outside Directors”); provided, however, that Company will notify Holder of such price within ten business days following receipt of Holder’s notice of exercise.

     1.5 Authorization. Company will at all times reserve and keep available out of its authorized but unissued capital stock, and will take all such action and obtain all such permission necessary to enable Company lawfully to issue, the full number of Warrant Shares deliverable upon exercise or conversion hereof or deliverable upon any permitted conversion into Common Stock of the Warrant Shares, as such number may be adjusted from time to time. Company will not create a Warrant Share with a par value higher than the applicable Exercise Price.

     2. Registration Rights. The Company agrees that upon the earlier of (x) when the Company next amends its Investors’ Rights Agreement, dated April 19, 2002, by and among the Company and certain of its stockholders (the “Investors’ Rights Agreement”), or (y) when the Company consummates its initial public offering, the Holder shall become a party to the Investors’ Rights Agreement and the Warrant Shares or, if the Shares are convertible into common stock of the Company, such common stock, shall be deemed to be “Registrable Securities” and Holder shall be deemed to be a “Holder,” as such terms are defined in the Investors’ Rights Agreement; provided, however, that Holder shall not be entitled to participate in any request for registration submitted to the Company as an Initiating Holder, as such term is defined in Section 1.2(a) of the Investors’ Rights Agreement. In addition, the rights contained in Section 2 of the Investors’ Rights Agreement shall not apply to Holder. The provisions set forth in the Investors’ Right Agreement or similar agreement relating to the above in effect as of the Issue Date may not be amended, modified or waived without the prior written consent of Holder unless such amendment, modification or waiver affects all other shares of the same series and class as the Shares granted to the Holder. Notwithstanding anything to the contrary in the Rights Agreement, all registration rights of Holder shall be fully and completely transferable with this Warrant and the Warrant Shares; provided that such transfer takes place in compliance with Section 7.3 herein. Company shall grant no person or entity other than Holder any rights of first refusal with respect to the purchase, sale or other disposition of this Warrant or the Warrant Shares.

     3. Adjustments. The Exercise Price, the Exercise Quantity and the number of shares of Common Stock issuable upon conversion of the Preferred Stock will be adjusted from time to time as provided herein and by law.

     3.1 Capitalization.

          (a) Subdivision or Combination. If Company subdivides or combines, by reclassification, stock split or dividend, or otherwise, the number of Warrant Shares outstanding into a greater or lesser number, simultaneously in each such case the Exercise Price and the Exercise Quantity shall both be proportionately adjusted.

          (b) Capitalization. If Company recapitalizes, reorganizes or reclassifies its capital stock, this Warrant shall thereafter be exercisable for or convertible into those shares of stock, other securities or property which a Holder of the Exercise Quantity of Warrant Shares would have received upon exercise or conversion of this Warrant, as adjusted according to the terms hereof.

          (c) Distributions. If Company declares, pays or distributes any cash or property dividends on, or rights to acquire, capital stock, or evidences of its indebtedness or assets to holders of shares of its capital stock, Holder shall, without additional cost, be entitled to receive upon conversion or exercise, in

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addition to the Warrant Shares, the cash, property, evidences of indebtedness and rights which Holder could have received had Holder been a record holder of Warrant Shares on the record dates for any such event.

          (d) Merger, Consolidation, or Liquidation.

               (i) If (A) Company (x) consolidates with or merges into another entity and is not the survivor, (y) receives notice that a purchase, tender or exchange offer has been made to the holders of more than 50% of the Company’s outstanding Common Stock (on an as-converted basis), or (z) sells or conveys substantially all of its property, and (B) in connection therewith, shares of stock, other securities, or property, or cash (collectively, “Merger Consideration”) are issuable or deliverable in exchange for Company’s capital stock, then (A) Company will give Holder 20 days prior written notice of the consummation of such transaction and (B) Holder may thereafter acquire immediately prior to the closing of such transaction in lieu of the Exercise Quantity of Warrant Shares the Merger Consideration which Holder could have received had Holder then exercised this Warrant in its entirety pursuant to Section 1.3(b) hereof.

               (ii) Unless (x) Holder has earlier exercised or converted this Warrant, or (y) this Warrant has terminated pursuant to Section 1.1(c), or (z) Holder has opted to exchange this Warrant for Merger Consideration pursuant to Section 3.1(d)(i) above, Company will, prior to the consummation of any such transaction described in Section 3.1(d)(i) above, cause any successor entity upon consolidation, merger, conveyance of substantially all of Company’s assets, or voting securities exchange to assume by written instrument, in form and substance satisfactory to Holder, Company’s obligations hereunder.

     3.2 Notice of Adjustment. Whenever events require adjustment to the Exercise Price or Exercise Quantity, Company will, at its expense, promptly prepare and mail to Holder a certificate of its chief financial officer calculating the adjusted Exercise Price and Exercise Quantity and fully setting forth in reasonable detail the relevant facts.

     4. Notice of Certain Events. In the event (a “Notice Event”): (a) Company authorizes the distribution to all holders of any class of its capital stock evidences of its indebtedness or assets where all other holders of the Company’s capital stock have the right to receive the notice described below; (b) of any capital reorganization or reclassification of the Warrant Shares or Company’s Common Stock, other than a subdivision or combination of the outstanding Common Stock and other than a change in par value of the Common Stock where all other holders of the Company’s capital stock have the right to receive the notice described below; (c) of any consolidation or merger to which Company is a party and for which approval of any of Company’s stockholders is required, other than a consolidation or merger in which Company is the continuing corporation and that does not result in any reclassification or change of the Warrant Shares or Common Stock outstanding; (d) of the conveyance or transfer of substantially all of Company’s properties and assets; or (e) of Company’s voluntary or involuntary dissolution, liquidation or winding-up; then Company will send by certified mail to Holder, at least 20 days (or 10 days in any case specified in clause (a) above) prior to the applicable record or effective date hereinafter specified, a notice stating the dates as of which (x) the holders of capital stock of record to be entitled to receive any such rights, warrants or distributions are to be determined, (y) such Notice Event is expected to become effective, and (z) it is expected that holders of Warrant Shares or Common Stock of record will be entitled to exchange or sell their Warrant Shares or Common Stock for securities or other property, if any, deliverable upon such Notice Event.

     5. Financial Reporting. Company will deliver to Holder: (a) audited financial statements for each fiscal year within 180 days after such year ends; and (b) unaudited financial statements for each fiscal quarter within 45 days after such quarter ends.

     6. Record Holder. This Warrant will be deemed to have been exercised or converted, as appropriate, and Holder will be the record holder of the Warrant Shares issued thereupon, immediately before the close of business on the Exercise Date or Conversion Date, as applicable. Company may deem and treat the registered holder as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. Other than as set forth herein, this Warrant does not give Holder rights as a Company stockholder.

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     7. Securities Law Matters; Transfers.

     7.1 Securities Act Representations and Warranties of Holder. Holder is experienced in evaluating start-up companies such as the Company, and has such knowledge and experience in financial and business matters that such Holder is capable of evaluating the merits and risks of such Holder’s investment in the Company, and has the ability to bear the economic risks of the investment. Holder is acquiring the Warrant, and upon exercise or conversion hereof would acquire the Warrant Shares, and upon conversion, if any, of the Warrant Shares would acquire the shares of the Company’s Common Stock issuable upon such conversion (the Warrant, Warrant Shares, and such shares of Common Stock issuable upon conversion of the Warrant Shares collectively the “Securities”), for investment for such Holder’s own account and not with the view to, or for resale in connection with, any distribution thereof. If not an individual, the Holder also represents that the Holder has not been formed for the specific purpose of acquiring the Securities. The Holder has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. The Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to the Holder or to which the Holder has access. Holder understands that the Securities have not been registered under the Securities Act by reason of a specific exemption therefrom which depends upon, among other things, the bona fide nature of the investment intent as expressed herein. Holder further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to any third person with respect to any of the Securities. Holder understands and acknowledges that the issuance of Securities has not been and will not be registered under the Securities Act, in reliance upon an exemption from the registration requirements of the Securities Act. Such Holder acknowledges that the Securities must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. Holder is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions. Holder covenants that, in the absence of an effective registration statement covering the Securities in question, such Holder will sell, transfer, or otherwise dispose of the Securities only in a manner consistent with such Holder’s representations and covenants set forth in this paragraph. Holder understands that no public market now exists for any of the Securities issued by the Company, and that there can be no guarantee that a public market will ever exist for any of the Securities. Holder is an “accredited Holder” as defined in Rule 501 of Regulation D promulgated under the Securities Act. Holder’s address indicated on the signature page hereto sets forth, in the case of individuals, the state in which such Holder resides or, in the case of entities, the state of Holder’s principal place of business.

     7.2 Market Stand-Off Provision. Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company’s initial public offering and ending on the date specified by the Company and the underwriter (such period not to exceed one hundred eighty (180) days) (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing provisions of this Section 7.2 shall apply only to the Company’s initial public offering of equity securities, and shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement. The underwriters in connection with the Company’s initial public offering are intended third party beneficiaries of this Section 7.2 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Securities until the end of such period.

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     7.3 Transfer and Exchange. This Warrant and the Warrant Shares issuable upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Warrant Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to any affiliate of Holder or if there is no material question as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company is provided with a copy of Holder’s notice of proposed sale. Provided Holder complies with this Section 7.3, Holder may transfer all or a portion hereof on Company’s books maintained for such purpose. Company will issue and deliver Related Warrants to Holder with respect to the untransferred portion, and to transferee, who thereupon will also become a Holder, with respect to the transferred portion. Holder may exchange or subdivide this Warrant into Related Warrants for the same aggregate number of Warrant Shares, with each new Related Warrant to represent the right to purchase that portion of the Exercise Quantity of Warrant Shares designated by Holder. “Related Warrant” means a new Warrant identical hereto (except for Exercise Quantity and as provided in Section 2(b)) issued to Holder or its transferee in accordance with the terms hereof. Subject to the provisions of Section 7.3, and upon providing Company with written notice, Holder may transfer all or part of this Warrant or the Warrant Shares issuable upon exercise of this Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) to any affiliate of Holder, or to any other transferee by providing to the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable). The Company may refuse to transfer this Warrant to any person who directly competes with the Company unless the Company’s stock is publicly traded.

     8. Miscellaneous.

     8.1 Warrant Value. The value of this Warrant on the date hereof is $100.

     8.2 Warrant Register. The Company will maintain a register containing the names and addresses of the Holders of this Warrant.

     8.3 Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     8.4 Fractional Shares. If a fractional Warrant Share would be issuable upon exercise or conversion, Company will instead pay in cash a sum equal to the product of such fraction and a full Warrant Share’s Fair Market Value, provided that the product is at least $5.00.

     8.5 Entire Agreement. This Warrant constitutes the entire agreement between the parties with respect to its subject matter and may only be modified in writing. Each provision hereof is severable from every other provision when determining legal enforceability. The terms and conditions hereof will inure to the benefit of and be binding upon the parties’ respective successors and assigns, except as expressly provided otherwise herein. This Warrant has been entered into in Menlo Park, California and is governed by California law.

     8.6 Notices. All notices will be in writing and delivered personally, by telefacsimile confirmed by letter, or by reliable nationally-recognized overnight courier, postage paid at Company’s expense, addressed, until further notice, (a) if to Holder, to Holder’s address and fax of record, attention of Holder, (b) if to Company, to Company’s Office, Attention: Corporate Secretary, or (c) if to a holder of a Related Warrant or Warrant Shares, to the most recent address of which said holder has notified Company, and are effective upon receipt.

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     8.7 Waivers and Amendments. Holder’s remedies hereunder, by law or otherwise, are cumulative and not exclusive. Holder’s delay or omission to exercise any right or remedy does not impair or -waive the same. A waiver of one breach or default does not waive any other breach or default. Any waiver, permit, consent or approval is effective only to the extent specifically written. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the party against which enforcement of the amendment or waiver is sought.

     8.8 Legends. This Warrant and the Warrant Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR UNDER ANY APPLICABLE STATE LAWS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THERE OF UNDER SUCH ACT AND AN EXEMPTION UNDER APPLICABLE STATE LAW OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED

     IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its duly authorized officer and issued as of the Issuance Date.

Effective Date of Warrant: June 30, 2003

COMPANY: Aruba, Inc.
180 Great Oaks Blvd., Suite B, San Jose, CA 95119

By:

Print Name:

Title:

ACCEPTED AND AGREED:

WARRANTHOLDER: Costella Kirsch Venture Partners I, L.P.;
Address: 873 Santa Cruz Ave., Suite 207; Menlo Park, CA 94025

By:

Print Name:

Title:

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EXHIBIT A

WARRANT CONVERSION, EXERCISE AND ASSIGNMENT FORM

CONVERSION OR EXERCISE FORM

     The undersigned hereby irrevocably elects to exercise [check where applicable]

     ___ the Conversion Right set forth in the Warrant to the extent of that number of Warrant Shares (as defined in the Warrant) into which______ % of the Warrant may be converted,

     ___the Warrant to the extent of purchasing ______ Warrant Shares, and hereby tenders $___ in payment of the exercise price thereof,

to occur on ___.

ASSIGNMENT FORM

     FOR VALUE RECEIVED, Holder hereby sells, assigns and transfers unto                                          [name] of                                                              [address] its right to purchase______ Warrant Shares and does hereby irrevocably constitute and appoint                                          attorney, to transfer the same on Company’s books, with full power of substitution in the premises.

INSTRUCTIONS FOR REGISTRATION

OF STOCK OR TRANSFER	OF RELATED WARRANT
Name	Name
Address	Address
Signature	Signature

SIGNATURE OF HOLDER

Date:	,	200_.
Signature
Name
Address

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EX-4.5

Exhibit 4.5

STOCK ISSUANCE AGREEMENT

          THIS STOCK ISSUANCE AGREEMENT (the “Agreement”) is made as of the 15th day of July, 2005, by and among Aruba Wireless Networks, Inc., a Delaware corporation (the “Company”), and Microsoft Corporation, a Washington corporation (“Microsoft”).

RECITALS

          WHEREAS, the Company and Microsoft have entered into that certain Microsoft Vendor Program Agreement of even date herewith (the “Vendor Program Agreement”); and

          WHEREAS, to induce Microsoft to enter into and as a condition of the Vendor Program Agreement, the Company has agreed to provide certain additional consideration to Microsoft in the event of an initial public offering of the Company, or, if the Company is sold to another party prior to such an initial public offering, upon such sale.

          NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and in the Vendor Program Agreement, the parties hereto agree as follows:

1.

IPO Shares. Subject to the provisions of Section 3 below, the Company agrees that, upon the Company’s firmly underwritten initial public offering of the Company’s common stock (the “IPO”) registered under the Securities Act of 1933, as amended (the “Act”), the Company shall issue to Microsoft a number of shares of the Company’s common stock (the “IPO Shares”) calculated as follows: (1) if the IPO occurs prior to the three- year anniversary of this Agreement (the “Final Calculation Date”), by dividing $3,500,000 by the actual per share public offering price of the Company’s common stock in such IPO (the “IPO Price”), or (2) if the IPO occurs on or after the Final Calculation Date, by dividing the lesser of (i) $3,500,000 and (ii) the aggregate amount of the Company’s products purchased by Microsoft pursuant to the Vendor Program Agreement (the “Total Purchase Amount”) as of the Final Calculation Date by the IPO Price. When issued, the IPO Shares shall be deemed to be fully paid and nonassessable. To the extent any shareholders of the Company have shares of Common Stock registered for sale in the IPO or in any subsequent underwritten offering of the Company’s common stock in the 12 months following the IPO, Microsoft shall be entitled to include a minimum of 50% of the IPO Shares in such offering. Except as provided in the foregoing, the IPO Shares shall be subject to the standard restrictions applicable to a private placement of securities under applicable state and federal securities laws, and such other restrictions on transferability as may be required by the Company’s underwriters and applicable to all of the Company’s shareholders in connection with such IPO. Notwithstanding the foregoing, the IPO Shares shall only be issued in the event that such IPO occurs prior to a Change in Control (as defined below).

2.

Change in Control Right.

(a) Subject to the provisions of Section 4 below, the Company agrees that, upon the consummation of a Change in Control (as defined below), the Company shall

	pay Microsoft from the aggregate proceeds of such Change in Control (the “Merger Consideration”) an amount (the “Change of Control Payment”) equal to the following: (1) if the Change of Control occurs prior to the Final Calculation Date, the Change of Control Payment shall be $5,000,000, or (2), if the Change of Control occurs on or after the Final Calculation Date, the Change of Control Payment shall equal the lesser of (x) $5,000,000 and (y) the Total Purchase Amount as of the date of the Final Calculation Date. Notwithstanding the foregoing, the Company shall only make the Change in Control Payment if the consummation of such Change in Control occurs prior to the Company’s IPO.
(b)	For purposes of this Agreement, “Change in Control” shall mean (i) the sale, transfer or other disposition of all or substantially all of the Company’s assets, (ii) the consummation of a merger or consolidation of the Company with or into another entity (except a merger or consolidation in which the holders of capital stock of the Company immediately prior to such merger or consolidation continue to hold at least 50% of the voting power of the capital stock of this corporation or the surviving or acquiring entity), or (iii) the closing of the transfer (whether by merger, consolidation or otherwise), in one transaction or a series of related transactions, to a person or group of affiliated persons (other than an underwriter of the Company’s securities), of the Company’s securities if, after such closing, such person or group of affiliated persons would hold at least 50% of the outstanding voting stock of the Company.
(c)	In the event that the Merger Consideration is not entirely cash proceeds, the Company, in its sole discretion, can elect to pay the Change in Control Payment out of cash or non-cash proceeds from the Merger Consideration in the same proportion as paid to the Company’s other shareholders. The fair market value of non-cash Merger Consideration shall be determined in good faith by the Company’s Board of Directors and shall be the same as determined for the Company’s other shareholders.

3. IPO Shares Escrow Arrangements.

(a)

If the IPO occurs prior to the Final Calculation Date, then (i) if the Total Purchase Amount as of the date of the IPO is less than $2,000,000, all of the IPO Shares shall be placed into escrow, upon terms and conditions and with an escrow agent reasonably acceptable to both Microsoft and the Company (the “IPO Escrow”), or (ii) if the Total Purchase Amount is $2,000,000 or greater as of the date of the IPO, a number of IPO Shares equal to the lesser of (x) $3,500,000 and (y) the Total Purchase Amount as of the date of the IPO divided by the IPO Price shall be delivered to Microsoft by the Company, and the remaining IPO Shares, if any, shall be placed into the IPO Escrow.

(b)

Following the date of the IPO, if, pursuant to Section 3(a)(i) above, no IPO Shares are delivered to Microsoft on the date of the IPO, but at a future date prior to the Final Calculation Date, the Total Purchase Amount exceeds

$2,000,000, the escrow agent shall promptly release to Microsoft from the IPO Escrow that number of IPO Shares calculated by dividing $2,000,000 by the IPO Price.

(c)

On the Final Calculation Date, the escrow agent shall (x) if the Total Purchase Amount as of the Final Calculation Date is less than $2,000,000, release all of the IPO Shares to the Company, (y) if the Total Purchase Amount as of the Final Calculation Date is greater than $2,000,000, but less than $3,500,000, release to Microsoft that number of IPO Shares calculated by subtracting the number of shares, if any, released pursuant to Section 3(b) above from the quotient obtained by dividing the Total Purchase Amount as of the Final Calculation Date by the IPO Price, with the remaining IPO Shares released to the Company, or (z) if the Total Purchase Amount as of the Final Calculation Date is greater than $3,500,000, release all of the IPO Shares to Microsoft.

4. Change of Control Payment Escrow Arrangements.

(a)	If a Change of Control occurs prior to the Final Calculation Date, then (i) if the Total Purchase Amount as of the date of the Change of Control is less than $2,000,000, all of the Change of Control Payment shall be placed into escrow, upon terms and conditions and with an escrow agent reasonably acceptable to both Microsoft and the Company (the “Change of Control Escrow”), or (ii) if the Total Purchase Amount is $2,000,000 or greater as of the date of the Change of Control, an amount equal to the lesser of (x) $5,000,000 and (y) the Total Purchase Amount as of the date of the Change of Control shall be paid to Microsoft by the Company, and the remaining Change of Control Amount, if any, shall be placed into the Change of Control Escrow.
(b)	Following the date of the Change of Control, if, pursuant to Section 4(a)(i) above, no Change of Control Payment is delivered to Microsoft on the date of the Change of Control, but at a future date prior to the Final Calculation Date, the Total Purchase Amount exceeds $2,000,000, the escrow agent shall promptly release $2,0000,000 to Microsoft from the Change of Control Escrow.
(c)	On the Final Calculation Date, the escrow agent shall (x) if the Total Purchase Amount as of the Final Calculation Date is less than $2,000,000, release all of the Change of Control Amount in the escrow to the Company, (y) if the Total Payment Amount as of the Final Calculation Date is greater than $2,000,000, but less than $5,000,000, release to Microsoft an amount equal to the difference between the Total Purchase Amount as of the Final Calculation Date and the amount, if any, released pursuant to Section 4(b) above, with the remaining Change of Control Payment released to the Company, or (z) if the Total Purchase Amount as of the Final Calculation Date is greater than $5,000,000, release all of the Change of Control Payment to Microsoft.

5. Entire Agreement; Amendments and Waivers. This Agreement (including the exhibits hereto) constitutes the full and entire understanding and agreement between the parties

	with regard to the subjects hereof. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of (i) the Company and (ii) Microsoft. Any amendment or waiver effected in accordance with this Section 5 shall be binding upon each holder of the rights set forth in this Agreement, each future holder of such rights, and the Company.
6.	Governing Law. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California.
7.	Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
8.	Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
9.	Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.
10.	Notices. All notices and other communications required or permitted hereunder shall be in writing, shall be effective when given, and shall in any event be deemed to be given (a) five (5) days after deposit with the U.S. Postal Service or other applicable postal service, if delivered by first class mail, postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day after the business day of deposit with Federal Express or similar overnight courier, freight prepaid, or (d) one day after the business day of delivery by facsimile transmission, if deliverable by facsimile transmission, with copy by first class mail, postage prepaid, and shall be addressed, as set forth on the signature pages hereto, or at such other address as such party may designate by ten (10) days’ advance written notice to the other parties hereto.

          In Witness Whereof, the undersigned have executed this Stock Issuance Agreement as of the date first above written.

ARUBA WIRELESS NETWORKS, INC.
By:	/s/ Don LeBeau
	Don LeBeau, Chief Executive Officer

Address:   1322 Crossman Ave.
Sunnyvale, CA 94089

MICROSOFT CORPORATION
By:	Ron Markezich
	Name:	Ron Markezich
	Title:	CIO, VP

Address:   1 Microsoft Way
Redmond, WA 98052

EX-10.2A

Exhibit 10.2A

Aruba Wireless Networks, Inc.

2002 Stock Plan

Adopted on April 18, 2002

(As Amended on May 6, 2003, July 31, 2003,
January 21, 2004, February 24, 2004, March 25, 2004,
May 4, 2004, August 27, 2004, August 11, 2005,
April 18, 2006, July 14, 2006, November 22, 2006 and December 8, 2006)

TABLE OF CONTENTS

	Page No.
SECTION 1. ESTABLISHMENT AND PURPOSE		1
SECTION 2. ADMINISTRATION		1
(a)  Committees of the Board of Directors		1
(b)  Authority of the Board of Directors		1
SECTION 3. ELIGIBILITY		1
(a)  General Rule		1
(b)  Ten-Percent Stockholders		1
SECTION 4. STOCK SUBJECT TO PLAN		2
(a)  Basic Limitation		2
(b)  Additional Shares		2
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES		2
(a)  Stock Purchase Agreement		2
(b)  Duration of Offers and Nontransferability of Rights		2
(c)  Purchase Price		2
(d)  Withholding Taxes		3
(e)  Restrictions on Transfer of Shares and Minimum Vesting		3
SECTION 6. TERMS AND CONDITIONS OF OPTIONS		3
(a)  Stock Option Agreement		3
(b)  Number of Shares		3
(c)  Exercise Price		3
(d)  Exercisability		4
(e)  Accelerated Exercisability		4
(f)  Basic Term		4
(g)  Termination of Service (Except by Death)		4
(h)  Leaves of Absence		5
(i)  Death of Optionee		5
(j)  Restrictions on Transfer of Shares and Minimum Vesting		5
(k)  Transferability of Options		6
(l)  Withholding Taxes		6
(m)  No Rights as a Stockholder		6
(n)  Modification, Extension and Assumption of Options		6

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	Page No.
SECTION 7. PAYMENT FOR SHARES		6
(a)  General Rule		6
(b)  Surrender of Stock		6
(c)  Services Rendered		7
(d)  Promissory Note		7
(e)  Exercise/Sale		7
(f)  Exercise/Pledge		7
SECTION 8. ADJUSTMENT OF SHARES		7
(a)  General		7
(b)  Mergers and Consolidations		7
(c)  Reservation of Rights		8
SECTION 9. SECURITIES LAW REQUIREMENTS		8
(a)  General		8
(b)  Financial Reports		8
SECTION 10. NO RETENTION RIGHTS		8
SECTION 11. DURATION AND AMENDMENTS		9
(a)  Term of the Plan		9
(b)  Right to Amend or Terminate the Plan		9
(c)  Effect of Amendment or Termination		9
SECTION 12. DEFINITIONS		9

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Aruba Wireless Networks, Inc. 2002 Stock Plan

SECTION 1. ESTABLISHMENT AND PURPOSE.

          The purpose of the Plan is to offer selected persons an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, by purchasing Shares of the Company’s Stock. The Plan provides both for the direct award or sale of Shares and for the grant of Options to purchase Shares. Options granted under the Plan may include Nonstatutory Options as well as ISOs intended to qualify under Section 422 of the Code.

          Capitalized terms are defined in Section 12.

SECTION 2. ADMINISTRATION.

          (a) Committees of the Board of Directors. The Plan may be administered by one or more Committees. Each Committee shall consist of one or more members of the Board of Directors who have been appointed by the Board of Directors. Each Committee shall have such authority and be responsible for such functions as the Board of Directors has assigned to it. If no Committee has been appointed, the entire Board of Directors shall administer the Plan. Any reference to the Board of Directors in the Plan shall be construed as a reference to the Committee (if any) to whom the Board of Directors has assigned a particular function.

          (b) Authority of the Board of Directors. Subject to the provisions of the Plan, the Board of Directors shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the Plan. All decisions, interpretations and other actions of the Board of Directors shall be final and binding on all Purchasers, all Optionees and all persons deriving their rights from a Purchaser or Optionee.

SECTION 3. ELIGIBILITY.

          (a) General Rule. Only Employees, Outside Directors and Consultants shall be eligible for the grant of Nonstatutory Options or the direct award or sale of Shares. Only Employees shall be eligible for the grant of ISOs.

          (b) Ten-Percent Stockholders. A person who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries shall not be eligible for designation as an Optionee or Purchaser unless (i) the Exercise Price is at least 110% of the Fair Market Value of a Share on the date of grant, (ii) the Purchase Price (if any) is at least 100% of the Fair Market Value of a Share and (iii) in the case of an ISO, such ISO by its terms is not exercisable after the expiration of five years from the date of grant. For purposes of this Subsection (b), in determining stock ownership, the attribution rules of Section 424(d) of the Code shall be applied.

SECTION 4. STOCK SUBJECT TO PLAN.

          (a) Basic Limitation. Not more than 38,965,837¹ Shares may be issued under the Plan (subject to Subsection (b) below and Section 8). The number of Shares that are subject to Options or other rights outstanding at any time under the Plan shall not exceed the number of Shares that then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. Shares offered under the Plan may be authorized but unissued Shares or treasury Shares.

          (b) Additional Shares. In the event that Shares previously issued under the Plan are reacquired by the Company pursuant to a forfeiture provision, right of repurchase or right of first refusal, such Shares shall be added to the number of Shares then available for issuance under the Plan. However, the aggregate number of Shares issued upon the exercise of ISOs (including Shares reacquired by the Company) shall in no event exceed 200% of the number specified in Subsection (a) above. In the event that an outstanding Option or other right for any reason expires or is canceled, the Shares allocable to the unexercised portion of such Option or other right shall not reduce the number of Shares available for issuance under the Plan.

SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.

          (a) Stock Purchase Agreement. Each award or sale of Shares under the Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Purchaser and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Purchase Agreement. The provisions of the various Stock Purchase Agreements entered into under the Plan need not be identical.

          (b) Duration of Offers and Nontransferability of Rights. Any right to acquire Shares under the Plan (other than an Option) shall automatically expire if not exercised by the Purchaser within 30 days after the grant of such right was communicated to the Purchaser by the Company. Such right shall not be transferable and shall be exercisable only by the Purchaser to whom such right was granted.

          (c) Purchase Price. The Purchase Price of Shares to be offered under the Plan shall not be less than 85% of the Fair Market Value of such Shares, and a higher percentage may be required by Section 3(b). Subject to the preceding sentence, the Board of Directors shall

¹ Reflects the 1.5-for-1 stock split effected April 26, 2002. Also reflects the 2,693,051- share decrease in the share reserve approved by the Board of Directors on May 6, 2003, the 3,651,494-share increase in the share reserve approved by the Board of Directors on July 31, 2003, the 2,328,133-share increase approved by the Board of Directors on January 21, 2004, the 290,000-share increase approved by the Board of Directors on February 24, 2004, the 407,000-share increase approved by the Board of Directors on March 25, 2004, the 2,535,000-share increase approved by the Board of Directors on May 4, 2004, the 2,500,000 shares increase approved by the Board of Directors on August 27, 2004, the 2,062,861 shares increase approved by the Board of Directors on August 11, 2005, the 6,161,610 share increase approved by the Board of Directors on April 18, 2006, the 4,122,790 share increase approved by the Board of Directors on July 14, 2006, the 3,800,000 share increase approved by the Board of Directors on November 22, 2006 and the 6,000,000 share increase approved by the Board of Directors on December 8, 2006.

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determine the Purchase Price at its sole discretion. The Purchase Price shall be payable in a form described in Section 7.

          (d) Withholding Taxes. As a condition to the purchase of Shares, the Purchaser shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such purchase.

          (e) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares awarded or sold under the Plan shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board of Directors may determine. Such restrictions shall be set forth in the applicable Stock Purchase Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally. In the case of a Purchaser who is not an officer of the Company, an Outside Director or a Consultant:

          (i) Any right to repurchase the Purchaser’s Shares at the original Purchase Price (if any) upon termination of the Purchaser’s Service shall lapse at least as rapidly as 20% per year over the five-year period commencing on the date of the award or sale of the Shares;

          (ii) Any such right may be exercised only for cash or for cancellation of indebtedness incurred in purchasing the Shares; and

          (iii) Any such right may be exercised only within 90 days after the termination of the Purchaser’s Service.

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

          (a) Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. The Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of Directors deems appropriate for inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.

          (b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 8. The Stock Option Agreement shall also specify whether the Option is an ISO or a Nonstatutory Option.

          (c) Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, and a higher percentage may be required by Section 3(b). The Exercise Price of a Nonstatutory Option shall not be less than 85% of the Fair Market Value of a Share on the date of grant, and a higher percentage may be required by Section 3(b). Subject to the preceding two sentences, the Exercise Price under any Option shall be determined by the

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Board of Directors at its sole discretion. The Exercise Price shall be payable in a form described in Section 7.

          (d) Exercisability. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. No Option shall be exercisable unless the Optionee has delivered an executed copy of the Stock Option Agreement to the Company. In the case of an Optionee who is not an officer of the Company, an Outside Director or a Consultant, an Option shall become exercisable at least as rapidly as 20% per year over the five-year period commencing on the date of grant. Subject to the preceding sentence, the Board of Directors shall determine the exercisability provisions of the Stock Option Agreement at its sole discretion.

          (e) Accelerated Exercisability. Unless the applicable Stock Option Agreement provides otherwise, all of an Optionee’s Options shall become exercisable in full if (i) the Company is subject to a Change in Control before the Optionee’s Service terminates, (ii) such Options do not remain outstanding, (iii) such Options are not assumed by the surviving corporation or its parent and (iv) the surviving corporation or its parent does not substitute options with substantially the same terms for such Options.

          (f) Basic Term. The Stock Option Agreement shall specify the term of the Option. The term shall not exceed 10 years from the date of grant, and a shorter term may be required by Section 3(b). Subject to the preceding sentence, the Board of Directors at its sole discretion shall determine when an Option is to expire.

          (g) Termination of Service (Except by Death). If an Optionee’s Service terminates for any reason other than the Optionee’s death, then the Optionee’s Options shall expire on the earliest of the following occasions:

               (i) The expiration date determined pursuant to Subsection (f) above;

               (ii) The date three months after the termination of the Optionee’s Service for any reason other than Disability, or such later date as the Board of Directors may determine; or

               (iii) The date six months after the termination of the Optionee’s Service by reason of Disability, or such later date as the Board of Directors may determine.

The Optionee may exercise all or part of the Optionee’s Options at any time before the expiration of such Options under the preceding sentence, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination). The balance of such Options shall lapse when the Optionee’s Service terminates. In the event that the Optionee dies after the termination of the Optionee’s Service but before the expiration of the Optionee’s Options, all or part of such Options may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by

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beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s Service terminated (or became exercisable as a result of the termination) and the underlying Shares had vested before the Optionee’s Service terminated (or vested as a result of the termination).

          (h) Leaves of Absence. For purposes of Subsection (g) above, Service shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave was approved by the Company in writing and if continued crediting of Service for this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company).

          (i) Death of Optionee. If an Optionee dies while the Optionee is in Service, then the Optionee’s Options shall expire on the earlier of the following dates:

          (i) The expiration date determined pursuant to Subsection (f) above; or

          (ii) The date 12 months after the Optionee’s death, or such later date as the Board of Directors may determine.

All or part of the Optionee’s Options may be exercised at any time before the expiration of such Options under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired such Options directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that such Options had become exercisable before the Optionee’s death (or became exercisable as a result of the death) and the underlying Shares had vested before the Optionee’s death (or vested as a result of the Optionee’s death). The balance of such Options shall lapse when the Optionee dies.

          (j) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board of Directors may determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally. In the case of an Optionee who is not an officer of the Company, an Outside Director or a Consultant:

          (i) Any right to repurchase the Optionee’s Shares at the original Exercise Price upon termination of the Optionee’s Service shall lapse at least as rapidly as 20% per year over the five-year period commencing on the date of the option grant;

          (ii) Any such right may be exercised only for cash or for cancellation of indebtedness incurred in purchasing the Shares; and

          (iii) Any such right may be exercised only within 90 days after the later of (A) the termination of the Optionee’s Service or (B) the date of the option exercise.

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          (k) Transferability of Options. An Option shall be transferable by the Optionee only by (i) a beneficiary designation, (ii) a will or (iii) the laws of descent and distribution, except as provided in the next sentence. If the applicable Stock Option Agreement so provides, an NSO shall also be transferable by the Optionee by (i) a gift to a member of the Optionee’s Immediate Family or (ii) a gift to an inter vivos or testamentary trust in which members of the Optionee’s Immediate Family have a beneficial interest of more than 50% and which provides that such NSO is to be transferred to the beneficiaries upon the Optionee’s death. An ISO may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee’s guardian or legal representative.

          (l) Withholding Taxes. As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Optionee shall also make such arrangements as the Board of Directors may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.

          (m) No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Shares covered by the Optionee’s Option until such person becomes entitled to receive such Shares by filing a notice of exercise and paying the Exercise Price pursuant to the terms of such Option.

          (n) Modification, Extension and Assumption of Options. Within the limitations of the Plan, the Board of Directors may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s obligations under such Option.

SECTION 7. PAYMENT FOR SHARES.

          (a) General Rule. The entire Purchase Price or Exercise Price of Shares issued under the Plan shall be payable in cash or cash equivalents at the time when such Shares are purchased, except as otherwise provided in this Section 7.

          (b) Surrender of Stock. To the extent that a Stock Option Agreement so provides, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when the Option is exercised. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

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          (c) Services Rendered. At the discretion of the Board of Directors, Shares may be awarded under the Plan in consideration of services rendered to the Company, a Parent or a Subsidiary prior to the award.

          (d) Promissory Note. To the extent that a Stock Option Agreement or Stock Purchase Agreement so provides, all or a portion of the Exercise Price or Purchase Price (as the case may be) of Shares issued under the Plan may be paid with a full-recourse promissory note. However, the par value of the Shares, if newly issued, shall be paid in cash or cash equivalents. The Shares shall be pledged as security for payment of the principal amount of the promissory note and interest thereon. The interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Board of Directors (at its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of such note.

          (e) Exercise/Sale. To the extent that a Stock Option Agreement so provides, and if Stock is publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

          (f) Exercise/Pledge. To the extent that a Stock Option Agreement so provides, and if Stock is publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

SECTION 8. ADJUSTMENT OF SHARES.

          (a) General. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of an extraordinary dividend payable in a form other than Shares in an amount that has a material effect on the Fair Market Value of the Stock, a combination or consolidation of the outstanding Stock into a lesser number of Shares, a recapitalization, a spin-off, a reclassification or a similar occurrence, the Board of Directors shall make appropriate adjustments in one or more of (i) the number of Shares available for future grants under Section 4, (ii) the number of Shares covered by each outstanding Option or (iii) the Exercise Price under each outstanding Option.

          (b) Mergers and Consolidations. In the event that the Company is a party to a merger or consolidation, outstanding Options shall be subject to the agreement of merger or consolidation. Such agreement shall provide for:

          (i) The continuation of such outstanding Options by the Company (if the Company is the surviving corporation);

7

          (ii) The assumption of the Plan and such outstanding Options by the surviving corporation or its parent;

          (iii) The substitution by the surviving corporation or its parent of options with substantially the same terms for such outstanding Options;

          (iv) The full exercisability of such outstanding Options and full vesting of the Shares subject to such Options, followed by the cancellation of such Options; or

          (v) The settlement of the full value of such outstanding Options (whether or not then exercisable) in cash or cash equivalents, followed by the cancellation of such Options.

          (c) Reservation of Rights. Except as provided in this Section 8, an Optionee or Purchaser shall have no rights by reason of (i) any subdivision or consolidation of shares of stock of any class, (ii) the payment of any dividend or (iii) any other increase or decrease in the number of shares of stock of any class. Any issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

SECTION 9. SECURITIES LAW REQUIREMENTS.

          (a) General. Shares shall not be issued under the Plan unless the issuance and delivery of such Shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded.

          (b) Financial Reports. The Company each year shall furnish to Optionees, Purchasers and stockholders who have received Stock under the Plan its balance sheet and income statement, unless such Optionees, Purchasers or stockholders are key Employees whose duties with the Company assure them access to equivalent information. Such balance sheet and income statement need not be audited.

SECTION 10. NO RETENTION RIGHTS.

          Nothing in the Plan or in any right or Option granted under the Plan shall confer upon the Purchaser or Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Purchaser or Optionee) or of the Purchaser or

8

Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

SECTION 11. DURATION AND AMENDMENTS.

          (a) Term of the Plan. The Plan, as set forth herein, shall become effective on the date of its adoption by the Board of Directors, subject to the approval of the Company’s stockholders. If the stockholders fail to approve the Plan within 12 months after its adoption by the Board of Directors, then any grants, exercises or sales that have already occurred under the Plan shall be rescinded and no additional grants, exercises or sales shall thereafter be made under the Plan. The Plan shall terminate automatically 10 years after the later of (i) its adoption by the Board of Directors or (ii) the most recent increase in the number of Shares reserved under Section 4 that was approved by the Company’s stockholders. The Plan may be terminated on any earlier date pursuant to Subsection (b) below.

          (b) Right to Amend or Terminate the Plan. The Board of Directors may amend, suspend or terminate the Plan at any time and for any reason; provided, however, that any amendment of the Plan shall be subject to the approval of the Company’s stockholders if it (i) increases the number of Shares available for issuance under the Plan (except as provided in Section 8) or (ii) materially changes the class of persons who are eligible for the grant of ISOs. Stockholder approval shall not be required for any other amendment of the Plan. If the stockholders fail to approve an increase in the number of Shares reserved under Section 4 within 12 months after its adoption by the Board of Directors, then any grants, exercises or sales that have already occurred in reliance on such increase shall be rescinded and no additional grants, exercises or sales shall thereafter be made in reliance on such increase.

          (c) Effect of Amendment or Termination. No Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Option previously granted under the Plan.

SECTION 12. DEFINITIONS.

          (a) “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time.

          (b) “Change in Control” shall mean:

          (i) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity; or

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          (ii) The sale, transfer or other disposition of all or substantially all of the Company’s assets.

A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

          (c) “Code” shall mean the Internal Revenue Code of 1986, as amended.

          (d) “Committee” shall mean a committee of the Board of Directors, as described in Section 2(a).

          (e) “Company” shall mean Aruba Wireless Networks, Inc., a Delaware corporation.

          (f) “Consultant” shall mean a person who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.

          (g) “Disability” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

          (h) “Employee” shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

          (i) “Exercise Price” shall mean the amount for which one Share may be purchased upon exercise of an Option, as specified by the Board of Directors in the applicable Stock Option Agreement.

          (j) “Fair Market Value” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

          (k) “Immediate Family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships.

          (l) “ISO” shall mean an employee incentive stock option described in Section 422(b) of the Code.

          (m) “Nonstatutory Option” shall mean a stock option not described in Sections 422(b) or 423(b) of the Code.

          (n) “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

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          (o) “Optionee” shall mean a person who holds an Option.

          (p) “Outside Director” shall mean a member of the Board of Directors who is not an Employee.

          (q) “Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

          (r) “Plan” shall mean this Aruba Wireless Networks, Inc. 2002 Stock Plan.

          (s) “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Board of Directors.

          (t) “Purchaser” shall mean a person to whom the Board of Directors has offered the right to acquire Shares under the Plan (other than upon exercise of an Option).

          (u) “Service” shall mean service as an Employee, Outside Director or Consultant.

          (v) “Share” shall mean one share of Stock, as adjusted in accordance with Section 8 (if applicable).

          (w) “Stock” shall mean the Common Stock of the Company, with a par value of $0.0001 per Share.

          (x) “Stock Option Agreement” shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to the Optionee’s Option.

          (y) “Stock Purchase Agreement” shall mean the agreement between the Company and a Purchaser who acquires Shares under the Plan that contains the terms, conditions and restrictions pertaining to the acquisition of such Shares.

          (z) “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

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EX-10.2B

Exhibit 10.2B

Aruba Wireless Networks, Inc. 2002 Stock Plan

Notice of Stock Option Grant

The Optionee has been granted the following option to purchase shares of the Common Stock of Aruba Wireless Networks, Inc.:

Name of Optionee:	«Name»
Total Number of Shares:	«TotalShares»
Type of Option:	«ISO» Incentive Stock Option (ISO)
	«NSO» Nonstatutory Stock Option (NSO)
Exercise Price per Share:	$«PricePerShare»
Date of Grant:	«DateGrant»
Date Exercisable:	This option may be exercised with respect to the first 25% of the Shares subject to this option when the Optionee completes 12 months of continuous Service after the Vesting Commencement Date set forth below. This option may be exercised with respect to an additional 1/48th of the Shares subject to this option when the Optionee completes each month of continuous Service thereafter.
Vesting Commencement Date:	«VestComDate»
Expiration Date:	«ExpDate». This option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 6 of the Stock Option Agreement.

By signing below, the Optionee and the Company agree that this option is granted under, and governed by the terms and conditions of, the 2002 Stock Plan and the Stock Option Agreement. Both of these documents are attached to, and made a part of, this Notice of Stock Option Grant. Section 13 of the Stock Option Agreement includes important acknowledgements of the Optionee. In addition, the Optionee acknowledges receipt of the memorandum entitled “Information for Optionees” (including Exhibits A, B and C thereto) included in this option package.

Optionee:	Aruba Wireless Networks, Inc.
	By:
	Title:

THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

Aruba Wireless Networks, Inc. 2002 Stock Plan:
Stock Option Agreement

SECTION 1. GRANT OF OPTION.

          (a) Option. On the terms and conditions set forth in the Notice of Stock Option Grant and this Agreement, the Company grants to the Optionee on the Date of Grant the option to purchase at the Exercise Price the number of Shares set forth in the Notice of Stock Option Grant. The Exercise Price is agreed to be at least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair Market Value if Section 3(b) of the Plan applies). This option is intended to be an ISO or an NSO, as provided in the Notice of Stock Option Grant.

          (b) $100,000 Limitation. Even if this option is designated as an ISO in the Notice of Stock Option Grant, it shall be deemed to be an NSO to the extent (and only to the extent) required by the $100,000 annual limitation under Section 422(d) of the Code.

          (c) Stock Plan and Defined Terms. This option is granted pursuant to the Plan, a copy of which the Optionee acknowledges having received. The provisions of the Plan are incorporated into this Agreement by this reference. Capitalized terms are defined in Section 14 of this Agreement.

SECTION 2. RIGHT TO EXERCISE.

          (a) Exercisability. Subject to Subsection (b) below and the other conditions set forth in this Agreement, all or part of this option may be exercised prior to its expiration at the time or times set forth in the Notice of Stock Option Grant. In addition, this option shall become exercisable in full if Section 8(b)(iv) of the Plan applies.

          (b) Stockholder Approval. Any other provision of this Agreement notwithstanding, no portion of this option shall be exercisable at any time prior to the approval of the Plan by the Company’s stockholders.

SECTION 3. NO TRANSFER OR ASSIGNMENT OF OPTION.

          Except as otherwise provided in this Agreement, this option and the rights and privileges conferred hereby shall not be sold, pledged or otherwise transferred (whether by

operation of law or otherwise) and shall not be subject to sale under execution, attachment, levy or similar process.

SECTION 4. EXERCISE PROCEDURES.

          (a) Notice of Exercise. The Optionee or the Optionee’s representative may exercise this option by giving written notice to the Company pursuant to Section 12(c). The notice shall specify the election to exercise this option, the number of Shares for which it is being exercised and the form of payment. The person exercising this option shall sign the notice. In the event that this option is being exercised by the representative of the Optionee, the notice shall be accompanied by proof (satisfactory to the Company) of the representative’s right to exercise this option. The Optionee or the Optionee’s representative shall deliver to the Company, at the time of giving the notice, payment in a form permissible under Section 5 for the full amount of the Purchase Price.

          (b) Issuance of Shares. After receiving a proper notice of exercise, the Company shall cause to be issued one or more certificates evidencing the Shares for which this option has been exercised. Such Shares shall be registered (i) in the name of the person exercising this option, (ii) in the names of such person and his or her spouse as community property or as joint tenants with the right of survivorship or (iii) with the Company’s consent, in the name of a revocable trust. The Company shall cause such certificates to be delivered to or upon the order of the person exercising this option.

          (c) Withholding Taxes. In the event that the Company determines that it is required to withhold any tax as a result of the exercise of this option, the Optionee, as a condition to the exercise of this option, shall make arrangements satisfactory to the Company to enable it to satisfy all withholding requirements. The Optionee shall also make arrangements satisfactory to the Company to enable it to satisfy any withholding requirements that may arise in connection with the disposition of Shares purchased by exercising this option.

SECTION 5. PAYMENT FOR STOCK.

          (a) Cash. All or part of the Purchase Price may be paid in cash or cash equivalents.

          (b) Surrender of Stock. At the discretion of the Board of Directors, all or any part of the Purchase Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value as of the date when this option is exercised.

          (c) Exercise/Sale. All or part of the Purchase Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company. However, payment pursuant to this Subsection (c) shall be permitted only if (i) Stock then is publicly traded and (ii) such payment does not violate applicable law.

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SECTION 6. TERM AND EXPIRATION.

          (a) Basic Term. This option shall in any event expire on the expiration date set forth in the Notice of Stock Option Grant, which date is 10 years after the Date of Grant (five years after the Date of Grant if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies).

          (b) Termination of Service (Except by Death). If the Optionee’s Service terminates for any reason other than death, then this option shall expire on the earliest of the following occasions:

          (i) The expiration date determined pursuant to Subsection (a) above;

          (ii) The date three months after the termination of the Optionee’s Service for any reason other than Disability; or

          (iii) The date six months after the termination of the Optionee’s Service by reason of Disability.

The Optionee may exercise all or part of this option at any time before its expiration under the preceding sentence, but only to the extent that this option had become exercisable before the Optionee’s Service terminated. When the Optionee’s Service terminates, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable. In the event that the Optionee dies after termination of Service but before the expiration of this option, all or part of this option may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become exercisable before the Optionee’s Service terminated.

          (c) Death of the Optionee. If the Optionee dies while in Service, then this option shall expire on the earlier of the following dates:

          (i) The expiration date determined pursuant to Subsection (a) above; or

          (ii) The date 12 months after the Optionee’s death.

All or part of this option may be exercised at any time before its expiration under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become exercisable before the Optionee’s death. When the Optionee dies, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable.

          (d) Leaves of Absence. For any purpose under this Agreement, Service shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave was approved by the Company in writing and if continued crediting of Service for such purpose is

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expressly required by the terms of such leave or by applicable law (as determined by the Company).

          (e) Notice Concerning ISO Treatment. Even if this option is designated as an ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax treatment as an ISO to the extent that it is exercised:

          (i) More than three months after the date when the Optionee ceases to be an Employee for any reason other than death or permanent and total disability (as defined in Section 22(e)(3) of the Code);

          (ii) More than 12 months after the date when the Optionee ceases to be an Employee by reason of permanent and total disability (as defined in Section 22(e)(3) of the Code); or

          (iii) More than three months after the date when the Optionee has been on a leave of absence for 90 days, unless the Optionee’s reemployment rights following such leave were guaranteed by statute or by contract.

SECTION 7. RIGHT OF FIRST REFUSAL.

          (a) Right of First Refusal. In the event that the Optionee proposes to sell, pledge or otherwise transfer to a third party any Shares acquired under this Agreement, or any interest in such Shares, the Company shall have the Right of First Refusal with respect to all (and not less than all) of such Shares. If the Optionee desires to transfer Shares acquired under this Agreement, the Optionee shall give a written Transfer Notice to the Company describing fully the proposed transfer, including the number of Shares proposed to be transferred, the proposed transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed sale or transfer will not violate any applicable federal, State or foreign securities laws. The Transfer Notice shall be signed both by the Optionee and by the proposed Transferee and must constitute a binding commitment of both parties to the transfer of the Shares. The Company shall have the right to purchase all, and not less than all, of the Shares on the terms of the proposal described in the Transfer Notice (subject, however, to any change in such terms permitted under Subsection (b) below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice was received by the Company.

          (b) Transfer of Shares. If the Company fails to exercise its Right of First Refusal within 30 days after the date when it received the Transfer Notice, the Optionee may, not later than 90 days following receipt of the Transfer Notice by the Company, conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions described in the Transfer Notice, provided that any such sale is made in compliance with applicable federal, State and foreign securities laws and not in violation of any other contractual restrictions to which the Optionee is bound. Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by the Optionee, shall again be subject to the Right of First Refusal and shall require compliance with the procedure described in Subsection (a) above. If the Company exercises its Right of First

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Refusal, the parties shall consummate the sale of the Shares on the terms set forth in the Transfer Notice within 60 days after the date when the Company received the Transfer Notice (or within such longer period as may have been specified in the Transfer Notice); provided, however, that in the event the Transfer Notice provided that payment for the Shares was to be made in a form other than cash or cash equivalents paid at the time of transfer, the Company shall have the option of paying for the Shares with cash or cash equivalents equal to the present value of the consideration described in the Transfer Notice.

          (c) Additional or Exchanged Securities and Property. In the event of a merger or consolidation of the Company with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Shares subject to this Section 7 shall immediately be subject to the Right of First Refusal. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 7.

          (d) Termination of Right of First Refusal. Any other provision of this Section 7 notwithstanding, in the event that the Stock is readily tradable on an established securities market when the Optionee desires to transfer Shares, the Company shall have no Right of First Refusal, and the Optionee shall have no obligation to comply with the procedures prescribed by Subsections (a) and (b) above.

          (e) Permitted Transfers. This Section 7 shall not apply to (i) a transfer by beneficiary designation, will or intestate succession or (ii) a transfer to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee transfers any Shares acquired under this Agreement, either under this Subsection (e) or after the Company has failed to exercise the Right of First Refusal, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

          (f) Termination of Rights as Stockholder. If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 7, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.

          (g) Assignment of Right of First Refusal. The Board of Directors may freely assign the Company’s Right of First Refusal, in whole or in part. Any person who accepts

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an assignment of the Right of First Refusal from the Company shall assume all of the Company’s rights and obligations under this Section 7.

SECTION 8. LEGALITY OF INITIAL ISSUANCE.

          No Shares shall be issued upon the exercise of this option unless and until the Company has determined that:

          (a) It and the Optionee have taken any actions required to register the Shares under the Securities Act or to perfect an exemption from the registration requirements thereof;

          (b) Any applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and

          (c) Any other applicable provision of federal, State or foreign law has been satisfied.

SECTION 9. NO REGISTRATION RIGHTS.

          The Company may, but shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Agreement to comply with any law.

SECTION 10. RESTRICTIONS ON TRANSFER OF SHARES.

          (a) Securities Law Restrictions. Regardless of whether the offering and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any State, the Company at its discretion may impose restrictions upon the sale, pledge or other transfer of such Shares (including the placement of appropriate legends on stock certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any State or any other law.

          (b) Market Stand-Off. In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, the Optionee or a Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior written consent of the Company or its managing underwriter. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriter. In no event, however, shall such period exceed 180 days plus such additional period as may reasonably be requested by the Company or such underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of research reports or (ii) analyst recommendations and opinions, including

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(without limitation) the restrictions set forth in Rule 2711(f)(4) of the National Association of Securities Dealers and Rule 472(f)(4) of the New York Stock Exchange, as amended, or any similar successor rules. The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection (b). This Subsection (b) shall not apply to Shares registered in the public offering under the Securities Act.

          (c) Investment Intent at Grant. The Optionee represents and agrees that the Shares to be acquired upon exercising this option will be acquired for investment, and not with a view to the sale or distribution thereof.

          (d) Investment Intent at Exercise. In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available that requires an investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.

          (e) Legends. All certificates evidencing Shares purchased under this Agreement shall bear the following legend:

“THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

All certificates evidencing Shares purchased under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN

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OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

          (f) Removal of Legends. If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares sold under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

          (g) Administration. Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 10 shall be conclusive and binding on the Optionee and all other persons.

SECTION 11. ADJUSTMENT OF SHARES.

          In the event of any transaction described in Section 8(a) of the Plan, the terms of this option (including, without limitation, the number and kind of Shares subject to this option and the Exercise Price) shall be adjusted as set forth in Section 8(a) of the Plan. In the event that the Company is a party to a merger or consolidation, this option shall be subject to the agreement of merger or consolidation, as provided in Section 8(b) of the Plan.

SECTION 12. MISCELLANEOUS PROVISIONS.

          (a) Rights as a Stockholder. Neither the Optionee nor the Optionee’s representative shall have any rights as a stockholder with respect to any Shares subject to this option until the Optionee or the Optionee’s representative becomes entitled to receive such Shares by filing a notice of exercise and paying the Purchase Price pursuant to Sections 4 and 5.

          (b) No Retention Rights. Nothing in this option or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Optionee) or of the Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

          (c) Notice. Any notice required by the terms of this Agreement shall be given in writing. It shall be deemed effective upon (i) personal delivery, (ii) deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid or (iii) deposit with Federal Express Corporation, with shipping charges prepaid. Notice shall be addressed to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company in accordance with this Subsection (c).

          (d) Entire Agreement. The Notice of Stock Option Grant, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter hereof.

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          (e) Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

SECTION 13. ACKNOWLEDGEMENTS OF THE OPTIONEE.

          (a) Tax Consequences. The Optionee agrees that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes the Optionee’s tax liabilities. The Optionee shall not make any claim against the Company or its Board of Directors, officers or employees related to tax liabilities arising from this option or the Optionee’s other compensation. In particular, the Optionee acknowledges that this option is exempt from Section 409A of the Code only if the Exercise Price is at least equal to the Fair Market Value per Share on the Date of Grant. Since Shares are not traded on an established securities market, the determination of their Fair Market Value is made by the Board of Directors or by an independent valuation firm retained by the Company. The Optionee acknowledges that there is no guarantee in either case that the Internal Revenue Service will agree with the valuation, and the Optionee shall not make any claim against the Company or its Board of Directors, officers or employees in the event that the Internal Revenue Service asserts that the valuation was too low.

          (b) Electronic Delivery of Documents. The Optionee agrees that the Company may deliver by email all documents relating to the Plan or this option (including, without limitation, a copy of the Plan) and all other documents that the Company is required to deliver to its security holders (including, without limitation, disclosures that may be required by the Securities and Exchange Commission). The Optionee also agrees that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company. If the Company posts these documents on a website, it shall notify the Optionee by email.

SECTION 14. DEFINITIONS.

          (a) “Agreement” shall mean this Stock Option Agreement.

          (b) “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.

          (c) “Code” shall mean the Internal Revenue Code of 1986, as amended.

          (d) “Committee” shall mean a committee of the Board of Directors, as described in Section 2 of the Plan.

          (e) “Company” shall mean Aruba Wireless Networks, Inc., a Delaware corporation.

          (f) “Consultant” shall mean a person who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.

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          (g) “Date of Grant” shall mean the date of grant specified in the Notice of Stock Option Grant, which date shall be the later of (i) the date on which the Board of Directors resolved to grant this option or (ii) the first day of the Optionee’s Service.

          (h) “Disability” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

          (i) “Employee” shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

          (j) “Exercise Price” shall mean the amount for which one Share may be purchased upon exercise of this option, as specified in the Notice of Stock Option Grant.

          (k) “Fair Market Value” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

          (l) “Immediate Family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships.

          (m) “ISO” shall mean an employee incentive stock option described in Section 422(b) of the Code.

          (n) “Notice of Stock Option Grant” shall mean the document so entitled to which this Agreement is attached.

          (o) “NSO” shall mean a stock option not described in Sections 422(b) or 423(b) of the Code.

          (p) “Optionee” shall mean the person named in the Notice of Stock Option Grant.

          (q) “Outside Director” shall mean a member of the Board of Directors who is not an Employee.

          (r) “Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

          (s) “Plan” shall mean the Aruba Wireless Networks, Inc. 2002 Stock Plan, as in effect on the Date of Grant.

          (t) “Purchase Price” shall mean the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised.

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          (u) “Right of First Refusal” shall mean the Company’s right of first refusal described in Section 7.

          (v) “Securities Act” shall mean the Securities Act of 1933, as amended.

          (w) “Service” shall mean service as an Employee, Outside Director or Consultant.

          (x) “Share” shall mean one share of Stock, as adjusted in accordance with Section 8 of the Plan (if applicable).

          (y) “Stock” shall mean the Common Stock of the Company.

          (z) “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

          (aa) “Transferee” shall mean any person to whom the Optionee has directly or indirectly transferred any Share acquired under this Agreement.

          (bb) “Transfer Notice” shall mean the notice of a proposed transfer of Shares described in Section 7.

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Aruba Wireless Networks, Inc. 2002 Stock Plan

Notice of Stock Option Grant

     You have been granted the following option to purchase shares of the Common Stock of Aruba Wireless Networks, Inc. (the “Company”):

Name of Optionee:	«Name»
Total Number of Shares:	«TotalShares»
Type of Option:	«ISO»Incentive Stock Option (ISO)
	«NSO»Nonstatutory Stock Option (NSO)
Exercise Price Per Share:	$«PricePerShare»
Date of Grant:	«DateGrant»
Date Exercisable:	This option may be exercised at any time after the Date of Grant for all or any part of the Shares subject to this option.
Vesting Commencement Date:	«VestComDate»
Vesting Schedule:	The Right of Repurchase shall lapse with respect to the first 25% of the Shares subject to this option when the Optionee completes 12 months of continuous Service after the Vesting Commencement Date. The Right of Repurchase shall lapse with respect to an additional 2.0833% of the Shares subject to this option when the Optionee completes each month of continuous Service thereafter.
Expiration Date:	«ExpDate». This option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 6 of the Stock Option Agreement.

By your signature and the signature of the Company’s representative below, you and the Company agree that this option is granted under and governed by the terms and conditions of the 2002 Stock Plan and the Stock Option Agreement, both of which are attached to and made a part of this document.

Optionee:	Aruba Wireless Networks, Inc.
	By:
	Title:

THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

Aruba Wireless Networks, Inc. 2002 Stock Plan:
Stock Option Agreement

SECTION 1. GRANT OF OPTION.

          (a) Option. On the terms and conditions set forth in the Notice of Stock Option Grant and this Agreement, the Company grants to the Optionee on the Date of Grant the option to purchase at the Exercise Price the number of Shares set forth in the Notice of Stock Option Grant. The Exercise Price is agreed to be at least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair Market Value if Section 3(b) of the Plan applies). This option is intended to be an ISO or an NSO, as provided in the Notice of Stock Option Grant.

          (b) $100,000 Limitation. Even if this option is designated as an ISO in the Notice of Stock Option Grant, it shall be deemed to be an NSO to the extent (and only to the extent) required by the $100,000 annual limitation under Section 422(d) of the Code.

          (c) Stock Plan and Defined Terms. This option is granted pursuant to the Plan, a copy of which the Optionee acknowledges having received. The provisions of the Plan are incorporated into this Agreement by this reference. Capitalized terms are defined in Section 14 of this Agreement.

SECTION 2. RIGHT TO EXERCISE.

          (a) Exercisability. Subject to Subsection (b) below and the other conditions set forth in this Agreement, all or part of this option may be exercised prior to its expiration at the time or times set forth in the Notice of Stock Option Grant. Shares purchased by exercising this option may be subject to the Right of Repurchase under Section 7.

          (b) Stockholder Approval. Any other provision of this Agreement notwithstanding, no portion of this option shall be exercisable at any time prior to the approval of the Plan by the Company’s stockholders.

SECTION 3. NO TRANSFER OR ASSIGNMENT OF OPTION.

          Except as otherwise provided in this Agreement, this option and the rights and privileges conferred hereby shall not be sold, pledged or otherwise transferred (whether by

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operation of law or otherwise) and shall not be subject to sale under execution, attachment, levy or similar process.

SECTION 4. EXERCISE PROCEDURES.

          (a) Notice of Exercise. The Optionee or the Optionee’s representative may exercise this option by giving written notice to the Company pursuant to Section 13(c). The notice shall specify the election to exercise this option, the number of Shares for which it is being exercised and the form of payment. The person exercising this option shall sign the notice. In the event that this option is being exercised by the representative of the Optionee, the notice shall be accompanied by proof (satisfactory to the Company) of the representative’s right to exercise this option. The Optionee or the Optionee’s representative shall deliver to the Company, at the time of giving the notice, payment in a form permissible under Section 5 for the full amount of the Purchase Price.

          (b) Issuance of Shares. After receiving a proper notice of exercise, the Company shall cause to be issued one or more certificates evidencing the Shares for which this option has been exercised. Such Shares shall be registered (i) in the name of the person exercising this option, (ii) in the names of such person and his or her spouse as community property or as joint tenants with the right of survivorship or (iii) with the Company’s consent, in the name of a revocable trust. In the case of Restricted Shares, the Company shall cause such certificates to be deposited in escrow under Section 7(c). In the case of other Shares, the Company shall cause such certificates to be delivered to or upon the order of the person exercising this option.

          (c) Withholding Taxes. In the event that the Company determines that it is required to withhold any tax as a result of the exercise of this option, the Optionee, as a condition to the exercise of this option, shall make arrangements satisfactory to the Company to enable it to satisfy all withholding requirements. The Optionee shall also make arrangements satisfactory to the Company to enable it to satisfy any withholding requirements that may arise in connection with the vesting or disposition of Shares purchased by exercising this option.

SECTION 5. PAYMENT FOR STOCK.

          (a) Cash. All or part of the Purchase Price may be paid in cash or cash equivalents.

          (b) Surrender of Stock. All or any part of the Purchase Price may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when this option is exercised. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Purchase Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to this option for financial reporting purposes.

          (c) Exercise/Sale. If Stock is publicly traded, all or part of the Purchase Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company)

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of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company.

          (d) Exercise/Pledge. If Stock is publicly traded, all or part of the Purchase Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part of the loan proceeds to the Company.

SECTION 6. TERM AND EXPIRATION.

          (a) Basic Term. This option shall in any event expire on the expiration date set forth in the Notice of Stock Option Grant, which date is 10 years after the Date of Grant (five years after the Date of Grant if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies).

          (b) Termination of Service (Except by Death). If the Optionee’s Service terminates for any reason other than death, then this option shall expire on the earliest of the following occasions:

          (i) The expiration date determined pursuant to Subsection (a) above;

          (ii) The date three months after the termination of the Optionee’s Service for any reason other than Disability; or

          (iii) The date six months after the termination of the Optionee’s Service by reason of Disability.

The Optionee may exercise all or part of this option at any time before its expiration under the preceding sentence, but only to the extent that this option is exercisable for vested Shares on or before the date when the Optionee’s Service terminates. When the Optionee’s Service terminates, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable and with respect to any Restricted Shares. In the event that the Optionee dies after termination of Service but before the expiration of this option, all or part of this option may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option was exercisable for vested Shares on or before the date when the Optionee’s Service terminated.

          (c) Death of the Optionee. If the Optionee dies while in Service, then this option shall expire on the earlier of the following dates:

          (i) The expiration date determined pursuant to Subsection (a) above; or

          (ii) The date 12 months after the Optionee’s death.

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All or part of this option may be exercised at any time before its expiration under the preceding sentence by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option is exercisable for vested Shares on or before the Optionee’s death. When the Optionee dies, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable and with respect to any Restricted Shares.

          (d) Leaves of Absence. For any purpose under this Agreement, Service shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave was approved by the Company in writing and if continued crediting of Service for such purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company).

          (e) Notice Concerning ISO Treatment. Even if this option is designated as an ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax treatment as an ISO to the extent that it is exercised:

          (i) More than three months after the date when the Optionee ceases to be an Employee for any reason other than death or permanent and total disability (as defined in Section 22(e)(3) of the Code);

          (ii) More than 12 months after the date when the Optionee ceases to be an Employee by reason of permanent and total disability (as defined in Section 22(e)(3) of the Code); or

          (iii) More than three months after the date when the Optionee has been on a leave of absence for 90 days, unless the Optionee’s reemployment rights following such leave were guaranteed by statute or by contract.

SECTION 7. RIGHT OF REPURCHASE.

          (a) Scope of Repurchase Right. Until they vest in accordance with the Notice of Stock Option Grant and Subsection (b) below, the Shares acquired under this Agreement shall be Restricted Shares and shall be subject to the Company’s Right of Repurchase. The Company, however, may decline to exercise its Right of Repurchase or may exercise its Right of Repurchase only with respect to a portion of the Restricted Shares. The Company may exercise its Right of Repurchase only during the Repurchase Period following the termination of the Optionee’s Service. The Right of Repurchase may be exercised automatically under Subsection (d) below. If the Right of Repurchase is exercised, the Company shall pay the Optionee an amount equal to the Exercise Price for each of the Restricted Shares being repurchased.

          (b) Lapse of Repurchase Right. The Right of Repurchase shall lapse with respect to the Restricted Shares in accordance with the vesting schedule set forth in the Notice of Stock Option Grant.

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          (c) Escrow. Upon issuance, the certificate(s) for Restricted Shares shall be deposited in escrow with the Company to be held in accordance with the provisions of this Agreement. Any additional or exchanged securities or other property described in Subsection (f) below shall immediately be delivered to the Company to be held in escrow. All ordinary cash dividends on Restricted Shares (or on other securities held in escrow) shall be paid directly to the Optionee and shall not be held in escrow. Restricted Shares, together with any other assets held in escrow under this Agreement, shall be (i) surrendered to the Company for repurchase upon exercise of the Right of Repurchase or the Right of First Refusal or (ii) released to the Optionee upon his or her request to the extent that the Shares have ceased to be Restricted Shares (but not more frequently than once every six months). In any event, all Shares that have ceased to be Restricted Shares, together with any other vested assets held in escrow under this Agreement, shall be released within 90 days after the earlier of (i) the termination of the Optionee’s Service or (ii) the lapse of the Right of First Refusal.

          (d) Exercise of Repurchase Right. The Company shall be deemed to have exercised its Right of Repurchase automatically for all Restricted Shares as of the commencement of the Repurchase Period, unless the Company during the Repurchase Period notifies the holder of the Restricted Shares pursuant to Section 13(c) that it will not exercise its Right of Repurchase for some or all of the Restricted Shares. During the Repurchase Period, the Company shall pay to the holder of the Restricted Shares the purchase price determined under Subsection (a) above for the Restricted Shares being repurchased. Payment shall be made in cash or cash equivalents and/or by canceling indebtedness to the Company incurred by the Optionee in the purchase of the Restricted Shares. The certificate(s) representing the Restricted Shares being repurchased shall be delivered to the Company properly endorsed for transfer.

          (e) Termination of Rights as Stockholder. If the Right of Repurchase is exercised in accordance with this Section 7 and the Company makes available the consideration for the Restricted Shares being repurchased, then the person from whom the Restricted Shares are repurchased shall no longer have any rights as a holder of the Restricted Shares (other than the right to receive payment of such consideration). Such Restricted Shares shall be deemed to have been repurchased pursuant to this Section 7, whether or not the certificate(s) for such Restricted Shares have been delivered to the Company or the consideration for such Restricted Shares has been accepted.

          (f) Additional or Exchanged Securities and Property. In the event of a merger or consolidation of the Company with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Restricted Shares shall immediately be subject to the Right of Repurchase. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Restricted Shares. Appropriate adjustments shall also be made to the price per share to be paid upon the exercise of the Right of Repurchase, provided that the aggregate purchase price payable for the Restricted Shares shall remain the same. In the event of a merger or

6

consolidation of the Company with or into another entity or any other corporate reorganization, the Right of Repurchase may be exercised by the Company’s successor.

          (g) Transfer of Restricted Shares. The Optionee shall not transfer, assign, encumber or otherwise dispose of any Restricted Shares without the Company’s written consent, except as provided in the following sentence. The Optionee may transfer Restricted Shares to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee transfers any Restricted Shares, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

          (h) Assignment of Repurchase Right. The Board of Directors may freely assign the Company’s Right of Repurchase, in whole or in part. Any person who accepts an assignment of the Right of Repurchase from the Company shall assume all of the Company’s rights and obligations under this Section 7.

SECTION 8. RIGHT OF FIRST REFUSAL.

          (a) Right of First Refusal. In the event that the Optionee proposes to sell, pledge or otherwise transfer to a third party any Shares acquired under this Agreement, or any interest in such Shares, the Company shall have the Right of First Refusal with respect to all (and not less than all) of such Shares. If the Optionee desires to transfer Shares acquired under this Agreement, the Optionee shall give a written Transfer Notice to the Company describing fully the proposed transfer, including the number of Shares proposed to be transferred, the proposed transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed sale or transfer will not violate any applicable federal or state securities laws. The Transfer Notice shall be signed both by the Optionee and by the proposed Transferee and must constitute a binding commitment of both parties to the transfer of the Shares. The Company shall have the right to purchase all, and not less than all, of the Shares on the terms of the proposal described in the Transfer Notice (subject, however, to any change in such terms permitted under Subsection (b) below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice was received by the Company.

          (b) Transfer of Shares. If the Company fails to exercise its Right of First Refusal within 30 days after the date when it received the Transfer Notice, the Optionee may, not later than 90 days following receipt of the Transfer Notice by the Company, conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions described in the Transfer Notice, provided that any such sale is made in compliance with applicable federal and state securities laws and not in violation of any other contractual restrictions to which the Optionee is bound. Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by the Optionee, shall again be subject to the Right of First Refusal and shall require compliance with the procedure described in Subsection (a) above. If the Company exercises its Right of First Refusal, the parties shall consummate the sale of the Shares on the terms set forth in the Transfer Notice within 60 days

7

after the date when the Company received the Transfer Notice (or within such longer period as may have been specified in the Transfer Notice); provided, however, that in the event the Transfer Notice provided that payment for the Shares was to be made in a form other than cash or cash equivalents paid at the time of transfer, the Company shall have the option of paying for the Shares with cash or cash equivalents equal to the present value of the consideration described in the Transfer Notice.

          (c) Additional or Exchanged Securities and Property. In the event of a merger or consolidation of the Company with or into another entity, any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Shares subject to this Section 8 shall immediately be subject to the Right of First Refusal. Appropriate adjustments to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 8.

          (d) Termination of Right of First Refusal. Any other provision of this Section 8 notwithstanding, in the event that the Stock is readily tradable on an established securities market when the Optionee desires to transfer Shares, the Company shall have no Right of First Refusal, and the Optionee shall have no obligation to comply with the procedures prescribed by Subsections (a) and (b) above.

          (e) Permitted Transfers. This Section 8 shall not apply to (i) a transfer by beneficiary designation, will or intestate succession or (ii) a transfer to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee transfers any Shares acquired under this Agreement, either under this Subsection (e) or after the Company has failed to exercise the Right of First Refusal, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

          (f) Termination of Rights as Stockholder. If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 8, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.

          (g) Assignment of Right of First Refusal. The Board of Directors may freely assign the Company’s Right of First Refusal, in whole or in part. Any person who accepts an assignment of the Right of First Refusal from the Company shall assume all of the Company’s rights and obligations under this Section 8.

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SECTION 9. LEGALITY OF INITIAL ISSUANCE.

          No Shares shall be issued upon the exercise of this option unless and until the Company has determined that:

          (a) It and the Optionee have taken any actions required to register the Shares under the Securities Act or to perfect an exemption from the registration requirements thereof;

          (b) Any applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and

          (c) Any other applicable provision of federal, state or foreign law has been satisfied.

SECTION 10. NO REGISTRATION RIGHTS.

          The Company may, but shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Agreement to comply with any law.

SECTION 11. RESTRICTIONS ON TRANSFER.

          (a) Securities Law Restrictions. Regardless of whether the offering and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any state, the Company at its discretion may impose restrictions upon the sale, pledge or other transfer of such Shares (including the placement of appropriate legends on stock certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any state or any other law.

          (b) Market Stand-Off. In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, the Optionee or a Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior written consent of the Company or its underwriters. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriters. In no event, however, shall such period exceed 180 days. The Market Stand-Off shall in any event terminate two years after the date of the Company’s initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become

9

convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection (b). This Subsection (b) shall not apply to Shares registered in the public offering under the Securities Act, and the Optionee or a Transferee shall be subject to this Subsection (b) only if the directors and officers of the Company are subject to similar arrangements.

          (c) Investment Intent at Grant. The Optionee represents and agrees that the Shares to be acquired upon exercising this option will be acquired for investment, and not with a view to the sale or distribution thereof.

          (d) Investment Intent at Exercise. In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available which requires an investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.

          (e) Legends. All certificates evidencing Shares purchased under this Agreement shall bear the following legend:

“THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES AND CERTAIN REPURCHASE RIGHTS UPON TERMINATION OF SERVICE WITH THE COMPANY. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

All certificates evidencing Shares purchased under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

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          (f) Removal of Legends. If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares sold under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.

          (g) Administration. Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 11 shall be conclusive and binding on the Optionee and all other persons.

SECTION 12. ADJUSTMENT OF SHARES.

          In the event of any transaction described in Section 8(a) of the Plan, the terms of this option (including, without limitation, the number and kind of Shares subject to this option and the Exercise Price) shall be adjusted as set forth in Section 8(a) of the Plan. In the event that the Company is a party to a merger or consolidation, this option shall be subject to the agreement of merger or consolidation, as provided in Section 8(b) of the Plan.

SECTION 13. MISCELLANEOUS PROVISIONS.

          (a) Rights as a Stockholder. Neither the Optionee nor the Optionee’s representative shall have any rights as a stockholder with respect to any Shares subject to this option until the Optionee or the Optionee’s representative becomes entitled to receive such Shares by filing a notice of exercise and paying the Purchase Price pursuant to Sections 4 and 5.

          (b) No Retention Rights. Nothing in this option or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Optionee) or of the Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

          (c) Notice. Any notice required by the terms of this Agreement shall be given in writing. It shall be deemed effective upon (i) personal delivery, (ii) deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid or (iii) deposit with Federal Express Corporation, with shipping charges prepaid. Notice shall be addressed to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company in accordance with this Subsection (c).

          (d) Entire Agreement. The Notice of Stock Option Grant, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) which relate to the subject matter hereof.

          (e) Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.

11

SECTION 14. DEFINITIONS.

          (a) “Agreement” shall mean this Stock Option Agreement.

          (b) “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.

          (c) “Code” shall mean the Internal Revenue Code of 1986, as amended.

          (d) “Committee” shall mean a committee of the Board of Directors, as described in Section 2 of the Plan.

          (e) “Company” shall mean Aruba Wireless Networks, Inc., a Delaware corporation.

          (f) “Consultant” shall mean a person who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.

          (g) “Date of Grant” shall mean the date specified in the Notice of Stock Option Grant, which date shall be the later of (i) the date on which the Board of Directors resolved to grant this option or (ii) the first day of the Optionee’s Service.

          (h) “Disability” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.

          (i) “Employee” shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

          (j) “Exercise Price” shall mean the amount for which one Share may be purchased upon exercise of this option, as specified in the Notice of Stock Option Grant.

          (k) “Fair Market Value” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.

          (l) “Immediate Family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships.

          (m) “ISO” shall mean an employee incentive stock option described in Section 422(b) of the Code.

          (n) “Notice of Stock Option Grant” shall mean the document so entitled to which this Agreement is attached.

12

          (o) “NSO” shall mean a stock option not described in Sections 422(b) or 423(b) of the Code.

          (p) “Optionee” shall mean the person named in the Notice of Stock Option Grant.

          (q) “Outside Director” shall mean a member of the Board of Directors who is not an Employee.

          (r) “Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

          (s) “Plan” shall mean the Aruba Wireless Networks, Inc. 2002 Stock Plan, as in effect on the Date of Grant.

          (t) “Purchase Price” shall mean the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised.

          (u) “Repurchase Period” shall mean a period of 90 consecutive days commencing on the date when the Optionee’s Service terminates for any reason, including (without limitation) death or disability.

          (v) “Restricted Share” shall mean a Share that is subject to the Right of Repurchase.

          (w) “Right of First Refusal” shall mean the Company’s right of first refusal described in Section 8.

          (x) “Right of Repurchase” shall mean the Company’s right of repurchase described in Section 7.

          (y) “Securities Act” shall mean the Securities Act of 1933, as amended.

          (z) “Service” shall mean service as an Employee, Outside Director or Consultant.

          (aa) “Share” shall mean one share of Stock, as adjusted in accordance with Section 8 of the Plan (if applicable).

          (bb) “Stock” shall mean the Common Stock of the Company, with a par value of $0.0001 per Share.

          (cc) “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

13

          (dd) “Transferee” shall mean any person to whom the Optionee has directly or indirectly transferred any Share acquired under this Agreement.

          (ee) “Transfer Notice” shall mean the notice of a proposed transfer of Shares described in Section 8.

14

EX-10.5

Exhibit 10.5

Aruba Wireless Networks, Inc.

EXECUTIVE EMPLOYMENT AGREEMENT
for
DOMINIC ORR

     This Executive Employment Agreement (“Agreement”) is effective as of April 4, 2006, by and between Dominic Orr (“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/ Steffan C. Tomlinson
Title:	CFO

Understood and Agreed:

Executive

By: /s/ Dominic Orr   Dominic Orr

EX-10.6

Exhibit 10.6

Aruba Networks, Inc.
3316 Pomerado Drive
San Jose, California 95135

April 12, 2002

Keerti Melkote
3305 Pomerado Way
San Jose, CA 95135

Dear Keerti:

          Aruba Networks, Inc. (the “Company”) is pleased to confirm your employment on the following terms (the “Agreement”):

          1. Compensation and Benefits. The Company will pay you such salary as agreed upon by you and the Company’s Board of Directors (the “Board”). Such salary will be payable in accordance with the Company’s standard payroll schedule and will be subject to adjustment pursuant to the Company’s employee compensation policies in effect from time to time. As a regular employee of the Company, you will be eligible to participate in such Company-sponsored benefits as are in effect from time to time.

          2. No Conflicts. By signing this Agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company.

          3. Stock Purchase Agreement. You purchased 2,000,000 shares of common stock pursuant to a Stock Purchase Agreement dated February 14, 2002. The terms of such Stock Purchase Agreement remain in full force and are not affected by this Agreement.

          4. Proprietary Information and Inventions Agreement. Like all Company employees, you signed the Company’s standard Proprietary Information and Inventions Agreement. The terms of that agreement remain in full force and are not affected by this Agreement.

          5. Employment Relationship. Employment with the Company is for no specific period of time. Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause. Any contrary representations that may have been made to you are superseded by this Agreement. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and a member of the Board.

Keerti Melkote
April 12, 2002
Page 2

          6. Outside Activities. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity without the prior written consent of the Company. While you render services to the Company, you also will not assist any person or entity in competing with the Company, in preparing to compete with the Company or in hiring any employees or consultants of the Company.

          7. Withholding Taxes. All forms of compensation referred to in this Agreement are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law.

          8. Entire Agreement. No other agreements, representations or understandings (whether oral or written and whether express or implied) that are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter hereof. This Agreement, the Proprietary Information and Inventions Agreement, and the Stock Purchase Agreement contain the entire understanding of the parties with respect to their respective subject matter and the subject matter hereof.

* * * * *

Keerti Melkote
April 12, 2002
Page 3

          Please indicate your agreement with these terms by signing and dating the enclosed duplicate originals of this Agreement and returning them to me. As required by law, your continued employment with the Company is contingent upon your providing legal proof of your identity and authorization to work in the United States.

Very truly yours,
Aruba Networks, Inc.
By:	/s/ Pankaj Manglik

I have read and accept the above terms of employment:

/s/ Keerti Melkote

Keerti Melkote

Dated:   4-12-02

EX-10.7

Exhibit 10.7

1322 Crossman Avenue | Sunnyvale, California 94089
Tel 408 227 4500 | Fax 408 227 4550
www.arubanetworks.com

July 18, 2006

Sriram Ramachandran

Dear Sriram:

Aruba Wireless Networks, Inc. (the “Company”) is pleased to offer you employment on the following terms:

1.	Position: You will start in a full-time position as Vice President, Engineering. By signing this letter, you confirm to the Company that you are under no contractual or other legal obligations that would prohibit you from performing your duties for the Company.
2.	Compensation: You will be paid an annual salary of $195,000.00 payable in accordance with the Company’s standard payroll schedule on a semi-monthly basis. This salary will be subject to adjustment pursuant to the Company’s employee compensation policies in effect from time to time.
3.	Employee Benefits: As a regular employee of the Company you will be eligible to participate in a number of Company-sponsored benefits, which are described in the employee benefit summary enclosed with this letter.
4.	Stock Options. Subject to the approval of the Company’s Board of Directors or its Compensation Committee, you will be granted an option to purchase 1,025,000 shares of the Company’s Common Stock. The exercise price per share will be equal to the fair market value per share on the date the option is granted or on your first day of employment, whichever is later. The option will be subject to the terms and conditions applicable to options granted under the Company’s 2002 Stock Plan, as described in that Plan and the applicable stock option agreement. The option will be immediately exercisable, but the purchased shares will be subject to repurchase by the Company at the exercise price in the event that your service terminates before you vest in the shares. You will vest in 25% of the option shares after 12 months of continuous service, and the balance will vest in equal monthly installments over the next 36 months of continuous service, as described in the applicable stock option agreement.
	Change in Control.
	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 one year from your date of hire, 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 one year from your date of hire, 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.

     Definition of “Change in Control.” For the 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 a 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 sales, lease, license or other disposition.

	The term “Change of Control” shall not include a sale of assets, merger, or the other transaction effected exclusively for the purpose of changing the domicile of the Company.
5.	Proprietary Information and Inventions Agreement; New Employee Guidelines: Like all Company employees, you will be required, as a condition to your employment with the Company, to sign the Company’s standard Proprietary Information and Inventions Agreement, a copy of which is attached hereto as Exhibit A. In addition, you will be required to sign the Company’s New Employee Guidelines, a copy of which is attached hereto as Exhibit B.
6.	Employment Relationship: Employment with the Company is for no specific period of time. Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause. Any contrary representations that may have been made to you are superseded by this offer. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and the Chief Executive Officer of the Company.

7.	Outside Activities: While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity without the written consent of the Company. While you render services to the Company, you also will not assist any person or entity in competing with the Company, in preparing to compete with the Company or in hiring any employees or consultants of the Company.
8.	Withholding Taxes: All forms of compensation referred to in this letter are subject to reduction to reflect applicable withholding and payroll taxes.
9.	Entire Agreement: This letter supersedes and replaces any prior understandings or agreements, whether oral or written, between you and the Company regarding the subject matter described in this letter.

We hope that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating both the enclosed duplicate original of this letter and the enclosed Proprietary Information and Inventions Agreement and returning them to me. As required by law, your employment with the Company is also contingent upon your providing legal proof of your identity and authorization to work in the United States. We look forward to having you join. If you have any questions, please call me at 408-754-3023. Welcome!

Very truly yours,

/s/ Dominic Orr

By: Dominic Orr

Title: Chief Executive Officer

I have read and accept this employment offer:

/s/ Sriram Ramachandran	7/20/2006
Signature of Sriram Ramachandran	Dated
August 14, 2006
Start Date

Attachment
Exhibit A: Proprietary Information and Inventions Agreement
Exhibit B: New Employee Guidelines

EX-10.8

Exhibit 10.8

1322 crossman avenue | sunnyvale, california 94089
tel 408 227 4500 | fax 408 227 4550
www.arubanetworks.com

July 14, 2005

Steffan C. Tomlinson
969 Lincoln Ave
Palo Alto, CA 94301

Dear Steffan:

Aruba Wireless Networks, Inc. (the “Company”) is pleased to offer you employment on the following terms:

1.	Position. You will start in a full-time position as Chief Financial Officer and report to the Company’s Chief Executive Officer. By signing this letter agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company.
2.	Cash Compensation. The Company will pay you a starting salary at the rate of $190,000 per year, payable in accordance with the Company’s standard payroll schedule. This salary will be subject to adjustment pursuant to the Company’s employee compensation policies in effect from time to time. You will also be eligible to participate in the fiscal year 2005 Executive Incentive Program. At targeted plan performance the Executive Incentive Plan pays out 25% of your base salary amount.
3.	Employee Benefits. As a regular employee of the Company, you will be eligible to participate in a number of Company-sponsored benefits. In addition, you will be entitled to paid vacation in accordance with the Company’s vacation policy, as in effect from time to time.
4.	Stock Options. Subject to the approval of the Company’s Board of Directors, following your commencement of service you will be granted an option to purchase 500,000 shares of the Company’s Common Stock (the “Option”). The exercise price per share will be equal to the fair market value per share on the date the Option is granted or on your first day of service, whichever is later. The Option will be subject to the terms and conditions applicable to options granted under the Company’s 2002 Stock Plan (the “Plan”), as described in the Plan and the applicable stock option agreement. The Option will be immediately exercisable, but the unvested portion of the purchased shares will be subject to repurchase by the Company at the exercise price in the event that your service terminates for any reason before you vest in the shares. You will vest in 25% of the option shares after 12 months of continuous service measured from the start of your service, and the balance will vest in equal monthly installments over the next 36 months of continuous service, as described in the applicable stock option agreement.
	If the Company is subject to a Change in Control (as defined in the Plan) and you are subject to an Involuntary Termination without cause within 12 months following such Change in Control, then you will immediately become vested in 50% of any then unvested shares, options and other equity you hold at that time.
	“Involuntary Termination” means either (a) involuntary discharge by the Company for reasons other than Cause or (b) voluntary resignation following (i) a change in your position with the Company

	that materially reduces your level of authority or responsibility, (ii) a reduction in your base salary or (iii) receipt of notice that your principal workplace will be relocated more than 35 miles. “Cause” means (a) an unauthorized use or disclosure of the Company’s confidential information or trade secrets, (b) a material failure to comply with the Company’s written policies or rules, (c) conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any state thereof or (d) gross misconduct.
5.	Proprietary Information and Inventions Agreement. Like all Company employees, you will be required, as a condition of your employment with the Company, to sign the Company’s standard Proprietary Information and Inventions Agreement, a copy of which is attached hereto as Exhibit A.
6.	Employment Relationship. Employment with the Company is for no specific period of time. Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause. Any contrary representations that may have been made to you are superseded by this letter agreement. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and the Chief Executive Officer.
7.	Outside Activities. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity without the prior written consent of the Company. While you render services to the Company, you also will not assist any person or entity in competing with the Company, in preparing to compete with the Company or in hiring any employees or consultants of the Company.
8.	Withholding Taxes. All forms of compensation referred to in this letter agreement are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law.
9.	Entire Agreement. This letter agreement supersedes and replaces any prior agreements, representations or understandings, whether written, oral or implied, between you and the Company.
	We hope that you will accept our offer to join the Company. You may indicate your agreement with these terms and accept this offer by signing and dating both the enclosed duplicate original of this letter agreement and the enclosed Proprietary Information and Inventions Agreement and returning them to me. As required by law, your employment with the Company is contingent upon your providing legal proof of your identity and authorization to work in the United States. We look forward to having you join us. Welcome!

Very truly yours,

/s/ Donald LeBeau

By: Donald LeBeau

Title: Chief Executive Officer

I have read and accept this employment offer:

/s/ Steffan C. Tomlinson	7/15/05
Signature of Steffan C. Tomlinson	Dated
9/1/05
Start Date

Attachment
Exhibit A: Proprietary Information and Inventions Agreement
Exhibit B: New Employee Guidelines

EX-10.9

Exhibit 10.9

	TEL FAX NET	408 227 4500 408 227 4550 www.arubanetworks.com
		180 Great Oaks Blvd., Ste B.
		San Jose, CA 95119

June 2, 2004

Richard C. Wilmer
23180 Mora Glen Dr.
Los Altos, CA 94024

Dear Rick:

Aruba Wireless Networks, Inc. (the “Company”) is pleased to offer you employment on the following terms:

1.	Position. You will start in a full-time position as Vice President, Operations and report to the Company’s Chief Executive Officer. By signing this letter agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company.
2.	Cash Compensation. The Company will pay you a starting salary at the rate of $175,000 per year, payable in accordance with the Company’s standard payroll schedule. This salary will be subject to adjustment pursuant to the Company’s employee compensation policies in effect from time to time. You will also be eligible to participate in the fiscal year 2005 Executive Incentive Program.
3.	Employee Benefits. As a regular employee of the Company, you will be eligible to participate in a number of Company-sponsored benefits. In addition, you will be entitled to paid vacation in accordance with the Company’s vacation policy, as in effect from time to time.
4.	Stock Options. Subject to the approval of the Company’s Board of Directors, following your commencement of service you will be granted an option to purchase 450,000 shares of the Company’s Common Stock (the “Option”). The exercise price per share will be equal to the fair market value per share on the date the Option is granted or on your first day of service, whichever is later. The Option will be subject to the terms and conditions applicable to options granted under the Company’s 2002 Stock Plan (the “Plan”), as described in the Plan and the applicable stock option agreement. The Option will be immediately exercisable, but the unvested portion of the purchased shares will be subject to repurchase by the Company at the exercise price in the event that your service terminates for any reason before you vest in the shares. You will vest in 25% of the option shares after 12 months of continuous service measured from the start of your service, and the balance will vest in equal monthly installments over the next 36 months of continuous service, as described in the applicable stock option agreement.
	If the Company is subject to a Change in Control (as defined in the Plan) and you are subject to an Involuntary Termination without cause within 12 months following such Change in Control, then you

	will immediately become vested in 50% of any then unvested shares, options and other equity you hold at that time.
	“Involuntary Termination” means either (a) involuntary discharge by the Company for reasons other than Cause or (b) voluntary resignation following (i) a change in your position with the Company that materially reduces your level of authority or responsibility, (ii) a reduction in your base salary or (iii) receipt of notice that your principal workplace will be relocated more than 35 miles.
	“Cause” means (a) an unauthorized use or disclosure of the Company’s confidential information or trade secrets, (b) a material failure to comply with the Company’s written policies or rules, (c) conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any state thereof or (d) gross misconduct.
5.	Proprietary Information and Inventions Agreement. Like all Company employees, you will be required, as a condition of your employment with the Company, to sign the Company’s standard Proprietary Information and Inventions Agreement, a copy of which is attached hereto as Exhibit A.
6.	Employment Relationship. Employment with the Company is for no specific period of time. Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause. Any contrary representations that may have been made to you are superseded by this letter agreement. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and the Chief Executive Officer.
7.	Outside Activities. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity without the prior written consent of the Company. While you render services to the Company, you also will not assist any person or entity in competing with the Company, in preparing to compete with the Company or in hiring any employees or consultants of the Company.
8.	Withholding Taxes. All forms of compensation referred to in this letter agreement are subject to reduction to reflect applicable withholding and payroll taxes and other deductions required by law.
9.	Entire Agreement. This letter agreement supersedes and replaces any prior agreements, representations or understandings, whether written, oral or implied, between you and the Company.

We hope that you will accept our offer to join the Company. You may indicate your agreement with these terms and accept this offer by signing and dating both the enclosed duplicate original of this letter agreement and the enclosed Proprietary Information and Inventions Agreement and returning them to me. As required by law, your employment with the Company is contingent upon your providing legal proof of your identity and authorization to work in the United States. We look forward to having you join us on June 21, 2004. Welcome!

Very truly yours,

/s/ Don LeBeau

By: Don LeBeau

Title: Chief Executive Officer

I have read and accept this employment offer:

/s/ Richard C. Wilmer	6/3/04
Signature of Richard C. Wilmer	Dated

Attachment
Exhibit A: Proprietary Information and Inventions Agreement
Exhibit B: New Employee Guidelines

EX-10.10

Exhibit 10.10

1322 Crossman Avenue | Sunnyvale, California 94089
Tel 408 227 4500 | Fax 408 227 4550
www.arubanetworks.com

April 6, 2006

Mr. Don LeBeau
12795 Normandy Lane
Los Altos Hills, CA 94022

Dear Don:

     This letter (the “Agreement”) confirms the agreement between you and Aruba Wireless Networks, Inc. (the “Company”) regarding the termination of your employment with the Company.

          1. Termination Date. Your employment with the Company shall terminate on April 10, 2006 (the “Termination Date”).

          2. Effective Date and Rescission. You have up to 21 days after you receive this Agreement to review it. You are advised to consult an attorney of your own choosing (at your own expense) before signing this Agreement. Furthermore, you have up to seven days after you sign this Agreement to revoke it. If you wish to revoke this Agreement after signing it, you may do so by delivering a letter of revocation to me. If you do not revoke this Agreement, the eighth day after the date you sign it will be the “Effective Date.” Because of the seven-day revocation period, no part of this Agreement will become effective or enforceable until the Effective Date.

          3. Salary and Vacation Pay. On the Termination Date, the Company will pay you all of your base salary earned through the Termination Date and all of your accrued but unused vacation time or PTO. You acknowledge that, prior to the execution of this Agreement, you were not entitled to receive any additional money from the Company, and that the only payments and benefits that you are entitled to receive from the Company for your services on or prior to the Termination Date are those specified in this Agreement

          4. Additional Option Vesting. On January 21, 2004, the Company granted you an option to purchase 833,333 shares of its Common Stock (the “First Option”) and an option to purchase 2,790,681 shares of its Common Stock (the “Second Option” and, together with the First Option, the “Options”). You exercised the Options for all 3,624,014 shares. As of the Termination Date, you will be vested in 486,111 of the shares that you purchased by exercising the First Option and 1,627,897 of the shares that you purchased by exercising the Second Option (for a total of 2,114,008 Option shares). If you sign this Agreement, you will become vested in 104,167 additional shares subject to the First Option and 348,835 additional shares subject to the Second Option (for a total of 2,567,010 vested Option shares) on the Effective Date. The Company hereby notifies you that it is exercising its right to repurchase from you the 1,057,004 remaining unvested shares pursuant to Section 7 of the Stock Option Agreements dated January 21, 2004 between you and the Company (the “Stock Option Agreements”). The Company will make a payment to you in the amount of $0.12 per

Mr. Don LeBeau
April 6, 2006
Page 2

repurchased share, or $126,840.48 in the aggregate, after the Effective Date. The Company will cancel the stock certificates that were issued in your name with respect to the shares that you purchased, and it will issue you a new stock certificate for the vested shares. As of the Termination Date, you will have no further interest in the repurchased shares and will have no stockholder rights with respect to those shares. You acknowledge and agree that in consideration of the Company’s immediate acceleration of your Option shares as described above, your “Service” as defined in the Stock Option Agreements will terminate on the Termination Date and that you will not vest in any of the shares subject to the Options, irrespective of whether you provide service to the Company following the Termination Date, as a member of the Company’s Board of Directors or as Chairman of the Board or otherwise. Except as amended herein, in all other respects, the Stock Option Agreements will remain in full force and effect, and you agree to remain bound by those Agreements. You acknowledge and confirm that you have no stock rights in the Company other than those enumerated in this paragraph.

          5. Release of All Claims. In consideration for receiving the immediate acceleration of your Option shares as described in Paragraph 4 above, you waive, release and promise not to assert any claims or causes of action, whether or not now known, against the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns and employee benefit plans with respect to any matter, including (without limitation) any matter related to your employment with the Company or the termination of that employment, including (without limitation) claims to attorneys’ fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act and all other laws and regulations relating to employment.

          6. Waiver. You expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any analogous law of any other state), which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

          7. No Admission. Nothing contained in this Agreement will constitute or be treated as an admission by you or the Company of liability, any wrongdoing or any violation of law.

          8. Other Agreements. The Proprietary Information and Inventions Agreement and the Indemnification Agreement, attached hereto as Exhibits A and B, respectively, shall remain in full force and effect at all times in the future. Except as expressly provided in this Agreement, this Agreement renders null and void all prior agreements between you and the Company and constitutes the entire agreement between you and the Company regarding the subject matter of this Agreement. This Agreement may be modified only in a written document signed by you and a duly authorized officer of the Company.

Mr. Don LeBeau
April 6, 2006
Page 3

          9. Confidentiality of Agreement. You agree that you will not disclose to others the existence or terms of this Agreement, except that you may disclose such information to your spouse, attorney or tax adviser if such individuals agree that they will not disclose to others the existence or terms of this Agreement.

          10. No Disparagement. You agree that you will never make any negative or disparaging statements (orally or in writing) about the Company or its stockholders, directors, officers, employees, products, services or business practices, except as required by law. The Company agrees that its directors and officers will never make any negative or disparaging statements (orally or in writing) about you, except as required by law.

          11. Severability. If any term of this Agreement is held to be invalid, void or unenforceable, the remainder of this Agreement will remain in full force and effect and will in no way be affected, and the parties will use their best efforts to find an alternate way to achieve the same result.

          12. Choice of Law. This Agreement will be construed and interpreted in accordance with the laws of the State of California (other than their choice-of-law provisions).

          13. Execution. This Agreement may be executed in counterparts, each of which will be considered an original, but all of which together will constitute one agreement. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.

Please indicate your agreement with the above terms by signing below.

Very truly yours,

ARUBA WIRELESS NETWORKS, INC.
 

/s/ Steffan Tomlinson  

Steffan Tomlinson, 

Chief Financial Officer 

Mr. Don LeBeau
April 6, 2006
Page 4

     I agree to the terms of this Agreement, and I am voluntarily signing this release of all claims. I acknowledge that I have read and understand this Agreement, and I understand that I cannot pursue any of the claims and rights that I have waived in this Agreement at any time in the future.

/s/ Don LeBeau

Signature of Don LeBeau

Dated: 5/10/06

EX-10.11

Exhibit 10.11

August 30, 2006

David Butler
17370 Skyline Blvd
Woodside, CA 94062

Re: Separation Agreement and General Release of All Claims

Dear Dave:

     This Separation Agreement and General Release of All Claims (“Separation Agreement”), upon your signature, will constitute the agreement between you and Aruba Wireless Networks, Inc. (“Aruba”) on the terms of your separation from employment with Aruba.

     1. Your employment will terminate effective Friday, September 8, 2006 (the “Termination Date”). The Termination Date and the remaining provisions of this Separation Agreement are contingent on your continued fulfillment of your current job duties and compliance with Company policies through September 8, 2006.

     2. As of the Termination Date, you will have been paid your earned salary, accrued vacation pay, all other wages, and all other amounts Aruba owed to you through the Termination Date, including but not limited to any bonuses, commissions or other contingent compensation. Any outstanding expense reports must be submitted by the Termination Date and will be reviewed and reimbursed, if approved, consistent with Company policy.

     3. You have received or will receive by separate cover information regarding your rights to health insurance continuation and your retirement benefits. To the extent that you have such rights, nothing in this agreement will impair those rights.

     4. On May 19, 2003, the Company granted you an option (grant no. SO-00064) to purchase 526,815 shares of its Common Stock (the “First Option”). You exercised the First Option for all 526,815 shares. As of the Termination Date, you will be vested in 428,038 of the shares that you purchased by exercising the First Option. Although you are not otherwise legally entitled to it, in consideration of your acceptance of this Separation Agreement, you will become vested in the remaining 98,777 shares on the Effective Date (as defined in Section 15). You acknowledge that, by the original terms of the First Option, no additional shares would have vested. In all other respects, the Stock Option Agreement, dated May 19, 2003, between you and the Company will remain in full force and effect and you agree to remain bound by that Agreement.

     5. On October 6, 2005, the Company granted you an additional option (grant no. SO-00396) to purchase 60,000 shares of the Company’s Common Stock

David Butler
August 30, 2006
Page 2

(the “Second Option”). As of the Termination Date, you will be vested in none of the shares subject to the Second Option. Although you are not otherwise legally entitled to it, in consideration of your acceptance of this Separation Agreement, you will become vested in 15,000 of the shares subject to the Second Option, effective as of the date immediately prior to the Termination Date. In addition, if you sign this Agreement, on the Effective Date the Company will extend the post-termination exercise period applicable to the Second Option so that it will expire with respect to the vested shares on January 31, 2007. For purposes of clarity, none of the shares subject to the Second Option shall be exercisable unless and until the Effective Date, at which time the Second Option will be exercisable with respect to the 15,000 vested shares at any time that occurs (a) after the Effective Date and (b) on or prior to January 31, 2007. The Second Option will expire with respect to the remaining unvested shares on the Termination Date. You acknowledge that, by the original terms of the Second Option, no shares would have vested. In addition, you acknowledge and agree that the extension of the post-termination exercise period constitutes a modification of the Second Option and that, accordingly, the Second Option will no longer be eligible for incentive stock option treatment as of the date of this Agreement. In all other respects, the Stock Option Agreement, dated October 6, 2005, between you and the Company will remain in full force and effect, and you agree to remain bound by that Agreement.

     6. Other than the First and Second Options and the option (grant no. SO-00104) to purchase 154,167 shares of the Company’s Common Stock granted to you on October 21, 2003 (the “Third Option”), you acknowledge and agree that you have no stock or stock option rights in the Company. As of the Termination Date, you will be vested in 109,202 of the shares subject to the Third Option. Although you are not otherwise legally entitled to it, in consideration of your acceptance of this Separation Agreement on the Effective Date the Company will extend the post-termination exercise period applicable to the Third Option so that it will expire with respect to the vested shares on January 31, 2007. The Third Option will expire with respect to the remaining unvested shares on the Termination Date. You acknowledge and agree that the extension of the post-termination exercise period constitutes a modification of the Third Option and that, accordingly, the Third Option will no longer be eligible for incentive stock option treatment as of the date of this Agreement. In all other respects, the Stock Option Agreement, dated October 21, 2003, between you and the Company will remain in full force and effect, and you agree to remain bound by that Agreement.

     7. You have returned or will immediately return to Aruba all Aruba documents and other company property, including but not limited to any information you have about Aruba’s practices, procedures, trade secrets, customer lists, product marketing, or other confidential information. You acknowledge that you have been the recipient of confidential and proprietary Aruba information, and that you shall not use or disclose such information except as may be permitted by Aruba in writing or by law. You hereby reaffirm your agreements and undertakings as set forth in the Proprietary Information and

David Butler
August 30, 2006
Page 3

Invention Agreement you signed on May 19, 2003, which shall survive this Agreement. Nothing in this Agreement supersedes or renders the terms and conditions of the Proprietary Information and Invention Agreement void or unenforceable.

     8. You waive and release and promise never to assert any and all claims that you have or might have against Aruba and its predecessors, successors, subsidiaries, affiliates, related entities, and assigns, and all of its and their respective past, present and future partners, principals, officers, directors, shareholders, employees, attorneys, insurers, representatives and agents, whether acting as agents or in individual capacities (collectively “Releasees”), arising from or related to your employment with Aruba and/or the termination of your employment with Aruba.

     These claims include, but are not limited to, claims arising under federal, state and local statutory or common law, such as the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the California Fair Employment and Housing Act, the California Labor Code, the Employee Retirement and Income Security Act, the law of contract and tort, including any contract or offer letter between you and Aruba, any compensation plan or policy, and any claims for attorney’s fees and costs.

     You also waive and release and promise never to assert any such claims, even if you do not believe that you have such claims. You therefore waive your rights under § 1542 of the Civil Code of California which states:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

You understand and agree that claims or facts in addition to or different from those which are now known or believed by you to exist may hereafter be discovered, but it is your intention to release all claims you have or may have against the Releasees, whether known or unknown, suspected or unsuspected. Notwithstanding any of the foregoing, you do not waive any rights you may have to vested benefits under Aruba’s 401k Plan.

     9. You will not, unless required or otherwise permitted by law, disclose to others any information regarding the terms of this Separation Agreement, the benefit being paid under it or the fact of its payment, except that you may disclose this information to your spouse, attorney, accountant or other professional advisor to whom you must make the disclosure in order for them to render professional services to you. You will instruct them, however, to maintain the confidentiality of this information just

David Butler
August 30, 2006
Page 4

as you must. You further agree not to aid, assist or encourage any person(s) asserting claims against Releasees, other than by providing truthful testimony as a result of a lawfully issued subpoena.

     10. You agree that during for a period of twelve (12) months immediately following the Termination Date you shall not, either directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees or consultants to terminate their relationship with the Company, or attempt to solicit, induce, recruit, encourage or take away employees or consultants of the Company, either for yourself or for any other person or entity.

     11. You agree to cooperate with Aruba in litigation or administrative proceedings involving Aruba that relate to matters about which you may have knowledge arising from your employment, including but not limited to speaking with Aruba’s representatives about such litigation or administrative proceedings and the facts and circumstances upon which the litigation or administrative proceeding is based, without requiring Aruba to subpoena you. Nothing in this paragraph is intended to require or suggest that, if called to testify in relation to such litigation or administrative proceeding, you would testify other than truthfully.

     12. If you sue any Releasee for any reason relating to any subject matter released herein, you shall pay any sued Releasee all of Releasee’s reasonable attorney’s fees and costs incurred in each such action, suit or other proceeding, including any and all appeals or petitions therefrom, regardless of the outcome. This paragraph is not intended to limit you from participating in an investigation conducted by the Equal Employment Opportunity Commission; provided, however, that you expressly waive and relinquish any rights you might have to recover damages or other relief, whether equitable or legal, in any such proceeding concerning events or actions that arose on or before the date that you signed this Separation Agreement.

     13. You agree that you will not disparage or encourage or induce others to disparage Aruba and the Releasees. Aruba agrees that its Officers and Directors will not disparage or encourage or induce others to disparage you. For the purpose of this Agreement, “disparage” includes, without limitation, making comments or statements to any person or entity including, but not limited to, the press and/or media, employees, partners or principals of Aruba or any entity with whom Aruba has a business relationship that would adversely affect in any manner (a) the conduct of the business of Aruba or any of the Releasees (including, but not limited to, any business plans or prospects) or (b) the reputation of you, Aruba or any of the Releasees.

     14. You agree that no promise, inducement or other agreement not expressly contained in this Separation Agreement or referred to in this Separation

David Butler
August 30, 2006
Page 5

Agreement, has been made conferring any benefit upon you, and that this Separation Agreement contains the entire agreement between you and Aruba with respect to its subject matter. Other than your Proprietary Information and Invention Agreement, all prior agreements, understandings, representations, oral agreements and writings are expressly superseded hereby and are of no further force and effect, and you expressly agree that you are not relying on any representations that are not contained in this Agreement. You acknowledge and agree that the severance benefits described in this Agreement are in lieu of the severance benefits described in the offer letter, dated May 13, 2003, between you and the Company (the “Offer Letter”), and that by signing this Agreement, you are waiving your rights to the benefits described in the Offer Letter. This Separation Agreement is entered into and governed by the laws of the State of California.

     15. The following is required by the Older Workers Benefit Protection Act:

     You have up to twenty-one (21) days from the date of this Separation Agreement, or September 20, 2006, to accept the terms of this Separation Agreement, although you may accept it at any time within those twenty-one (21) days. You are advised to consult an attorney (at your own expense) about the Separation Agreement.

     To accept the Separation Agreement, please sign and date this Separation Agreement and return it to me. (An extra copy for your files is enclosed.) Once you sign and date this Separation Agreement, you will have seven (7) days from the date you sign this Separation Agreement in which to revoke your acceptance. To revoke, you must deliver a written statement of revocation, which should be delivered to me. If you do not revoke, the eighth day after the date you signed and dated this Separation Agreement will be the “Effective Date” of the Separation Agreement.

     Dave, I am pleased that we were able to part ways on these amicable terms. Aruba and I wish you every success in your future endeavors.

Sincerely,
 

/s/ Aaron Bean  

Aaron Bean 

VP, Human Resources 

Enclosure

David Butler
August 30, 2006
Page 6

     By signing this Separation Agreement, I acknowledge that I have had the opportunity to review this Separation Agreement carefully with an attorney of my choice; that I understand the terms of the Separation Agreement; and that I voluntarily agree to them.

Date: Aug 30, 2006

/s/ David Butler  

David Butler  

EX-10.12

Exhibit 10.12

LOAN AND SECURITY AGREEMENT

     This Loan and Security Agreement No. 352040201 (this “Agreement”) is entered into as of March 3, 2003, by and between Lighthouse Capital Partners IV, L.P. (“Lender”) and Aruba Wireless Networks, Inc., a Delaware corporation (“Borrower”).

Recitals

     Borrower wishes to borrow money from time to time from Lender and Lender desires to lend money to Borrower. This Agreement sets forth the terms on which Lender will lend to Borrower and Borrower will repay the loan to Lender.

Agreement

     The parties agree as follows:

     1. Definitions and Construction

          1.1 Definitions. As used in this Agreement, the following terms shall have the following definitions:

               “Affiliate” means any Person that owns or controls directly or indirectly five percent (5%) or more of the stock of another entity, any Person that controls or is controlled by or is under common control with such Persons or any Affiliate of such Persons or each of such Person’s officers, directors, joint venturers or partners.

               “Basic Rate” means a per annum rate of interest (based on a year of 360 days and actual days elapsed) equal to 7.5%. If the Prime Rate as quoted in the western edition of The Wall Street Journal (the “Prime Rate”) on the date ten (10) days prior to each Loan Commencement Date is greater than 4.25%, the Loan Factor will be adjusted upward to maintain an interest rate equal to the Prime Rate plus 3.25%. Once the Repayment Period begins for any Loan, there will be no further adjustments to the Loan Factor for such Loan.

               “Borrower’s Books” means all of Borrower’s books and records including: ledgers; records concerning Borrower’s assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information.

               “Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in the State of California are authorized or required to close.

               “Code” means the Uniform Commercial Code as adopted and in effect in the State of California, as amended from time to time.

               “Collateral” means the Property described on Exhibit A attached hereto.

               “Commitment” means $1,750,000.00

               “Commitment Fee” means $5,000.00.

               “Commitment Termination Date” means December 31, 2003.

               “Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation directly or indirectly guaranteed, endorsed (otherwise than for

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collection or deposit in the ordinary course of business), co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported.

               “Default” means any event which with the passing of time or the giving of notice or both would become an Event of Default hereunder.

               “Default Rate” means the per annum rate of interest equal to fifteen percent (15%), but such rate shall in no event be more than the highest rate permitted by applicable law to be charged on commercial loans.

               “Event of Default” has the meaning given to such term in Section 8.

               “Event of Loss” has the meaning given to that term in Section 6.10.

               “Final Payment” means, with respect to each Loan, a payment (in addition to and not in substitution for the regular monthly payments of principal and accrued interest) due on the Maturity Date, equal to the Loan Amount for such Loan at such time multiplied by the Final Payment Percentage.

               “Final Payment Percentage” means 12.5%.

               “Funding Date” means any date on which a Loan is made to or on account of Borrower under this Agreement.

               “Governmental Authority” means (a) any federal, state, county, municipal or foreign government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, (c) any court or administrative tribunal or (d) with respect to any Person, any arbitration tribunal or other non-governmental authority to whose jurisdiction that Person has consented.

               “Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of Property or services, including reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations.

               “Landlord Consent” means a consent in the form of Exhibit C or such other form as Lender may agree to accept.

               “Lender’s Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the preparation and negotiation, administration, and enforcement of the Loan Documents; and Lender’s reasonable attorneys’ fees and expenses incurred in amending, modifying, enforcing or defending the Loan Documents, including in the exercise of any rights or remedies afforded hereunder or under applicable law, whether or not suit is brought; provided, however, that Lender’s Expenses shall not exceed $5,000 for the preparation and negotiation of the initial set of Loan Documents..

               “Lien” means any pledge, bailment, lease, mortgage, hypothecation, conditional sales and title retention agreement, charge, claim, encumbrance or other lien in favor of any Person,

               “Loan” means each advance of credit by Lender to Borrower under this Agreement.

               “Loan Agreement Supplement” means a supplement to this Agreement in substantially the form of Exhibit D.

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               “Loan Amount” means, with respect to each Loan, as of any date, the original principal amount of such Loan less the aggregate of all Prepayment Amounts relating to prepayments of such Loan paid prior to such date.

               “Loan Commencement Date” means, with respect to each Loan, the first Business Day of the calendar month following the Funding Date of such Loan.

               “Loan Documents” means, collectively, this Agreement, the Warrant, the Landlord Consent(s) and all other documents, instruments and agreements entered into between Borrower and Lender in connection with this Agreement, all as amended or extended from time to time.

               “Loan Factor” means, collectively, with respect to each Loan the amount set forth as a percentage in the Summary of Loan Agreement Supplement with respect to such Loan, calculated using the Basic Rate applicable to such Loan. Initially for months 1 through 3 of the Repayment Period, the Loan Factor shall be 0.6250% (the “Initial Loan Factor”) (subject to adjustment to the Basic Rate as set forth above); for months 4 through 39, the Loan Factor shall be 3.0913% (the “Term Loan Factor”) (subject to adjustment to the Basic Rate as set forth above).

               “Maturity Date” means, with respect to each Loan, the last day of the Repayment Period for such Loan, or the date of prepayment under Section 2.5.

               “Minimum Funding Amount” means $10,000.00

               “Obligations” means all debt, principal, interest, fees, charges, expenses and attorneys’ fees and costs and other amounts, obligations, covenants, and duties owing by Borrower to Lender of any kind and description (whether pursuant to or evidenced by the Loan Documents, or by any other agreement between Lender and Borrower, and whether or not for the payment of money), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including the principal, interest and Final Payment due with respect to the Loans, and including any debt, liability, or obligation owing from Borrower to others that Lender may have obtained by assignment or otherwise, and further including all interest not paid when due and all Lender’s Expenses that Borrower is required to pay or reimburse by the Loan Documents, by law, or otherwise.

               “Payment Date” has the meaning given to that term in Section 2.4(a).

               “Permitted Liens” means the following:

                    (a) The Lien created by this Agreement;

                    (b) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same have no superior priority over Lender’s Lien in the Collateral; and

                    (c) Liens to secure payment of worker’s compensation, employment insurance, old age pensions or other social security obligations of Borrower in the ordinary course of business of Borrower.

                    (d) Liens arising from final judgments, decrees or attachments for which the permissible time frame for filing appeals has expired; provided such Liens do not exceed $50,000 in the aggregate at any time outstanding; and

                    (e) Liens to secure the claims or demands of landlords, carriers, warehousemen, mechanics, laborers, materialmen and other like Persons arising by operation of law in the ordinary course of business for sums which are not yet due and payable or liens which are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves are maintained to the extent required by generally accepted accounting principles.

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               “Person” means and includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited liability company, any unincorporated association or any other entity and any domestic or foreign national, state or local government, any political subdivision thereof, and any department, agency, authority or bureau of any of the foregoing.

               “Prepayment Amount” means in the case of a mandatory prepayment pursuant to Sections 2.5(a) and 6.10, the original Stated Cost of the item of Collateral with respect to which such prepayment relates.

               “Property” means any interest in any kind of property or asset, whether real, personal or mixed, whether tangible or intangible.

               “Repayment Period” means the period beginning on the first Payment Date and continuing for 39 calendar months.

               “Responsible Officer” means each of the President and the Chief Financial Officer of Borrower.

               “Scheduled Payments” has the meaning given to such term in Section 2.4(a).

               “Stated Cost” means with respect to an item of Collateral, the original cost to Borrower of the item of Collateral net of any and all freight, installation, tax and other soft costs.

               “Stipulated Loan Value” means, with respect to each Loan, the percentages set forth in Annex B to the Loan Agreement Supplement for such Loan.

               “Subsidiary” means any corporation of which a majority of the outstanding capital stock entitled to vote for the election of directors (otherwise than as the result of a default) is owned by Borrower directly or indirectly through Subsidiaries.

               “Summary of Loan Agreement Supplement” means, with respect to each Loan, the “Summary of Loan Agreement Supplement” attached as Annex C to the Loan Agreement Supplement prepared by Lender in connection with such Loan.

               “Term” means the period from and after the date hereof until termination of the Commitment and the payment in full of all Obligations, including amounts and liabilities payable under this Agreement and the other Loan Documents, including principal and interest on the Loans and the Final Payment with respect to each Loan.

               “Warrant” means the warrant in favor of Lender to purchase securities of Borrower substantially in the form of Exhibit B.

     1.2 Other Interpretive Provisions. References in this Agreement to “Articles,” “Sections,” “Exhibits,” “Schedules” and “Annexes” are to recitals, articles, sections, exhibits, schedules and annexes herein and hereto unless otherwise indicated. References in this Agreement and each of the other Loan Documents to any document, instrument or agreement shall include (a) all exhibits, schedules, annexes and other attachments thereto, (b) all documents, instruments or agreements issued or executed in replacement thereof, and (c) such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement or any other Loan Document shall refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. The words “include” and “including” and words or similar import when used in this Agreement or any other Loan Document shall not be construed to be limiting or exclusive. Unless otherwise indicated in this Agreement or any other Loan Document, all accounting terms used in this Agreement or any other Loan Document shall be construed, and all

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accounting and financial computations hereunder or thereunder shall be computed, in accordance with generally accepted accounting principles as in effect in the United States of America from time to time.

     2. Loan and Terms of Payment

          2.1 Commitment. Subject to the terms and conditions of this Agreement and relying upon the representations and warranties herein set forth as and when made or deemed to be made, Lender agrees to lend to Borrower the Loans; provided that the aggregate principal amount of the Loans shall not exceed the Commitment at such time; provided further, that the aggregate principal amount of any Loan shall not exceed the Stated Cost of the equipment or soft costs, including prototypes, financed with such Loan; provided further that such financed equipment is delivered to Borrower within ninety (90) days of the Funding Date for such equipment. The foregoing notwithstanding, with respect to the first Loan only, Lender agrees to finance equipment delivered to Borrower on or after April 1, 2002 at an amount equal to the Stated Cost of such equipment, provided such funding occurs within thirty (30) days of the date of this Agreement. If prepaid, the principal of the Loans may not be re-borrowed. The aggregate principal amount of any Loans relating to the financing of Soft Costs shall not exceed in the aggregate fifty percent (50%) of the Commitment.

          2.2 Use of Proceeds; The Loan.

               (a) Use of Proceeds. The proceeds of the Loan shall be used solely for the acquisition of new and used computers, peripherals, analytical and test equipment, laboratory equipment and furniture, office furniture and equipment, Soft Costs (as defined below) in an amount not to exceed fifty percent (50%) of the aggregate Commitment, and other equipment as approved by Lender. Each invoice for such equipment shall a have a minimum value of Five Hundred Dollars ($500). “Soft Costs” shall mean software, leasehold improvements, Prototypes, taxes, warranty charges, installation expense and other similar expenses and other soft costs acceptable to Lender. “Prototype” shall mean working units that could be shipped to a customer or used internally by Borrower. For a Prototype to be eligible for financing, Borrower must provide Lender with the serial number of the Prototype, the name of the company at which the Prototype will be located and its address, as well as a bill of materials or other documents reasonably acceptable to Lender indicating the cost of the Prototype. Borrower shall provide Lender with proof of vendor payment on assets representing at least 50% of the dollar value of all financed Prototypes. All Prototypes must be kept at 100% of their Stated Costs until Final Payment.

               (b) The Loans. The Loans shall be repayable in consecutive monthly installments in accordance with the terms of Section 2.4. Lender may, and is hereby authorized by Borrower to, endorse in its books and records appropriate notations regarding Lender’s interest in the Loans; provided, however, that the failure to make, or an error in making, any such notation shall not limit or otherwise affect the Obligations of Borrower hereunder.

          2.3 Procedure for Making Loan.

               (a) Notice. With the exception of the first Loan hereunder which may be funded within a shorter time period with Lender’s approval, whenever Borrower desires that Lender make a Loan, Borrower shall so notify Lender in writing (or by telephone with prompt confirmation in writing) at least ten (10) Business Days in advance of the desired Funding Date, which notice shall be irrevocable. Lender’s obligation to make Loans shall be expressly subject to the satisfaction of the conditions set forth in Sections 3.1 and 3.2. Lender shall have the right, exercisable at any time, to request that Borrower furnish Lender with such additional information with respect to the Loans as Lender shall reasonably request.

               (b) Loan Interest Rate. Borrower shall pay interest on the unpaid principal amount of each Loan from the Loan Commencement Date until such Loan has been paid in full, at a per annum rate of interest equal to the Basic Rate, determined as of the date that is ten (10) business days prior to the Loan Commencement Date. The Basic Rate applicable to each Loan shall be fixed for the Repayment Period and shall not be subject to change in the absence of a manifest error. All computations of interest on each Loan shall be based on a year of 360 days for actual days elapsed. Notwithstanding any other provision hereof, the amount of interest payable hereunder shall not in any event exceed the maximum amount permitted by the law applicable to interest charged on commercial loans.

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               (c) Loan Factor and Stipulated Loan Value Calculation. On each Loan Commencement Date, Lender shall establish the Initial Loan Factor and Term Loan Factor and a schedule of Stipulated Loan Values with respect to the applicable Loan. The Loan Factor shall be calculated in a manner to fully amortize the Loan over the Repayment Period applicable to such Loan in equal periodic installments of principal and interest. The Loan Factor and schedule of Stipulated Loan Values applicable to such Loan shall be set forth in the Loan Agreement Supplement prepared by Lender with respect to such Loan and shall be conclusive in the absence of a manifest error.

               (d) Disbursement. Subject to the satisfaction of the conditions set forth in Sections 3.1 and 3.2 with respect to the initial Loan and the satisfaction of the conditions set forth in Section 3.2 with respect to each subsequent Loan, Lender shall disburse the Loans.

               (e) Termination of Commitment to Lend. Notwithstanding anything in the Loan Documents, Lender’s obligation to lend the undisbursed portion of the Commitment to Borrower hereunder shall terminate on the earlier of (i) at the Lender’s sole election, the occurrence and continuance of any Default or Event of Default hereunder, and (ii) the Commitment Termination Date. Notwithstanding the foregoing, Lender’s obligation to lend the undisbursed portion of the Commitment to Borrower shall terminate if, in Lender’s sole but good faith judgment, there has been a material adverse change in the general affairs, management, results of operations, or financial condition of Borrower, whether or not arising from transactions in the ordinary course of business, or there has been any material adverse deviation by Borrower from the business plan of Borrower presented to and not disapproved by Lender, since the date of this Agreement.

          2.4 Amortization of Principal and Interest; Interim Payment; Final Payment.

               (a) Principal and Interest Payments On Payment Dates. Borrower shall make payments of principal and accrued interest in advance for each Loan (collectively, “Scheduled Payments”), commencing on the Loan Commencement Date (or commencing on the Funding Date if the Funding Date is the first Business Day of the calendar month) with respect to such Loan and continuing thereafter during the Repayment Period on the first Business Day of each calendar month (each a “Payment Date”), in an amount equal to the Loan Factor multiplied by the Loan Amount for such Loan as of such Payment Date. In any event, all unpaid principal and accrued interest shall be due and payable in full on the last Payment Date with respect to such Loan.

               (b) Interim Payment. In addition to the Scheduled Payments, on the Loan Commencement Date for the Loan (unless the Funding Date is the first Business Day of the calendar month) Borrower shall pay to Lender an amount (the “Interim Payment”) equal to the initial Loan Amount multiplied by the product of (i) the quotient derived from dividing the Basic Rate by three hundred sixty (360), and (ii) the number of days from the Funding Date of the Loan until the first Payment Date with respect to the Loan.

               (c) Final Payment. On the Maturity Date, Borrower shall pay, in addition to the unpaid principal and accrued interest and all other amounts due on such date with respect to such Loan, an amount equal to the Final Payment with respect to such Loan.

               (d) Commitment Fee. The Commitment Fee shall be applied to the expenses, advance payment, interim payments, the first month’s payment and every subsequent payment until fully applied.

               (e) Late Fee. A late charge on any Scheduled Payments or other sums due hereunder which are past due more than ten (10) days, in an amount equal to 2% of the past due amount, payable on demand.

          2.5 Prepayments.

               (a) Prepayment Upon an Event of Loss. If any Collateral is subject to an Event of Loss and Borrower is required to or elects to prepay the Loans with respect to such Collateral pursuant to Section 6.10, then the Loans shall be prepaid to the extent and in the manner provided in such section.

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               (b) Mandatory Prepayment Upon an Acceleration. If the Loans are accelerated following the occurrence of an Event of Default or otherwise (other than following an Event of Loss), then Borrower shall immediately pay to Lender (i) all unpaid Scheduled Payments with respect to the Loans due prior to the date of prepayment, (ii) the Stipulated Loan Value with respect to each Loan multiplied by the Loan Amount of such Loan, (iii) the Final Payment discounted from the Maturity Date thereof to the prepayment date at the Prime Rate and (iv) all other sums, if any, that shall have become due and payable hereunder with respect to such Loan.

               (c) Voluntary Prepayment. Borrower may voluntarily prepay the Loans, provided that each of the following conditions is satisfied: Borrower pays to Lender (i) all unpaid Scheduled Payments with respect to the Loans due prior to the date of prepayment, (ii) the outstanding principal amount of such Loans and any unpaid accrued interest of such Loans, (iii) the Final Payment discounted from the Maturity Date thereof to the prepayment date at the Prime Rate and (iv) all other sums, if any, that shall have become due and payable hereunder with respect to the Loans.

               (d) No Other Prepayment. Borrower may not prepay any Loan except upon the occurrence of an event described in Section 2.5(a), (b) and (c) above in which event the prepayment shall be made as described in such sections.

          2.6 Other Payment Terms.

               (a) Place and Manner. Borrower shall make all payments due to Lender at the address specified in Section 11, in lawful money of the United States and in same day or immediately available funds.

               (b) Date. Whenever any payment due hereunder shall fall due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be.

               (c) Default Rate. If either (i) any amounts required to be paid by Borrower under this Agreement or the other Loan Documents (including principal, interest, the Final Payment payable with respect to any Loan, and any fees or other amounts) remain unpaid after such amounts are due, or (ii) an Event of Default has occurred and is continuing, Borrower shall pay interest on the aggregate, outstanding balance hereunder from the date due or from the date of the Event of Default, as applicable, until such past due amounts are paid in full or until all Events of Default are cured, as applicable, at a per annum rate equal to the Default Rate. All computations of such interest shall be based on a year of 360 days for actual days elapsed.

          2.7 Minimum Funding Amount. Except with the prior consent of Lender, in Lender’s sole discretion, the amount of the requested Loan shall not be less than the Minimum Funding Amount.

          2.8 Crediting Payments. The receipt by Lender of any wire transfer of funds, check, or other item of payment shall be immediately applied conditionally to reduce Obligations, but shall not be considered a payment on account unless such wire transfer is of immediately available federal funds and is made to the appropriate deposit account of Lender or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Lender after 11:00 a.m. California time shall be deemed to have been received by Lender as of the opening of business on the immediately following Business Day.

          2.9 Term. This Agreement shall become effective upon acceptance by Lender and shall continue in full force and effect during the Term. Notwithstanding the foregoing, Lender shall have the right to terminate this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default.

          3. Conditions of Loans

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          3.1 Conditions Precedent to Initial Loan. The obligation of Lender to make the initial Loan is subject to the condition precedent that Lender shall have received, in form and substance satisfactory to Lender, all of the following:

               (a) This Agreement duly executed by Borrower.

               (b) The Warrant to be issued to Lender duly executed by Borrower.

(c) An officer’s certificate of Borrower with copies of the following documents attached: (i) the certificate of incorporation and by-laws of Borrower certified by Borrower as being in full force and effect on the Funding Date, (ii) incumbency and representative signatures, and (iii) resolutions authorizing the execution and delivery of this Agreement and each of the other Loan Documents.

               (d) A good standing certificate from Borrower’s state of incorporation and the state in which Borrower’s principal place of business is located, together with certificates of the applicable governmental authorities stating that Borrower is in compliance with the franchise tax laws of each such state, each dated as of a recent date.

               (e) The insurance coverage required by Section 6.9 of this Agreement.

               (f) All necessary consents of shareholders and other third parties with respect to the execution, delivery and performance of this Agreement, the Warrant and the other Loan Documents.

               (g) Payment of any unreimbursed Lender’s Expenses.

               (h) Such other documents, and completion of such other matters, as Lender may deem necessary or appropriate.

          3.2 Conditions Precedent to all Loans. The obligation of Lender to make each Loan, including the initial Loan, is further subject to the following conditions:

               (a) No Default or Event of Default shall have occurred and be continuing.

               (b) Borrower shall have provided to Lender with respect to the Collateral, copies of vendor invoices, bills of sale, receipts, agreements, proof of payment, and other documents as Lender shall reasonably request to evidence the ownership by Borrower of, the payment in full of the purchase price of, and the fair market value of, such Collateral, each in form and substance reasonably satisfactory to Lender.

               (c) Borrower and Lender shall have executed a Loan Agreement Supplement with respect to the proposed Loan.

               (d) Borrower shall use its best efforts to obtain a Landlord Consent from the owner of any building in which Collateral is to be located.

               (e) Lender shall have received such documents, instruments and agreements, including UCC financing statements or amendments to UCC financing statements, as Lender shall reasonably request to evidence the perfection and priority of the security interests granted to Lender pursuant to Section 4.

               (f) Borrower shall have delivered to Lender a subordination agreement, release, or estoppel letter, as appropriate, from any Person having an existing Lien superior to the Lien of Lender on any item of Collateral.

               (g) Such other documents, and completion of such other matters, as Lender may deem necessary or appropriate.

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          3.3 Covenant to Deliver. Borrower agrees (not as a condition but as a covenant) to deliver to Lender each item required to be delivered to Lender as a condition to the Loan, if such Loan is advanced. Borrower expressly agrees that the extension of such Loan prior to the receipt by Lender of any such item shall not constitute a waiver by Lender of Borrower’s obligation to deliver such item.

     4. Creation of Security Interest

          4.1 Grant of Security Interest. Borrower grants to Lender a valid, first priority, continuing security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt, full and complete payment of any and all Obligations and in order to secure prompt, full and complete performance by Borrower of each of its covenants and duties under each of the Loan Documents.

          4.2 Duration of Security Interest. Lender’s security interest in the Collateral shall continue until the payment in full and the satisfaction of all Obligations, whereupon such security interest shall terminate; provided, however, if any item of Collateral is subject to an Event of Loss, then following the prepayment of the Loan with respect to such item pursuant to Section 2.5, Lender shall release its security interest in such item of Collateral. Lender shall, at Borrower’s sole cost and expense, execute such further documents and take such further actions as may be necessary to effect the release contemplated by this Section 4.2, including duly executing and delivering termination statements for filing in all relevant jurisdictions under the Code.

          4.3 Possession of Collateral. So long as no Event of Default has occurred and is continuing, Borrower shall remain in full possession, enjoyment and control of the Collateral (except only as may be otherwise required by Lender for perfection of their security interest therein) and shall be entitled to manage, operate and use the same and each part thereof with the rights and franchises appertaining thereto; provided, however, that the possession, enjoyment, control and use of the Collateral shall at all times be subject to the observance and performance of the terms of this Agreement.

          4.4 Markings on the Collateral. At Lender’s request at any time during the Term of the Loan (including any extension thereof), Borrower shall place in a conspicuous location on each item of Collateral a plaque or other marking to be supplied by Lender which reads substantially as follows:

          Lighthouse Capital Partners IV, L.P. has a first priority security interest in this item of equipment.

Such plaque or other marking shall not be removed (or if removed or damaged such plaque or other marking shall be replaced) until the security interest in favor of Lender in such item of Collateral is terminated pursuant to this Agreement.

          4.5 Delivery of Additional Documentation Required. Borrower shall from time to time execute and deliver to Lender, all financing statements and other documents such Lender may reasonably request, in form satisfactory to Lender, to perfect and continue Lender’s perfected security interests in the Collateral and in order to consummate fully all of the transactions contemplated under the Loan Documents.

          4.6 Right to Inspect. Lender (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower’s usual business hours, to inspect Borrower’s Books and to make copies thereof and to check, test, and appraise the Collateral in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral; provided, that such inspections shall be conducted no more often than once every twelve (12) months unless an Event of Default has occurred and is continuing.

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     5. Representations and Warranties

          Borrower represents, warrants and covenants as follows:

          5.1 Due Organization and Qualification. Borrower is a corporation duly existing and in good standing under the laws of its state of incorporation and qualified and licensed to do business in, and is in good standing in, any state in which the conduct of its business or its ownership of Property requires that it be so qualified or in which the Collateral is located, except for such states as to which any failure so to qualify would not have a material adverse effect on Borrower.

          5.2 Authority. Borrower has all necessary power and authority to execute, deliver, and perform in accordance with the terms thereof, the Loan Documents to which it is a party. Borrower has all requisite power and authority to own and operate its properties and to carry on its businesses as now conducted.

          5.3 Subsidiaries. Borrower has no Subsidiaries, except those listed in Schedule 2 hereto.

          5.4 Conflict with Other Instruments, etc. Neither the execution and delivery of any Loan Document to which Borrower is a party nor the consummation of the transactions therein contemplated nor compliance with the terms, conditions and provisions thereof will conflict with or result in a breach of any of the terms, conditions or provisions of the certificate of incorporation and the by-laws, or other organizational documents of Borrower or in any material respect with any law or any regulation, order, writ, injunction or decree of any court or governmental instrumentality or any material agreement or instrument to which Borrower is a party or by which it or any of its properties is bound or to which it or any of its properties is subject, or constitute a default thereunder or result in the creation or imposition of any Lien, other than Permitted Liens.

          5.5 Authorization; Enforceability. The execution and delivery of this Agreement, the granting of the security interest in the Collateral, the incurring of the Loans, the execution and delivery of the other Loan Documents to which Borrower is a party and the consummation of the transactions herein and therein contemplated have each been duly authorized by all necessary action on the part of Borrower. The Loan Documents have been duly executed and delivered and constitute legal, valid and binding obligations of Borrower, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application relating to or affecting the enforcement of creditors’ rights or by general principles of equity.

          5.6 No Prior Encumbrances. Borrower has good and marketable title to the Collateral, free and clear of liens, claims, security interests, or encumbrances, except for the first priority lien held by the Lender and except for other Permitted Liens. Borrower has not acquired any part of the Collateral from an assignor outside the ordinary course of such assignor’s business.

          5.7 Name; Location of Chief Executive Office, Principal Place of Business and Collateral. Borrower has not done business under any name other than that specified on the signature page hereof. The chief executive office, principal place of business, and the place where Borrower maintains its records concerning the Collateral are presently located at the address set forth in Section 11. The Collateral is presently located at the addresses set forth set forth in Section 11 or as listed on each Loan Agreement Supplement and such other locations of which Borrower has given Lender prior written notice in accordance with Section 7.1.

          5.8 Litigation. There are no actions or proceedings pending by or against Borrower before any court or administrative agency in which an adverse decision could have a material adverse effect on Borrower or the aggregate value of the Collateral. Borrower does not have knowledge of any such pending or threatened actions or proceedings. Borrower will promptly notify Lender in writing if any action, proceeding or governmental investigation involving Borrower is commenced that may result in damages or costs to Borrower of Fifty Thousand Dollars ($50,000) or more.

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          5.9 Financial Statements. All financial statements relating to Borrower or any Affiliate that have been or may hereafter be delivered by Borrower to Lender present fairly in all material respects Borrower’s financial condition as of the date thereof and Borrower’s results of operations for the period then ended.

          5.10 Solvency. Borrower is solvent and able to pay its debts (including trade debts) as they mature.

          5.11 Taxes. Borrower has filed or caused to be filed all tax returns required to be filed, and has paid, or has made adequate provision for the payment of, all taxes that are due and payable, except for such taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves have been created in accordance with generally accepted accounting principles..

          5.12 Consents and Approvals. No approval, authorization or consent of any trustee or holder of any indebtedness or obligation of Borrower or of any other Person under any such material agreement, contract, lease or license or similar document or instrument to which Borrower is a party or by which Borrower is bound, is required to be obtained by Borrower in order to make or consummate the transactions contemplated under the Loan Documents. All consents and approvals of, filings and registrations with, and other actions in respect of, all Governmental Authorities required to be obtained by Borrower in order to make or consummate the transactions contemplated under the Loan Documents have been, or prior to the time when required will have been, obtained, given, filed or taken and are or will be in full force and effect.

          5.13 Trademarks, Patents, Copyrights, Franchises and Licenses. Borrower possesses and owns all necessary trademarks, trade names, copyrights, patents, patent rights, franchises and licenses which are material to the conduct of its business as now operated.

          5.14 Material Contracts. There are no material defaults under any material contract or agreement by Borrower. Upon request, Borrower will deliver to Lender true and correct copies of all such contracts or agreements (or, with respect to oral contracts or agreements, written descriptions of the material terms thereof).

          5.15 Full Disclosure. No representation, warranty or other statement made by Borrower in any Loan Document, certificate or written statement furnished to Lender contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading.

     6. Affirmative Covenants

          Borrower covenants and agrees that, until the full and complete payment of the Obligations and the termination of the Commitments, Borrower shall do all of the following:

          6.1 Good Standing. Borrower shall maintain its corporate existence and its good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could have a material adverse effect on the financial condition, operations or business of Borrower. Borrower shall maintain in force all licenses, approvals and agreements, the loss of which could have a material adverse effect on its financial condition, operations or business.

          6.2 Government Compliance. Borrower shall comply with all statutes, laws, ordinances and government rules and regulations to which it is subject, noncompliance with which could materially adversely affect the financial condition, operations or business of Borrower.

          6.3 Financial Statements, Reports, Certificates. Borrower shall deliver to Lender: (a) as soon as available, but in any event within forty-five (45) days after the end of each month, a company prepared balance sheet, income statement and cash flow statement covering Borrower’s operations during such period, certified by a Responsible Officer; (b) commencing with the 2003 fiscal year, as soon as available, but in any event within two hundred ten (210) days after the end of Borrower’s fiscal year, audited financial statements of Borrower prepared in

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accordance with generally accepted accounting principles, consistently applied, together with an unqualified opinion on such financial statements of a nationally recognized or other independent public accounting firm reasonably acceptable to Lender; (c) promptly upon becoming available, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders; (d) promptly upon receipt of notice thereof, a report of any material legal actions pending or threatened against Borrower; and (e) such other financial information as Lender may reasonably request from time to time.

          6.4 Certificates of Compliance. Each time financial statements are furnished pursuant to Section 6.3 above, there shall be delivered to Lender a certificate signed by a Responsible Officer (each an “Officer’s Certificate”) with respect to such financial reports to the effect that: (i) no Event of Default or Default has occurred and is continuing hereunder since the date of this Agreement or, if later, since the date of the prior Officer’s Certificate or, if such an event or condition has occurred and is continuing, the nature and extent thereof and the action Borrower proposes to take with respect thereto, and (ii) Borrower is in compliance in all material respects with the provisions of Sections 6 and 7.

          6.5 Notice of Event of Loss. As soon as possible, and in any event within ten (10) days thereafter, Borrower shall notify Lender in writing in reasonable detail of any Event of Loss.

          6.6 Notice of Defaults. As soon as possible, and in any event within five (5) days after the discovery of a Default or an Event of Default provide Lender with an Officer’s Certificate of Borrower setting forth the facts relating to or giving rise to such Default or Event of Default and the action which Borrower proposes to take with respect thereto.

          6.7 Taxes. Borrower shall make due and timely payment or deposit of all federal, state, and local taxes, assessments, or contributions required of it by law or imposed upon any properties belonging to it, and will execute and deliver to Lender, on demand, appropriate certificates attesting to the payment or deposit thereof; and Borrower will make timely payment or deposit of all tax payments and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Lender with proof satisfactory to Lender indicating that Borrower has made such payments or deposits; provided that Borrower need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is adequately reserved against by Borrower.

          6.8 Use; Maintenance.

               (a) Borrower, at its expense, shall make all necessary site preparations and cause the Collateral to be operated in accordance with any applicable manufacturer’s manuals or instructions. So long as no Default or Event of Default has occurred and is continuing, Borrower shall have the right to quietly possess and use the Collateral as provided herein without interference by Lender (except as necessary to protect Lender’s security interest in the Collateral).

               (b) Borrower, at its expense, shall maintain the Collateral in good condition, reasonable wear and tear excepted, and will comply in all material respects with all laws, rules and regulations to which the use and operation of the Collateral may be or become subject. Such obligation shall extend to repair and replacement of any partial loss or damage to the Collateral, regardless of the cause. If maintenance is mandated by manufacturer, Borrower shall obtain and keep in effect, at all times during the Term maintenance service contracts with suppliers approved by Lender, such approval not to be unreasonably withheld. All parts furnished in connection with such maintenance or repair shall immediately become part of the Collateral, All such maintenance, repair and replacement services shall be immediately paid for and discharged by Borrower with the result that no Lien will attach to the Collateral.

          6.9 Insurance.

               (a) Borrower, at its own expense, shall obtain and maintain in amounts and coverages satisfactory to Lender (a) insurance against loss or damage to the Collateral, (b) commercial general

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liability insurance, including contractual liability, products liability and completed operations coverage according to standard industry practices, and (c) such other insurance against such other risks of loss and with such terms as shall be reasonably satisfactory to or reasonably required by Lender as to carriers, amounts and otherwise. The amount of insurance covering loss or damage to the Collateral shall be the greater than or equal to the Stipulated Loan Value (as defined in Section 1.1) of all Collateral outstanding under the Loan Documents.

               (b) The amount of commercial general public liability insurance (other than products liability coverage and completed operations insurance) shall be at least $2,000,000 per occurrence. The amount of such products liability and completed operations insurance) shall be at least $2,000,000 per occurrence. The deductible with respect to insurance against loss or damage to the Collateral and product liability insurance shall not exceed $25,000; otherwise there shall be no deductible with respect to any insurance required to be maintained hereunder without the prior written approval of Lender. Each such insurance policy shall: (i) name Lender loss payee or additional insured, as appropriate, (ii) provide for insurer’s waiver of its right of subrogation against Lender and Borrower, (iii) provide that such insurance shall not be invalidated by any action of, or breach of warranty by, Borrower and waive set-off, counterclaim or offset against Lender, (iv) provide that Borrower’s insurance shall be primary without a right of contribution of Lender’s insurance, if any, or any obligation on the part of Lender to pay premiums of Borrower, and (v) require the insurer to give Lender at least thirty (30) days prior written notice of cancellation. Borrower shall, on or prior to the first disbursement of funds hereunder and prior to each policy renewal, furnish to Lender certificates of insurance. Borrower shall give Lender prompt notice of any damage to, or loss of, any Collateral.

          6.10 Loss; Damage; Destruction and Seizure.

               (a) Borrower shall bear the risk of the Collateral being lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for use, or seized by a governmental authority for any reason whatsoever at any time until the expiration or termination of the Term.

               (b) If during the Term any item of Collateral becomes obsolete or is lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for use, or seized by a governmental authority for any reason whatsoever for a period equal to at least the remainder of the Term (an “Event of Loss”), then in each case Lender shall receive from the proceeds of insurance maintained pursuant to Section 6.9, from any award paid by the seizing governmental authority or, to the extent not received from the proceeds of insurance or award or both, from Borrower, on or before the Payment Date next succeeding such Event of Loss, an amount equal to the sum of: (i) all accrued and unpaid Scheduled Payments with respect to such Loan due prior to the next such Payment Date, (ii) a prepayment in an amount equal to the Stipulated Loan Value with respect to such Loan multiplied by the Prepayment Amount of each affected item of Collateral and (iii) all other sums, if any, that shall have become due and payable hereunder with respect to such Loan, including interest at the Default Rate with respect to any past due amounts. On the date of receipt by Lender of the amount specified above with respect to each such item of Collateral subject to an Event of Loss, this Agreement shall terminate as to such Collateral. Except as provided in Section 6.10(c), any proceeds of insurance maintained by Borrower pursuant to Section 6.9 and received by Borrower shall be paid to Lender promptly upon their receipt by Borrower. If any proceeds of insurance or awards received from governmental authorities are in excess of the amount owed under this Section 6.10, Lender shall promptly remit to Borrower the amount in excess of the amount owed to Lender.

               (c) So long as no Event of Default has occurred and is continuing, any proceeds of insurance maintained pursuant to Section 6.9 received by Lender or Borrower with respect to an item of Collateral, the repair of which is practicable, shall, at the election of Borrower, be applied either to the repair or replacement of such Collateral or, upon Lender’s receipt of evidence of the repair or replacement of the Collateral reasonably satisfactory to Lender, to the reimbursement of Borrower for the cost of such repair or replacement. All replacement parts and equipment acquired by Borrower in replacement of Collateral pursuant to this Section 6.10(c) shall immediately become part of the Collateral upon acquisition by Borrower. Borrower shall take such actions and provide such documentation as may be reasonably requested by Lender to protect and preserve their first priority security interest and otherwise to avoid any impairment of Lender’s rights under the Loan Documents in connection with such repair or replacement.

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          6.11 Further Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Lender to effect the purposes of this Agreement.

          6.12 Equity Participation Right. Borrower hereby grants Lender, to be exercised at Lender’s sole discretion, an option to purchase up to $175,000 of preferred stock in Borrower’s next round of equity financing under the same terms and conditions as all other investors in such financing.

     7. Negative Covenants

          Borrower covenants and agrees that until the full and complete payment of the Obligations and termination of the Commitments, Borrower will not do any of the following:

          7.1 Chief Executive Office; Location of Collateral. During the continuance of this Agreement, change the state of incorporation, chief executive office or principal place of business or remove or cause to be removed, except in the ordinary course of Borrower’s business, the Collateral or the records concerning the Collateral from the premises listed on the cover page without thirty (30) days prior written notice to Lender.

          7.2 Extraordinary Transactions and Disposal of Assets. Enter into any transaction not in the ordinary and usual course of Borrower’s business, including the sale, lease, license or other disposition of, moving, relocation, or transfer, whether by sale or otherwise, of Borrower’s assets, other than (i) sales of inventory in the ordinary and usual course of Borrower’s business as presently conducted and (ii) sales or other dispositions in the ordinary course of business of assets, other than Collateral, that have become worn out or obsolete or that are promptly being replaced (iii) transfer of assets, other than Collateral, among Borrower and its Subsidiaries, and (iv) other dispositions of assets, other than Collateral, not exceeding One Hundred Thousand Dollars ($250,000) in the aggregate in any fiscal year.

Notwithstanding anything contained in this Section 7.2, the Borrower may do any of the following: (i) transfer non-exclusive licenses and similar arrangements for use of its intellectual property, in arm’s length transactions, in the ordinary course of its business for adequate consideration (ii) declare and make any dividend payment payable in its equity securities, (iii) convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange therefor, (iv) repurchase stock from former employees of Borrower in accordance with the terms of repurchase, vesting or similar agreements between Borrower and such employees in its ordinary course of business, (v) repurchase equity securities with the proceeds from the issuance of equity securities, (vi) repurchase, redeem, retire, defease or otherwise acquire for value equity securities in connection with or pursuant to any employees benefit plan or stock option plan of the Borrower, and (vii) provided no Event of Default has occurred and is continuing or is not caused thereby, mergers, consolidations or acquisitions, which after giving effect thereto, Borrower is the surviving entity.

          7.3 Restructure. Change Borrower’s name; make any material change in Borrower’s financial structure or business operations in any manner which would have a material adverse effect on Borrower or on the prospect of repayment of the Obligations; or cause, permit, or suffer any material change in Borrower’s ownership (other than through a public offering or the sale of preferred stock to equity investors); or suspend operation of Borrower’s business.

          7.4 Liens. Create, incur, assume or suffer to exist any Lien or any other encumbrance of any kind with respect to any of the Collateral, whether now owned or hereafter acquired, except for Permitted Liens.

     8. Events of Default

          Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement:

          8.1 Payment Default. If Borrower fails to pay within three (3) days of the date when due and payable or when declared due and payable in accordance with the Loan Documents, any portion of the Obligations.

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          8.2 Certain Covenant Defaults. If Borrower fails to perform any obligation under Sections 6.9, 6.10 or 6.11, or violates any of the covenants contained in Section 7 of this Agreement.

          8.3 Other Covenant Defaults. If Borrower fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained in this Agreement, in any of the other Loan Documents, or in any other present or future agreement between Borrower and Lender and as to any default under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure such default within thirty (30) days after the occurrence of such default.

          8.4 Material Adverse Change. If there occurs a material adverse change in Borrower’s business, or if there is a material impairment of the prospect of repayment of any portion of the Obligations owing to Lender or a material impairment of the value or priority of Lender’s security interests in the Collateral.

          8.5 Attachment. If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within thirty (30) days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within thirty (30) days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contesting by Borrower.

          8.6 Other Agreements. If there is a default in any agreement to which Borrower is a party with a third party or parties resulting in a right by such third party or parties (which has not been waived or cured within any applicable grace period), whether or not exercised, to accelerate the maturity of any Indebtedness of at least One Hundred Thousand Dollars ($100,000).

          8.7 Judgments. If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least One Hundred Thousand Dollars ($100,000) shall be rendered against Borrower and shall remain unsatisfied or unstayed for a period of thirty (30) days.

          8.8 Redemption or Repurchase. Borrower shall, after the date of this Agreement, redeem or repurchase (a) any shares of any class or series of its preferred stock or (b) more than Fifty Thousand Dollars ($50,000) in the aggregate of common stock, in each case whether pursuant to a mandatory redemption or otherwise, other than redemption or repurchases as may be expressly permitted under this Agreement.

          8.9 Misrepresentations. If any representation or warranty made by Borrower herein or by Borrower (or any of its officers or directors) in connection with this Agreement shall prove to have been incorrect in any material respect when made.

          8.10 Breach of Warrant. If Borrower shall breach the terms of the Warrant in any material respect.

          8.11 Enforceability. If any Loan Document shall in any material respect cease to be, or Borrower shall assert that any Loan Document is not, a legal, valid and binding obligation of Borrower enforceable in accordance with its terms.

          8.12 Involuntary Bankruptcy or Insolvency. If a proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee (or similar official) of Borrower or for any substantial part of its

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property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting the relief sought in such proceeding.

          8.13 Voluntary Bankruptcy or Insolvency. If Borrower shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian (or other similar official) of Borrower or for any substantial part of its property, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action in furtherance of any of the foregoing.

     9. Lender’s Rights and Remedies

          9.1 Rights and Remedies. Upon the occurrence and during the continuance of any Default or Event of Default, Lender shall have no further obligation to advance money or extend credit to or for the benefit of Borrower. In addition, upon the occurrence and during the continuance of an Event Of Default, Lender shall have the rights, options, duties and remedies of a secured party as permitted by law and, in addition to and without limitation of the foregoing, Lender may, at their election, without notice of election and without demand, do any one or more of the following, all of which are authorized by Borrower:

               (a) Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, including the Stipulated Loan Value of the Loan Amount of each Loan, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.12 or 8.13 all Obligations shall become immediately due and payable without any action by Lender);

               (b) Without notice to or demand upon Borrower, make such payments and do such acts as Lender consider necessary or reasonable to protect their security interest in the Collateral. Borrower agrees to assemble the Collateral if Lender so requires, and to make the Collateral available to Lender as Lender may designate. Borrower authorizes Lender to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Lender’s determination appears to be prior or superior to their security interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower’s owned premises, Borrower hereby grants Lender a license to enter into possession of such premises and to occupy the same, without charge, for up to one hundred twenty (120) days in order to exercise any of Lender’s rights or remedies provided herein, at law, in equity, or otherwise;

               (c) Without notice to Borrower, set off and apply to the Obligations any and all indebtedness at any time owing to or for the credit or the account of Borrower;

               (d) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Lender is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any Property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Lender’s exercise of their rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements shall inure to Lender’s benefit;

               (e) Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower’s premises) as Lender determines are commercially reasonable;

               (f) Lender may credit bid and purchase at any public sale; and

               (g) Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.

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          9.3 Effect of Sale. Any sale, whether under any power of sale hereby given or by virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Borrower in and to the Property sold, and shall be a perpetual bar, both at law and in equity, against Borrower, its successors and assigns, and against any and all Persons claiming the Property sold or any part thereof under, by or through Borrower, its successors or assigns.

          9.4 Power of Attorney in Respect of the Collateral. Borrower does hereby irrevocably appoint Lender (which appointment is coupled with an interest) on the occurrence and continuance of a Default or an Event of Default, the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name: (a) to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all rents, issues, profits, avails, distributions, income, payment draws and other sums in which a security interest is granted under Section 4 with full power to settle, adjust or compromise any claim thereunder as fully as if Lender were Borrowers themselves, (b) to receive payment of and to endorse the name of Borrower to any items of Collateral (including checks, drafts and other orders for the payment of money) that come into such Lender’s possession or under such Lender’s control, (c) to make all demands, consents and waivers, or take any other action with respect to, the Collateral, (d) in Lender’s discretion to file any claim or take any other action or proceedings, either in its own name or in the name of Borrower or otherwise, which Lender may reasonably deem necessary or appropriate to protect and preserve the right, title and interest of Lender in and to the Collateral, or (e) to otherwise act with respect thereto as though Lender were the outright owner of the Collateral.

          9.5 Lender’s Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Lender may do any or all of the following: (a) make payment of the same or any part thereof; (b) set up such reserves in Borrower’s loan account as Lender deems necessary to protect Lender from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section 6.9 of this Agreement, and take any action with respect to such policies as Lender deem prudent. Any amounts paid or deposited by Lender shall constitute Lender’s Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Lender shall not constitute an agreement by Lender to make similar payments in the future or a waiver by Lender of any Event of Default under this Agreement.

          9.6 Remedies Cumulative. Lender’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Lender shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Lender of one right or remedy shall be deemed an election, and no waiver by Lender of any Event of Default on Borrower’s part shall be deemed a continuing waiver. No delay by Lender shall constitute a waiver, election, or acquiescence by it.

          9.7 Application of Collateral Proceeds. The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the avails of any remedy hereunder (as well as any other amounts of any kind held by Lender at the time of or received by Lender after, the occurrence of an Event of Default hereunder) shall be paid to and applied as follows:

               (a) First, to the payment of out-of-pocket costs and expenses, including all amounts expended to preserve the value of the Collateral, of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances, including reasonable legal expenses and attorneys’ fees, incurred or made hereunder by Lender;

               (b) Second, to the payment to Lender of the amount then owing or unpaid on the Loans for Scheduled Payments, the Stipulated Loan Value of the Loan Amount, and all other Obligations with respect to all Loans, and in case such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid upon the Loans, then to the unpaid interest thereon, then to unpaid principal thereof, then to the Stipulated Loan Value of the Loan Amount with respect to the Loan, and then to the payment of other amounts then payable to Lender under any of the Loan Documents; and

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               (c) Third, to the payment of the surplus, if any, to Borrower, its successors and assigns, or to whomsoever may be lawfully entitled to receive the same.

          9.8 Reinstatement of Rights. If Lender shall have proceeded to enforce any right under this Agreement or any other Loan Document by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case (unless otherwise ordered by a court of competent jurisdiction), Lender shall be restored to their former position and rights hereunder with respect to the Property subject to the security interest created under this Agreement.

     10. Waivers; Indemnification

          10.1 Demand; Protest. Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Lender on which Borrower may in any way be liable.

          10.2 Lender’s Liability for Collateral. So long as Lender complies with its obligations, if any, under Section 9207 of the Code, Lender shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person whomsoever. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.

          10.3 Indemnification. Whether or not the transactions contemplated hereby shall be consummated:

               (a) General Indemnity. Borrower shall pay, indemnify, and hold Lender and each of its officers, directors, employees, counsel, partners, agents and attorneys-in-fact (each, an “Indemnified Person”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including Lender’s Expenses and reasonable attorney’s fees and the allocated cost of in-house counsel) of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement and any other Loan Documents, or the transactions contemplated hereby and thereby, and with respect to any investigation, litigation or proceeding (including any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, dissolution or relief of debtors or any appellate proceeding) related to this Agreement or the Loans or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”); provided, that Borrower shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of such Indemnified Person. An Indemnified Person may not enter into any settlement or other compromise with respect to any Indemnified Liabilities without Borrower’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, and if a claim is settled or compromised without such consent, Borrower shall not be obligated to provide indemnification under this section. If any Indemnified Person obtains recovery of any of the amounts that Borrower has paid to it pursuant to the indemnity set forth in this section, then such Indemnified Person shall promptly pay the Borrower the amount of such recovery.

               (b) Survival; Defense. The obligations in this Section 10.3 shall survive payment of all other Obligations. At the election of any Indemnified Person, Borrower shall defend such Indemnified Person using legal counsel satisfactory to such Indemnified Person in such Person’s sole discretion, at the sole cost and expense of Borrower. All amounts owing under this Section 10.3 shall be paid within thirty (30) days after written demand.

     11. Notices

          Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally

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delivered or sent by certified mail, postage prepaid, return receipt requested, or by prepaid facsimile to Borrower or to Lender, as the case may be, at their respective addresses set forth below:

If to Borrower:	Aruba Wireless Networks, Inc.
	180 Great Oaks Blvd., Suite B
	San Jose, California 95119
	Attention: Chief Financial Officer
	FAX: (408) 227-4550
If to Lender:	Lighthouse Capital Partners IV, L.P.
	500 Drake’s Landing Road
	Greenbrae, California 94904-3011
	Attention: Contract Administrator
	FAX: (415) 925-3387

     The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

12. General Provisions

          12.1 Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Lender’s prior written consent, which consent may be granted or withheld in Lender’s sole discretion. Lender shall have the right without the consent of or notice to Borrower to sell, transfer, negotiate, or grant participations in all or any part of, or any interest in such Lender’s rights and benefits hereunder.

          12.2 Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement.

          12.3 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

          12.4 Entire Agreement; Construction; Amendments and Waivers.

               (a) This Agreement and each of the other Loan Documents dated as of the date hereof, taken together, constitute and contain the entire agreement between Borrower and Lender and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof.

               (b) This Agreement is the result of negotiations between and has been reviewed by each of Borrower and Lender executing this Agreement as of the date hereof and their respective counsel; accordingly, this Agreement shall be deemed to be the product of the parties hereto, and no ambiguity shall be construed in favor of or against Borrower or Lender, Borrower and Lender agree that they intend the literal words of this Agreement and the other Loan Documents and that no parol evidence shall be necessary or appropriate to establish Borrower’s or Lender’s actual intentions.

               (c) Any and all amendments, modifications, discharges or waivers of, or consents to any departures from any provision of this Agreement or of any of the other Loan Documents shall not be effective without the written consent of Lender. Any waiver or consent with respect to any provision of the Loan Documents shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances. Any amendment, modification, waiver or consent effected in accordance with this Section 12.4 shall be binding upon Lender and on Borrower.

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          12.5 Reliance by Lender. All covenants, agreements, representations and warranties made herein by Borrower shall, notwithstanding any investigation by Lender, be deemed to be material to and to have been relied upon by Lender.

          12.6 No Set-Offs by Borrower. All sums payable by Borrower pursuant to this Agreement or any of the other Loan Documents shall be payable without notice or demand and shall be payable in United States Dollars without set-off or reduction of any manner whatsoever.

          12.7 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.

          12.8 Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding. The obligations of Borrower to indemnify Lender with respect to the expenses, damages, losses, costs and liabilities described in Section 10.3 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Lender have run.

     13. No Original Issue Discount. Borrower and Lender hereby acknowledge and agree that the warrant (the “Warrant”) to purchase stock transferred to Lender under the Warrant to purchase stock is part of an investment unit within the meaning of Section 1273(c)(2) of the Internal Revenue Code which includes the Loans. Borrower and Lender further agree as between Borrower and Lender, that the fair market value of the Warrant is equal to US$100.00 and that, pursuant to Treas. Reg. § 1.1273-2(h), US$100.00 of the issue price of the investment unit will be allocable to the Warrant and the balance shall be allocable to the Loans. Borrower and Lender agree to prepare their federal income tax returns in a manner consistent with the foregoing agreement and, pursuant to Treas. Reg. § 1.1273, the original issue discount on the Loans shall be considered to be zero.

     14. Relationship of Parties. Borrower and Lender acknowledge, understand and agree that the relationship between the Borrower, on the one hand, and Lender, on the other, is, and at all times shall remain solely that of a borrower and lender. Lender shall not under any circumstances be construed to be a partner or joint venturer of Borrower or any of its Affiliates; nor shall the Lender under any circumstances be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or any of its Affiliates, or to owe any fiduciary duty to Borrower or any of its Affiliates. Lender do not undertake or assume any responsibility or duty to Borrower or any of its Affiliates to select, review, inspect, supervise, pass judgment upon or otherwise inform the Borrower or any of its Affiliates of any matter in connection with its or their Property, any Collateral held by Lender or the operations of Borrower or any of its Affiliates. Borrower and each of its Affiliates shall rely entirely on their own judgment with respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by Lender in connection with such matters is solely for the protection of Lender and neither Borrower nor any Affiliate is entitled to rely thereon.

     15. Choice of Law and Venue; Jury Trial Waiver. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER AND LENDER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA. BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.

     16. Confidentiality. Lender agrees to hold in confidence any confidential information it receives from Borrower pursuant hereto, except for disclosure: (a) to legal counsel and accountants for Lender or any

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assignee; (b) to other professional advisors to Lender or any assignee; (c) to regulatory officials having jurisdiction over Lender or any assignee; (d) as required by law or legal process or in connection with any legal proceeding to which Lender (or any assignee) and Borrower are adverse parties; and (e) in connection with a disposition or proposed disposition in any or all of Lender’s rights and benefits hereunder. For purposes of this section, “confidential information” shall mean any information respecting Borrower or provided by Borrower other than: (i) information which is or becomes generally available to the public other than as a result of a disclosure by Lender or any assignee in violation of this section; (ii) information which becomes available to Lender or any assignee from any other source (other than Borrower) which is not known by Lender or such assignee to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligations of confidentiality of Borrower with respect to the information made available; and (iii) information known by Lender or any assignee on a non-confidential basis prior to its disclosure to Lender of the assignee by Borrower.

THIS SPACE IS INTENTIONALLY LEFT BLANK

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     In Witness Whereof, the parties hereto have caused this Agreement to be executed as of the date first above written.

BORROWER:		LENDER:
ARUBA WIRELESS NETWORKS, INC.		LIGHTHOUSE CAPITAL PARTNERS IV, L.P.
		By: LIGHTHOUSE MANAGEMENT
By:	/s/ Pankaj Manglik	PARTNERS IV, L.L.C., its general partner
Name:	Pankaj Manglik
Title:	CEO	By:
		Name:
		Title:

Exhibit A — Collateral
Exhibit B — Warrant
Exhibit C — Landlord Consent
Exhibit D — Loan Agreement Supplement
Exhibit E — Ancillary Documents

Schedule 1 — Existing Liens
Schedule 2 — Subsidiaries

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Exhibit A

DEBTOR/BORROWER:	Aruba Wireless Networks, Inc.
SECURED PARTY/LENDER:	Lighthouse Capital Partners IV, L.P.

COLLATERAL

     The Collateral shall consist of all right, title and interest of Debtor in and to all the following:

     All right, title, interest, claims and demands of Debtor in and to each and every item of equipment, fixtures or personal property that is financed pursuant to Loan and Security Agreement No. 352040201 by and between Debtor and Secured Party, including without limitation, the equipment, fixtures and personal property described in Annex A attached hereto whether now owned or hereafter acquired, wherever located, together with all substitutions, renewals or replacements of and additions, improvements, accessions and accumulations to any and all of such equipment, fixtures or personal property together with all the rents, issues, income, profits and avails therefrom and all of the products and proceeds thereof, including without limitation, insurance, proceeds of insurance, proceeds of proceeds, condemnation, requisition or similar payments, and all proceeds from sales, renewals, releases or other dispositions thereof.

1

Annex A
to
Exhibit A

The following represent further specific descriptions of the Financed Equipment:

Financed Equipment

2

Exhibit B

Warrant

1

EX-10.13

Exhibit 10.13

MASTER LOAN AND SECURITY AGREEMENT

Agreement No. CKVP-ARU-03 Dated July 31, 2003

This Loan and Security Agreement (this “Agreement”) is entered into by and between Costella Kirsch Venture Partners I, L.P. (“Lender”), having its principal place of business at 873 Santa Cruz Ave., Suite 207, Menlo Park, CA 94025, and Aruba Wireless Networks, Inc.
(“Borrower”), having its principal place of business at 180 Great Oaks Blvd., Suite B, San Jose, CA 95119.

1. LOAN: Subject to the terms and conditions of this Agreement, Lender agrees to make loans (each, a “Loan” and, collectively, the “Loans”) to Borrower from time to time prior to April 30, 2004, each in an amount equal to the aggregate original invoice cost of the Equipment (as defined below) specified on a schedule in the form of Exhibit A attached hereto (each, a “Schedule” and, collectively, the “Schedule(s)”); provided that the aggregate original amount of all Loans shall not exceed the Commitment Amount as stated in the Commitment Letter attached hereto as Exhibit B. Amounts borrowed and repaid may not be reborrowed. Each Loan shall be secured by the personal property and software listed on a Schedule which shall be approved by Lender in its sole discretion (such personal property and software with respect to any Schedule, together with any replacements, substitutions, repairs, or additions being referred to herein as the “Equipment” with respect to such Schedule). A list of such property to be included in a Schedule together with copies of paid invoices must be delivered to Lender at least ten (10) calendar days before Lender funds under such Schedule. Each Schedule shall constitute a separate and independent Loan and shall incorporate the terms and conditions contained herein. Lender may suspend its commitment to make any additional loans, advances or extensions of credit at any time if any of the following occurs as determined by Lender in its sole discretion: (i) there is (A) any material adverse change to the business, operations, or financial condition of Borrower or (B) a material impairment of any portion of the Collateral or of the Borrower’s ability to perform under this Agreement or any Schedule, or (C) any material adverse deviation by Borrower from the business plan presented to and approved by Lender (each, a “Material Adverse Change”) or (ii) any Event of Default occurs and continues.

2. TERMS AND PAYMENTS: Each Loan shall commence upon the execution of a Schedule in connection therewith by the Lender and the Borrower. Borrower agrees to pay Lender the combined payments of principal and interest (“Payments”) specified herein and in the applicable Schedule. Borrower may prepay any Loan at any time by making a single payment equal to (i) all outstanding amounts due prior to the date of prepayment and (ii) the present value of all future payments, discounted using a rate equal to the Bank of America Prime Rate (as in effect on the date of prepayment) minus 1.5%. The first Payment is due on the date specified in the applicable Schedule (“Commencement Date”) and remaining Payments are due on the same date of each succeeding month during the term of the Loan (“Term”), or as specified in the applicable Schedule. If Lender should make any fundings under a Schedule prior to the Commencement Date of the Schedule therefor, Borrower shall, on such Commencement Date, pay interim interest to Lender at a rate equal to the implicit interest rate of the Schedule multiplied by the “Equipment Cost This Schedule” as set forth in the applicable Schedule from such funding date to the Commencement Date. If Borrower is late in making any payment under this Agreement by more than three (3)

days (a “Late Payment”), Borrower agrees to pay a late charge of five percent (5%) of the payment due, but not less than two hundred dollars ($200) for any one such delinquent payment, plus default interest accruing at a rate of 1% per month on the amount due.

3. THIS SECTION INTENTIONALLY LEFT BLANK.

4. GRANT OF SECURITY INTEREST: Borrower hereby grants to Lender a valid, first priority, continuing security interest in all of its rights, title or interest in, to and under any and all presently existing or owned or hereafter arising or acquired Equipment which is listed on a Schedule and any and all proceeds thereof (collectively, the “Collateral”), in order to secure the full, prompt and complete payment and performance of its obligations under this Agreement and each Schedule.

5. WARRANTIES: Borrower acknowledges that it has made the selection of each item of Equipment based upon its own judgment. LENDER MAKES NO EXPRESS OR IMPLIED WARRANTIES INCLUDING THOSE OF DESCRIPTION, INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE WITH RESPECT TO THE EQUIPMENT AND HEREBY DISCLAIMS THE SAME. Lender shall have no liability for any damages, whether direct or consequential, incurred by Borrower as a result of any defect or malfunction of the Equipment.

6. TITLE, LOCATION AND RETURN: Lender and Borrower hereby confirm their intent that the Equipment used as Collateral for the Loan remain and be deemed the personal property of, regardless of its attachment to any real property, and title thereto shall remain in Borrower. Borrower, at its expense, shall protect and defend the title to the Collateral and keep it free of all claims and liens of third parties other than Lender and other than Permitted Liens. “Permitted Liens” means: (i) liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same have no priority over any of Lender’s security interests; and (ii) liens securing claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like persons or entities imposed without action of such parties, provided that the payment thereof is not yet required. If requested by Lender, Borrower will affix plates or markings on the Equipment indicating the security interest of Lender. Borrower may not remove the Equipment from its place of installation without Lender’s prior written consent, which consent shall not be unreasonably withheld. Lender shall have the right to inspect the Equipment during regular business hours, with reasonable notice, and in compliance with Borrower’s reasonable security procedures. Upon the occurrence and continuance of any Event of Default as defined below, at Lender’s request, and at Borrower’s own risk and expense, Borrower will deliver the Equipment to Lender in the same condition as when received, ordinary wear and tear excepted, at such location as Lender shall designate within Northern California. All charges to cover the Equipment’s transportation, deinstallation, packing, installation and handling to and from Lender’s facilities or vendor’s plant or as required hereunder shall be paid by Borrower.

7. ASSIGNMENT: Borrower acknowledges and agrees that Lender may sell, assign, grant a security interest in, or otherwise transfer all or any part of its rights, title and interest in this Agreement (including, without limitation, the security interest granted herein) or any Schedule without notice to or the consent of Borrower. Upon written notice, Borrower shall, if requested, pay directly to such assignee without abatement, deduction or set-off all amounts which become due hereunder. Borrower waives and agrees it will not assert against such assignee any set-off in any action for Payments under any Schedule. Each assignee shall be deemed a Lender hereunder

and if there are two or more Lenders through such assignment, the exercise of Lenders’ rights and remedies shall be by agreement of Lenders holding a majority, by dollar amount, of the Loan outstanding. BORROWER MAY NOT ASSIGN, GRANT A SECURITY INTEREST IN (OTHER THAN A PERMITTED LIEN), OR OTHERWISE TRANSFER, LEASE OR DISPOSE OF ALL OR ANY PART OF ITS RIGHTS, TITLE AND INTEREST IN AND TO THIS AGREEMENT, ANY SCHEDULE OR ANY EQUIPMENT. Notwithstanding the foregoing, Borrower may (i) dispose of excess, worn-out or obsolete Equipment (provided that any cash proceeds from the disposition are used to purchase additional equipment or are provided to Lender and applied to the last payment under the applicable schedule), and (ii) assign this Agreement, the Equipment, and each Schedule to a successor in interest to all or substantially all of the business of Borrower to which the Equipment relates if the following conditions precedent are satisfied: (i) no Event of Default has occurred and is continuing, (ii) such successor has a net worth and financial condition greater than or equal to Borrower as determined in good faith by Lender, and (iii) such successor executes an assumption agreement in form and substance satisfactory to Lender.

8. TAXES: Borrower agrees to pay if and when due, and indemnify, hold harmless and reimburse Lender for, in addition to other amounts due hereunder and under each Schedule, all fees and assessments, and all sales, use, property, excise and other taxes and charges (including all interest and penalties), now or hereafter imposed by any governmental body or agency upon or in connection with any of the Equipment or this Agreement or any Schedule hereunder or upon the purchase, ownership, possession, leasing, operation, use, rentals or other payments, or disposition of any Equipment whether payable by Lender or Borrower (exclusive, in each case, of any taxes on or measured by Lender’s net income or gross receipts). Borrower agrees to prepare and file promptly with the appropriate offices any and all tax and similar returns required to be filed with respect thereto. Any expenses paid by Lender on behalf of Borrower shall become immediately due and payable.

9. USE; MAINTENANCE: (a) Borrower, at its expense, shall make all necessary site preparations and cause the Equipment to be operated substantially in accordance with any applicable manufacturer’s manuals or instructions. So long as no Event of Default has occurred and is continuing, Borrower shall have the right to quietly possess and use the Equipment as provided herein without interference by Lender. (b) Borrower, at its expense, shall maintain the Equipment in good condition, reasonable wear and tear excepted, and will comply with all material laws to which the use and operation of the Equipment may be or become subject, except where the failure to comply would not cause a Material Adverse Change. Such obligation shall extend to repair and replacement of any partial loss or damage to the Equipment, regardless of the cause. If maintenance is mandated by manufacturer, Borrower shall obtain and keep in effect, at all times during the term of this Agreement maintenance service contracts reasonably approved by Lender such approval not to be unreasonably withheld. All parts furnished in connection with such maintenance or repair shall immediately become part of the Equipment. All such maintenance, repair and replacement services shall be timely paid for and discharged by Borrower with the result that no lien will attach to the Equipment.

10. INSURANCE: Borrower shall obtain and maintain for the term of this Agreement, at its own expense, “all risk” insurance against loss or damage to the Equipment, and general public liability insurance (including contractual liability coverage), and such other insurance against such other risks of loss and with such terms, as maintained by similarly situated corporations. The amount of the “all risk” insurance shall be the greater of the replacement value of the Equipment (as new) or the “Total Purchase Price” of the Equipment as specified in the applicable Schedule. Each

insurance policy shall: (i) name Lender as an additional insured or loss payee, or both, as appropriate, (ii) provide each insurer’s waiver of its right of subrogation against Lender, (iii) provide that such insurance shall not be invalidated by any action of, or breach of warranty by, Borrower under any of its insurance policies, (iv) provide that Borrower’s insurance shall be primary without a right of contribution of Lender’s insurance, if any, and (v) shall contain a clause requiring the insurer to give Lender at least 30 days prior written notice of any alterations in the terms of such policy or of its cancellation. Borrower shall on or prior to the date of the first Schedule and prior to each policy renewal, furnish to Lender certificates of insurance or other evidence satisfactory to Lender that such insurance coverage is in effect. Borrower further agrees to give Lender prompt notice of any material damage to, or loss of, the Equipment, or any part thereof.

11. LOSS; DAMAGE; INDEMNIFICATION: If, for any reason, any of the Equipment shall become lost, stolen, destroyed or damaged beyond repair, or be condemned, confiscated, or seized (except by Lender), Borrower shall promptly replace the Equipment with equipment of similar kind and such replacement equipment shall immediately become subject to Lender’s security interest hereunder, or pay to Lender the aggregate unpaid Payments for the remaining term of the applicable Schedule plus an amount equal to any final balloon payment obligation as set forth in the applicable Schedule under “End of Loan Terms,” discounted using a rate equal to the Bank of America Prime Rate (as in effect on the date of prepayment) minus 1.5% per annum from the scheduled date of each such payment to the date of the loss, less the net amount of the recovery, if any, received by Lender from insurance or a governmental authority. Borrower hereby assumes liability for, and shall indemnify and defend Lender against, any and all liabilities, losses, damages, claims and expenses (including reasonable attorney fees) in any way relating to or arising out of this Agreement, any Schedule or any item of Equipment, including without limitation the manufacture, purchase, ownership, shipment, transportation, delivery, installation, leasing, possession, use, operation, deinstallation, storage and return of such Equipment, except for loss caused solely by the gross negligence or willful misconduct of Lender. Borrower shall give Lender prompt notice of any occurrence, event or condition in connection of which Borrower becomes aware with which Lender may be entitled to indemnification hereunder. The indemnities contained herein shall survive the expiration of the Term.

12. EVENTS OF DEFAULT: An “Event of Default” shall occur if Borrower: (i) fails to pay any installment of rent or other payment required hereunder when due; or (ii) fails to perform or observe any other covenant, condition or agreement hereunder or breaches any provision contained herein or in any other document furnished Lender in connection herewith and such failure or breach continues for 30 days; or (iii) without Lender’s consent, attempts to sell, transfer, encumber (other than Permitted Liens), part with possession, or lease any item of Equipment (except as permitted by this Agreement); or (iv) makes any representation or warranty herein or in any document furnished in connection herewith, which shall have been materially false or inaccurate when made; or (v) fails to maintain insurance required hereunder; or (vi) shall be generally unable to pay its debts as they become due, makes an assignment for the benefit of creditors or consents to the appointment of a trustee or receiver or bankruptcy or insolvency proceedings shall be instituted by or against Borrower (and in the case of any such filing against Borrower, a period of 90 days shall have elapsed without such filing being vacated) or (vii) shall deviate materially from its business plan as presented to Lender (or any subsequent business plan approved by Borrower’s Board of Directors and presented to and accepted by Lender) or (viii) fails to provide Lender with monthly financials within 30 days of month end, provided that Borrower shall have 15 days following receipt of written notice from Lender of such failure to provide monthly financials to

cure such failure before such failure is deemed an Event of Default hereunder or (ix) fails to provide audited annual financials within 240 days of year end provided that Borrower did have an audit performed, provided that Borrower shall have 15 days following receipt of written notice from Lender of such failure to provide audited annual financials to cure such failure before such failure is deemed an Event of Default hereunder or (x) shall be in default with any other lender for money borrowed in excess of $100,000 which default would allow such lender to accelerate such loan.

13. REMEDIES: Upon the occurrence of any Event of Default and at any time thereafter, provided such Event of Default is then continuing, Lender may, in its discretion, do any one or more of the following: (i) terminate this Agreement upon notice to Borrower; (ii) declare any or all sums under this Agreement or any Schedule to be immediately due and payable; (iii) require that Borrower return all Equipment to Lender in accordance with Section 6 hereof; (iv) enter upon the premises where such Equipment is located and take immediate possession of and remove the same, all without liability to Lender or its agents for such entry; (v) to the extent permitted by applicable law, sell any or all of the Collateral at public or private sale, with or without notice to Borrower or advertisement, or otherwise dispose of, or lease to others such Equipment, all free and clear of any rights of Borrower; (vi) exercise any other right or remedy which may be available under the Uniform Commercial Code, any other applicable law or in equity, including the right to recover damages for the breach hereof. In addition, Borrower shall be liable for, and reimburse Lender for, all reasonable and necessary attorneys’ fees and other expenses incurred by Lender in enforcing this Agreement, or the exercise of Lender’s remedies hereunder, including, without limitation, placing any Equipment in the condition required by Section 6 hereof. No remedy referred to in this Section is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lender at law or in equity. There shall be no waiver by Lender of any default unless in writing and such waiver shall not constitute a waiver of any other default by Borrower, or a waiver of any of Lender’s other rights. Any partial exercise of or failure to exercise any right or remedy shall not operate as a waiver or disclaimer of such right or remedy or any other right or remedy of Lender.

14. BORROWER’S REPRESENTATIONS, WARRANTIES, AND COVENANTS: As of the date of the Loan, and, without any further action, again as of the date of each Schedule, Borrower warrants and represents the following: (a) Borrower is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and is duly qualified and authorized to do business in each state where the failure to be so qualified could have a material adverse effect on Borrower. Borrower has the full corporate power, authority and legal right and has obtained all necessary approvals, consents and given all notices to execute and deliver this Agreement and perform the terms hereof and of each Schedule; (b) There is no action, proceeding or patent claim pending or, insofar as Borrower knows, threatened against Borrower or any of its subsidiaries before any court or administrative agency which might have a materially adverse effect on the business, condition or operations of Borrower or such subsidiary; and (c) All financials delivered to Lender by Borrower shall be prepared using Generally Acceptable Accounting Practices. Borrower further warrants, represents, and covenants that it (i) is and shall be in compliance with all securities, environmental, labor and other material laws, rules and regulations to which it is subject except where noncompliance will not cause a Material Adverse Change; (ii) will not transfer, sell, lease, license or otherwise convey any of the Collateral except as permitted by this Agreement; and (iii) will not voluntarily pre-pay any other amortizing debt prior to its scheduled maturity without offering comparable prepayment terms to Lender with respect to the Loans.

15. MISCELLANEOUS: (a) Any notices hereunder shall be in writing and shall be deemed given when delivered personally, by facsimile transmission or four days after being sent by certified mail, postage prepaid, addressed to the other party at its address set forth herein or to such other address as either party may designate in writing. (b) Borrower will promptly execute and deliver to Lender such further reasonable documents (including, but not limited to, UCC financing statements) and take such further reasonable action (including, but not limited to, obtaining any Landlord or Mortgagee’s Waiver and Consent), as Lender may request in order to more effectively carry out the intent and purpose of this Agreement. (c) Borrower shall furnish to Lender unaudited monthly and audited (for any year in which an audit is performed) annual financial statements and such other financial information as Lender may reasonably request from time to time. (d) This Agreement and the Commitment Letter attached hereto as Exhibit B and incorporated herein by reference constitute the entire agreement on the subject matter hereof between the parties hereto and may not be amended except in a writing executed by the Lender and the Borrower and shall be binding upon and inure to the benefit of the parties hereto, their permitted successors and assigns. In the event of a conflict between this Agreement and the Commitment Letter, this Agreement shall prevail. (e) Any provision of the Loan which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof; and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. (f) Time is of the essence with respect to each Loan. (g) The captions set forth herein are for convenience only and shall not define or limit any of the terms hereof. (h) Borrower’s and Lender’s obligations hereunder shall survive the expiration and termination of the Term to the extent required for full performance and satisfaction thereof. (i) This Loan shall in all respects be governed by, and construed in accordance with the laws of the State of California without regard to its principles regarding conflicts of law. (j) Lender may use the logo and name of Borrower in its marketing materials. (k) If any payment or other transaction under this Agreement or any Schedule shall be deemed to be a preference or otherwise avoided, rescinded, reduced or required to be returned to Borrower or its estate, then this Agreement and any obligations of Borrower so avoided shall remain in full force and effect and the security interests granted herein to secure such obligations shall be revived without any further action by the parties, all as though such payment or transaction had never been made. (l) This Agreement and any Schedule may be executed in any number of counterparts, each of which shall be deemed an original but all of which, when taken together, shall constitute but one and the same agreement.

The person executing this Agreement on behalf of Borrower hereby certifies that he or she is duly authorized to execute this Agreement on behalf of Borrower.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above.

BORROWER: ARUBA WIRELESS NETWORKS, INC.		LENDER: COSTELLA KIRSCH VENTURE PARTNERS I, L.P.
BY:	/s/ Pankaj Manglik	BY:	/s/ Richard F. Ginn
PRINT NAME: P. Manglik		PRINT NAME: Richard F. Ginn
TITLE: CEO      DATE: 8/5/03		TITLE: Member of the G.P.       DATE: 8/5/03

Exhibit A — Form of Schedule
Exhibit B — Commitment Letter

Exhibit A

SCHEDULE NO.	o	COMMENCEMENT DATE
		LAST MONTHLY PAYMENT DATE
		FINAL (BALLOON) PAYMENT DATE

To Master Loan and Security Agreement (MLSA)                      dated                      between the undersigned parties. The terms and conditions of the MLSA are incorporated herein by this reference and apply to the Loan secured by the Equipment described below. Capitalized terms have the meanings given to them in the MLSA.

A. BORROWER (AND EQUIPMENT LOCATION)	B. LENDER
	COSTELLA KIRSCH VP I, L.P.
	873 Santa Cruz Avenue, Suite 207
	Menlo Park, CA 94025

C. LENDER’S COMMITMENT

	Letter	Remaining Funds	Expiration
Amount	Dated	Hardware/Softw    Other	Date

D. EQUIPMENT	See attached Exhibit	E. EQUIPMENT COST THIS SCHEDULE	$
	“A”

F. PAYMENT TERMS

Monthly		Balloon	Monthly Payment	Monthly
Payments		Payment	Due Date	Payment
Months	+	%	Payments In Advance	$

G. END OF LOAN TERMS

After                      monthly payments. Borrower will pay a final balloon payment of $                     (                     % of Equipment cost for this Schedule). This represents the final payment obligation.

H. INSURANCE    See attached Certificate of Insurance

I. SPECIAL PROVISIONS AND CONDITIONS (reference to additional clauses/attachments, if any)

o N/A

þ With respect to this Schedule, title to all Equipment specified in Ex. “A” attached shall remain with Borrower.

J. ACCEPTANCE CERTIFICATE

On Behalf of Borrower, I hereby: (1) certify that I am duly authorized to execute this Schedule; (2) request Lender to make this Loan for the purpose of financing Borrower’s purchase of the Equipment; (3) confirm that Borrower has read and understood the terms and conditions of the Loan and, as agent for Borrower, execute documents and accept the Equipment hereunder on the above date; (4) declare that the Equipment and supplier thereof have been chosen by the Borrower using its own skill and judgment; (5) acknowledge that this Schedule shall not become binding on the Lender until signed for and on behalf of the Lender and Borrower; and (6) agree that the Equipment has been installed and is ready for use as of the date hereof.

FOR AND ON BEHALF OF:

BORROWER:	LENDER:	COSTELLA KIRSCH VP I, L.P.
Signed:	Signed:
Name:	Name:
Title:	Title:

Exhibit B (Commitment Letter)

COSTELLA KIRSCH 873 Santa Cruz Ave., Suite 207, Menlo Park CA 94025; 650-462-1888

Pankaj Manglik, Founder and CEO	Jul 7, 2003
Deborah Kranz, Kranz and Assoc.
Aruba Networks, Inc.
180 Great Oaks Blvd., Suite B
San Jose, California 95119

Dear Pankaj:

Costella Kirsch is pleased to offer this final revised commitment to Aruba Networks, Inc. to provide debt financing on the following terms:

LENDER:

Costella Kirsch or its assigns

BORROWER:

Aruba Networks, Inc.

TOTAL COMMITMENT:

$2,000,000.

AVAILABILITY:

A. $500,000 is available before the next venture round is complete. The next venture round must be not less than $10,000,000. and be sufficient to last for twelve months per a board approved financial plan. This portion of the commitment expires October 31, 2003 if a new venture round has not closed.

B. $1,500,000 is available through April 30, 2004, but only after the above venture round. Any unused commitment in A may be added to this availability.

COLLATERAL:

Computers, software, demo-pool (evaluation) units, and miscellaneous office equipment. Evaluation units at Borrower’s material cost. Evaluation units, software and other soft costs not to exceed 35% of Total Commitment. All collateral subject to Lender’s final approval.

TERM and PAYMENTS:

Each funding will be evidenced by a Schedule and carry a 39 (thirty-nine) month term, with timely monthly payments in advance, first payment due at the time of funding, each equal to 3.09% of the Equipment Cost on each Schedule (the “Monthly Rate Factor or MRF”). There is no balloon payment due at the end of the term. The effective rate of the MRF is 12.25%.

The MRF will be adjusted to reflect changes in Bank of America Prime Rate, but once funded, the payments remain fixed for the full term. Each draw shall be not less than 550,000 and will include invoices dated in the prior 60 days.

Pankaj Manglik — Page 2

WARRANTS:

For the initial $500,000 facility, warrants to purchase $25,000 (5%) of the lower of Series A preferred at the Series A price per share or Series B preferred at the Series B price per share shall be awarded to Lender.

For the follow-on $1,500,000 facility, warrants to purchase $75,000 (5%) of Series B (when issued) at the to be determined Series B price. If Series B has not been issued when the warrant is exercised, than the warrant will be for Series A at the Series A exercise price.

The warrants will survive an IPO or merger (unless merger consideration consists of cash or publicly traded securities and has a value of at least three times the warrant exercise price), have an exercise period of seven (7) years, allow for net issuance, and have the same rights and protections as other investors in the stock series.

OWNERSHIP:

All costs of ownership of the Equipment are to be paid by Borrower. This includes, but is not limited to, filing and paying personal property tax, sales tax, and maintenance costs.

FINANCIAL:

Borrower to provide Lender with monthly financial and annual audited statements.

COMMITMENT DEPOSIT:

Borrower shall remit a deposit of $5,000 (.25% of Total Commitment) to Lender in good faith upon acceptance of this commitment by signature below. This deposit will be applied first to a documentation fee of $2000, and then pro rata, to the first Monthly Payment on each Equipment Schedule until fully utilized.

CONDITION — PRECEDENT:

Lender’s obligations to provide funding against this commitment are subject to the following:

1. Execution of documentation satisfactory to both parties.

2. Borrower’s performance against Business Plan and financial projections as presented at the meeting on April 3, 2003, and absence of any material adverse change in the management or financial condition (including timing and amount of future equity rounds) of the Borrower from the date herein through the funding dates of each Equipment Schedule, all as determined by Lender in its sole discretion.

3. This commitment expires July 9, 2003 and supercedes the previously executed term sheet dated June 9, 2003.

Pankaj and Deborah, we enjoyed hearing your presentation and learning about your exciting company. We look forward to working with you.

If these terms are acceptable to you, please sign below and return to me along with your good faith deposit of $5,000. We will then commence with final documentation.

Best regards,
COSTELLA KIRSCH	Accepted and agreed this 5 day of AUG, 2003.
	Aruba Networks, Inc.       By: Pankaj Manglik
	Title: CEO

EX-10.14

Exhibit 10.14

SUBLEASE

     THIS SUBLEASE (“Sublease”) is dated for reference purposes only as of September 10, 2004, and is made by and between Harmonic Inc., a Delaware corporation (“Sublessor), and Aruba Wireless Networks, a Delaware corporation (“Sublessee”). Sublessor and Sublessee hereby agree as follows:

     1. Recitals: This Sublease is made with reference to the fact that Caribbean/Geneva Investors, a California limited partnership, and Crossman Partners, L.P., a California limited partnership, as landlord (together, “Master Lessor”), and Sublessor, as tenant, entered into that certain Lease Agreement dated as of May 24, 2000 (“Master Lease”), whereby Master Lessor leased to Sublessor those certain premises consisting of approximately 52,325 rentable square feet as more particularly described on Exhibit A to the Master Lease (the “Premises”) being a building (the “Building”) located at 1322 Crossman Avenue, Sunnyvale, California, A copy of the Master Lease is attached hereto as Exhibit “A” and incorporated herein to the extent set forth below. Capitalized terms not otherwise defined herein shall have the same meaning as in the Master Lease.

     2. Premises: Pursuant to the terms and conditions of this Sublease, Sublessor hereby subleases to Sublessee, and Sublessee hereby subleases from Sublessor, the entire Premises.

     3. Term:

          (a) Initial Term. The term of this Sublease (“Term”) shall commence on the latest to occur of (i) October 1, 2004, and (ii) the date on which Sublessor has received Master Lessor’s written consent to this Sublease (such later date herein called the “Commencement Date”), and shall end three (3) years after the Commencement Date (“Expiration Date”), unless this Sublease is sooner terminated pursuant to its terms or the Master Lease is sooner terminated pursuant to its terms. Sublessee, at Sublessee’s option, shall have the right to early entry into the Premises for fit-up purposes (i.e., installing Sublessee’s furniture, equipment, fixtures and voice and data communications systems) upon receipt of Master Lessor’s consent to this Sublease. During such early entry Sublessee shall pay no Monthly Base Rent (as defined in Paragraph 4(a) below) or Additional Rent (as defined in Paragraph 4(b) below), except for the cost of utilities provided to the Premises during the period of such early entry, and the cost to repair any damage caused by Sublessee or its Agents (as defined in Paragraph 14 below). The indemnity provisions of Paragraph 10(c) of the Master Lease shall be applicable to any such early entry by Sublessee. Sublessee shall not be entitled to any fitup period unless the Master Lessor provides its consent to this Sublease prior to October 1, 2004, the scheduled Sublease Commencement Date, and the failure of the Master Lessor to provide its consent prior to such date shall not entitle Sublessee to extend the Sublease Commencement Date in order to fit up the Premises.

          (b) Extension Option. Upon condition that (i) no Default (as defined in Paragraph 15 below) is continuing under this Sublease at the time of exercise or at the commencement of the option term, and (ii) Sublessee continues to physically occupy at least fifty percent (50%) of the entire Premises, then Sublessee shall have the right to extend the Term through August 31, 2010 (the

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“Extension Term”) following the initial Expiration Date by giving written notice (“Exercise Notice”) to Sublessor at least one hundred eighty (180) days prior to the expiration of the initial Term.

          (c) Rent During Extension Term. The Monthly Base Rent during the Extension Term shall be the greater of the Monthly Base Rent paid during the last month of the initial Term or at ninety-five percent (95%) of the Fair Market Rental Value for the Premises as of the commencement of the Extension Term, as determined in accordance with Paragraph 43(a) of the Master Lease; provided that the references to “eighteen (18) months” in said Paragraph 43(a) shall be modified to be “one hundred eighty (180) days”. On each anniversary of the commencement date of the Extension Term, the Monthly Base Rent shall increase by four percent (4%) of the Monthly Base Rent for the immediately prior year.

     4. Rent:

          (a) Monthly Base Rent. Commencing on the Commencement Date and continuing throughout the Term, Sublessee shall pay monthly base rent (“Monthly Base Rent”) to Sublessor as follows:

Months	Monthly Base Rent
01-12	$	26,162.50
13-24	$	28,778.75
25-Expiration Date	$	31,395.00

As used herein, the word “month” shall mean a period beginning on the first (1st) day of a month and ending on the last day of that month. Monthly Base Rent shall be paid on or before the first (1st) day of each calendar month during the Term. Rent for any period during the Term which is for less than one month of the Term shall be a pro rata portion of the monthly installment based on a thirty (30)-day month. Rent shall be payable without notice or demand and without any deduction, offset, or abatement, in lawful money of the United States of America. Rent shall be paid directly to Sublessor at 549 Baltic Way, Sunnyvale, California 94089, Attention: Chief Financial Officer, or such other address as may be designated in writing by Sublessor.

          (b) Additional Rent: All monies other than Monthly Base Rent required to be paid by Sublessee under this Sublease, including, without limitation, (i) Additional Charges (as defined in Paragraph 3 of the Master Lease), and (ii) utility charges with respect to utilities serving the Premises, shall be deemed additional rent (“Additional Rent”) and shall be payable within fifteen (15) days after receiving an invoice from Sublessor; provided, however, with respect to the calculation of the management fee listed in Paragraph 3(c)(i)(D) of the Master Lease, Sublessee shall only be responsible for the payment of the management fee as calculated based on Sublessee’s Monthly Base Rent under this Sublease and not the “Monthly Base Rent” payable by Sublandlord under the Master Lease. Notwithstanding the foregoing, Sublessee shall not be responsible for any cost or expense to repair and maintain the Building foundations, exterior wall structure, roof structure, roof membrane, structural support system or subsurface plumbing (as it relates to structure). Sublessor shall be responsible for all such costs and expenses as between Sublessor and Sublessee solely to the extent that the Master Lease obligates the “Tenant”

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thereunder to pay for such costs and expenses. Monthly Base Rent and Additional Rent hereinafter collectively shall be referred to as “Rent”.

          (c) Prepayment of First Month’s Rent: Upon execution hereof by Sublessor, Sublessee shall pay to Sublessor, in cash, the sum of Twenty Six Thousand One Hundred Sixty-Two and 50/100 Dollars ($26,162.50), which shall be applied as a credit against the first installment of Monthly Base Rent due hereunder.

     5. Security Deposit: Upon the execution of this Sublease by Sublessor, Sublessee shall deposit with Sublessor, in cash, the sum of Twenty Six Thousand One Hundred Sixty-Two and 50/100 Dollars ($26,162.50) (the “Security Deposit”). The Security Deposit shall be held by Sublessor as security for the faithful performance by Sublessee of all of its obligations under this Sublease. The Security Deposit is not an advance payment of Rent or a measure or limit of Sublessor’s damages upon Sublessee’s default under this Sublease. Sublessor may retain the Security Deposit with its general funds and shall not be obligated to pay interest thereon. Sublessee hereby grants to Sublessor a security interest in the Security Deposit pursuant to the applicable provisions of the California Uniform Commercial Code. Sublessor may apply the Security Deposit as is reasonably necessary for the following purposes: (a) to remedy any default by Sublessee in the payment of Rent that is not cured within any applicable cure period; (b) to repair damage to the Premises caused by Sublessee which is not repaired by Sublessee within any applicable cure period (subject to Paragraph 7(e) of the Master Lease); (c) to clean the Subleased Premises upon termination of this Sublease; and (d) to remedy any other default of Sublessee to the extent permitted by law that is not cured within any applicable cure period, and in this regard, Sublessee hereby waives any restriction on the uses to which the Security Deposit may be put contained in California Civil Code Paragraph 1950.7. The use, application or retention of the Security Deposit, or any portion thereof, by Sublessor shall not prevent Sublessor from exercising any other right or remedy provided by this Sublease or by law or in equity, it being intended that Sublessor shall not first be required to proceed against the Security Deposit, and the Security Deposit shall not operate as a limitation on any recovery to which Sublessor otherwise may be entitled. If following a default hereunder that is not cured within any applicable cure period, any portion of the Security Deposit is used by Sublessor, Sublessee, within seven (7) days after written demand therefor, shall deposit cash with Sublessor in an amount sufficient to restore the Security Deposit to the amount required hereunder. Sublessee’s failure to restore the Security Deposit as required hereunder shall be an incurable default under this Sublease. Sublessor shall return the Security Deposit, without interest, to Sublessee, or so much of the Security Deposit as has not been applied in accordance with this Paragraph 5 to cure any default of Sublessee, within thirty (30) days after Sublessee surrenders the Subleased Premises to Sublessor in the condition required by this Sublease.

     6. Late Charge. If Sublessee shall fail to pay Sublessor any amount due hereunder on or before the date when such payment is due and such failure continues beyond the five (5) day grace period set forth in Paragraph 3(d) of the Master Lease, the late charges and interest set forth in said Paragraph 3(d) of the Master Lease shall be charged to Sublessee.

     7. Possession and Condition of Premises. Exclusive possession of the Premises shall be delivered to Sublessee on the Commencement Date. If exclusive possession of the Premises is

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not delivered to Sublessee on or before November 15, 2004, Sublessee may terminate this Sublease upon written notice to Sublessor delivered on or before December 15, 2004. Upon such termination, Sublessor shall promptly refund to Sublessee all monies previously tendered to Sublessor. Except as otherwise expressly provided herein, Sublessee agrees to accept possession of the Premises in accordance with the foregoing schedule in its “AS IS” “WHERE IS” condition existing on the date this Sublease is executed by Sublessor. Sublessee acknowledges that, except as expressly set forth herein, Sublessor has not made any representation or warranty, express or implied, with respect to the condition of the Premises, the suitability or fitness of the Premises for the conduct of Sublessee’s permitted use or for any other purposes, or the actual dimensions of the Premises. Sublessee represents and warrants that Sublessee has conducted a thorough and diligent inspection and investigation, either independently or through agents of Sublessee’s own choosing, of the Premises and the suitability of the Premises for Sublessee’s intended use, that Sublessee is fully aware of the needs of its operations and has determined, based solely on its own investigation, that the Premises are suitable for its operations and intended use. In no event shall Sublessor be liable for any defect in the Premises or for any limitations on the use of the Premises, except as expressly and specifically set forth in this Sublease. Sublessor’s sole obligation with respect to the condition of the Premises upon delivery of possession shall be to deliver it in broom clean condition with all building systems (electrical, plumbing and HVAC), roof membrane, parking lot, driveways, sidewalks and truck doors in good operating condition. In addition, Sublessee agrees that the sole improvements required to be made by Sublessor to the Premises shall be to replace all damaged ceiling tiles, touch up the interior paint, repair the flooring in the labs as reasonably needed, and coil the coaxial cable and secure it to a T-Bar out of sight. If Sublessee fails to provide Sublessor written notice that any of the foregoing warranted portions of the Premises are not in good operating condition or that the improvements Sublessor agreed to make are incomplete or defective within forty-five (45) days after the Commencement Date, then Sublessor shall be deemed to have complied with its obligations set forth in the immediately preceding sentence, and Sublessee’s obligations regarding maintenance and repair of such shall be controlled by Paragraph 7 of the Master Lease. If Sublessee timely notifies Sublessor that any of the foregoing warranted portions of the Premises are not in good operating condition or that the improvements Sublessor agreed to make are incomplete or defective, Sublessor shall promptly correct the same; provided, however, that if any of the warranted items are the obligation of the Master Lessor to repair, Sublessor shall promptly notify the Master Lessor of the need for repair. Sublessee specifically acknowledges and agrees that Sublessor shall have no obligation to perform any improvements, repairs or other work to the Premises in connection with this Sublease other than to deliver possession as hereinabove specified. Sublessee shall look solely to Master Lessor for performance of any repairs required to be performed by Master Lessor under the terms of the Master Lease, and if Master Lessor fails to perform any such repairs within thirty (30) days after Master Lessor has been requested to do so by Sublessee, then Sublessee shall promptly notify Sublessor of Master Lessor’s failure to perform, and use reasonable efforts to cause Master Lessor to perform any such repairs and maintenance as provided in Paragraph 23(a) below.

     8. Indemnities: The indemnities set forth in Paragraphs 10(a) and 10(c) shall apply to the Sublessor and Sublessee, respectively. The foregoing indemnities shall survive the expiration or earlier termination of this Sublease.

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     9. Right to Cure Defaults: Sublessor shall have all cure rights afforded the Master Lessor under the Master Lease in the event of Sublessee’s default hereunder, including without limitation, the cure rights set forth in Paragraph 7(e). All such sums paid, and all costs and expenses of performing any such act, shall be deemed Additional Rent payable by Sublessee to Sublessor upon demand. In addition, Sublessee shall pay to Sublessor interest on all amounts due, at the Default Rate from the date of the expenditure until repaid.

     10. Assignment and Subletting: Sublessee may not assign this Sublease, sublet the Premises, transfer any interest of Sublessee therein or permit any use of the Premises by another party (collectively, “Transfer”), without the prior written consent of Sublessor (which consent shall not be unreasonably withheld, conditioned or delayed) and Master Lessor, and otherwise in strict accordance with the terms of the Master Lease as incorporated herein. A consent to one Transfer shall not be deemed to be a consent to any subsequent Transfer. Any Transfer without such consent shall be void and, at the option of Sublessor, shall terminate this Sublease. Sublessor’s waiver or consent to any assignment or subletting shall be ineffective unless set forth in writing, and Sublessee shall not be relieved from any of its obligations under this Sublease unless the consent expressly so provides. Notwithstanding anything to the contrary contained in this Sublease or in the Master Lease (as incorporated herein), (a) Sublessee shall pay to Sublessor one hundred percent (100%) of all rent and other consideration received by Sublessee in connection with any assignment of the Sublease or sublease of the Premises in excess of the Rent allocated to the space sublet or assigned, after deducting any reasonable brokerage commissions incurred by Sublessee in connection with the Transfer amortized on a straight line basis (without interest and not to exceed 6% of monthly base rent) over the term of the sublease or assignment; (b) at Sublessor’s sole option, Sublessor shall have the right to terminate this Sublease within ten (10) days after receipt of such request, if Sublessee requests Sublessor’s consent to an assignment of this Sublease or a sublet of all or any portion of the Premises; (c) Sublessee may enter into a Permitted Transfer (as defined in Paragraph 9(d) of the Master Lease) provided that such transfer shall be subject to the terms and conditions of said Paragraph 9(d) and Suiblessee shall provide Sublessor with ten (10) days prior written notice of the transfer accompanied with the current financials of the transferee; and (d) Sublessee may enter into an Assignment of Sublessee’s interest in this Sublease or a sublease of all or any portion of the Premises to an Affiliate (as defined in Paragraph 9(f) of the Master Lease) provided that such Assignment or sublease shall be subject to the terms and conditions of said Paragraph 9(f).

     11. Use: Sublessee may use the Premises only for the uses specified in the Master Lease and for no other purpose and in strict compliance with all other terms of the Master Lease which are incorporated herein. Sublessee shall not store any materials, supplies, finished or unfinished products, or articles of any nature outside of the Premises. Sublessee shall comply with all rules and regulations promulgated from time to time by Master Lessor with respect to Sublessor’s use of the Premises.

     12. Effect of Conveyance: As used in this Sublease, the term “Sublessor” means the holder of the tenant’s interest under the Master Lease. In the event of any transfer of said tenant’s interest, Sublessor shall be and hereby is entirely relieved of all covenants and obligations of Sublessor hereunder to be performed after the date of the conveyance, and it shall be deemed and construed, without further agreement between the parties, that the transferee has assumed and shall

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carry out all covenants and obligations thereafter to be performed by Sublessor hereunder from and after the date of the conveyance. Sublessor shall transfer and deliver any Security Deposit of Sublessee to the transferee of said tenant’s interest in the Master Lease, and thereupon Sublessor shall be discharged from any further liability with respect thereto. Notwithstanding the foregoing, as between Sublessor and Sublessee, in no event shall the release provided in the first sentence of this Paragraph 12 relieve Sublessor of any covenants or obligations which Sublessor was obligated to perform or which Sublessor failed to perform under the Master Lease prior to the Commencement Date of this Sublease.

     13. Alterations and Improvements: No alterations or improvements shall be made by or for Sublessee to the Premises, except in accordance with this Sublease and the Master Lease, and with the prior written consent of both Master Lessor and Sublessor, which consent of Sublessor shall not be unreasonably withheld, conditioned or delayed. .

     14. Hazardous Substances. With respect to Hazardous Substances, Sublessee shall not engage in or permit any activities in or about the Premises which involve the use or presence of Hazardous Substances on or about the Premises, or on or under the Building or the Land, except as otherwise expressly permitted under the Master Lease, and shall comply with all provisions of the Master Lease relating to Hazardous Substances, including, without limitation, Paragraph 40. Sublessor represents and warrants, without duty of inquiry or investigation, that, except as set forth in the report referenced in said Paragraph 40, Sublessor has no actual knowledge of any Hazardous Substances located on the Premises, or on or under the Building or the Land. Sublessor agrees to indemnify Sublessee as set forth in Paragraph 40(c) of the Master Lease, but only as to Hazardous Substances to the extent released, manufactured, discharged, disposed, used or stored on, in or under the Project, the Land, the Building or the Premises prior to the Commencement Date by Sublessor or its servants, employees, contractors, agents, licensees or invitees. Sublessee agrees to indemnify Sublessee as set forth in Paragraph 40(b) of the Master Lease, but only as to Hazardous Substances to the extent released, manufactured, discharged, disposed, used or stored on, in or under the Project, the Land, the Building or the Premises after the Commencement Date by Sublessee or any of its servants, employees, contractors, agents, licensees or invitees (“Agents”).

     15. Default: Sublessee’s performance of each of its obligations under this Sublease constitutes a condition as well as a covenant, and Sublessee’s right to continue in possession of the Premises is conditioned upon such performance within the applicable time periods provided herein (including all applicable cure periods). In addition, Sublessee shall be in material default of its obligations under this Sublease if Sublessee is responsible for the occurrence of any of the events of “Default” set forth in Paragraph 19(a) of the Master Lease.

     16. Remedies: In the event of any default by Sublessee under this Sublease (including, without limitation, a Default pursuant to Paragraph 19 of the Master Lease as incorporated herein), Sublessor shall have all rights pursuant to Paragraph 19 of the Master Lease and all remedies provided by applicable law. Sublessor may resort to its remedies cumulatively or in the alternative.

     17. Surrender: Prior to Expiration Date or earlier termination of this Sublease, Sublessee shall remove all of its trade fixtures and other property and improvements if and to the extent required under this Sublease and shall surrender the Premises to Sublessor in substantially

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the same condition as received, normal wear and tear and damage by casualty or condemnation excepted, free of Hazardous Substances placed on or about the Premises, the Project, the Land and the Building, by Sublessee or its Agents, and otherwise in the condition required under Paragraph 24 of the Master Lease. If the Premises are not so surrendered, then Sublessee shall be liable to Sublessor for all costs incurred by Sublessor in returning the Premises to the required condition, plus interest thereon at the Default Rate. Sublessee shall have no responsibility or liability for the removal of any Alterations not constructed by or for Sublessee.

     18. Broker: Sublessor and Sublessee each represent to the other that they have dealt with no real estate brokers, lenders, agents or salesmen in connection with this transaction other than Cornish & Carey representing Sublessor and CRESA Partners representing Sublessee (collectively, the “Brokers”). Each party agrees to hold the other party harmless from and against all claims for brokerage commissions, finder’s fees, or other compensation made by any agent, broker, salesman or finder other than the Brokers as a consequence of said party’s actions or dealings with such agent, broker, salesman, or finder other than the Brokers. Sublessor shall pay its broker a commission in connection with this transaction pursuant to a separate written agreement.

     19. Notices: Unless five (5) days’ prior written notice is given in the manner set forth in this Paragraph, the address of each party for all purposes connected with this Sublease shall be that address set forth below their signatures at the end of this Sublease. The address for Master Lessor shall be as set forth in the Master Lease. All notices, demands, or communications in connection with this Sublease shall be considered received when (i) personally delivered; or (ii) if properly addressed and either sent by nationally recognized overnight courier or deposited in the mail (registered or certified, return receipt requested, and postage prepaid), on the date shown on the return receipt for acceptance or rejection. All notices given to the Master Lessor under the Master Lease shall be considered received only when delivered in accordance with the Master Lease to all parties hereto at the address set forth below their signatures at the end of this Sublease.

     20. Severability: If any term of this Sublease is held to be invalid or unenforceable by any court of competent jurisdiction, then the remainder of this Sublease shall remain in full force and effect to the fullest extent possible under the law, and shall not be affected or impaired.

     21. Amendment: This Sublease may not be amended except by the written agreement of all parties hereto.

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     22. Insurance; Waiver: Sublessee shall procure and maintain all insurance policies required of the “Tenant” under the Master Lease with respect to the Premises. All such liability policies shall name Sublessor and Master Lessor as additional insureds. A certificate of insurance reflecting that the insurance required to be carried by Sublessee pursuant to this Sublease and the Master Lease is in force, accompanied by an endorsement showing the required additional insureds satisfactory to Sublessor in substance and form, shall be delivered to Sublessor prior to Sublessee’s entry onto the Premises (but in no event after the Commencement Date), and upon renewal of such policies (but not less than thirty (30) days prior to the expiration of the term of such coverage). Sublessor and Sublessee agree that the waiver of subrogation in Paragraph 11 of the Master Lease shall be deemed a three-party agreement by and among Sublessee, Sublessor and Master Lessor.

     23. Other Sublease Terms:

          (a) Incorporation by Reference: Except as otherwise provided in this Sublease, the terms and provisions contained in the Master Lease are incorporated herein by reference and are made a part hereof as if set forth at length; provided, however, that: (i) each reference in such incorporated Paragraphs to “Lease” and to “Premises” shall be deemed a reference to this “Sublease” and the “Premises” defined herein, respectively; (ii) each reference to “Landlord” and “Tenant” shall be deemed a reference to “Sublessor” and “Sublessee”, respectively, except as expressly set forth herein; (ii) with respect to any obligation of Sublessee to be performed under this Sublease, wherever the Master Lease grants to Sublessor a specified number of days to perform its obligations under the Master Lease, except as otherwise provided herein, Sublessee shall have three (3) fewer days to perform the obligation, including, without limitation, curing any defaults but in no event fewer than three (3) days; (iii) Sublessor shall have no liability to Sublessee with respect to (a) representations and warranties made by Master Lessor under the Master Lease, (b) any indemnification obligations of Master Lessor under the Master Lease, or other obligations or liabilities of Master Lessor under the Master Lease with respect to compliance with laws, condition of the Premises or Hazardous Substances, and (c) except as otherwise expressly set forth herein, obligations under the Master Lease to repair, maintain, restore, or insure all or any portion of the Premises, regardless of whether the incorporation of one or more provisions of the Master Lease might otherwise operate to make Sublessor liable therefore; (iv) with respect to any approval or consent required to be obtained from the Master Lessor under the Master Lease, such approval or consent must be obtained from both Master Lessor and Sublessor, and the approval of Sublessor may be withheld if Master Lessor’s approval or consent is not obtained; (v) in any case where “Tenant” is to indemnify, release or waive claims against “Landlord”, such indemnity, release or waiver shall be deemed to run from Sublessee to both Master Lessor and Sublessor; (vi) Sublessee shall not have the right to terminate this Sublease due to casualty or condemnation unless Sublessor has such right under the Master Lease; (vii) in any case where “Tenant” is to execute and deliver certain documents or notices to “Landlord”, such obligation shall be deemed to run from Sublessee to both Master Lessor and Sublessor; (ix) the following provisions of the Master Lease are expressly not incorporated herein by reference or are incorporated as amended hereby: Basic Lease Information (Lease Date, Lease Term, Estimated Availability Date, Monthly Base Rent, Monthly Base Rent Adjustment, and Security Deposit) are not incorporated but “Tenant” and “Tenant’s Address” are incorporated but refer to Sublessor herein; first paragraph of Master Lease; Paragraphs 2, 3(a) and (b); Paragraph 3(c)(vi) is

8

incorporated but “180 days” is changed to “120” days and the reference to “Landlord” therein shall mean only “Master Landlord”; the last sentence of Paragraph 9(b); Paragraphs 26, 32, 37, 42, 43 (the introductory first paragraph only is excluded); and (x) notwithstanding the foregoing, all references to “Landlord” in the following provisions of the Master Lease shall mean Master Lessor, not Sublessor: Basic Lease Information (Landlord’s and Managing Agent’s Address); and Paragraphs 9(f) and 15.

          (b) Assumption of Obligations: This Sublease is and all times shall be subject and subordinate to the Master Lease and the rights of Master Lessor thereunder. Sublessee hereby expressly assumes and agrees: (i) to comply with all provisions of the Master Lease applicable to the Premises which are incorporated herein to the extent first arising during the Term of this Sublease, (ii) to perform all the obligations on the part of the “Tenant” to be performed under the terms of the Master Lease which are incorporated herein first arising during the Term of this Sublease, and (iii) to do nothing which shall create a Default under the Master Lease, and (iv) to hold Sublessor free and harmless of and from all liability, judgments, costs, damages, claims, demands, and expenses (including reasonable attorneys’ and experts’ fees) to the extent caused by Sublessee’s failure to comply with or to perform Sublessee’s obligations hereunder or the obligations of the “Tenant” under the Master Lease as herein provided or to act or omit to act in any manner which will constitute a breach of the Master Lease. The foregoing indemnity shall survive the expiration or earlier termination of this Sublease. Should there be any conflict between the terms of this Sublease and the terms of the Master Lease, the terms of this Sublease shall control as between Sublessor and Sublessee only.

          (c) Obligations of Master Lessor: With respect to work, services, repairs, restoration, insurance or the performance of any other obligation of Master Lessor under the Master Lease (including, without limitation, Paragraphs 3(c)(vi), 5(a), 7(a), 10(f), 12(a), 20(a), and 34), the sole obligation of Sublessor shall be to request the same in writing from Master Lessor, as and when requested to do so by Sublessee, and to use Sublessor’s reasonable efforts to obtain Master Lessor’s performance so long as Sublessee advances all costs of Sublessor in connection therewith; provided, however, if Master Lessor defaults under the Master Lease or fails to perform any of its obligations under the Master Lease after receipt of written notice from Sublessor of such failure, Sublessor shall either institute legal proceedings against Master Lessor directly so long as Sublessee advances all costs of Sublessor in connection therewith, or assign Sublessor’s rights under the Master Lease to Sublessee solely to the extent necessary to permit Sublessee to institute legal proceedings against Master Lessor to obtain the performance of Master Lessor’s obligations under the Master Lease so long as Sublessee indemnifies, defends, protects and holds Sublessor harmless from and against any claims, losses or liabilities arising out of such assignment except to the extent Master Lessor’s default or failure to perform is due to default of Sublessor under the Master Lease.

     25. Sublandlord’s Representations: Sublessor hereby represents to Sublessee that to the best of Sublessor’s knowledge: (i) the Master Lease attached hereto as Exhibit A has been executed and delivered by Master Lessor and Sublessor and constitutes the entire agreement of the parties thereto relating to the lease of the Premises; (ii) no default or breach by Sublessor or by Master Lessor exists under the Master Lease; (iii) no event has occurred that, with the passage of time, the giving of notice, or both, otherwise would constitute a default or breach by Sublessor or

9

by Master Lessor under the Lease; (iv) subject to the receipt of Master Lessor’s written consent hereto, Sublessor has the right and power to execute and deliver this Sublease and to perform its obligations hereunder; and (v) the Premises complies with all building codes and requirements for seismic and structural strength, the ADA and Title 24. Sublessor shall not amend or modify the Master Lease in any manner which would have a material adverse effect upon Sublessee or terminate the Master Lease unless such termination will be effective after the expiration of the initial Term unless Master Lessor is willing to enter into a direct lease with Sublessee on the terms set forth herein. So long as no default by Sublessee has occurred and remains uncured after the expiration of any applicable cure periods, Sublessee shall be entitled to peaceful and quiet possession of the Premises, subject to the terms and conditions of this Sublease and the Master Lease.

     26. Condition Precedent: This Sublease and Sublessor’s and Sublessee’s obligations hereunder are conditioned upon having obtained the written consent of the Master Lessor. If Sublessor has not obtained Master Lessor’s consent on or before September 30, 2004, either party may terminate this Sublease by written notice to the other party given at any time until such consent is obtained by Sublessor, whereupon this Sublease shall terminate and Sublessor shall return to Sublessee all sums paid by Sublessee to Sublessor in connection with its execution of this Sublease, and neither party shall have any further rights or obligations hereunder. The return of all sums paid by Sublessee shall be Sublessee’s sole and exclusive remedy in the event of a termination pursuant to the foregoing sentence.

     27. Board Approval: Sublessee represents and warrants to Sublessor that Sublessee’s Board of Directors has authorized Sublessee’s execution hereof.

     28. Miscellaneous: This Sublease shall in all respects be governed by and construed in accordance with the laws of the state in which the Premises are located. If any term of this Sublease is held to be invalid or unenforceable by any court of competent jurisdiction, then the remainder of this Sublease shall remain in full force and effect to the fullest extent possible under the law, and shall not be affected or impaired. This Sublease may not be amended except by the written agreement of all parties hereto. Time is of the essence with respect to the performance of every provision of this Sublease in which time of performance is a factor. Any executed copy of this Sublease shall be deemed an original for all purposes. This Sublease shall, subject to the provisions regarding assignment and subletting, apply to and bind the respective heirs, successors, executors, administrators and assigns of Sublessor and Sublessee. The language in all parts of this Sublease shall in all cases be construed as a whole according to its fair meaning, and not strictly for or against either Sublessor or Sublessee. The captions used in this Sublease are for convenience only and shall not be considered in the construction or interpretation of any provision hereof. When a party is required to do something by this Sublease, it shall do so at its sole cost and expense without right of reimbursement from the other party unless specific provision is made therefor. Whenever one party’s consent or approval is required to be given as a condition to the other party’s right to take any action pursuant to this Sublease, unless another standard is expressly set forth, such consent or approval shall not be unreasonably withheld or delayed. This Sublease may be executed in counterparts, all of which taken together as a whole, shall constitute one original document.

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     29. Holdover: The holdover provisions set forth in Paragraph 14 of the Master Lease shall apply to any holding over by Sublessee after the expiration of the initial Term of this Sublease; provided that the holdover rent shall be based upon the Monthly Base Rent payable by Sublessee under this Sublease and not the “Monthly Base Rent” payable by Sublandlord under the Master Lease. Notwithstanding the foregoing, if Sublessee exercises its option to renew this Sublease until the expiration date of the Master Lease, the parties hereby acknowledge that if Sublessee fails to surrender the Premises to Sublessor by the expiration date of the Master Lease (or the earlier termination of this Sublease during the Extension Term, as defined in Paragraph 3(b) above), Sublessor will be obligated to pay Master Lessor holdover rent based upon the “Monthly Base Rent” reserved under the Master Lease, which Monthly Base Rent is significantly greater than the Monthly Base Rent reserved hereunder. Accordingly, in the event that Sublessee does not surrender the Premises by the expiration date of the Master Lease (or earlier termination of this Sublease during the Extension Term) in accordance with Paragraph 17 hereof, Sublessee shall indemnify, defend, protect and hold harmless Sublessor from and against all costs, loss and liability resulting from Sublessee’s delay in surrendering the Premises and pay Sublessor holdover rent as provided in Paragraph 14 of the Master Lease, except that such holdover rent shall be equal to the amount of holdover rent payable by Sublessor under the Master Lease. The indemnification set forth in this Paragraph shall survive the expiration or earlier termination of this Sublease.

     30. Furniture: Sublessee shall have the right to use the furniture listed in the attached Exhibit B (“Furniture”) during the Term (as it may be extended). Such use shall be without representation or warranty of any kind whatsoever by Sublessor. Sublessee shall insure the Furniture for its full replacement value and shall surrender the same upon the expiration or earlier termination of the Term (as it may be extended) in the same condition as received, reasonable wear and tear excepted.

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IN WITNESS WHEREOF, the parties have executed this Sublease as of the day and year first above written.

SUBLESSOR:		SUBLESSEE:
HARMONIC INC.,		ARUBA WIRELESS NETWORKS,
a Delaware corporation		a Delaware corporation
By:	/s/ Robin N. Dickson	By:	/s/ Dusten Williams
Printed		Printed
Name:	Robin N. Dickson	Name:	Dusten Williams
Title:	CFO	Title:	CFO
		By:	/s/ Keerti G. Melkote
		Printed
		Name:	Keerti G. Melkote
		Title:	VP, Product Mgmt.
Address:	549 Baltic Way Sunnyvale CA 94089 Attn: Diane Georgi	Address: Prior to the Commencement: 180 Great Oaks Blvd San Jose, CA 95119
		After the Commencement Date:
		At the Premises

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EXHIBIT “A”

LEASE AGREEMENT

by and between

CARIBBEAN/GENEVA INVESTORS
and CROSSMAN PARTNERS, L.P.

(“Landlord”)

and

HARMONIC, INC.

(“Tenant”)

Dated as of May 24, 2000

EXHIBITS

Exhibit “A”	Premises
Exhibit “B”	Land
Exhibit “C”	Declaration of Covenants, Conditions and Restrictions
Exhibit “D”	Rules and Regulations
Exhibit “E”	Form of Tenant Estoppel Certificate
Exhibit “F”	Subordination, Nondisturbance and Attornment Agreement

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BASIC LEASE INFORMATION

Lease Date:	May 24, 2000
Landlord:	Caribbean/Geneva Investors, a California limited partnership, and Crossman Partners, L.P., a California limited partnership, Tenants In Common
Managing Agent:	The Mozart Development Company
Landlord’s and Managing Agent’s
Address:	c/o The Mozart Development Company 1068 East Meadow Circle
	Palo Alto, CA 94303
	Attn: James Freitas & John Mozart
Tenant:	Harmonic, Inc., a Delaware corporation

TENANT’S ADDRESS:	FOR NOTICE	FOR BILLING
	549 Baltic Way	549 Baltic Way
	Sunnyvale, CA 94089	Sunnyvale, CA 94089
	Attn: Robin Dickson,	Attn: Robin Dickson,
	Chief Financial Officer	Chief Financial Officer

Building:	The building located at 1322 Crossman Avenue, Sunnyvale, California
Premises:	The entire Building as depicted on Exhibit “A”
Land:	The Real Property described on Exhibit “B”
Rentable Area of the Premises:	52.325 rentable square feet (“Rentable Area”)
Parking Spaces:	All parking spaces located on the Land
Tenant’s Use of the Premises:	General office, research, development, manufacturing, storage and distribution, production, marketing and distribution
Lease Term:	Ten (10) years (the “Initial Term”), with the right to extend for two (2) additional five (5) year terms (each an “Extension Term”) in accordance with Paragraph 42. The Initial Term, and any Extension Term(s) shall collectively be defined as the “Term”
Estimated Availability Date:	September 1, 2000
Monthly Base Rent:	$3.25 per rentable square foot of the Rentable Area of the Premises.
Monthly Base Rent Adjustment:	On each anniversary of the Commencement Date, the Monthly Base Rent shall increase by four percent (4%) of the Monthly Base Rent for the immediately prior year
Tenant’s Share of Expenses and Taxes:	100%
Security Deposit:	$193,600

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Guarantor of Lease:	None
Landlord’s Broker:	None
Tenant’s Broker:	Cornish & Carey
Broker’s Fee or Commission,
if any, paid by:	Landlord, pursuant to separate agreement

The foregoing Basic Lease Information is hereby incorporated into and made a part of this Lease. Each reference in this Lease to any of the Basic Lease Information shall mean the respective information hereinabove set forth and shall be construed to incorporate all of the terms provided under the particular paragraph pertaining to such information. In the event of any conflict between any Basic Lease Information and the Lease, the latter shall control

LANDLORD:
CARIBBEAN/GENEVA INVESTORS,
a California Limited Partnership
By:	/s/ John Mozart
	John Mozart, Trustee of the Mozart Family Trust dated September 8, 1977
	Its: General Partner
By:	/s/ John Lovewell
	John Lovewell
	Its: General Partner
CROSSMAN PARTNERS, L.P.,
a California Limited Partnership
By:	/s/ John Mozart
	John Mozart, Trustee of the Mozart Family Trust dated September 8, 1977
	Its: General Partner
TENANT:
HARMONIC, INC.,
a Delaware corporation
By:	/s/ Robin N. Dickson
	Robin N. Dickson
	Its: Chief Financial Officer

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LEASE AGREEMENT

     THIS LEASE AGREEMENT (the “Lease”) is made and entered into as of May 24, 2000, by and between CARIBBEAN/GENEVA INVESTORS, a California Limited Partnership and CROSSMAN PARTNERS, L.P., a California Limited Partnership, as Tenants in Common (herein collectively called “Landlord”), and HARMONIC, INC., a Delaware corporation (herein called “Tenant”).

     Upon and subject to the terms, covenants and conditions hereinafter set forth, Landlord hereby leases to Tenant and Tenant hereby hires from Landlord those premises (the “Premises”) outlined on EXHIBIT A, comprising the entire rentable area in the Building located at 1322 Crossman Avenue in Sunnyvale, California (hereinafter referred to as the “Building”) specified in the Basic Lease Information attached hereto. Prior to the execution of this Lease, Tenant has reviewed and approved the Rentable Area specified in the Basic Lease Information, which shall be conclusive and binding on the parties for purposes of calculating Rent and the Tenant Allowance hereunder notwithstanding any measurement or remeasurement by Landlord. Tenant orany other party that may now or hereafter indicate a different Rentable Area. The Building, together with the associated land specified in the Basic Lease Information and improvements is referred to as the “Project.” The term “Common Area” shall mean all areas and facilities within the Project that are not designated by Landlord for the exclusive use of Tenant or any other tenant or other occupant of the Project that are located outside the perimeter (including footings) of the Building, including the parking areas, access and perimeter roads, pedestrian sidewalks, landscaped areas, trash enclosures, recreation areas and the like.

     1. OCCUPANCY AND USE. Tenant may use and occupy the Premises for the purposes specified in the Basic Lease Information (“Permitted Use”), subject to the terms and conditions of this Lease, and for no other use or purpose without the prior written consent of Landlord. Landlord shall have the right to grant or withhold consent to a use other than as specified in the Basic Lease Information in its sole discretion. Tenant shall be entitled to the nonexclusive use of the Common Area with Landlord and other occupants (if any) of the Project in accordance with the Rules and Regulations established by Landlord from time to time. Notwithstanding anything to the contrary in the Basic Lease Information or in this Lease, Tenant understands and agrees that the Declaration of Covenants, Conditions and Restrictions (“CC&Rs”) described in EXHIBIT C encumbers the Project and that Tenant’s Occupancy and Use of the Premises are restricted by, and Tenant shall fully comply with any and all restrictions on the use of the Premises specified in, such CC&Rs.

     2. TERM AND POSSESSION.

          (a) The term of this Lease (the “Term”) shall be for the period specified in the Basic Lease Information (or until sooner terminated as herein provided), commencing on the Commencement Date and expiring on the Expiration Date. The “Commencement Date” shall be the earlier to occur of (i) thirty (30) days after the date on which Landlord gives Tenant written notice that the Premises is available for Tenant’s occupancy, or (ii) any earlier date upon which Tenant actually occupies and conducts business in any portion of the Premises. Within five (5) business days after the Commencement Date, the parties shall execute a letter confirming the Commencement Date and certifying that Tenant has accepted delivery of the Premises (the “Commencement Date Memorandum”). Either party’s failure to request execution of, or to execute, the Commencement Date Memorandum shall not in any way alter the Commencement Date. By occupying the Premises, Tenant shall be deemed to have accepted the same as suitable for the purpose herein intended. The “Expiration Date” shall be the date that is one day prior to the tenth anniversary of the Commencement Date (subject to extension in accordance with Paragraph 42 to the date that is one day prior to the fifth anniversary of any exercised Extension Term).

          (b) Tenant is aware that the Premises is currently occupied by another tenant (“Existing Tenant”). Pursuant to a written agreement between Landlord and the Existing Tenant, the Existing Tenant has agreed to vacate the Premises on or before the Estimated Availability Date set forth in the Basic lease Information. If Landlord, for any reason whatsoever (including without limitation the failure of the Existing Tenant to surrender possession of the Premises on or before the Estimated Availability Date), cannot deliver possession of the Premises to Tenant by the Estimated Commencement Date, this Lease shall not be void or voidable, nor shall Landlord be

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liable to Tenant for any loss or damage resulting therefrom. In that event, however, the Term of the Lease shall not commence until such commencement date as is determined pursuant to Paragraph 2(a). In such event, the Commencement Date and the Expiration Date shall be adjusted accordingly.

          (c) The Premises shall be delivered by Landlord to Tenant in its as-is, where-is condition, with all faults”, but in “broom clean” condition. Tenant acknowledges that Landlord has not made any representation or warranty, express or implied, with respect to the condition of the Premises, the suitability or fitness of the Premises for the conduct of Tenant’s Permitted Uses or for any other purposes, or the actual dimensions of the Premises. Tenant represents and warrants that Tenant has conducted a thorough and diligent inspection and investigation, either independently or through agents of Tenant’s own choosing, of the Premises and the suitability of the Premises for Tenant’s intended use, that Tenant is fully aware of the needs of its operations and has determined, based solely on its own investigation, that the Premises are suitable for its operations and intended use. In no event shall Landlord be liable for any defect in the Premises or for any limitations on the use of the Premises, except as expressly and specifically set forth in this Lease.

     3. RENT; RENT ADJUSTMENTS; ADDITIONAL CHARGES FOR EXPENSES AND TAXES.

          (a) Monthly Base Rent and Additional Charges. Commencing on the Commencement Date and throughout the Term of this Lease, Tenant shall the monthly base rent specified in the Basic Lease Information, as adjusted pursuant to Paragraph 3(b) (as so adjusted from time to time, “Monthly Base Rent”), on the first day of each month, in advance, with the first month’s Monthly Base Rent and Additional Charges for Expenses and Taxes (as defined below) due upon execution of this Lease, in lawful money of the United States (without any prior demand therefor and without deduction or offset whatsoever, except as expressly provided in Paragraphs 20 and 21) to Landlord or its Managing Agent at the address specified in the Basic Lease Information or to such other firm or to such other place as Landlord or its Managing Agent may from time to time designate in writing. In addition, Tenant shall pay to Landlord all charges and other amounts whatsoever as provided in this Lease (“Additional Charges”) at the place where the Monthly Base Rent is payable, and Landlord shall have the same remedies for a Default in the payment of Additional Charges as for a Default in the payment of Monthly Base Rent. As used herein, the term “Rent” shall include all Monthly Base Rent and Additional Charges (including, without limitation, Additional Charges for Real Estate Taxes and Expenses pursuant to Paragraph 3(c) below, and Additional Charges pursuant to Paragraphs 6, 7(e), 8, 10(d) and 23). If the Commencement Date occurs on a day other than the first day of a calendar month, or the Expiration Date occurs on a day other than the last day of a calendar month, then the Monthly Base Rent and Additional Charges for such fractional month shall be prorated on a daily basis.

          (b) Annual Adjustments in Monthly Base Rent. The Monthly Base Rent under Paragraph 3(a) shall be adjusted throughout the Term (including any Extension Term(s)) as provided in the Basic Lease Information under the heading “Monthly Base Rent Adjustment”.

          (c) Additional Charges for Expenses and Taxes.

          (i) Definitions of Additional Charges. For purposes of this Paragraph 3(c), the following terms shall have the meanings hereinafter set forth:

          (A) “Tax Year” shall mean each twelve (12) consecutive month period commencing January 1st of the calendar year during which the Commencement Date of this Lease occurs, provided that Landlord, upon notice to Tenant, may change the Tax Year from time to time so any other twelve (12) consecutive month period and, in the event of any such change, Tenant’s Share of Real Estate Taxes (as hereinafter defined) shall be equitably adjusted for the Tax Years involved in any such change.

          (B) “Tenant’s Share” shall mean the percentage figure so specified in the Basic Lease Information.

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          (C) “Real Estate Taxes” shall mean all taxes, assessments and charges levied upon or with respect to the Project or any personal property of Landlord used in the operation thereof, or Landlord’s interest in the Project or such personal property. Real Estate Taxes shall include, without limitation, all general real property taxes and general and special assessments, charges, fees or assessments for transit, housing, police, fire or other governmental services or purported benefits to the Project (provided, however, that any refunds of Real Estate Taxes paid by Tenant shall be credited against Tenant’s further obligation to pay Real Estate Taxes during the Term or refunded to Tenant if received by Landlord within one year after the Expiration Date), service payments in lieu of taxes, and any tax, fee or excise on the act of entering into this Lease, or any other lease of space in the Building, or on the use or occupancy of the Building or any part thereof, or on the rent payable under any lease or in connection with the business of renting space in the Building, that are now or hereafter levied or assessed against Landlord by the United States of America, the State of California, or any political subdivision, public corporation, district or any other political or public entity, and shall also include any other tax fee or other excise, however described, that may be levied or assessed as a substitute for, or as an addition to, in whole or in part, any other Real Estate Taxes, whether or not now customary or in the contemplation of the parties on the date of this Lease. Real Estate Taxes shall not include franchise, transfer, inheritance or capital stock taxes or income taxes measured by the net income of Landlord from all sources unless, due to a change in the method of taxation, any of such taxes is levied or assessed against Landlord as a substitute for, in whole or in part, any other tax that would otherwise constitute a Real Estate Tax. Additionally, Real Estate Taxes shall not include any assessments or like charges to pay for any remediation of contamination from any Hazardous Substance (defined in Paragraph 40 hereof) existing at the Project as of the Commencement Date unless introduced in, on, under or about the Premises by Tenant or Tenant’s employees, agents, contractors or invitees. Real Estate Taxes shall also include reasonable legal fees, costs and disbursements incurred in connection with proceedings to contest, determine or reduce Real Estate Taxes; provided that such fees, costs and disbursements do not exceed the actual savings in Real Estate Taxes obtained by Tenant over the Term of the Lease. If any assessments are levied on the Project, Tenant shall have no obligation to pay more than that amount of annual installments of principal and interest that would become due during the Term had Landlord elected to pay the assessment in installment payments, even if Landlord pays the assessment in full.

          (D) “Expenses” shall mean the total costs and expenses paid or incurred by Landlord in connection with the management, operation, maintenance and repair of the Project, including, without limitation (i) the cost of air conditioning, electricity, steam, heating, mechanical, ventilating, elevator systems and all other utilities, to the extent provided by Landlord, and the cost of supplies and equipment and maintenance and service contracts in connection therewith, (ii) the cost of repairs and general maintenance and cleaning; (iii) the cost of fire, extended coverage, boiler, sprinkler, public liability, property damage, rent, earthquake (if Landlord elects to obtain it) and other insurance for the Project obtained by Landlord, or otherwise obtained by Landlord in connection with the Project, all including, without limitation, insurance premiums and any deductible amounts paid by Landlord, including, without limitation, the insurance required by Paragraph 10(f); (iv) fees, charges and other costs directly related to the operation of the Project (as distinct from the operation of the partnership which owns the Project), including management fees, consulting fees, legal fees and accounting fees, fees of all independent contractors engaged by Landlord directly related to the operation of the Project or reasonably charged by Landlord if Landlord performs management services in connection with the Project, (though the management fee shall not exceed the cap noted in the following paragraph); (v) the cost of any capital improvements made to the Project after the Commencement Date (excluding, however, any capital improvements required by Laws that are Tenant’s responsibility under Paragraph 5, which shall be paid directly by Tenant pursuant to Paragraph 5), the cost of such capital improvements incurred by Landlord shall be amortized over the useful life of the capital item in question as determined in accordance with generally accepted accounting principles (“GAAP”), ”), together with interest on the unamortized balance at the greater of (x) the rate paid

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by Landlord on funds borrowed from an institutional lender for the purpose of constructing such capital improvements; or (y) 10% per annum; provided, however, the amount of the cost of capital improvements which may be included within Expenses pursuant to this clause (v) shall be the greater of (I) the amount that would be payable pursuant to the foregoing amortization or (II) $.02 per square foot of the Rentable Area of the Premises per month (and to the extent the amount under this clause (II) exceeds the amount that would be payable under clause (I), such excess shall be credited against the unamortized balance of the cost of capital improvements in the inverse order in which they would be payable by Tenant under clause (i)); and (vi) any other reasonable expenses of any other kind whatsoever reasonably incurred in managing, operating, maintaining and repairing the Project. Any “deductible” amounts relating to capital improvements required to be paid by Tenant hereunder in connection with any property or earthquake insurance policy carried by Landlord shall be amortized over the useful life of the restoration work to which such deductible amount relates in accordance with GAAP, in the same manner as other capital improvements that are included in Expenses as provided above.

Notwithstanding anything to the contrary herein contained, Expenses shall not include, and in no event shall Tenant have any obligation to pay for pursuant to this Paragraph 3 or Paragraph 7(a)7(b), (aa) any rent payable pursuant to a ground lease, and debt service (including, but without limitation, interest, principal and any impound payments) required to be made on any mortgage or deed of trust recorded with respect to all or any portion of the Project other than debt service and financing charges imposed pursuant to Paragraph 3(c)(i)(D)(v) above; (bb) depreciation; (cc) the portion of a management fee paid to Landlord or affiliate in excess of three percent (3%) of Monthly Base Rent and Additional Charges for Expenses and Taxes (excluding the management fee); (dd) costs occasioned by the fraud or willful misconduct under applicable laws of Landlord or its agents, servants, contractors, employees; (ee) costs for which Landlord has a right of and has received reimbursement from others; (ff) environmental pollution remediation related costs for which Landlord has indemnified Tenant pursuant to Paragraph 40(c); (gg) advertising or promotional expenditures; and (hh) leasing commissions. All costs and expenses shall be determined in accordance with GAAP which shall be consistently applied (with accruals appropriate to Landlord’s business).

          (E) “Expense Year” shall mean each twelve (12) consecutive month period commencing January 1 of the calendar year during which the Commencement Date of the Lease occurs, provided that Landlord, upon notice to Tenant, may change the Expense Year from time to time to any other twelve (12) consecutive month period, and, in the event of any such change, Tenant’s Share of Expenses shall be equitably adjusted for the Expense Years involved in any such change.

          (ii) Payment of Real Estate Taxes. With reasonable promptness after Landlord has received the tax bills for any Tax Year, Landlord shall furnish Tenant with a statement (herein called “Landlord’s Tax Statement”) setting forth the amount of Real Estate Taxes for such Tax Year. Unless otherwise required pursuant to Paragraph 3(c)(v) below, Tenant shall pay to Landlord the full amount of said actual Real Estate Taxes no later than twenty (20) days prior to the due date of each installment of Real Estate Taxes. Notwithstanding the foregoing, Landlord shall have the right, upon the giving of written notice to Tenant, to require Tenant to pay the estimated amount of Real Estate Taxes; and if Landlord gives such notice, Tenant shall, commencing with the next succeeding calendar month, pay to Landlord as Additional Charges one-twelfth (1/12th) of the Real Estate Taxes for each Tax Year on or before the first day of each month during such Tax Year, in advance, in an amount reasonably estimated by Landlord and billed by Landlord to Tenant. Landlord shall have the right initially to determine monthly estimates and to revise such estimates from time to time. If the actual Real Estate Taxes for such Tax Year (as shown on Landlord’s Tax Statement) exceed the estimated Real Estate Taxes paid by Tenant for such Tax Year, Tenant shall pay to Landlord the difference between the amount paid by Tenant and the actual Real Estate Taxes within fifteen (15) days after the receipt of Landlord’s Tax Statement, and if the total amount paid by Tenant for any such Tax Year shall exceed the actual Real Estate Taxes for such Tax Year, such excess

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shall be credited against the next installment of Real Estate Taxes due from Tenant to Landlord hereunder or if the Term has ended it shall be returned to Tenant within thirty (30) days. If it has been determined that Tenant has overpaid Real Estate Taxes during the last year of the Lease Term, then Landlord shall reimburse Tenant for such overage on or before the thirtieth (30th) day following the Expiration Date. No delay by Landlord in providing Landlord’s Tax Statement shall be deemed a default by Landlord or a waiver of Landlord’s right to require payment of the actual or estimated sums of Real Estate Taxes.

          (iii) Payment of Insurance Costs. With reasonable promptness after Landlord has received an invoice for any fire, extended coverage, boiler, sprinkler, public liability, property damage, rent, earthquake (if Landlord elects to obtain it) and other insurance for the Project obtained by Landlord, or otherwise obtained by Landlord in connection with the Project, including, without limitation, the insurance required by Paragraph 10(f), Landlord shall furnish Tenant with a statement (herein called “Landlord’s Insurance Statement”) setting forth the amount of the premium for such insurance. Unless otherwise required pursuant to Paragraph 3(c)(v) below, Tenant shall pay to Landlord the full amount of said insurance premium no later than twenty (20) days prior to the due date of such insurance premium. Notwithstanding the foregoing, Landlord shall have the right, upon the giving of written notice to Tenant, to require Tenant to pay the estimated amount of Landlord’s cost of insurance in monthly installments in accordance with the provisions of Paragraph 3(c)(iv) below.

          (iv) Payment of Expenses. Commencing on the Commencement Date, Tenant shall pay to Landlord as Additional Charges one-twelfth (1/12th) of the Expenses (including insurance premiums if Landlord has made the election described in the last sentence of Paragraph 3(c)(iii) above) for each Expense Year on or before the first day of each month of such Expense Year, in advance, in an amount reasonably estimated by Landlord and billed by Landlord to Tenant, and Landlord shall have the right initially to determine monthly estimates and to revise such estimates from time to time. With reasonable promptness after the expiration of each Expense Year, Landlord shall furnish Tenant with a statement (herein called “Landlord’s Expense Statement”), setting forth in reasonable detail the Expenses for such Expense Year. If the actual Expenses for such Expense Year exceed the estimated Expenses paid by Tenant for such Expense Year, Tenant shall pay to Landlord the difference between the amount paid by Tenant and the actual Expenses within fifteen (15) days after the receipt of Landlord’s Expense Statement, and if the total amount paid by Tenant for any such Expense Year shall exceed the actual Expenses for such Expense Year, such excess shall be credited against the next installment of the estimated Expenses due from Tenant to Landlord hereunder or if the Term has ended it shall be returned to Tenant within thirty (30) days. Any utility rebates for the Project which Landlord receives for payments made by Tenant shall be forwarded to Tenant so long as such rebate is received within one year following the Expiration Date or sooner termination of the Lease. If it has been determined that Tenant has overpaid Expenses during the last year of the Lease Term (including rebates of utilities applicable to Tenant), then Landlord shall reimburse Tenant for such overage on or before the thirtieth (30th) day following the Expiration Date.

          (v) Other. To the extent any item of Real Estate Taxes or Expenses is payable by Landlord in advance of the period to which it is applicable (e.g. insurance and tax escrows required by Landlord’s Lender), or to the extent that prepayment is customary for the service or matter, Landlord may (i) include such items in Landlord’s estimate for periods prior to the date such item is to be paid by Landlord and (ii) to the extent Landlord has not collected the full amount of such item prior to the date such item is to be paid by Landlord, Landlord may include the balance of such full amount in a revised monthly estimate for Additional Charges. If the Commencement Date or Expiration Date shall occur on a date other than the first day of a Tax Year and/or Expense Year, Tenant’s Share of Real Estate Taxes and Expenses, for the Tax Year and/or Expense Year in which the Commencement Date occurs shall be prorated.

          (vi) Audit. Within one hundred eighty (180) days after receipt of any Expense Statement or Tax Statement from Landlord, Tenant shall have the right to examine and copy Landlord’s books and records relating to such Expense Statements and Tax Statements, or cause an independent audit thereof to be conducted by an accounting firm to be selected by Tenant and subject to the reasonable approval of Landlord. If the audit conclusively proves that Tenant has overpaid either Expenses or Real

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Estate Taxes, then Landlord shall reimburse Tenant within thirty (30) days for such overage together with interest on such overpayment at the Default Rate (as defined in 3(d) below), and if such overage exceeds five percent (5%) of the actual amount of Expenses or Real Estate Taxes paid by Landlord for the Tax or Expense Year covered by such audit, then Landlord shall bear the reasonable cost of such audit, up to a maximum cost of $5,000. If Tenant fails to object to any such Expense Statement or Tax Statement or conduct an independent audit thereof within one hundred eighty (180) days after receipt thereof, such Expense Statement and/or Tax Statement shall be final and shall not be subject to any audit, challenge or adjustment. All information obtained through any audit by Tenant and any compromise, settlement or adjustment reached between Landlord and Tenant relative to the results of such audit shall be held in strict confidence by the Tenant.

          (d) Late Charges. Tenant recognizes that late payment of any Monthly Base Rent or Additional Charges will result in administrative expenses to Landlord, the extent of which additional expense is extremely difficult and economically impractical to ascertain. Tenant therefore agrees that if any Monthly Base Rent or Additional Charges remain unpaid five (5) days after such amount is due, the amount of such unpaid Monthly Base Rent or Additional Charges shall be increased by a late charge to be paid to Landlord by Tenant in an amount equal to four percent (4%) of the amount of the delinquent Monthly Base Rent or Additional Charges. In addition, any outstanding Monthly Base Rent, Additional Charges, late charges and other outstanding Rent amounts shall accrue interest at an annualized rate of the lesser of (i) the greater of 10% or The Federal Reserve Discount Rate plus 5% until paid to Landlord, or (ii) the maximum rate permitted by law (“the Default Rate”). Tenant agrees that such amount is a reasonable estimate of the loss and expense to be suffered by Landlord as a result of such late payment by Tenant and may be charged by Landlord to defray such loss and expense. The provisions of this Paragraph 3(d) in no way relieve Tenant of the obligation to pay Monthly Base Rent or Additional Charges on or before the date on which they are due, nor do the terms of this Paragraph 3(d) in any way affect Landlord’s remedies pursuant to Paragraph 19 in the event any Monthly Base Rent or Additional Charges are unpaid after the date due.

     4. RESTRICTIONS ON USE. Tenant shall not use or allow the Premises to be used for any unlawful purpose, nor shall Tenant cause or maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or suffer the commission of any waste in, on or about the Premises.

     5. COMPLIANCE WITH LAWS.

          (a) Tenant’s Compliance Obligations. Tenant shall not use the Project or permit anything to be done in or about the Project which will in any way conflict with any present and future laws, statutes, ordinances, resolutions, regulations, proclamations, orders or decrees of any municipal, county, state or federal government or other governmental or regulator authority with jurisdiction over the Project, or any portion thereof, whether currently in effect or adopted in the future and whether or not in the contemplation of the parties hereto (collectively, “Laws”), and Tenant shall promptly, at its sole expense, maintain the Premises, any Alterations (as defined in Paragraph 6 below) permitted hereunder and Tenant’s use and operations thereon in strict compliance at all times with all Laws. “Laws” shall include, without limitation, all Laws relating to health and safety (including, without limitation, the California Occupational Safety and Health Act of 1973 and the California Safe Drinking Water and Toxic Enforcement Act of 1986, including posting and delivery of notices required by such Laws with respect to the Premises), disabled accessibility (including, without limitation, the Americans with Disabilities Act 42 U.S.C. section 12101 et seq.), Hazardous Substances, and all present and future life safety, fire, sprinkler, seismic retrofit, building code and municipal code requirements; provided however, that Tenant’s obligation to comply with Laws relating to Hazardous Substances is subject to the terms and conditions of Paragraph 40, and Tenant shall not be responsible for compliance with clean-up provisions of any Laws with respect to Hazardous Substances except to the extent of any release caused by the Tenant or any of its servants, employees, contractors, agents, licensees or invitees (collectively, including Tenant, the “Tenant Parties”) or otherwise included in Tenant’s indemnity contained in Paragraph 40. Notwithstanding the foregoing, Landlord, and not Tenant, shall be responsible for correcting any condition with respect to the exterior or structural portions of the Building (but not with respect to the interior of the Premises), which is in violation of applicable Laws (subject to Tenant’s obligation to pay such costs to the extent they are included as Expenses under Paragraph 3(c)(i)(D) above), except to the extent such condition is caused by the negligent or intentional acts or omissions of the Tenant Parties, or such violation results from Tenant’s particular

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use of the Premises, or such condition will be altered in connection with the installation of any Alterations. Any Alterations that are Tenant’s responsibility pursuant to this Paragraph 5 shall be made in accordance with Paragraph 6 below, at Tenant’s sole cost. The parties acknowledge and agree that Tenant’s obligation to comply with all Laws as provided in this paragraph (subject to the limitations contained herein) is a material part of the bargained-for consideration under this Lease. Tenant’s obligations under this Paragraph and under Paragraph 7(c) below shall include, without limitation, the responsibility of Tenant to make substantial or structural repairs and alterations to the Premises to the extent provided above, regardless of, among other factors, the relationship of the cost of curative action to the Rent under this Lease, the length of the then remaining Term hereof, the relative benefit of the repairs to Tenant or Landlord, the degree to which the curative action may interfere with Tenant’s use or enjoyment of the Premises, and the likelihood that the parties contemplated the particular Law involved.

          (b) Insurance Requirements. Tenant shall not do or permit anything to be done in or about the Premises or bring or keep anything therein which will in any way increase the rate of any insurance upon the Project or any of its contents (unless Tenant agrees to pay for such increase) or cause a cancellation of any insurance on the Project or otherwise violate any requirements, guidelines, conditions, rules or orders with respect to such insurance. Tenant shall at its sole cost and expense promptly comply with the requirements of the Insurance Services Office (ISO), board of fire underwriters, or other similar body now or hereafter constituted relating to or affecting Tenant’s use or occupancy of the Project (other than in situations where compliance involves repair, maintenance or replacement of items that Landlord is expressly required to repair, maintain or replace under this Lease).

          (c) No Limitation on Obligations. The provisions of this Paragraph 5 shall in no way limit Tenant’s maintenance, repair and replacement obligations under Paragraph 7 or Tenant’s obligation to pay Expenses under Paragraph 3(c). The judgment of any court of competent jurisdiction or the admission of Tenant in an action against Tenant, whether Landlord is a party thereto or not, that Tenant has so violated any such Law shall be conclusive of such violation as between Landlord and Tenant.

     6. ALTERATIONS.

          (a) Tenant shall not make or suffer to be made any additional alterations, additions or improvements (“Alterations”) in, on or to the Premises or any part thereof without the prior written consent of Landlord. Failure of Landlord to give its approval within fifteen (15) calendar days after receipt of Tenant’s written request for approval shall constitute disapproval by Landlord. Any Alterations in, on or to the Premises, except for Tenant’s trade fixtures and movable furniture and equipment, shall be the property of Tenant during the Term and shall become Landlord’s property at the end of the Term without compensation to Tenant. Landlord shall not unreasonably withhold or delay its consent to Alterations that (i) do not materially affect the structure of the Building or its electrical, plumbing, HVAC, security or other systems, (ii) are not visible from the exterior of the Premises and do not otherwise affect the exterior appearance of the Building, (iii) are consistent with Tenant’s Permitted Use hereunder; (iv) do not require any application to a political jurisdiction for rezoning, general plan amendment, variance, conditional use permit or architectural review approval, (v) will not interfere with the use and occupancy of any other portion of the Project by Landlord or by any other tenants or occupants or their invitees, or by any other party with the right to use any portion of the Project, (vi) comply with any ground lease, CC&Rs (including without limitation the CC&Rs described in EXHIBIT C) and Mortgages, and (vii) do not adversely affect the value or marketability of Landlord’s reversionary interest upon termination or expiration of this Lease.

          (b) If Landlord consents to the making of any Alterations by Tenant, the same shall be made by Tenant, at Tenant’s sole cost and expense, in accordance with plans and specifications submitted by Tenant to Landlord concurrently with its request pursuant to Paragraph 6(a) and reasonably approved by Landlord, and any contractor or person selected by Tenant to make the same must first be reasonably approved in writing by Landlord. With respect to any Alterations that affect the structure of the Building, the Building Systems, or any portion of the Project outside the Premises, at Landlord’s option the Alterations shall be made by Landlord, or by a contractor specified by Landlord, for Tenant’s account and Tenant shall reimburse Landlord for the cost thereof (including a reasonable charge for Landlord’s overhead) as an Additional Charge, within twenty (20) days after receipt of a statement from Landlord therefor

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          (c) Tenant shall reimburse Landlord upon demand for any reasonable out-of-pocket expenses incurred by Landlord in the review of any Alterations made by Tenant, including fees charged by Landlord’s contractors or consultants to review plans and specifications, and such obligation shall be an Additional Charge. Landlord’s consent to any Alterations shall not obligate Landlord to repair, maintain, insure or otherwise assume any responsibility or liability with respect to any such Alteration. In addition, notwithstanding Landlord’s review, Tenant and not Landlord shall be responsible for compliance of the Alterations, and plans and specifications therefor, with all applicable Laws, and Landlord shall not be responsible for any omissions or errors therein.

          (d) Upon the expiration or sooner termination of the Term, Tenant shall upon demand by Landlord, at Landlord’s election either (i) at Tenant’s sole cost and expense, forthwith and with all due diligence remove any Alterations made by or for the account of Tenant, designated by Landlord to be removed (provided, however, that upon the written request of Tenant prior to installation of such Alterations, Landlord shall advise Tenant at that time whether or not such Alterations must be removed upon the expiration or sooner termination of this Lease), and restore the Premises to substantially its original condition as of the Commencement Date, subject to normal wear and tear and the rights and obligations of Tenant concerning casualty damage pursuant to Paragraph 20 or (ii) pay Landlord the reasonable estimated cost thereof.

     7. REPAIR AND MAINTENANCE.

          (a) Landlord’s Obligations.

          (i) Landlord shall maintain, repair and replace, except as provided in Paragraph 7(c), the exterior (excluding windows and window frames), roof structure (but not the roof membrane) and structural portions of the Building (including load bearing walls and foundations).

          (ii) Landlord shall maintain, repair and replace the parking areas, courtyards, sidewalks, entry ways, lawns, fountains, landscaping and other similar facilities located in the Common Area.

All costs incurred by Landlord in connection with the foregoing obligations shall be payable by Tenant as Additional Charges in accordance with Paragraph 3(c) to the extent they are properly included in Expenses thereunder. Landlord’s obligations under this Paragraph 7(a) with respect to any particular repair, replacement or maintenance requirement, shall not commence until Tenant notifies Landlord in writing of any circumstances which Tenant believes may trigger Landlord’s obligations.

          (b) Tenant’s Obligations. Tenant shall maintain, repair and replace, at its sole cost and expense, all portions of the Premises which are not Landlord’s obligations under Paragraph 7(a), including, without limitation, (i) the roof membrane, windows, and window frames; (ii) the building systems serving the Premises for electrical, mechanical, HVAC and plumbing and all controls appurtenant thereto, and any elevators in the Building (collectively, including elevators, “Building Systems”); and (iii) the interior portion of the Building, the Alterations, and any additional tenant improvements, alterations or additions installed by or on behalf of Tenant within the Premises. Tenant shall be responsible for the expense of installation, operation, and maintenance of its telephone and other communications cabling from the point of entry into the Building to the Premises and throughout the Premises, though Landlord shall have the right to perform such work on behalf of Tenant in Common Areas, provided Landlord performs such work in coordination with Tenant and its contractors in such a manner as will accommodate Tenant’s reasonable objectives with respect thereto. The Premises shall at all times be maintained by Tenant in the condition of a first-class office building. Tenant’s obligations under this Paragraph 7 include, without limitation, the replacement, at Tenant’s sole cost and expense, of any portions of the Premises or Building Systems which are not Landlord’s express responsibility under Paragraph 7(a), if it would be commercially prudent to replace, rather than repair, such portions of the Premises, regardless of whether such replacement would be considered a capital expenditure. Tenant hereby waives and releases its right to make repairs at Landlord’s expense under Sections 1941 and 1942 of the California Civil Code or under any similar law, statute or ordinance now or hereafter in effect. In addition, Tenant hereby waives and releases its right to terminate this Lease under Section 1932(1) of the California Civil Code or under any similar law, statute or ordinance now or hereafter in effect.

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          (c) Additional Obligations of Tenant. The purpose of Paragraph 7(a) and 7(b) is to define the obligations of Landlord and Tenant to perform various repair and maintenance functions; the allocation of the costs therefor are covered under this Paragraph 7(c) and Paragraph 3. Tenant shall bear the full cost of repairs or maintenance interior or exterior, structural or otherwise, to preserve the Premises and the Building in good working order and first-class condition, arising out of (i) the existence, installation, use or operation of any Alterations or any of Tenant’s trade fixtures or personal property; (ii) the moving of Tenant’s property or fixtures in or out of the Building or Project or in and about the Premises; (iii) the particular use or particular occupancy or manner of use or occupancy of the Premises by any Tenant Party; or (iv) except to the extent any claims arising from any of the foregoing are reimbursed by insurance carried by Landlord, are covered by the waiver of subrogation in Paragraph 11 or are otherwise provided for in Paragraph 20, the acts, omissions or negligence of any Tenant Parties.

          (d) Maintenance Service Contracts. In connection with Tenant’s maintenance and repair obligations contained in this Paragraph 7, Tenant shall, at its own cost and expense, enter into regularly scheduled preventive maintenance service contracts with maintenance contractors approved by Landlord, in its reasonable discretion, for servicing all Building Systems, elevators and equipment within the Premises, and shall provide copies of such contracts and periodic maintenance reports to Landlord. At Landlord’s option at any time in which Tenant is in Default hereunder, maintenance service contracts shall be prepaid on an annual basis. Each maintenance service contract shall specifically name Landlord as a third parly beneficiary, with the right to receive copies of all notices delivered under such contract and the ability to exercise Tenant’s rights thereunder, at Landlord’s election, in connection with any cure of Tenant’s default by Landlord, or any assumption by Landlord of Tenant’s maintenance obligations with respect to Building Systems, pursuant to Paragraph 7(e) below.

          (e) Cure Rights. Tenant shall have a period of thirty (30) days from the date of written notice from Landlord within which to cure any failure to fulfill any of its obligations under this Paragraph 7; provided, however, that if such failure is curable but cannot be cured within such thirty (30) day period, Tenant shall have such additional time as may be reasonably required to cure (not to exceed sixty (60) additional days) so long as Tenant commences such cure within such (30) day period and diligently prosecutes such cure to completion. Landlord shall have the rights set forth in Paragraph 23 with respect to any failure of Tenant to perform its obligations under this Paragraph 7. In addition. Landlord may elect, by delivery of written notice to Tenant, to assume Tenant’s maintenance obligations with respect to the Building Systems under item (ii) of Paragraph 7(b) if Tenant does not cure any breach of such obligations, or if Tenant has failed to perform such obligations more than once in any twelve month period (without benefit of cure periods) upon the second such failure. If Landlord assumes such obligations, all costs incurred by Landlord in connection therewith shall be included in Expenses payable by Tenant as Additional Charges in accordance with Paragraph 3(c). The remedies described in this paragraph are cumulative and in addition to any other remedies Landlord may have at law or under this Lease.

          (f) No Abatement. Except to the extent any claims arising from any of the foregoing are reimbursed by rental abatement insurance proceeds actually received by Landlord, are covered by the waiver of subrogation in Paragraph 11 or are otherwise provided for in Paragraph 20, there shall be no abatement of Rent with respect to, and except for Landlord’s gross negligence or willful misconduct, Landlord shall not be liable for any injury to or interference with Tenant’s business arising from, any repairs, maintenance, alteration or improvement in or to any portion of the Project, including the Premises, or in or to the fixtures, appurtenances and equipment therein.

     8. LIENS. Tenant shall keep the Premises free from any liens arising out of any work performed, material furnished or obligations incurred by Tenant. In the event that Tenant shall not within ten (10) days following the imposition of any such lien, cause the same to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other remedies provided herein and by law, the right, but not the obligation, to cause the same to be released by such means as it shall deem proper, including without limitation by the payment of the claim giving rise to such lien or by the posting of a bond. All such sums paid by Landlord and all expenses incurred by Landlord in connection therewith shall be considered Additional Charges and shall be payable to Landlord by Tenant on demand with interest from the date incurred by Landlord at the Default Rate. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law, or which Landlord shall deem proper, for the protection of Landlord, the Premises, the Project and any other

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party having an interest therein, from mechanics’ and materialment’s liens, and Tenant shall give written notice to Landlord at least fifteen (15) business days prior to commencement of any construction on the Premises.

     9. ASSIGNMENT AND SUBLETTING

          (a) Except as otherwise provided in this Paragraph 9, Tenant shall not directly or indirectly, voluntarily or by operation of law, sell, assign, encumber, pledge or otherwise transfer or hypothecate all or any part of the Premises or Tenant’s leasehold estate hereunder (collectively, “Assignment”), or permit the Premises to be occupied by anyone other than Tenant or sublet the Premises or any portion thereof (collectively, “Sublease”), without Landlord’s prior written consent in each instance, which consent shall not be unreasonably withheld; provided, however, that Tenant shall have the right to enter into an Assignment of Sublease to any affiliate of Tenant pursuant to Paragraph 9(f) below or a Permitted Transfer pursuant to Paragraph 9(d) below. Without otherwise limiting the criteria upon which Landlord may withhold its consent to any proposed Sublease or Assignment, if Landlord withholds its consent where either (i) the creditworthiness of the proposed Sublessee or Assignee is not reasonably acceptable to Landlord, or (ii) the proposed Sublessee’s or Assignee’s use of the Premises is not in compliance with the Permitted Use as described in the Basic Lease Information, such withholding of consent shall be presumptively reasonable. If Landlord consents to the Sublease or Assignment, Tenant may thereafter enter into a valid Sublease or Assignment upon the terms and conditions set forth in this Paragraph 9.

          (b) If Tenant desires at any time to enter into an Assignment of this Lease or a Sublease of the Premises or any portion thereof for which Landlord’s consent is required it shall first give written notice to Landlord of its desire to do so, which notice shall contain (i) the name of the proposed assignee, subtenant or occupant; (ii) the name of the proposed assignee’s, subtenant, or occupant’s business to be carried on in the Premises; (iii) the terms and provisions of the proposed Assignment or Sublease; and (iv) such financial information as Landlord may reasonably request concerning the proposed assignee, subtenant or occupant.

          At any time within fifteen (15) days after Landlord’s receipt of the notice specified in Paragraph 9(b), Landlord may by written notice to Tenant elect to (i) consent to the Sublease or Assignment; or (ii) disapprove the Sublease or Assignment. In addition, Landlord may elect to terminate this Lease as to the portion of the Premises that is specified in such notice, with a proportionate abatement in Monthly Base Rent and Additional Charges for Expenses and Taxes, if such notice is with respect to (x) any proposed Assignment or (y) any proposed Sublease and either (I) such Sublease has a term (including any renewal or extension options) that either is coterminous with the Term or expires within the last two years of the Term, or (II) after giving effect to such Sublease, the original Tenant will occupy less than fifty percent (50%) of the Rentable Area of the Premises. If Landlord elects to terminate the Lease as to a portion of the Premises pursuant to the immediately preceding sentence, Tenant shall at all times provide reasonable and appropriate access to such portion of the Premises and use of any common facilities within the Building. Promptly after request from Landlord, Tenant shall enter into any amendment to this Lease or other documentation reasonably requested by Landlord in connection with any such termination of this Lease as to a portion of the Premises. Failure by Landlord to either consent to or disapprove a proposed Assignment or Sublease within the fifteen (15) day time period specified above shall be deemed to be Landlord’s disapproval thereof. At Tenant’s option, Tenant may notify Landlord in writing if Tenant wishes to Assign or Sublease any portion of the Premises, prior to commencing negotiations for an Assignment or Sublease with another party, if such Assignment or Sublease would be subject to Landlord’s termination right provided above (such notice being the “Availability Notice”), and Landlord shall have the option, by written notice to Tenant within fifteen (15) days after receiving any Availability Notice, to terminate this Lease with respect to the portion of the Premises as provided above. If Landlord declines or fails timely to elect to terminate this Lease with respect to such portion of the Premises, Tenant shall have the right within one hundred twenty (120) days after the expiration of such fifteen (15) day period, to enter into an Assignment or Sublease with respect to the portion of the Premises designated in the Availability Notice, subject to Landlord’s consent and the other provisions of this Paragraph 9, except that Landlord shall not have the further right to terminate with respect to such Assignment or Sublease. If Tenant fails to enter into an Assignment or Sublease within such one hundred twenty (120) day period, or upon expiration of any Sublease entered into within such one hundred twenty (120) day period, Landlord’s rights under this Paragraph 9 to terminate the Lease with respect to the portion of the Premises upon any future proposed Sublease or Assignment shall revive. If Landlord consents to the Sublease or Assignment within fifteen (15) days

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after receipt of Tenant’s notice as provided above. Tenant may thereafter within one hundred twenty (120) days after Landlord’s consent, but not later than the expiration of said one hundred twenty (120) days, enter into such Assignment or Sublease of the Premises or portion thereof upon the terms and conditions set forth in the notice furnished by Tenant to Landlord pursuant to Paragraph 9(b). However, Tenant shall pay to Landlord seventy-five percent (75%) of any rent or other consideration realized by Tenant under any and all Subleases in excess of the Monthly Base Rent and Additional Charges payable hereunder (or the amount thereof proportionate to the portion of the Premises subject to such Sublease(s)), including, without limitation, any sums paid for the sale or rental of any Alterations, after first deducting from such excess costs reasonably incurred for tenant improvements installed by Tenant (commensurate with a standard office build-out) to obtain the Sublease or Assignment in question, each of which are installed in that portion of the Premises which is the subject of the Sublease or Assignment and which unamortized costs shall be amortized on a straight line basis (without interest) over the term of the Sublease or Assignment in equal installments, and after deducting therefrom any customary brokers’ commissions that Tenant has incurred in connection with such Sublease amortized on a straight line basis (without interest) over the term of the Sublease.

          (c) No consent by Landlord to any Assignment or Sublease by Tenant shall relieve Tenant of any obligation to be performed by Tenant under this Lease, whether arising before or after the Assignment or Sublease. The consent by Landlord to any Assignment or Sublease shall not relieve Tenant from the obligation to obtain Landlord’s express written consent to any other Assignment or Sublease. Any Assignment or Sublease that is not in compliance with this Paragraph 9 shall be void and, at the option of Landlord, shall constitute a material Default by Tenant under this Lease. The acceptance of Monthly Base Rent or Additional Charges by Landlord from a proposed assignee or sublessee shall not constitute the consent to such Assignment or Sublease by Landlord.

          (d) The following shall be deemed a voluntary assignment of Tenant’s interest in this Lease: (i) any dissolution, merger, consolidation, or other reorganization of Tenant; and (ii) if the capital stock of Tenant is not publicly traded, the sale or transfer to one person or entity stock possessing more than fifty percent (50%) of the total combined voting power of all classes of Tenant’s stock issued, outstanding and entitled to vote for the election of directors. Notwithstanding anything to the contrary contained in this Paragraph 9, Tenant may enter into any of the following transfers (a “Permitted Transfer”) without Landlord’s prior written consent: (1) Tenant may assign its interest in the Lease to a corporation, partnership, limited liability company, or limited liability partnership (“Transfer Entity”) which results from a merger, consolidation or other reorganization, so long as the surviving Transfer Entity has a net worth immediately following such transaction that is equal to or greater than the net worth of Tenant as of the date immediately prior to such transaction; and (2) Tenant may assign this Lease to a Transfer Entity which purchases or otherwise acquires all or substantially all of the assets of Tenant so long as such acquiring Transfer Entity has a net worth immediately following such transaction that is equal to or greater than the net worth of Tenant as of the date immediately prior to such transaction.

          (e) Each assignee pursuant to an Assignment as provided in this Paragraph 9 shall assume all obligations of Tenant under this Lease, and shall be and remain liable jointly and severally with Tenant for the payment of Monthly Base Rent and Additional Charges, and for the performance of all the terms, covenants, conditions and agreements herein contained on Tenant’s part to be performed for the Term. No Assignment shall be binding on Landlord unless the assignee or Tenant shall deliver to Landlord a counterpart of the Assignment and an instrument in recordable form that contains a covenant of assumption by the assignee satisfactory in substance and form to Landlord, consistent with the requirements of this Paragraph 9(e), but the failure or refusal of the assignee to execute such instrument of assumption shall not release or discharge the assignee from its liability as set forth above. Notwithstanding anything to the contrary in this Lease, no Sublease shall be binding on Landlord unless and until Landlord shall agree in writing following termination of this Lease to recognize such sublessee and such sublessee agrees in writing to attorn to Landlord on the terms and conditions of the sublease (including the obligations under this Lease to the extent that they relate to the portion of the Premises subleased), and any Sublease entered into by Tenant hereunder shall include an obligation by the sublessee to so attorn to Landlord if Landlord, in Landlord’s sole discretion, elects to recognize such Sublease upon any termination of this Lease.

          (f) Tenant shall have the right, without Landlord’s consent and without triggering Landlord’s rights under Paragraph 9(b), but with written notice to Landlord at least ten (10) days prior thereto, to enter into an

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Assignment of Tenant’s interest in the Lease or a Sublease of all or any portion of the Premises to an Affiliate (as defined below) of Tenant, provided that (i) in connection with an Assignment that is not a Sublease, the Affiliate delivers to Landlord concurrent with such Assignment a written notice of the Assignment and an assumption agreement whereby the Affiliate assumes and agrees to perform, observe and abide by the terms, conditions, obligations, and provisions of this Lease arising from and after the effective date of the assignment; and (ii) the assignee or sublessee remains an Affiliate throughout the term of this Lease (and, in connection with an Assignment that is not a Sublease, the assumption agreement shall contain provisions consistent with the provisions of this subparagraph allowing Landlord to terminate this Lease at such time as the entity is no longer an Affiliate of the original Tenant). If this Lease is assigned or sublet to an Affiliate and thereafter any circumstance occurs which causes such assignee or sublessee to no longer be an Affiliate of the assigning or subleasing Tenant, Tenant shall give written notice thereof to Landlord, which notice, to become effective, shall refer to Landlord’s right to terminate this Lease pursuant to this subparagraph, in the event of an Assignment, or to cause Tenant to terminate the Sublease, in the event of a Sublease (“Affiliation Termination Notice”). Following occurrence of the circumstance giving rise to the discontinuation of such assignee or sublessee being an Affiliate (“Affiliate Termination”) of the assigning or subleasing Tenant, Landlord shall be entitled to terminate this Lease in the event of an Assignment or to cause Tenant to terminate the Sublease in the event of a Sublease, unless Landlord has given its prior written consent to such circumstance, which consent shall not be unreasonably withheld by Landlord so long as, in the event of an Assignment, such assignee (after giving effect to such circumstance) has financial strength (as demonstrated by audited financial statements) equal to or greater than the assigning or subleasing Tenant (including its net worth) as of the date of execution of this Lease, or the assigning or subleasing Tenant executes a guaranty in usual form reasonably acceptable to Landlord (however, this does not imply that Tenant would be released without such guaranty). No Sublease or Assignment by Tenant made pursuant to this paragraph shall relieve Tenant of Tenant’s obligations under this Lease. As used in this paragraph, the term “Affiliate” shall mean and collectively refer to a corporation or other entity which controls, is controlled by or is under common control with Tenant, by means of an ownership of either (aa) more than fifty percent (50%) of the outstanding voting shares of stock or partnership or other ownership interests, or (bb) stock, or partnership or other ownership interests, which provide the right to control the operations, transactions and activities of the applicable entity.

     10. INSURANCE AND INDEMNIFICATION

          (a) Except to the extent caused by the negligence or willful misconduct of Tenant Parties or Tenant’s breach of this Lease, Landlord shall indemnify and hold Tenant harmless from and defend Tenant against any and all claims or liability for any injury or damage to any person or property including any reasonable attorney’s fees (but excluding any consequential damages or loss of business) occurring in, on, or about the Project to the extent such injury or damage is caused by the gross negligence or willful misconduct of: (i) Landlord; or (ii) Landlord’s agents, servants, contractors or employees (collectively, together with Landlord, “Landlord Parties”), provided, however, that in no event shall Landlord be liable to Tenant for any losses arising from any interruption of Tenant’s business, or for lost profits, or for charges or expenses which continue but would have been earned if the business had gone on without interruption, or for any other loss, claim, cost, expense or damage which would be covered by a standard policy of business interruption insurance, even if such lost profits, charges, expenses, losses, claims, costs or damages caused by the gross negligence or willful misconduct of Landlord’s agents, servants, contractors or employees.

          (b) Landlord shall not be liable to Tenant and Tenant hereby waives all claims against Landlord Parties for any injury or damage to any person or property in or about the Premises by or from any cause whatsoever (other than the gross negligence or willful misconduct of Landlord Parties), and without limiting the generality of the foregoing, whether caused by water leakage of any character from the roof, walls, basement, or other portion of the Premises or the Building, or caused by gas, fire, oil, electricity, or any cause whatsoever, in, on, or about the Premises, the Project or any part thereof (other than that caused by the gross negligence or willful misconduct of Landlord Parties); provided, however, that in no event shall Landlord be liable to Tenant for any losses arising from any interruption of Tenant’s business, or for lost profits, or for charges or expenses which continue but would have been earned if the business had gone on without interruption, or for any other loss, claim, cost, expense or damage which would be covered by a standard policy of business interruption insurance, even if caused by the gross negligence or willful misconduct of Landlord’s agents, servants, contractors or employees.

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Tenant acknowledges that any casualty insurance carried by Landlord will not cover loss of income to Tenant or damage to the Alterations in the Premises installed by Tenant or Tenant’s personal property located within the Premises (except as provided in Paragraph 10(f) below). Tenant shall be required to maintain the insurance described in Paragraph 10(d) below during the Term.

          (c) Except to the extent caused by the gross negligence or willful misconduct of Landlord Parties, Tenant shall indemnify and hold Landlord harmless from and defend Landlord against any and all claims or liability for any injury or damage to any person or property whatsoever: (i) occurring in or on the Premises; or (ii) occurring in, on, or about any other portion of the Project to the extent such injury or damage shall be caused by the negligence or willful misconduct by the Tenant Parties. Tenant further agrees to indemnify and hold Landlord harmless from, and defend Landlord against, any and all claims, losses, or liabilities (including damage to Landlord’s property) arising from (x) any breach of this Lease by Tenant, (y) any matter referred to in Paragraph 10(g). and/or (z) the conduct of any work or business of Tenant Parties in or about the Project, including, but not limited to any release, discharge, storage or use of any Hazardous Substance. In the event of a discrepancy between the terms of this paragraph and the terms of Paragraph 40 of the Lease concerning Hazardous Substance liability, the latter shall control. Notwithstanding the foregoing, however, Tenant shall so indemnify, hold harmless and defend Landlord with respect to losses arising from any interruption of Tenant’s business, or for lost profits, or for charges or expenses which continue but would have been earned if the business had gone on without interruption, or for any other loss, claim, cost, expense or damage which would be covered by a standard policy of business interruption insurance, even if such losses resulted from the gross negligence or willful misconduct of Landlord’s agents, servants, contractors or employees.

          (d) Tenant shall procure at its cost and expense and keep in effect during the Term the following insurance:

          (i) Commercial general liability insurance on an occurrence form, including contractual liability, with a minimum combined single limit of liability of Three Million Dollars ($3,000,000). Such insurance shall name Landlord, any Mortgagee, any ground lessor, and such other parties as Landlord may request as additional insureds, shall specifically include the liability assumed hereunder by Tenant and shall provide that it is primary insurance, and not excess over or contributory with any other valid, existing and applicable insurance in force for or on behalf of Landlord, and shall provide that Landlord shall receive thirty (30) days’ written notice from the insurer prior to any cancellation or change of coverage. The limits of such insurance shall not limit the liability of Tenant hereunder, and Tenant is responsible for ensuring that the amount of liability insurance carried by Tenant is sufficient for Tenant’s purposes.

          (ii) Intentionally Omitted;

          (iii) “Special” (also known as “all risk”) property insurance (including, without limitation, boiler and machinery (if applicable), sprinkler damage, vandalism and malicious mischief) on all of Tenant’s personal property. Such insurance shall be in an amount equal to full replacement cost of the aggregate of the foregoing and shall provide coverage comparable to the coverage in the standard ISO All Risk form, when such form is supplemented with the coverages required above;

          (iv) Worker’s compensation insurance with limits as may be required by law;

          (v) Such other insurance as may be required by Laws, or by Landlord to the extent it is commercially reasonable for tenants to be required to carry such other insurance under similar leases with respect to similar property in similar locations.

Insurance required under this Paragraph 10(d) shall be in companies rated “A”X or better in “Best’s Insurance Guide.” Tenant shall deliver copies of policies of such insurance and certificates naming the additional insureds thereof to Landlord on or before the Commencement Date, and thereafter at least thirty (30) days before the expiration dates of expiring policies; and, in the event Tenant shall fail to procure such insurance, or to deliver such

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policies or certificates, Landlord may, at its option after written notice to Tenant, procure same for the account of Tenant and the cost thereof shall be paid to Landlord as Additional Charges within five (5) days after delivery to Tenant of bills therefor.

          (e) The provisions of this Paragraph 10 shall survive the expiration or termination of this Lease with respect to any claims or liability occurring prior to such expiration or termination.

           (f) Landlord shall maintain insurance on the Project, including the Building, and any Alterations installed in the Premises by Tenant at its expense to the extent Tenant provides Landlord with all information reasonably required by Landlord or its insurer in connection therewith (with the entire cost of any such insurance on Alterations to be payable directly by Tenant to Landlord as an Additional Charge, including the incremental cost to add such insurance to Landlord’s policies and any deductibles payable with respect to such Alterations), against fire and risks covered by “special” coverage (also known as “all risk”) (excluding earthquake and flood, though Landlord, at its sole option, may include this coverage) on a 100% of “replacement cost” basis (though reasonable deductibles may be included under such coverage). Landlord’s insurance shall also have a building ordinance provision and shall provide for rental interruption insurance covering a period of twelve (12) full months. In no event shall Landlord be deemed a co-insurer under such policy. Landlord shall also maintain commercial general liability insurance on an occurrence basis in amounts not less than Three Million Dollars ($3,000,000) per occurrence with respect to bodily injury or death and property damage in the Project. Notwithstanding the foregoing obligations of Landlord to carry insurance, Landlord may modify the foregoing coverages if and to the extent it is commercially reasonable to do so. Landlord agrees to provide Tenant, upon written request, with certificates of insurance evidencing the foregoing coverages. Tenant acknowledges that, notwithstanding any provision of this Paragraph 10(f) or any other provision of this Lease, Landlord currently intends to carry earthquake insurance on the Project during the Term of this Lease.

          (g) Tenant acknowledges that even if Landlord installs and operates security cameras or other security equipment and/or provides any other services that could be construed as being intended to enhance security, Landlord shall have no obligation to Tenant or to any of Tenant’s Parties for any damage, claim, loss or liability related to any claim that Landlord had a duty to provide security or that the equipment or services provided by Landlord were inadequate, inoperative or otherwise failed to provide adequate security. Any such claim made against Landlord by any employee, customer or invitee of Tenant shall be included within Tenant’s obligation of indemnity and defense set forth in Paragraph 10)(c) above.

     11. WAIVER OF SUBROGATION. Notwithstanding anything to the contrary in this Lease, the parties hereto release each other (including Landlord Parties and Tenant Parties) and their respective agents, employees, successors, assignees and subtenants from all liability for injury to any person or damage to any property that is caused by or results from a risk (i) which is actually insured against, to the extent of receipt of payment under such policy (unless the failure to receive payment under any such policy results from a failure of the insured party to comply with or observe the terms and conditions of the insurance policy covering such liability, in which event, such release shall not be so limited), (ii) which is required to be insured against under this Lease, without regard to the negligence or willful misconduct of the entity so released, or (iii) which would normally be covered by the standard form of “special” or “all risk” coverage property insurance. Landlord and Tenant shall each obtain from their respective insurers under all policies of fire, theft, and other property insurance maintained by either of them at any time during the Term insuring or covering the Building, the Premises, or the Project or any portion thereof of its contents therein, a waiver of all rights of subrogation which the insurer of one party might otherwise, if at all, have against the other party and Landlord and Tenant shall each indemnify the other against any loss or expense, including reasonable attorneys’ fees, resulting from the failure to obtain such waiver.

     12. SERVICES AND UTILITIES.

          (a) Landlord shall provide the maintenance and repairs described in Paragraph 7(a), except for damage occasioned by the act or omission of Tenant or for which Tenant is responsible pursuant to Paragraph 10(c), which damage shall be repaired by Landlord at Tenant’s expense.

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          (b) Subject to the provisions elsewhere herein contained and to the Rules and Regulations, Tenant shall be responsible for arranging for, and direct payment of any and all cost of, garbage pickup, recycling, janitorial, security, transportation management programs, water, electricity, gas, telephone, cable and digital services, and Tenant shall provide the maintenance, repair and replacement of Building Systems in connection with such utilities and services, and Tenant shall provide the maintenance, repair and services as described in Paragraph 7(b). Landlord shall cooperate with Tenant’s efforts to arrange all such services. If Landlord assumes Tenant’s maintenance obligations with respect to the Building Systems pursuant to Paragraph 7(e), Tenant shall cooperate fully with Landlord and abide by all the reasonable regulations and requirements that Landlord may prescribe for the proper functioning and protection of the Building Systems.

          (c) Tenant will not without the written consent of Landlord, which consent shall not be unreasonably withheld or delayed, use any apparatus or device in the Premises which, when used, puts an excessive load on the Building or its structure or systems, including, without limitation, electronic data processing machines, punch card machines and machines using excess lighting or voltage in excess of the amount for which the Building is designed.

          (d) Landlord shall not be in default hereunder, nor be deemed to have evicted Tenant, nor be liable for any damages directly or indirectly resulting from, nor shall the rental herein reserved be abated, except as expressly provided for in the last sentence of this paragraph, by reason of (i) the installation, use or interruption of use of any equipment in connection with the foregoing utilities and services; (ii) failure to furnish or delay in furnishing any services to be provided by Landlord when such failure or delay is caused by Acts of God or the elements, labor disturbances of any character, any other accidents or other conditions beyond the reasonable control of Landlord, or by the making of repairs or improvements to the Premises or to the Building (except in the case of Landlord’s gross negligence or willful misconduct); or (iii) the limitation, curtailment, rationing or restriction on use of water or electricity, gas or any other form of energy or any other service or utility whatsoever serving the Premises or the Project. Furthermore, Landlord shall be entitled to cooperate with the mandatory requirements of national, state or local governmental agencies or utilities suppliers in connection with reducing energy or other resources consumption. If the Premises become unsuitable for Tenant’s use as a consequence of cessation of gas and electric utilities or other services provided to the Premises resulting from a casualty covered by Landlord’s insurance, then Tenant’s Monthly Base Rent and Additional Charges shall abate during the period of time in which Tenant cannot occupy the Premises for the Permitted Uses, but only to the extent of rental abatement insurance proceeds received by Landlord.

     13. TENANT’S CERTIFICATES. Tenant, at any time and from time to time, within ten (10) days from receipt of written notice from Landlord, will execute, acknowledge and deliver to Landlord and, at Landlord’s request, to any prospective tenant, purchaser, ground or underlying lessor or mortgagee of any part of the Project any other party acquiring an interest in Landlord, a certificate of Tenant substantially in the form attached as EXHIBIT E and also containing any other information that may reasonably be required by any of such persons. It is intended that any such certificate of Tenant delivered pursuant to this Paragraph 13 may be relied upon by Landlord and any prospective tenant, purchaser, ground or underlying lessor or mortgagee of any part of the Project, or such other party.

     14. HOLDING OVER. If Tenant (directly or through any successor-in-interest of Tenant) remains in possession of all or any portion of the Premises after the expiration of the Term or the termination of this Lease with the written consent of Landlord, such continued possession shall be construed to be a tenancy from month to month at one hundred twenty-five percent (125%) of the Monthly Base Rent payable in the last full month prior to such termination or expiration (and shall be increased in accordance with Paragraph 3(b)), together with an amount estimated by Landlord for the monthly Additional Charges for Expenses and Taxes payable under this Lease, and shall otherwise be on the terms and conditions herein specified so far as applicable. If Tenant (directly or through any successor-in-interest of Tenant) remains in possession of all or any portion of the Premises after the expiration of the Term or the termination of this Lease without the written consent of Landlord, Tenant’s continued possession shall be on the basis of a tenancy at the sufferance of Landlord. In such event, Tenant shall continue to comply with or perform all the terms and obligations of Tenant under this Lease, except that the Monthly Base Rent during Tenant’s holding over shall be the greater of the then-fair market rent for the Premises (as reasonably determined by

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Landlord) or one hundred fifty percent (150%) of the Monthly Base Rent and Additional Charges for Expenses and Taxes payable in the last full month prior to the termination or expiration of this Lease (and shall be increased in accordance with Paragraph 3(b). In addition to Rent, Tenant shall pay Landlord for all damages proximately caused by reason of the Tenant’s retention of possession. Landlord’s acceptance of Rent after the expiration of the Term or termination of the Term of this Lease shall not constitute a renewal of this Lease, and nothing contained in this provision shall be deemed to waive Landlord’s right of re-entry or any other right hereunder or at law. Tenant acknowledges that in Landlord’s marketing and re-leasing efforts for the Premises, Landlord is relying on Tenant’s vacation of the Premises on the Expiration Date. Accordingly, Tenant shall indemnify, defend and hold Landlord harmless from and against all claims, liabilities, losses, costs, expenses and damages arising or resulting directly or indirectly from Tenant’s failure to timely surrender the Premises, including (i) any loss, cost or damages suffered by any prospective tenant of all or any part of the Premises, and (ii) Landlord’s damages as a result of such prospective tenant rescinding or refusing to enter into the prospective lease of all or any portion of the Premises by reason of such failure of Tenant to timely surrender the Premises.

     15. SUBORDINATION. Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, this Lease shall be subject and subordinate at all times to: (i) all ground leases or underlying leases which may now exist or hereafter be executed affecting all or any portion of the Project, (ii) any CC&Rs (including without limitation the CC&Rs described in EXHIBIT C), and (iii) the lien of any mortgage or deed of trust which may now exist or hereafter be executed in any amount for which all or any portion of the Project, ground leases or underlying leases, or Landlord’s interest or estate in any of said items, is specified as security (any of the foregoing, a “Mortgage”, and the beneficiary or mortgagee under any of the foregoing, a “Mortgagee”). Notwithstanding the foregoing, Landlord shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such Mortgages to this Lease. In the event that any ground lease or underlying lease terminates for any reason or any Mortgage is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination, attorn to and become the Tenant of the successor in interest to Landlord at the option of such successor in interest. Notwithstanding anything to the contrary contained herein, this Lease shall not be subject or subordinate to any ground or underlying lease or to any Mortgage, unless the ground lessor or Mortgagee executes a reasonable recognition and non-disturbance agreement which provides that Tenant shall be entitled to continue in possession of the Premises on the terms and conditions of this Lease if and for so long as Tenant fully performs all of its obligations hereunder. Landlord and Tenant covenant and agree to cooperate in efforts to obtain a mutually acceptable form of subordination, non-disturbance and attornment agreement from Landlord’s current Mortgagee, and Tenant covenants and agrees to execute and deliver upon demand by Landlord and in the form requested by Landlord and reasonably acceptable to Tenant (Tenant has approved the form of the subordination, non-disturbance and attornment agreement attached as EXHIBIT F, without limiting Tenant’s future approval of any additional or substitute form), any customary additional documents evidencing the priority or subordination of this Lease with respect to any such ground leases or underlying leases or the lien of any such Mortgage. Tenant shall execute, deliver and record any such documents within ten (10) days after Landlord’s written request.

     16. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the rules and regulations attached to this Lease as EXHIBIT D and all reasonable modifications thereof and additions thereto from time to time put into effect by Landlord. Landlord shall not be responsible for the nonperformance by any other Tenant or occupant of the Building or the Project of any said rules and regulations. In the event of an express and direct conflict between the terms, covenants, agreements and conditions of this Lease and those set forth in the rules and regulations, as modified and amended from time to time by Landlord, this Lease shall control.

     17. RE-ENTRY BY LANDLORD. Landlord reserves and shall at all reasonable times, upon reasonable prior notice (except in the case of an emergency), and subject to Tenant’s reasonable security precautions and the right of Tenant to accompany Landlord at all times, have the right to re-enter the Premises to inspect the same, to supply janitor service and any other service to be provided by Landlord to Tenant hereunder (unless Tenant is supplying such service), to show the Premises to prospective purchasers, Mortgagees or tenants (as to prospective tenants, only during the last eighteen (18) months of the Term), to post notices of nonresponsibility or as otherwise required or allowed by this Lease or by law, and to alter, improve or repair the Premises and any portion of the Building and may for that purpose erect, use, and maintain scaffolding, pipes, conduits, and other necessary

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structures in and through the Premises where reasonably required by the character of the work to be performed. Landlord shall not be liable in any manner for any inconvenience, disturbance, loss of business, nuisance or other damage arising from Landlord’s entry and acts pursuant to this paragraph and Tenant shall not be entitled to an abatement or reduction of Monthly Base Rent or Additional Charges if Landlord exercises any rights reserved in this paragraph. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby, except to the extent caused by Landlord’s gross negligence or willful misconduct. For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises, excluding Tenant’s vaults and safes, or special security areas (designated in advance), and Landlord shall have the right to use any and all means which Landlord may deem necessary or proper to open said doors in an emergency, in order to obtain entry to any portion of the Premises, and any entry to the Premises, or portion thereof obtained by Landlord by any of said means, or otherwise, shall not under any emergency circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction, actual or constructive, of Tenant from the Premises or any portions thereof. Landlord shall use commercially reasonable efforts during re-entry to not unreasonably interfere with Tenant’s use of the Premises or its business conducted therein.

     18. INSOLVENCY OR BANKRUPTCY. The appointment of a receiver to take possession of all or substantially all of the assets of Tenant, or an assignment of Tenant for the benefit of creditors, or any action taken or suffered by Tenant under any insolvency, bankruptcy, reorganization or other debtor relief proceedings, whether now existing or hereafter amended or enacted, shall at Landlord’s option constitute a breach of this Lease by Tenant (provided that, with respect to a petition in bankruptcy, or receiver attachment, or other remedy pursued by a third party, such event shall not constitute a breach of this Lease so long as it is discharged within sixty (60) days). Upon the happening of any such event or at any time thereafter, this Lease shall terminate five (5) days after written notice of termination from Landlord to Tenant. In no event shall this Lease be assigned or assignable by operation of law or by voluntary or involuntary bankruptcy proceedings or otherwise and in no event shall this Lease or any rights or privileges hereunder be an asset of Tenant under any bankruptcy, insolvency, reorganization or other debtor relief proceedings.

     19. DEFAULT.

          (a) The failure to perform or honor any covenant, condition or representation made under this Lease shall constitute a “Default” hereunder by Tenant upon expiration of the appropriate grace period hereinafter provided. Tenant shall have a period of five (5) days from the date of written notice from Landlord (which notice shall be in lieu of and not in addition to the notice required by Section 1161 of the California Code of Civil Procedure) within which to cure any failure to pay Monthly Base Rent or Additional Charges; provided, however, that Landlord shall not be required to provide such notice more than two (2) times during any two (2) year period during the Term with respect to non-payment of Monthly Base Rent or Additional Charges, the third such non-payment constituting Default without requirement of notice. Tenant shall have a period of thirty (30) days from the date of receipt of written notice from Landlord within which to cure any other Default under this Lease; provided, however, that with respect to any curable Default other than the payment of Monthly Base Rent or Additional Charges that cannot reasonably be cured within thirty (30) days, the cure period shall be extended for an additional period of time reasonably required to cause such cure if Tenant commences to cure within thirty (30) days from Landlord’s notice and continues to prosecute diligently the curing thereof, provided that such cure period shall in no event extend beyond ninety (90) days after Landlord’s notice. Notwithstanding the foregoing, (i) if a different cure period is specified elsewhere in this Lease with respect to any specific obligation of Tenant, such specific cure period shall apply with respect to a failure of such obligation in lieu of and not in addition to, the cure period provided in this Paragraph 19(a); and (ii) the cure periods specified in Paragraphs 7(e) and 23 shall apply with respect to Landlord’s rights to cure Tenant’s failure to perform pursuant to Paragraphs 7(e) and 23, respectively. Upon a Default of this Lease by Tenant, Landlord shall have the following rights and remedies in addition to any other rights or remedies available to Landlord at law or in equity:

          (i) The rights and remedies provided by California Civil Code, Section 1951.2, including but not limited to, recovery of the worth at the time of award of the amount by which the unpaid

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Monthly Base Rent and Additional Charges for the balance of the Term after the time of award exceeds the amount of rental loss for the same period that the Tenant proves could be reasonably avoided, as computed pursuant to subsection (b) of said Section 1951.2;

          (ii) The rights and remedies provided by California Civil Code, Section 1951.4, that allows Landlord to continue this Lease in effect and to enforce all of its rights and remedies under this Lease, including the right to recover Monthly Base Rent and Additional Charges as they become due, for so long as Landlord does not terminate Tenant’s right to possession; provided, however, if Landlord elects to exercise its remedies described in this Paragraph 19(a)(ii) and Landlord does not terminate this Lease, and if Tenant requests Landlord’s consent to an assignment of this Lease or a sublease of the Premises at such time as Tenant is in Default, Landlord shall not unreasonably withhold its consent to such assignment or sublease. Acts of maintenance or preservation, efforts to relet the Premises or the appointment of a receiver upon Landlord’s initiative to protect its interest under this Lease shall not constitute a termination of Tenant’s rights to possession;

          (iii) The right to terminate this Lease by giving notice to Tenant in accordance with applicable law;

          (iv) if Landlord elects to terminate this Lease, the right and power to enter the Premises and remove therefrom all persons and property and, to store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant, and to sell such property and apply such proceeds therefrom pursuant to applicable California law.

          (b) Landlord shall have a period of thirty (30) days from the date of written notice from Tenant within which to cure any default of Landlord under this Lease; provided, however, that with respect to any default that cannot reasonably be cured within thirty (30) days, the default shall not be deemed to be uncured if Landlord commences to cure within thirty (30) days from Tenant’s notice and continues to prosecute diligently the curing thereof. Tenant agrees to deliver to any Mortgagee a copy of any Notice of Default served upon the Landlord in the manner prescribed by Paragraph 26 hereof, provided that prior to such notice Tenant has been notified in writing (by way of Notice of Assignment of Rents and Leases, or otherwise) of the address of such Mortgagee. Tenant further agrees that if Landlord shall have failed to cure such default within the time provided for in this Lease, then the Mortgagee shall have an additional thirty (30) days (provided that Tenant notifies Mortgagee concurrently with Tenant’s notice to Landlord at the beginning of Landlord’s thirty (30) day period; otherwise Mortgagee shall have sixty (60) days from the date on which it is noticed) within which to cure such default or if such default cannot be cured within that time, then such additional time as may be reasonably necessary to cure such default shall be granted if within such applicable period Mortgagee has commenced and is diligently pursuing the remedies necessary to cure such default (including, but not limited to, commencement of foreclosure proceedings, if necessary to effect such cure), in which event the Lease shall not be terminated while such remedies are being so diligently pursued.

     20. DAMAGE BY FIRE, ETC.

          (a) Restoration or Termination. If the Premises or the Building are damaged by fire or other casualty, Landlord shall forthwith repair the same, provided that such repairs can be made within one hundred eighty (180) days after the date of such damage under the laws and regulations of the federal, state and local governmental authorities having jurisdiction thereof. In such event, this Lease shall remain in full force and effect except that Tenant shall be entitled to a proportionate reduction of Monthly Base Rent and Additional Charges while such repairs to be made hereunder by Landlord are being made. Such reduction of Monthly Base Rent and Additional Charges, if any, shall be based upon the greater of (i) the proportion that the area of the Premises rendered untenantable by such damage bears to the total area of the Premises; or (ii) the extent to which such damage and the making of such repairs by Landlord shall interfere with the business carried on by Tenant in the Premises, and shall be limited to the extent of rental abatement insurance proceeds actually received by Landlord under Landlord’s casualty insurance policy. Within thirty (30) days after the date of such damage, Landlord shall notify Tenant whether or not in Landlord’s reasonable opinion such repairs can be made within one hundred eighty

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(180) days after the date of such damage and Landlord’s reasonable estimate of the time needed for such repairs. If such repairs cannot be made within one hundred eighty (180) days from the date of such damage, Landlord shall within thirty (30) days after the date of such damage elect either to: (i) notify Tenant of Landlord’s intention to repair such damage and diligently prosecute such repairs, in which event this Lease shall continue in full force and effect and the Monthly Base Rent and Additional Charges shall be reduced as provided herein; or (ii) notify Tenant of Landlord’s election to terminate this Lease as of a date specified in such notice, which date shall not be less than thirty (30) days nor more than sixty (60) days after such notice is given and this Lease shall terminate on the date specified in such notice. If Landlord notifies Tenant that restoration or repair of the Premises will take more than one hundred eighty (180) days, Tenant shall have a right to terminate the Lease within fifteen (15) days following receipt of Landlord’s notice, by providing Landlord with written notice of its election to do so. In such event (and also in the event Landlord terminates the Lease pursuant to the immediately preceding sentence), Tenant shall have no liability for payment of the deductible under Landlord’s insurance relating to such damage. In case of termination by either event, the Monthly Base Rent and Additional Charges shall be reduced by a proportionate amount based upon the extent to which such damage interfered with the business carried on by Tenant in the Premises, and Tenant shall pay such reduced Monthly Base Rent and Additional Charges up to the date of termination. Landlord agrees to refund to Tenant any Monthly Base Rent and Additional Charges previously paid for any period of time subsequent to such date of termination. The repairs to be made hereunder by Landlord shall not include, and Landlord shall not be required to repair, any damage by fire or other cause to the property of Tenant or any repairs or replacements of any paneling, decorations, railings, floor coverings or any alterations, additions, fixtures or improvements installed on the Premises by or at the expense of Tenant; provided, however, that to the extent Landlord’s insurance policies cover any Alterations pursuant to Paragraph 10(f), Landlord shall make available to Tenant any available insurance proceeds with respect to any damage or destruction that affects such Alterations, after deducting therefrom the cost, if any, to Landlord for the recovery of such proceeds and/or of any repair to the Building or Premises or Project for which Landlord is responsible hereunder, in order for Tenant to repair and restore such Alterations, pursuant to disbursement procedures established by Landlord and/or any Mortgagee. Tenant hereby waives the provisions of Section 1932.2, and Section 1933.4, of the Civil Code of California. Notwithstanding anything contained herein to the contrary, if a Major Casualty (as defined below) occurs with respect to any portion of the Building, and the net insurance proceeds obtained as a result of such casualty are ninety percent (90%) or a lesser percentage of the cost of restoration, rebuilding or replacement, then Landlord shall not be obligated to undertake such restoration, rebuilding or replacement unless Landlord elects to do so in writing, provided that Landlord’s election not to restore shall be deemed Landlord’s election to terminate. For the purpose of this Lease, a “Major Casualty” shall mean a casualty that renders unusable twenty percent (20%) or more of the Net Rentable Area of the Building or which materially adversely affects the use of such Building.

          (b) Casualty at End of Term. Notwithstanding anything to the contrary contained in this Lease, if during the twelve (12) months prior to the expiration of the Term, either of the Building or a substantial portion thereof are damaged or destroyed by fire or other casualty, either Tenant or Landlord shall have the option to terminate this Lease as of the date of such damage or destruction by written notice to the other party given within thirty (30) days after such damage or destruction, in which event Landlord shall make a proportionate refund to Tenant of such Rent as may have been paid in advance. For purposes of this paragraph, a “substantial portion” shall mean fifty percent (50%) of the Building.

          (c) Uninsured Casually. Notwithstanding Paragraph 20(a), and subject to the termination right in Paragraph 20(b), in the event of a total or partial destruction of the Premises (i) by a casualty of a type not required to be insured against by Landlord under the terms of this Lease, or (ii) under circumstances where Landlord has been required by any Mortgagee to utilize substantially all of the insurance proceeds to pay down the Mortgage, which destruction exceeds five percent (5%) of the replacement cost of the Building, this Lease shall automatically terminate, unless (x) Landlord elects to reconstruct the Building, and (y) the damage can be reconstructed within one hundred eighty (180) days after the date of such damage. If Landlord elects to reconstruct, the cost incurred by Landlord for such reconstruction shall be amortized over the useful life of the Building and such amortization shall be reimbursed by Tenant to Landlord as an Additional Charge together with interest at the Default Rate; provided, however, that Tenant shall not be obligated to pay for any portion of the useful life of the Building which extends beyond the Expiration Date.

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     21. EMINENT DOMAIN. If any part over fifteen percent (15%) of the Premises shall be taken or appropriated under the power of eminent domain or conveyed in lieu thereof, Tenant shall have the right to terminate this Lease at its option. In such event, Landlord shall receive (and Tenant shall assign to Landlord upon demand from Landlord) any income, rent, award or any interest therein which may be paid in connection with the exercise of such power of eminent domain, and Tenant shall have no claim against Landlord for any part of sum paid by virtue of such proceedings, whether or not attributable to the value of the unexpired term of this Lease except that Tenant shall be entitled to petition the condemning authority for the following: (i) the then unamortized cost of any Alterations paid for by Tenant from its own funds (as opposed to any allowance, including the Tenant Allowance, provided by Landlord); (ii) the value of Tenant’s trade fixtures; (iii) Tenant’s relocation costs; and (iv) Tenant’s goodwill, loss of business and business interruption. If a part of the Premises shall be so taken or appropriated or conveyed and neither party hereto shall elect to terminate this Lease and the Premises have been damaged as a consequence of such partial taking or appropriation or conveyance, Landlord shall restore the Premises continuing under this Lease at Landlord’s cost and expense; provided, however, that Landlord shall not be required to repair or restore any injury or damage to the property of Tenant or to make any repairs or restoration of any Alterations installed on the Premises by or at the expense of Tenant. Thereafter, the Monthly Base Rent and Additional Charges to be paid under this Lease for the remainder of the Term shall be proportionately reduced, such that thereafter the amounts to be paid by Tenant shall be in the ratio that they are of the portion of the Premises not so taken bears to the total area of the Premises prior to such taking. Notwithstanding anything to the contrary contained in this Paragraph 21, if the temporary use or occupancy of any part of the Premises shall be taken or appropriated under power of eminent domain during the Term, this Lease shall be and remain unaffected by such taking or appropriation and Tenant shall continue to pay in full all Monthly Base Rent and Additional Charges payable hereunder by Tenant during the Term. In the event of any such temporary appropriation or taking, Tenant shall be entitled to receive that portion of any award which represents compensation for the use of or occupancy of the Premises during the Term, and Landlord shall be entitled to receive that portion of any award which represents the cost of restoration of the Premises and the use and occupancy of the Premises after the end of the Term. If such temporary taking is for a period longer than two hundred and seventy (270) days and unreasonably interferes with Tenant’s use of the Premises or the Common Area, then Tenant shall have the right to terminate the Lease, Landlord and Tenant understand and agree that the provisions of this Paragraph 21 are intended to govern fully the rights and obligations of the parties in the event of a Taking of all or any portion of the Premises. Accordingly, the parties each hereby waives any right to terminate this Lease in whole or in part under Sections 1265.120 and 1265.130 of the California Code of Civil Procedure or under any similar Law now or hereafter in effect.

     22. SALE BY LANDLORD. If Landlord sells or otherwise conveys its interest in the Premises, Landlord shall be relieved of its obligations under the Lease from and after the date of sale or conveyance (including the obligations of Landlord under Paragraph 40), only when the successor assumes in writing the obligations to be performed by Landlord on and after the effective date of the transfer, whereupon Tenant shall attorn to such successor.

     23. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement of Monthly Base Rent or Additional Charges. If Tenant shall default in the payment of any sum of money, other than Monthly Base Rent or Additional Charges, required to be paid by it hereunder or shall fail to perform any other act on its part to be performed hereunder (including, without limitation, Tenant’s obligation to maintain and repair the Premises and Building Systems pursuant to Paragraph 7(b)), and either (i) such failure continues, and Tenant does not commence cure of such failure, for ten (10) days after notice thereof by Landlord as provided in Paragraph 19(a) (except in the event of emergency, when no cure period shall be required but Landlord shall make reasonable good faith efforts to notify Tenant prior to commencing such emergency cure), or (ii) having commenced such cure Tenant does not diligently prosecute the curing thereof, or (iii) if Landlord is, in Landlord’s reasonable business judgment, in a better position to accomplish such cure or can accomplish such cure in a more efficient or cost-effective manner than Tenant, or (iv) if a default under any Mortgage is, in Landlord’s reasonable judgment, likely to occur due to Tenant’s failure to cure such failure in a timely manner, then in any such situation Landlord may, but shall not be obligated so to do, and without waiving or releasing Tenant from any obligations of Tenant, make any such payment or perform any such act on Tenant’s part to be made or performed as provided in this Lease. All sums so paid and costs so incurred by Landlord, together with interest thereon at the Default Rate

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from the date Landlord makes such payment or incurs such cost, shall be payable as Additional Charges to Landlord within thirty (30) days after receipt by Tenant of a bill or statement therefor.

     24. SURRENDER OF PREMISES.

          (a) At the end of the Terra or any renewal thereof or other sooner termination of this Lease, Tenant will peaceably deliver to Landlord possession of the Premises, together with all improvements or additions upon or belonging to Landlord, by whomsoever made, in substantially the same condition as received, or first installed, subject to the terms of Paragraphs 6, 21 and 40, subject to normal wear and tear and the rights and obligations of Tenant concerning casualty damage pursuant to Paragraph 20. Tenant may, upon the termination of this Lease, remove all movable furniture and equipment belonging to Tenant, at Tenant’s sole cost, provided that Tenant repairs any damage caused by such removal. Property not so removed by the Expiration Date (or in the event of an earlier termination, within five (5) days of such earlier termination date) shall be deemed abandoned by Tenant and title to the same shall thereupon pass to Landlord. Upon such expiration or sooner termination of the Term, Tenant shall upon demand by Landlord, at Landlord’s election either (i) at Tenant’s sole cost and expense, forthwith and with all due diligence remove any Alterations made by or for the account of Tenant, designated by Landlord to be removed (provided, however, that upon the written request of Tenant prior to installation of such Alterations, Landlord shall advise Tenant at that time whether or not such Alterations must be removed upon the expiration or sooner termination of this Lease), and restore the Premises to its original condition as of the Delivery Date, subject to the foregoing; or (ii) pay Landlord the reasonable estimated cost thereof.

          (b) The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subleases or subtenancies, or may, at the option of Landlord, operate as an assignment to it of any or all such subleases or subtenancies.

     25. WAIVER. If either Landlord or Tenant waives the performance of any term, covenant or condition contained in this Lease, such waiver shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein. Furthermore, the acceptance of Rent or Additional Charges by Landlord shall not constitute a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, regardless of Landlord’s knowledge of such preceding breach at the time Landlord accepted such Monthly Base Rent or Additional Charges. Failure by Landlord to enforce any of the terms, covenants or conditions of this Lease for any length of time shall not be deemed to waive or to decrease the right of Landlord to insist thereafter upon strict performance by Tenant. Waiver by Landlord of any term, covenant or condition contained in this Lease may only be made by a written document signed by Landlord.

     26. NOTICES. Except as otherwise expressly provided in this Lease, any bills, statements, notices, demands, requests or other communications given or required to be given under this Lease shall be effective only if rendered or given in writing, sent by certified mail, return receipt requested, reputable overnight carrier, or delivered personally, (i) to Tenant (A) at Tenant’s address set forth in the Basic Lease Information, if sent prior to Tenant’s taking possession of the Premises, or (B) at the Premises if sent subsequent to Tenant’s taking possession of the Premises, or (C) at any place where Tenant may be found if sent subsequent to Tenant’s vacating, deserting, abandoning or surrendering the Premises; or (ii) to Landlord at Landlord’s address set forth in the Basic Lease Information; or (iii) to such other address as either Landlord or Tenant may designate as its new address for such purpose by notice given to the other in accordance with the provisions of this Paragraph 26. Any such bill, statement, notice, demand, request or other communication shall be deemed to have been rendered or given on the date the return receipt indicates delivery of or refusal of delivery if sent by certified mail, the day upon which recipient accepts and signs for delivery from a reputable overnight carrier, or on the date a reputable overnight earner indicates refusal of delivery, or upon the date personal delivery is made. If Tenant is notified in writing of the identity and address of any Mortgagee or ground or underlying lessor, Tenant shall give to such Mortgagee or ground or underlying lessor notice of any Default by Landlord under the terms of this Lease in writing sent by registered or certified mail, and such Mortgagee or ground or underlying lessor shall be given the opportunity to cure such Default (as defined in Paragraph 19(a)) prior to Tenant exercising any remedy available to it.

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     27. TAXES PAYABLE BY TENANT. Prior to delinquency Tenant shall pay all taxes levied or assessed upon Tenant’s equipment, furniture, fixtures and other personal property located in or about the Premises. If the assessed value of Landlord’s property is increased by the inclusion therein of a value placed upon Tenant’s equipment, furniture, fixtures or other personal property, Tenant shall pay to Landlord, upon written demand, the taxes so levied against Landlord, or the proportion thereof resulting from said increase in assessment.

     28. ABANDONMENT. Tenant shall not abandon the Premises and cease performing its financial and maintenance obligations under this Lease at any time during the Term, and if Tenant shall abandon and cease performing its financial and maintenance obligations under this Lease, or surrender the Premises or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and left on the Premises shall, at the option of Landlord, be deemed to be abandoned and title thereto shall thereupon pass to Landlord. Notwithstanding anything to the contrary contained herein, Tenant shall not be allowed to vacate the Premises for any period of time unless either (a) such vacation would not result in a termination of, limitation on, or other adverse effect on, Landlord’s insurance policies, or (b) Tenant pays the incremental premium costs, and assumes responsibility for any increased deductible amounts, to the extent required to cause Landlord’s insurance policies to not be terminated, limited or adversely affected as a result of such vacation. For purposes of this Paragraph 28, the Tenant shall not be deemed to have abandoned the Premises solely because the Tenant is not occupying the Premises.

     29. SUCCESSORS AND ASSIGNS. Subject to the provisions of Paragraph 9, the terms, covenants and conditions contained herein shall be binding upon and inure to the benefit of the parties hereto and their respective legal and personal representatives, successors and assigns.

     30. ATTORNEY’S FEES. If Tenant or Landlord brings any action for any relief against the other, declaratory or otherwise, arising out of this Lease, including any suit by Landlord for the recovery of Rent or possession of the Premises, the losing party shall pay to the prevailing party a reasonable sum for attorney’s fees and costs, which shall be deemed to have accrued on the commencement of such action and shall be paid whether or not the action is prosecuted to judgment.

     31. LIGHT AND AIR. Tenant covenants and agrees that no diminution of light, air or view by any structure which may hereafter be lawfully erected (whether or not by Landlord) shall entitle Tenant to any reduction of rent under this Lease, result in any liability of Landlord to Tenant, or in any other way affect this Lease or Tenant’s obligations hereunder. Landlord has informed Tenant that it has no intention of constructing additional facilities at the Project except those facilities needed to service the Project.

     32. SECURITY DEPOSIT. Concurrently with execution hereof, Tenant has paid to Landlord the Security Deposit specified in the Basic Lease Information as security for the full and faithful performance of Tenant’s obligations under this Lease. If a default occurs under this Lease, or if Tenant is the subject of an Insolvency Proceeding, Landlord may use the Security Deposit to remedy any such default and to compensate Landlord for damages incurred. If Landlord uses any portion of the Security Deposit to cure any default by Tenant hereunder, Tenant shall deposit additional cash with Landlord in an amount equal to restore the Security Deposit to its original amount within ten (10) days of notice from Landlord; and Tenant’s failure to do so shall become be a material breach of this Lease. Landlord shall hold the Security Deposit for the foregoing purposes; provided, however, that Landlord shall have no obligation to segregate the Security Deposit from its general funds or to pay interest thereon. Within sixty (60) days after the expiration of the Term or earlier termination, the Security Deposit shall be returned to Tenant, reduced by those amounts that may be required by Landlord to remedy defaults on the part of Tenant in the payment of Rent, to repair damages to the Premises caused by Tenant and to clean the Premises. If Landlord conveys or transfers its interest in the Leased Premises, and as a part of such conveyance or transfer, assigns its interest in this Lease and Security Deposit, or any portion thereof not previously applied, the Security Deposit shall be transferred to Landlord’s successor and Landlord shall be released and discharged from any further liability to Tenant with respect to such Security Deposit. In no event shall any mortgagee or beneficiary under a mortgage or deed of trust encumbering all or any portion of the Project, or any purchaser of all or any portion of the Project at a public or private foreclosure sale under such mortgage or deed of trust, have any liability or obligation whatsoever to Tenant or Tenant’s successors or assigns for the return of all or any pan of the Security Deposit in the event any such mortgagee, beneficiary or purchaser becomes a mortgagee in possession or succeeds

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to the interest of Landlord under this Lease unless, and then only to the extent that, such mortgagee, beneficiary or purchaser has received all or any part of the Security Deposit.

     33. CORPORATE AUTHORITY; FINANCIAL INFORMATION. If Tenant signs as a corporation each of the persons executing this Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly authorized and existing corporation, that Tenant has and is qualified to do business in California, that the corporation has full right and authority to enter into this Lease, and that each and both of the persons signing on behalf of the corporation were authorized to do so . If Tenant signs as a partnership or limited liability company, each of the persons executing this Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly authorized and existing partnership or limited liability company, as applicable, that Tenant has and is qualified to do business in California, that Tenant has full right and authority to enter into this Lease, and that each and both of the persons signing on behalf of the Tenant were authorized to do so and by their signatures bind the Tenant. Upon Landlord’s request, Tenant shall provide Landlord with evidence reasonably satisfactory to Landlord confirming the foregoing covenants and warranties. Upon Landlord’s request, Tenant shall provide Landlord with evidence reasonably satisfactory to Landlord confirming the foregoing covenants and warranties. Tenant hereby further covenants and warrants to Landlord that all financial information and other descriptive information regarding Tenant’s business, which has been or shall be furnished to Landlord, is and shall be accurate and complete at the time of delivery to Landlord. If Landlord signs as a corporation each of the persons executing this Lease on behalf of Landlord does hereby covenant and warrant that Landlord is a duly authorized and existing corporation, that Landlord has and is qualified to do business in California, that the corporation has full right and authority to enter into this Lease, and that each and both of the persons signing on behalf of the corporation were authorized to do so. Upon Tenant’s request, Landlord shall provide Tenant with evidence reasonably satisfactory to Tenant confirming the foregoing covenants and warranties.

     34. PARKING. Tenant shall have the right to use, and Landlord shall maintain for use by Tenant pursuant to the provisions of Paragraph 7, all of the parking spaces located on the Project. Landlord agrees that so long as not required by an applicable governmental entity, there shall be no additional Monthly Base Rent charged for parking (not to be confused with the Expenses charged pursuant to Paragraph 3).

     35. MISCELLANEOUS.

          (a) The term “Premises” wherever it appears herein includes and shall be deemed or taken to include (except where such meaning would be clearly repugnant to the context) the office space demised and improvements now or at any time hereafter comprising or built in the space hereby demised. The paragraph headings herein are for convenience of reference and shall in no way define, increase, limit or describe the scope or intent of any provision of this Lease. The term “Landlord” shall include Landlord and its successors and assigns. In any case where this Lease is signed by more than one person, the obligations hereunder shall be joint and several. The term “Tenant” or any pronoun used in place thereof shall indicate and include the masculine or feminine, the singular or plural number, individuals, firms or corporations, and their and each of their respective successors, executors, administrators, and permitted assigns, according to the context hereof.

          (b) Time is of the essence of this Lease and all of its provisions. This Lease shall in all respects be governed by the laws of the State of California. This Lease, together with its exhibits, contains all the agreements of the parties hereto and supersedes any previous negotiations. There have been no representations made by the Landlord or Tenant or understandings made between the parties other than those set forth in this Lease and its exhibits. This Lease may not be modified except by a written instrument by the parties hereto.

          (c) If for any reason whatsoever any of the provisions hereof shall be unenforceable or ineffective, all of the other provisions shall be and remain in full force and effect.

          (d) Upon Tenant paying the Monthly Base Rent and Additional Charges and performing all of Tenant’s obligations under this Lease, Tenant shall have quiet and peaceful enjoyment of the Premises during the Term as against all persons or entities lawfully claiming by, through or under Landlord; subject, however, to the provisions of this Lease.

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     36. TENANT’S REMEDIES. If any default hereunder by Landlord is not cured within the applicable cure period provided in Paragraph
19(b) (including any Mortgagee’s additional cure period), Tenant’s exclusive remedies shall be (i) an action for specific performance, or (ii) an action for actual damages. Tenant shall look solely to Landlord’s interest in the Project for the recovery of any judgment from Landlord. Landlord, or if Landlord is a partnership its partners whether general or limited, or if Landlord is a corporation its directors, officers or shareholders, or if Landlord is a limited liability company its members or managers, shall never be personally liable for any such judgment. Any lien obtained to enforce such judgment and any levy of execution thereon shall be subject and subordinate to any Mortgage (excluding any Mortgage which was created as part of an effort to defraud creditors, i.e., a fraudulent conveyance); provided, however that any such judgement and any such levy of execution thereon shall not be subject or subordinated to any Mortgage that is created or recorded in the official records of the county in which the Project is located after the date of the judgement giving rise to such lien. Landlord’s interest in the Project shall include any insurance proceeds received by Landlord which are not controlled by any Mortgagee or other lender. Tenant hereby waives the benefit of any Laws granting it (A) the right to perform Landlord’s obligations, or (B) the right to terminate this Lease or withhold Rent on account of any Landlord default, including, without limitation, Sections 1932(1), 1941 and 1942 of the California Civil Code.

     37. REAL ESTATE BROKERS. Each party represents that it has not had dealings with any real estate broker, finder or other person with respect to this Lease in any manner, except for any broker named in the Basic Lease Information, whose fees or commission, if earned, shall be paid as provided in the Basic Lease Information. Each party shall hold harmless the other party from all damages resulting from any claims that may be asserted against the other party by any other broker, finder or other person with whom the other party has or purportedly has dealt.

     38. LEASE EFFECTIVE DATE. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or option for lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant.

     39. SIGNAGE. Tenant shall be allowed to use a monument sign near the Project’s entrance, and to install exterior signage and signage in the lobby of the Building, subject to this Paragraph 39. Tenant shall be responsible for the costs related to such signage. Such signage shall be subject to approval from Landlord of the exact number, size, location and materials therefor (which consent shall not be unreasonably withheld), approval from the City of Sunnyvale and compliance with applicable governmental restrictions, including but not limited to ordinances of the City of Sunnyvale.

     40. HAZARDOUS SUBSTANCE LIABILITY. Tenant has received from Landlord a copy of the Phase I Environmental Assessment of Two Office Buildings located at 1322 Crossman Avenue and 1341 Orleans Drive, Sunnyvale, California, dated August 7, 1997, prepared by McLaren Han (the “Environmental Report”).

          (a) Definition of Hazardous Substances. For the purpose of this Lease, “Hazardous Substances” shall be defined, collectively, as oil, flammable explosives, asbestos, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under applicable environmental laws, ordinance or regulation.

          (b) Tenant Indemnity. Tenant releases Landlord from any liability for, waives all claims against Landlord and shall indemnify, defend and hold harmless Landlord, its employees, partners, agents, subsidiaries and affiliate organizations against any and all claims, suits, loss, costs (including costs of investigation, clean up, monitoring, restoration and reasonably attorney fees), damage or liability, whether foreseeable or unforeseeable, by reason of property damage (including diminution in the value of the property of Landlord), personal injury or death directly arising from or related to Hazardous Substances released, manufactured, discharged, disposed, used or stored on, in, or under the Project or Premises during the Term by any Tenant Parties. The provisions of this Tenant Indemnity regarding Hazardous Substances shall survive the termination of the Lease.

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          (c) Landlord Indemnity. Landlord releases Tenant from any liability for, waives all claims against Tenant and shall indemnify, defend and hold harmless Tenant, its officers, employees, and agents to the extent of Landlord’s interest in the Project, against any and all actions by any governmental agency for clean up of Hazardous Substances on or under the Project, including costs of legal proceedings, investigation, clean up, monitoring, and restoration, including reasonable attorney fees, if, and to the extent, arising from the presence of Hazardous Substances on, in or under the Project or Premises as of the date of this Lease. The provisions of this Landlord Indemnity regarding Hazardous Substances shall survive the termination of the Lease.

Tenant’s use of Hazardous Substances beyond very immaterial amounts of toxic materials incidental to its office use (e.g., copier toner) shall be subject to Landlord’s prior written approval and shall comply with any applicable laws.

     41. SATELLITE ANTENNAE. During the Term of this Lease, Tenant shall have the right, subject to relevant regulatory approvals and Landlord’s consent (with Landlord’s consent not to be unreasonably withheld, conditioned or delayed), to install satellite antennae (“Antennae”) on the roof of the Building in a location satisfactory to both Landlord and Tenant. Without otherwise limiting the criteria upon which Landlord may withhold its consent to any proposed Antennae, if Landlord withholds its consent due to concerns regarding the appearance of the Antennae or the impact on structural aspects of the Building, such withholding of consent shall be presumptively reasonable. Tenant shall not be charged additional rent for roof space. Prior to submitting any plans to the City of Sunnyvale or proceeding with any installation of the Antennae. Tenant shall submit to Landlord elevations and specifications for the Antennae. Tenant shall install the Antennae at its sole expense and shall be responsible for any damage caused by the installation of the Antennae or related to the Antennae. At the end of the Term, Tenant shall remove the Antennae from their locations and repair any damage caused by such removal.

     42. OPTION TO RENEW. Upon condition that (i) no Default is continuing under this Lease at the time of exercise or at the commencement of the option term, and (ii) Tenant continues to physically occupy the entire Premises, then Tenant shall have the right to extend the Term for two (2) periods of five (5) years each (each, an “Extension Term”) following the initial Expiration Date or the Expiration Date as extended by the first Extension Term, as applicable, by giving written notice (“Exercise Notice”) to Landlord at least eighteen (18) months prior to the Expiration of the immediately preceding Term.

     43. RENT DURING EXTENSION TERM. The initial Monthly Base Rent (subject to Paragraph 3(b)) during each five (5) year Extension Term shall be the greater of the Base Rent paid during the last month of the immediately preceding Term or the Fair Market Rental Value for the Premises as of the commencement of the option term, as determined below:

          (a) Within thirty (30) days after receipt of Tenant’s Exercise Notice, Landlord shall notify Tenant of Landlord’s estimate of the Fair Market Rental Value for the Premises, as determined below, for determining Monthly Base Rent during the ensuing Extension Term; provided, however, if Tenant’s Exercise Notice is given more than eighteen (18) months before the Expiration Date, Landlord’s estimate of Fair Market Rental Value may, but need not be given more than eighteen (18) months before the Expiration Date. Within fifteen (15) days after receipt of such notice from Landlord, Tenant shall notify Landlord in writing that it (i) agrees with such rental rate or (ii) disagrees with such rental rate. No response shall constitute agreement. In the event that Tenant disagrees with Landlord’s estimate of Fair Market Rental Value for the Premises, then the parties shall meet and endeavor to agree within fifteen (15) days after Landlord receives Tenant’s notice described in the immediately preceding sentence. If the parties cannot agree upon the Fair Market Rental Value within said fifteen (15) day period, then the parties shall submit the matter to binding appraisal in accordance with the following procedure except that in any event neither party shall be obligated to start such procedure sooner than eighteen (18) months before the expiration of the Lease Term. Within fifteen (15) days of the conclusion of the period during which the two parties fail to agree (but not sooner than eighteen (18) months before the expiration of the Lease Term), the parties shall either (i) jointly appoint an appraiser for this purpose or (ii) failing this joint action, each separately designate a disinterested appraiser. No person shall be appointed or designated an appraiser unless such person has at least five (5) years experience in appraising major commercial property in Santa Clara County and is a member of a recognized society of real estate appraisers. If within thirty (30) days after the appointment, the two appraisers reach agreement on the Fair Market Rental Value for the Premises, that value shall be binding and conclusive upon

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the parties. If the two appraisers thus appointed cannot reach agreement on the Fair Market Rental Value for the Premises within thirty (30) days after their appointment, then the appraisers thus appointed shall appoint a third disinterested appraiser having like qualifications within five (5) days. If within thirty (30) days after the appointment of the third appraiser a majority of the appraisers agree on the Fair Market Rental Value of the Premises, that value shall be binding and conclusive upon the parties. If within thirty (30) days after the appointment of the third appraiser a majority of the appraisers cannot reach agreement on the Fair Market Rental Value for the Premises, then the three appraisers shall each simultaneously submit their independent appraisal to the parties, the appraisal farthest from the median of the three appraisals shall be disregarded, and the mean average of the remaining two appraisals shall be deemed to be the Fair Market Rental Value for the Premises and shall be binding and conclusive upon the parties. Each party shall pay the fees and expenses of the appraiser appointed by it and shall share equally the fees and expenses of the third appraiser. If the two appraisers appointed by the parties cannot agree on the appointment of the third appraiser, they or either of them shall give notice of such failure to agree to the parties and if the parties fail to agree upon the selection of such third appraiser within ten (10) days after the appraisers appointed by the parties give such notice, then either of the parties, upon notice to the other party, may request such appointment by the American Arbitration Association or, on it failure, refusal or inability to act, may apply for such appointment to the presiding judge of the Superior Court of Santa Clara County, California.

          (b) Wherever used throughout this paragraph (Rent during Extension Term) the term “Fair Market Rental Value” shall mean the fair market rental value of the Premises, using as a guide the rate of monthly base rent which would be charged during the Extension Term in the City of Sunnyvale and adjacent cities for comparable high image. Class A office space in comparable condition, of comparable quality, as of the time that the Extension Term commences, with appropriate adjustments regarding taxes, insurance and operating expenses as necessary to insure comparability to this Lease, as the case may be, and also taking into consideration amount and type of parking, location, the existence of any leasehold improvements (regardless of who paid for them and with the assumption, for purposes of determining the Fair Market Rental Value, that they are fully usable by Tenant), proposed term of lease, amount of space leased, extent of service provided or to be provided, and any other relevant terms or conditions (including consideration of whether or not the monthly base rent is fixed).

          (c) In the event of a failure, refusal or inability of any appraiser to act, his successor shall be appointed by the party who originally appointed him, but in the case of the third appraiser, his successor shall be appointed in the same manner as provided for appointment of the third appraiser.

          (d) The appraisers shall render their appraisals in writing with counterpart copies to Landlord and Tenant. The appraisers shall have no power to modify the provisions of this Lease.

          (e) To the extent that a binding appraisal has not been completed prior to the expiration of any preceding period for which Monthly Base Rent has been determined, Tenant shall pay Monthly Base Rent at the rate estimated by Landlord, with an adjustment to be made once Fair Market Rental Value is ultimately determined by binding appraisal. In no event shall any such adjustment result in a decrease of the Monthly Base Rent for the Premises below the amount payable by Tenant as of the period immediately preceding the ensuing Extension Term.

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          (f) From and after the commencement of the Extension Term, all of the other terms, covenants and conditions of the Lease shall also apply; provided, however, that during the second Extension Term Tenant shall have no further rights to extend the Term.

     IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first above written.

LANDLORD: CARIBBEAN/GENEVA INVESTORS, a California Limited Partnership
By:	/s/ John Mozart
	John Mozart, Trustee of the Mozart
	Family Trust dated September 8, 1977 Its: General Partner
By:	/s/ John Lovewell
	John Lovewell
	Its: General Partner
GROSSMAN PARTNERS, L.P., a California Limited Partnership
By:	/s/ John Mozart
	John Mozart, Trustee of the Mozart
	Family Trust dated September 8, 1977 Its: General Partner
TENANT: HARMONIC, INC., a Delaware corporation
By:	/s/ Robin N. Dickson
	Robin N. Dickson
	Its: Chief Financial Officer

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EXHIBIT “A”

PREMISES

[See attached Site Plan]

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EXHIBIT “B”

LEGAL DESCRIPTION OF THE LAND

REAL PROPERTY in the City of Sunnyvale, County of Santa Clara, State of California, described as follows:

Parcel 6, as shown on that certain Map entitled which was filed for record in the Office of the Recorder of the County of Santa Clara, State of California on July 18, 1978 in Book 423 of Maps, page(s) 13.

APN: 110-36-003
ARB: 10-04-23.02.02 (23.02, 23)

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EXHIBIT “C”

DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS

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     2. So long as Tenant is not in default (beyond any period given Tenant to cure such default) in the payment of rent or additional rent or in the performance of any material term, covenant or condition of the Lease on Tenant’s part to the performed, (a) Tenant’s possession of the Demised Premises and Tenant’s rights and privileges under the Lease, or any extensions or renewals thereof or acquisition of additional space which may be effected in accordance with any option therefor in the Lease, shall not be diminished or interfered with by Mortgagee in the exercise of any of its rights under the Mortgage, and (b) Mortgagee will not join Tenant as a party defendant in any action or proceeding for the purposes of terminating Tenant’s interest and estate under the Lease because of any default under the Mortgage, however Mortgagee may join Tenant as a party defendant in any action or proceeding to enforce the Mortgage or any other instrument given as security for the loan to Landlord, if such is done only for purposes of procedure and required completeness and not for the purposes of canceling the Lease or Tenant’s rights under such Lease.

     3. In the event any proceedings are brought for the foreclosure of the Mortgage, or if the Mortgaged Property be sold pursuant to a trustee’s sale under the Mortgage or if the Mortgagee becomes owner of the Mortgaged Property by acceptance of a deed or assignment in lieu of foreclosure or otherwise, Tenant shall attorn to the purchaser or Mortgagee, as the case may be, upon any such foreclosure sale or trustee’s sale or acceptance by Mortgagee of a deed or assignment in lieu of foreclosure and Tenant shall recognize such purchaser or Mortgagee, as the case may be, as the landlord under the Lease. Such attornment shall be effective and self-operative without the execution of any further instrument on the part of any of the parties hereto. Tenant agrees, however, to execute and deliver at any time and from time to time, upon the request of Landlord or of any holder(s) of any of the indebtedness or other obligations secured by the Mortgage or any such purchaser, any instrument or certificate which, in the reasonable judgment of Landlord or of such holder(s) or such purchaser, may be necessary or appropriate in any such foreclosure proceeding or otherwise to evidence such attornment.

     4. If Mortgagee shall succeed to the interest of Landlord under the Lease in any manner, or if any purchaser acquires the Demised Premises upon any foreclosure of the Mortgage or any trustee’s sale under the Mortgage, Mortgagee or such purchaser, as the case may be, in the event of attornment shall have the same remedies by entry, action or otherwise in the event of any default by Tenant (beyond any period given Tenant to cure such default) in the payment of rent or additional rent or in the performance of any of the terms, covenants and conditions of the Lease on Tenant’s part to be performed that Landlord had or would have had if Mortgagee or such purchaser had not succeeded to the interest of Landlord. From and after any such attornment, Mortgagee or such purchaser shall be bound to Tenant under all the terms, covenants, and conditions of the Lease, and Tenant shall, from and after the succession to the interest of Landlord under the Lease by Mortgagee or such purchaser, have the same remedies against Mortgagee or such purchaser for the breach of an agreement contained in the Lease that Tenant might have had under the Lease against Landlord if Mortgagee or such purchaser had not succeeded to the interest of Landlord; provided, however, the Mortgagee or such purchaser shall not be:

          (a) liable for any act or omission of any prior landlord (including Landlord); or

          (b) subject to any offsets or defenses which Tenant might have against any prior landlord (including Landlord); or

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          (c) bound by any rent or additional rent which Tenant might have paid for more than the current month to any prior landlord (including Landlord).

     5. Nothing herein contained is intended, nor shall it be construed, to abridge or adversely affect any right or remedy of Landlord under the Lease in the event of any default by Tenant (beyond any period given Tenant to cure such default) in the payment of rent or additional rent or in the performance of any of the terms, covenants or conditions of the Lease on Tenant’s part to be performed.

     6. This Agreement and the Lease may not be amended or modified orally or in any manner other than by an agreement in writing signed by the parties hereto or their respective successors in interest. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their successors and assigns, and any purchaser or purchasers at foreclosure of the Mortgaged Property, and their respective heirs, personal representatives, successors and assigns.

     7. To the extent that the Lease shall entitle the Tenant to notice of any mortgage, and/or the address of the Mortgagee, this Agreement shall constitute such notice to the Tenant with respect to the Mortgage and to the address of the Mortgagee.

     IN WITNESS WHEREOF, the parties hereto have hereunto caused this Agreement to be duly executed as of the day and year first above written.

TENANT: NAME
By:
	Name:
	Title:
MORTGAGEE: GENERAL AMERICAN LIFE INSURANCE COMPANY
By:
	Title:       Vice President/Authorized Representative
	Address: 700 Market Street                 St. Louis, Missouri 63101

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EX-21.1

Exhibit 21.1

SUBSIDIARIES OF ARUBA NETWORKS, INC.

	Jurisdiction of
Name	Incorporation/Organization
Aruba Wireless Networks Japan KK	Japan
Aruba (Europe) Ltd.	United Kingdom
Aruba Wireless Networks India Private Limited	Bangalore, India
Aruba Wireless Networks Singapore Private Limited	Singapore

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form S-1 of our report dated December 13, 2006 relating to the financial statements and financial statement schedule of Aruba Networks, Inc., which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP
San Jose, California
December 13, 2006