Exhibit 10.7


 


ACME
PACKET, INC.


 


RESTRICTED
STOCK UNIT AGREEMENT


(Form of Restricted Stock
Unit Agreement for the 2006 Equity Incentive Plan for Executive Officers)


 


This RESTRICTED STOCK UNIT AGREEMENT, dated
as of <date> (this “Agreement”), is between ACME PACKET, INC., a
Delaware corporation (the “Company”), and <Grantee Name> (the “Grantee”).
Capitalized terms used herein without definition shall have the meaning
ascribed to such terms in the Company’s 2006 Equity Incentive Plan, a copy of
which is attached hereto as Exhibit A (the “Plan”).


 


1.             Grant  of  Restricted  Stock
Unit  Award. Pursuant to the Plan, the Company grants to the
Grantee a total of <Number of Units> Restricted Stock Units (the “Units”),
subject to adjustment pursuant to Section 8 of the Plan. Subject to, and
in accordance with, the provisions of Section 2 below, each Unit entitles
Grantee to receive from the Company one (1) share of Common Stock in
accordance with the terms of this Agreement and the Plan. This Award is granted
as of <Date of Grant> (the “Grant  Date”). As used here in,
the term “Vesting Start Date” shall mean <Vesting Start Date>.


 


2.             Settlement of Units.


 


(a)           Continued Employment Units. With
respect to [        ] of the Units (the
“Continued  Employment  Units”), on the fifth business day
after the day on which any Continued Employment Units are no longer subject to
risk of forfeiture pursuant to, and in accordance with, Section 3(a) below,
the Company shall deliver or cause to be delivered to Grantee a stock
certificate registered in the name of Grantee in respect of the shares of
Common Stock subject to such Continued Employment Units.


 


(b)           Performance Units. With respect to
[        ] of the Units (the “Performance
Units”), on the fifth business day after the day on which the
Performance Units are no longer subject to risk of forfeiture pursuant to, and
in accordance with, Section 3(b) below, the Company shall deliver or
cause to be delivered to Grantee a stock certificate registered in the name of
Grantee in respect of the shares of Common Stock subject to the Performance
Units.


 


(c)           Other Lapse or Termination of Risk of
Forfeiture. With respect to any Units, whether Continued Employment Units
or Performance Units, that remain subject to risk of forfeiture under Section 3(a) or
Section 3(b), as applicable, on the fifth business day after the day on
which such risk of forfeiture shall have lapsed or terminated pursuant to, and
in accordance with, the provisions of Section 4 below, the Company shall
deliver or cause to be delivered to Grantee a stock certificate registered in
the name of Grantee in respect of the shares of Common Stock subject to those
Units in respect of which such risk of forfeiture shall have so lapsed or
terminated.


 

















 


(d)           Effect of Settlement. Upon delivery
of a stock certificate to the Grantee pursuant to the provisions of this Section 2,
the corresponding portion of the Units being settled shall be satisfied in full
and Grantee shall have not further rights with respect thereto.


 


3.             Forfeiture; Lapse  of  Risk
of  Forfeiture.


 


(a)           Continued Employment Units. Subject
to the other provisions of this Section 3(a) and to the provisions of
Section 4 below, the Continued Employment Units shall be forfeited
(without any settlement thereof pursuant to Section 2(a) above) if
the Grantee’s association with the Company or any of its Affiliates as an
employee, director or consultant ends for any reason or no reason, regardless
of whether the end of such association is effected by the Company, any such
Affiliate or the Grantee (whether voluntarily or involuntarily, including
because an entity with which the Grantee has any such association ceases to be
an Affiliate of the Company), and immediately following the end of any such
association, the Grantee is not associated with the Company or any of its
Affiliates as an employee, director or consultant, or if the Grantee dies; provided,
however, that military or sick leave or other bona fide leave shall not
be deemed a termination of employment, if it does not exceed the longer of
ninety (90) days or the period during which the absent original grantee’s
reemployment rights, if any, are guaranteed by statute or by contract. Notwithstanding
the foregoing provisions of this Section 3(a) to the contrary, [(i) 33%
of the Continued Employment Units shall no longer be subject to forfeiture or
risk of forfeiture pursuant to this Section 3(a) on the first
anniversary of the Vesting Start Date; (ii) an additional 33% of the
Continued Employment Units shall no longer be subject to forfeiture or risk of
forfeiture pursuant to this Section 3(a) on the second anniversary of
the Vesting Start Date; and (iii) the balance of the Continued Employment
Units shall no longer be subject to forfeiture or risk of forfeiture pursuant
to this Section 3(a) on the third anniversary of the Vesting Start
Date](1); provided, however, that the foregoing provisions of
this sentence shall only operate to release Continued Employment Units from
risk of forfeiture under this Section 3(a) until and including the
date that the Grantee has no association with the Company or any of its
Affiliates as an employee, director or consultant.


 


(b)           [Performance Units. Subject to the
provisions of Section 4 below, the Performance Units shall be forfeited
(without any settlement thereof pursuant to Section 2(a) above) on
the Performance Units Forfeiture Date (as defined below) unless (x) on or
prior to the Performance Units Forfeiture Date the Board of Directors of the
Company (the “Board”) or the Compensation Committee of the Board (the “Compensation
Committee”) has made a determination that the compounded annual growth
rate of the Company’s net revenue for the two year period beginning on January 1,
2008 and ending on December 31, 2009 is equal to or greater than 28% (such
compounded annual growth rate being hereinafter referred to as the “Performance
Target”) and (y) the Grantee has continued to be associated with
the Company or any of its Affiliates as an employee, director or consultant
during the period commencing on January 1, 2008 and ending on the
Performance Units Forfeiture Date. For purposes of this Section 3(b), the
term “Performance  Units  Forfeiture  Date” shall mean
the earlier to occur of (i) March 1, 2010, (ii) the date in
calendar year 2010 that the Board or the Compensation


 






(1) The specific vesting schedule of each Award under the Plan is
determined at the discretion of the Board or the Compensation Committee on a
case-by-case basis at the time of grant.


 


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Committee makes a determination as to whether or not the Performance
Target has been achieved and (iii) the date the Grantee is no longer
associated with the Company or any of its Affiliates as an employee, director
or consultant. At any time during the period commencing on January 1, 2010
and ending on March 1, 2010, the Board or the Compensation Committee shall
make a determination as to whether or not the Performance Target has been
achieved.](2)


 


4.             Acceleration  or  Other
Termination  of  Risk  of  Forfeiture.


 


(a)           Upon Election by the Board or the
Compensation Committee. Notwithstanding anything in Section 3(a) or
Section 3(b) above to the contrary, the Board or the Compensation
Committee may, at any time and in its discretion in accordance with the
provisions of Section 7.3(a) of the Plan, cause any or all Units that
remain subject to a risk of forfeiture under Section 3(a) or Section 3(b) hereof,
as applicable, to cease to be subject to such risk of forfeiture.


 


(b)           Upon Termination of Employment Following
a Change of Control. Notwithstanding anything in Section 3(a) or Section 3(b) above
to the contrary but subject to the provisions of Section 4(c) below,
in the event that (i) a Change of Control occurs prior to the time that
all of the Continued Employment Units and all of the Performance Units shall no
longer be subject to any risk of forfeiture under Section 3(a) or Section 3(b),
as applicable, (ii) the Grantee is an employee of the Company or any of
its Affiliates immediately prior to such Change of Control,  and (iii)  either (A) the Grantee
voluntarily terminates his employment with the Company and  all of its Affiliates following (x) any material adverse change (without Grantee’s
written consent) in the authorities, duties or responsibilities of Grantee’s
employment with the Company or any of its Affiliates that occurs as a result
of, or after, such Change of Control or (y) any relocation of the
Grantee (without his written consent) by the Company or any of its Affiliates
after such Change of Control to a location that increases Grantee’s commute
prior to such relocation by more than fifty (50) miles or (B) the Company
or any of its Affiliates terminates the Grantee’s employment with the Company
and all of its Affiliates for any reason or no reason (other than Cause, as
such term is defined in Section 4(d) below), in the case of any of
the foregoing clauses (A) or (B) if the applicable termination of
employment occurs at any time within 365 days after the occurrence of such
Change of Control, then fifty percent (50%) of such Continued Employment Units
that are, immediately prior to any such termination of employment by Grantee or
by the Company or any of its Affiliates, still subject to risk of forfeiture
under Section 3(a) and fifty percent (50%) of such Performance Units
that are, immediately prior to any such termination of employment by Grantee or
by the Company or any of its Affiliates, still subject to risk of forfeiture
under Section 3(b) shall, immediately following any such termination
of employment by Grantee or by the Company or any of its Affiliates, no longer
be subject to any risk of forfeiture under Section 3(a) or Section 3(b) above,
as applicable . In the case of those Continued Employment Units that are,
immediately prior to any such termination of employment by Grantee or by the
Company or any of its Affiliates, still subject to risk of


 






(2) All of the dates set forth in this Section 3(b) are
subject to change to reflect the applicable Vesting Start Date of any Award of
Restricted Stock Units under the Plan or to reflect the specific vesting
schedule of the applicable Award of Restricted Stock Units under the Plan. The
Vesting Start Date applicable to any Award of Restricted Stock Units under the
Plan, as well as the specific vesting schedule and/or performance criteria of
such Award, is determined at the discretion of the Committee on a case-by-case
basis at the time of grant.


 


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forfeiture under Section 3(a), the foregoing provisions of this Section 4(b) shall
be implemented ratably across all of such Continued Employment Units regardless
of the date when each of such Continued Employment Units would have otherwise
no longer been subject to risk of forfeiture under Section 3(a) above.


 


(c)           Continuation of Employment by Successor.
If the Grantee is an employee of the Company or any of its Affiliates
immediately prior to a Change of Control, then employment of the Grantee
following such Change of Control by any person or entity that is the successor
or acquiror of the Company as a result of such Change of Control or that is the
parent company or affiliate of such successor or acquiror (in either case, the “Successor
Employer”) shall be treated under this Agreement as if the Grantee
continued to be employed by the Company, and in such context any reference in
this Agreement to the Company shall be deemed to be a reference to the
Successor Employer.


 


(d)           Definition of Cause. For purposes of
this Agreement, the term “Cause” shall mean
(i) if the Grantee is convicted of, or pleads guilty or no contest to, a
felony or any crime involving moral turpitude, deceit, dishonesty or fraud; (ii) any
act of embezzlement, theft, sexual harassment, discrimination, fraud or other
acts of a criminal nature by the Grantee in his dealings with the Company, any
of its Affiliates or any of their respective employees or representatives, as
determined by the Board of Directors of the Company; (iii) the breach by
the Grantee of any material term of an agreement with the Company or any of its
Affiliates, including covenants not to compete and provisions relating to
confidential information and intellectual property rights; or (iv) any
failure by the Grantee to comply with a specific directive given by the Company’s
executive officers or Board of Directors which failure has not been cured
within 30 days after written notice from the Company.


 


5.             Dividends. Grantee shall not be
entitled to receive payments equivalent to any dividends declared with respect
to Common Stock underlying the Units.


 


6.             Transfer  of  Units. Other
than as expressly permitted by the provisions of Section 7.3(e) of
the Plan, the Units may not be transferred except by will or the laws of
descent and distribution and, during the lifetime of the Grantee, may be
exercised only by the Grantee.


 


7.             Tax  Withholding. Pursuant to
Section 9.7 of the Plan, the Company has the right to require the Grantee
to remit to the Company an amount sufficient to satisfy federal, state, local
or other withholding tax requirements if, when, and to the extent required by
law (whether so required to secure for the Company an otherwise available tax
deduction or otherwise) prior to the delivery of any certificate or
certificates for such shares issuable upon settlement of the Units. The obligations
of the Company under this Agreement and the Plan shall be conditional on
satisfaction of all such withholding obligations and the Company shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the recipient of an Award. However,
Grantee may elect to satisfy any applicable withholding requirement, in whole
or in part, by having the Company withhold shares issuable upon settlement of
the Units to satisfy their tax obligations. Grantee may only elect to have
shares of Common Stock withheld having a Market Value on the date the tax is to
be determined equal to the minimum statutory total tax which could be imposed
on the transaction. Any such election


 


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shall be irrevocable, made in writing, signed by the Grantee, and shall
be subject to any restrictions or limitations that the Committee deems
appropriate.


 


8.             Incorporation  of  Plan
Terms. The Units are granted subject to all of the applicable terms and
provisions of the Plan, including, but not limited to, the limitations on the
Company’s obligation to deliver shares of Common Stock upon termination of the
restrictions set forth in Section 9.1 (Violation of Law), Section 9.2
(Corporate Restrictions on Rights in Stock), and Section 9.3 (Investment
Representations).


 


9.             Miscellaneous. This Agreement shall
be construed and enforced in accordance with the internal, substantive laws of
The Commonwealth of Massachusetts and shall be binding upon and inure to the
benefit of any successor or assign of the Company and any executor,
administrator, trustee, guardian, or other legal representative of the Grantee.


 


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IN WITNESS WHEREOF, the parties have executed
this Restricted Stock Unit Agreement as a sealed instrument as of the date
first above written.


 


 


	
  ACME PACKET, INC.

  	
   

  	
  GRANTEE

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Grantee’s Address:

  



 


 


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