Exhibit 10.7


 


ACME
PACKET, INC.


 


RESTRICTED STOCK UNIT AGREEMENT
 (Form of RSU Agreement with Periodic and
Performance Vesting)


 


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 


 






(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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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 15, 2010, (ii) the date in
calendar year 2010 that the Board or the Compensation 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 Affliates 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 


 






(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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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 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


 


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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, in such cases Grantee may elect,
subject to the approval of the Committee, acting in its sole discretion, to
satisfy any applicable withholding requirement, in whole or in part, by having
the Company withhold shares 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.  All elections 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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Exhibit A


 


2006 EQUITY
INCENTIVE PLAN