Document:

Exhibit 10.17

 

Candela
Corporation

 

Executive
Retention Agreement

With

Gerard E. Puorro

 

THIS EXECUTIVE RETENTION
AGREEMENT (this “Agreement”), effective as of November     ,
2007 (the “Effective Date”) is made by and between Candela Corporation,
a Delaware corporation (the “Company”), and Gerard E. Puorro (the “Executive”).

 

WHEREAS, the Company and
the Executive have entered into that certain Amended and Restated Employment
Agreement, which restated agreement became effective on the date hereof  (the “Employment Agreement”);

 

WHEREAS, the Company
recognizes that, as is the case with many publicly-held corporations, the
possibility of a change in control of the Company exists and that such
possibility, and the uncertainty and questions which it may raise among key
personnel, may result in the departure or distraction of key personnel to the
detriment of the Company and its stockholders; and

 

WHEREAS, the Board of
Directors of the Company (the “Board”) has identified key positions
within the Company (“Key Positions”) and determined that appropriate
steps should be taken to reinforce and encourage the continued employment and
dedication of those persons, including the Executive, who hold Key Positions
within the Company without distraction from the possibility of a change in
control of the Company and related events and circumstances;

 

NOW, THEREFORE, as an
inducement for and in consideration of the Executive remaining in its employ,
the Company agrees that notwithstanding any severance provisions contained in the
Employment Agreement, the Executive shall receive the severance benefits set
forth in this Agreement in the event the Executive’s employment with the
Company is terminated under the circumstances described below subsequent to a
Change in Control (as defined in Section 1.1).

 

1                       Key
Definitions.

 

As
used herein, the following terms shall have the following respective meanings:

 

1.1                       “Change in Control” means an event or occurrence set forth in
any one or more of subsections (a) through (d) below (including an
event or occurrence that constitutes a Change in Control under one of such
subsections but is specifically exempted from another such subsection):

 

a)                                      the acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of
beneficial ownership of any capital stock and as to which ownership, such
Person either (i) shall have filed a Form 13D in respect of its or
their holdings with the Securities and Exchange Commission (“SEC”), or (ii) in
the reasonable opinion of the Company, such Person should  have
filed a Form 13D with the SEC in respect of its holdings and its
intentions (and the Executive shall be permitted to request, and the Company
shall promptly furnish, an indication of whether the Board of Directors has
concluded that such Person should have so filed), of the Company if, after such
acquisition, such Person beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act), 30% or more of either (X) the
then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (Y) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (a), the following
acquisitions of beneficial ownership of Outstanding Company Common Stock or
Outstanding Company Voting Securities shall not constitute a Change in 

 

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Control: (1) any acquisition directly from the Company
(excluding an acquisition pursuant to the exercise, conversion or exchange of
any security exercisable for, convertible into or exchangeable for common stock
or voting securities of the Company, unless the Person exercising, converting
or exchanging such security acquired such security directly from the Company or
an underwriter or agent of the Company), (2) any acquisition by the
Company, (3) any acquisition by any
employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (4) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i) and (ii) of
subsection (c) of this Section 1.1; or

 

b)                                     such time as the Continuing Directors (as defined below) do
not constitute a majority of the Board (or, if applicable, the Board of
Directors of a successor corporation to the Company), where the term “Continuing
Director” means at any date a member of the Board (i) who was a member of
the Board on the date of the execution of this Agreement or (ii) who was
nominated or elected subsequent to such date by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall be
excluded from this clause (ii) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Board; or

 

c)                                      the consummation of a merger, consolidation,
reorganization, recapitalization or statutory share exchange involving the
Company or a sale or other disposition of all or substantially all of the
assets of the Company in one or a series of transactions (a “Business
Combination”), unless, immediately following such Business Combination, each of
the following two conditions is satisfied: (i) all or substantially all of
the individuals and entities who were the beneficial owners of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of the then-outstanding shares of common stock and the combined
voting power of the then-outstanding securities entitled to vote generally in
the election of directors, respectively, of the resulting or acquiring
corporation in such Business Combination (which shall include, without
limitation, a corporation which as a result of such transaction owns the
Company or substantially all of the Company’s assets either directly or through
one or more subsidiaries) (such resulting or acquiring corporation is referred
to herein as the “Acquiring Corporation”) in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively; and (ii) no Person (excluding the Acquiring Corporation, any
employee benefit plan (or related trust) maintained or sponsored by the Company
or by the Acquiring Corporation or any Exempt Person) which has either (X) filed
a Form 13D in respect of its holdings with the SEC, or (Y) in the
reasonable opinion of the Company, such person should  have filed
a Form 13D with the SEC in respect of its holdings and its intentions,
beneficially owns, directly or indirectly, 30% or more of the then outstanding
shares of common stock of the Acquiring Corporation, or of the combined voting
power of the then-outstanding securities of such corporation entitled to vote
generally in the election of directors (except to the extent that such
ownership existed prior to the Business Combination); or

 

d)                                     approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company (as distinguished from a filing made
by the Company under Chapter 11 of the Federal Bankruptcy laws).

 

1.2                       “Change in Control Date” means the first date during the Term
(as defined in Section 2) on which a Change in Control occurs.  Anything in this Agreement to the contrary
notwithstanding, if (a) a Change in Control occurs, (b)  the
Executive’s employment with the Company is terminated prior to the date on
which the Change in Control occurs, and (c) it is reasonably demonstrated
by the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change in Control or (ii) otherwise arose in connection with 

 

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or in anticipation of a Change in Control, then for all
purposes of this Agreement the “Change in Control Date” shall mean the date
immediately prior to the date of such termination of employment.

 

1.3                       “Cause” means:

 

a)                                      the Executive’s abject failure to work cooperatively with
the Company’s other officers and senior employees, as determined in good faith
by the Board of Directors, following reasonable notice and opportunity to cure;

 

b)                                     the Executive’s gross negligence or willful misconduct in
performing any action, or not performing any action, that has had, or could
have, alone or in the aggregate, a material negative impact on the Company;

 

c)                                      the Executive’s theft, dishonesty, willful misconduct,
breach of fiduciary duty for personal profit, or falsification of any Company
documents or records;

 

d)                                     the Executive’s unauthorized use, misappropriation,
destruction or diversion of any material asset or corporate opportunity of the
Company (including, without limitation, the Executive’s improper use or
disclosure of the Company’s confidential or proprietary information or his
failure to abide by Company policies relating to confidentiality);

 

e)                                      any intentional act by the Executive which has a material
detrimental effect on the Company’s reputation or business;

 

f)                                        any material breach by the Executive of this Agreement and
any other agreement between the Company and Executive, which breach is not
cured within fifteen (15) days after Executive receives notice from the Company
specifying such breach; or

 

g)                                     the Executive’s conviction (including any plea of guilty or
nolo contendere) of any criminal
act involving fraud, dishonesty, misappropriation or moral turpitude, or which
impairs the Employee’s ability to perform his duties with the Company.

 

1.4                       “Involuntary Termination” means the Executive’s voluntary
resignation from his employment within sixty (60) days following (i) any
material diminution in the Executive’s authority, duties or responsibilities;
provided, however, that a change in job position (including a change in title)
shall not be deemed a “material diminution” unless the Executive’s new
authority, duties or responsibilities are materially reduced from the prior
authority, duties or responsibilities, (ii) any material diminution of the
Executive’s base compensation, (iii) a material diminution in the
authority, duties, or responsibilities of the supervisor to whom the Executive
is required to report, including a requirement that the Executive report to a
corporate officer or employee instead of reporting directly to the board of
directors of the corporation, (iv) a material change in the geographic
location at which the Executive must perform his duties, which is more than 50
miles from the current location, or (v) a material breach by the Company
of the terms of this Agreement, including a failure of the Company to obtain an
assumption of this Agreement at or prior to the effectiveness of any succession
pursuant to Section 6.1; provided that the Executive’s termination of
employment shall not be deemed to be an Involuntary Termination unless the
Company or the Board of Directors on behalf of the Company shall have been
provided with advance notice of the termination and a period of not less than
30 days to cure the event or condition described in (i), (ii), (iii) or
(iv), and shall have either failed to so cure the event or waived its right to
cure the event.

 

Any dispute as to whether any action by
the Company constitutes an “Involuntary Termination” shall be resolved through
the dispute procedures set forth in Section 5 of this Agreement.

 

1.5                       “Disability” means the Executive’s absence from the full-time
performance of the Executive’s duties with the Company for 180 consecutive
calendar days as a result of incapacity due to mental or 

 

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physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive’s legal representative.

 

2                       Term
of Agreement.  This Agreement, and all rights and
obligations of the parties hereunder, shall take effect upon the Effective Date
and shall expire upon the first to occur of (a) the expiration of the Term
(as defined below) if a Change in Control has not occurred during the Term, (b) the
date the Executive no longer holds a Key Position if negotiations relating to a
Change in Control have not commenced prior thereto, (c) the date 24 months
after the Change in Control Date, if the Executive is still employed by the
Company as of such later date, or (d) the fulfillment by the Company of
all of its obligations under Sections 4 and 5.2 if the Executive’s
employment with the Company terminates within twenty-four (24) months following
the Change in Control Date.  “Term” shall
mean the period commencing as of the Effective Date and continuing in effect
through December 31, 2009, provided, however, that commencing on January 1,
2010, and each January 1 thereafter, the Term shall be automatically
extended for one additional year unless, not later than 60 days prior to the
scheduled expiration of the Term (or any extension thereof), the Company shall
have given the Executive written notice that the Term will not be extended.

 

3                       Employment
Status; Termination Following Change in Control.

 

3.1                       Not an Employment Contract.  The Executive acknowledges that this
Agreement does not constitute a contract of employment or impose on the Company
or the Board of Directors any obligation to retain the Executive as an employee
and that this Agreement does not prevent the  Executive from terminating employment at any time.  Except as otherwise provided in Section 1.2,
if the Executive’s employment with the Company terminates for any reason and
subsequently a Change in Control shall occur, the Executive shall not be
entitled to any benefits hereunder.

 

3.2                       Termination of Employment.

 

a)                                      If the Change in Control Date occurs during the Term, any
termination of the Executive’s employment by the Company, the Board of
Directors or by the Executive within 24 months following the Change in Control
Date (other than due to the death of the Executive) shall be communicated by a
written notice to the other party hereto (the “Notice of Termination”), given
in accordance with Section 7.  Any
Notice of Termination shall: (i) indicate the specific termination
provision (if any) of this Agreement relied upon by the party giving such
notice, (ii) to the extent applicable, set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated, and (iii) specify
the Date of Termination (as defined below). 
The effective date of an employment termination (the “Date of
Termination”) shall be the close of business on the date specified in the
Notice of Termination (which date may not be less than 15 days or more than 120
days after the date of delivery of such Notice of Termination), in the case of
a termination other than one due to the Executive’s death, or the date of the
Executive’s death, as the case may be. 
In the event the Company fails to satisfy the requirements of Section 3.2(a) regarding
a Notice of Termination, the purported termination of the Executive’s
employment pursuant to such Notice of Termination shall not be effective for
purposes of this Agreement.

 

b)                                     The failure by the Executive or the Company to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Involuntary Termination or Cause shall not waive any right of the
Executive or the Company, respectively, hereunder or preclude the Executive or
the Company, respectively, from asserting any such fact or circumstance in
enforcing the Executive’s or the Company’s rights hereunder.

 

c)                                      Any Notice of Termination for Cause given by the Company
must be given within 90 days of the occurrence of the event(s) or
circumstance(s) which constitute(s) Cause.

 

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d)                                     Any Notice of Involuntary Termination given by the
Executive to the Company must be given within sixty (60) days of the occurrence
of the event(s) or circumstance(s) which constitute(s) an
Involuntary Termination.

 

4                       Benefits
to Executive.

 

4.1                       Stock Acceleration following a Change in Control and upon the
Termination of Executive’s Employment.  If a Change in Control occurs
during the Term, then, following the Change in Control Date and effective upon
an Involuntary Termination of the Executive’s employment or termination of the
Executive’s employment by the Company or the Board of Directors on behalf of
the Company (other than for Cause, Disability or death), then, (a) each
Stock Appreciation Right (“SAR”) issued by the Company to the Executive shall
immediately become vested and exercisable in full; (b) each outstanding
option to purchase shares of Common Stock of the Company held by the Executive
shall become immediately exercisable in full and will no longer be subject to a
right of repurchase, if any, by the Company; (c) each outstanding
restricted stock award shall be deemed to be fully vested and will no longer be
subject to a right of repurchase by the Company, and (d) notwithstanding
any provision in any applicable stock option or other equity instrument
agreement to the contrary, each such option, SAR or alternative equity
instrument shall continue to be exercisable by the Executive (to the extent
such option was exercisable on the Date of Termination or became exercisable
pursuant to this Section 4.1) for the duration of the term set forth in
the stock option agreement, SAR or other equity instrument agreement applicable
thereto as if termination of employment had not occurred.

 

4.2                       Compensation.  If the Change in Control Date occurs during
the Term and the Executive’s employment with the Company terminates within 24
months following the Change in Control Date, the Executive shall be entitled to
the following benefits:

 

a)                                      Termination Without Cause or Involuntary Termination.  If the Executive’s
employment with the Company is terminated by the Company or the Board of
Directors on behalf of the Company (other than for Cause, Disability or death)
or by the Executive because of an Involuntary Termination, in either case
within 24 months following the Change in Control Date, then the Executive shall
be entitled to the following benefits:

 

(i)                                     the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination (or, such later date as may
be required by Section 4.2 (d)), the sum of (A) the Executive’s base
salary through the Date of Termination, (B) the product of (x) the
Executive’s target annual bonus (irrespective of the level of attainment to
date of any target bonus benchmarks such as firm wide or individual objectives
or hurdles) for the fiscal year in which the Date of Termination occurs and (y) a
fraction, the numerator of which is the number of days in the current fiscal
year through the Date of Termination, and the denominator of which is 365, and (C) any
accrued vacation pay, in each case to the extent not previously paid (the sum
of the amounts described in clauses (A), (B), and (C) shall be hereinafter
referred to as the “Accrued Obligations”);

 

(ii)                                  the Executive shall receive regular monthly installments
for a two-year period equal to one twenty-fourth (1/24th) of the
Executive’s annual salary (at the rate in effect when the Change in Control
Date occurs and before reduction for taxes or other withholdings or deductions
such as a 401(k) Plan contribution or like payment) multiplied by a factor
of three (3.0x) times, with such monthly payments commencing on the payroll
date next following the date of termination or such later date as may be
required by Section 4.2(d);

 

(iii)                               the Executive shall receive regular monthly installments
for a two-year period equal to one twenty-fourth (1/24th) of the
Executive’s target annual bonus (irrespective of the level of attainment to
date of any target bonus bench-marks, such as firm- wide or individual
objectives or hurdles) for the fiscal year in which the Change in Control Date
occurs and before reduction for taxes or other withholdings or deductions such
as a 401(k) Plan 

 

5

 

contribution or like payment) , multiplied by a factor of
three (3.0x) times, with such monthly payments commencing on the payroll date
next following the date of termination or such later date as may be required by
Section 4.2(d);

 

(iv)                              for 18 months after the Date of Termination, or such longer
period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue to provide benefits to the
Executive and the Executive’s family at least equal to those which would have
been provided to them if the Executive’s employment had not been terminated, in
accordance with the applicable Benefit Plans in effect immediately prior to the
Change in Control Date or, if more favorable to the Executive and his family,
in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies; provided, however, that
if the Executive becomes reemployed by another employer and is eligible to
receive a particular type of benefit (e.g., health insurance benefits) from such
employer on terms at least as favorable to the Executive and his family as
those being provided by the Company, then the Company shall no longer be
required to provide those particular benefits to the Executive and his family;

 

(v)                                 to the extent not previously paid or provided, the Company
shall pay or provide to the Executive when due, without accelerating the
payment date of any deferred compensation, any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
following the Executive’s termination of employment under any plan, program,
policy, practice, contract or agreement of the Company and its affiliated
companies (such other amounts and benefits shall be hereinafter referred to as
the “Other Benefits”); and

 

(vi)                              from and after his Termination Date, the Company shall
continue to make available to the Executive, and to make payments on, one
leased vehicle until the end of the lease term, at which point the Executive
may exercise the purchase option if there is one.

 

b)                                     Resignation; or Termination for Death or Disability.  If the Executive
voluntarily resigns from his employment with the Company within 24 months
following the Change in Control Date, excluding a resignation because of an
Involuntary Termination, or if the Executive’s employment with the Company is
terminated by reason of the Executive’s death or Disability within 24 months
following the Change in Control Date, then the Company shall (i) pay the
Executive (or his estate, if applicable), in a lump sum in cash within 30 days
after the Date of Termination, the Accrued Obligations and (ii) timely pay
or provide to the Executive the Other Benefits. 
If upon a termination described in this Section 4.2(b) the
Executive is entitled to receive severance payments or benefits under the
Employment Agreement, the Executive shall remain eligible to
receive such severance
payments or benefits under his Employment Agreement, provided there is no
duplication of payments or benefits.

 

c)                                      Termination for Cause.  If the Company or
the Board of Directors terminates the Executive’s employment with the Company
for Cause within 24 months following the Change in Control Date, then the
Company shall (i) pay the Executive, in a lump sum in cash within 30 days
after the Date of Termination, the sum of (A) the Executive’s annual base
salary through the Date of Termination and (B) the amount of any
compensation previously deferred by the Executive, in each case to the extent
not previously paid, and (ii) timely pay or provide to the Executive the
Other Benefits.

 

d)                                     Section 409A Matters.  It is the intent
of the parties hereto that, to the extent permitted, the payments and benefits
provided pursuant to this Agreement qualify as short-term deferrals, as defined
in Treasury Regulation §1.409A-1(a)(4), separation pay due to an involuntary
separation from service under Treasury Regulation §1.409A-1(b)(9)(iii),
reimbursement of medical benefits under Treasury Regulation
§1.409A-1(b)(9)(v)(B), and/or limited payments, as defined in Treasury
Regulation §1.409A-1(b)(9)(v)(D).  If (a) it
is determined that any payments or benefits provided pursuant to this Agreement
that are paid upon “separation from service” (as that term is used in Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), and any
related 

 

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regulations or other applicable guidance promulgated
thereunder (collectively, “Section 409A”)) constitute deferred
compensation for purposes of Section 409A (after taking into account the
exceptions listed in the prior sentence and/or any other applicable exceptions)
and (b) the Executive is a “specified employee” (as that term is used in Section 409A)
on the date on which the separation from service occurs, such payments or
benefits (or portions thereof) that constitute deferred compensation and that
are to be paid or provided during the six (6) month period following the
Executive’s separation from service shall not be paid or provided until the
first business day after the date that is six (6) months following the
Executive’s separation from service or, if the Executive dies during such six (6) month
period, on the first business day after the date of the Executive’s death.  The payment that is made pursuant to the
prior sentence shall include the cumulative amount of any amounts that could
not be paid during the six (6) month period.  All other payments or benefits under this
Agreement shall be paid or provided in accordance with the applicable provision
of this Agreement.  Each installment
payment under this Agreement shall be treated as a separate payment as defined
under Treasury Regulation §1.409A-2(b)(2). 
For all purposes under this Agreement, references to termination of the
Executive’s employment and similar terms shall be interpreted to mean “separation
from service,” as that term is used in Section 409A, and the Executive’s
employment shall not be deemed to have terminated for purposes of Section 4
unless and until a separation from service shall have occurred for purposes of Section 409A.

 

4.3                       Taxes.

 

a)                                      In the event that the Company undergoes a “Change in
Ownership or Control” (as defined below), the Company shall, within 30 days
after each date on which the Executive becomes entitled to receive (whether or
not then due) a Contingent Compensation Payment (as defined below) relating to
such Change in Ownership or Control, determine and notify the Executive (with
reasonable detail regarding the basis for its determinations) (i) which of
the payments or benefits due to the Executive (under this Agreement or
otherwise) following such Change in Ownership or Control constitute Contingent
Compensation Payments and (ii) the amount, if any, of the excise tax (the “Excise
Tax”) which would be payable by the Executive pursuant to Section 4999
of the Code, with respect to such Contingent Compensation Payment but for the
operation of this Section 4.3.  If
it is determined by the Company and the Executive that an Excise Tax would be
payable by the Executive, then in such instance either (i) the Contingent
Compensation Payments shall be scaled back (with the latest-to-be-paid of such
Payments to be withheld for this purpose) such that the Contingent Compensation
Payments would trigger benefits which, in the aggregate, would generate $1.00
less than the threshold which would otherwise cause Contingent Compensation
Payments to be subject to the Excise Tax, or (ii) if the value of the
Contingent Compensation Payments is such that, after deducting any applicable
Excise Tax, there would be an amount of Contingent Compensation Payments
remaining available to him, so that the Executive would receive a net benefit
(after deducting all Excise Tax) that is greater than the benefit the Executive
would have retained had his Contingent Compensation Payments been
reduced to avoid the Excise
Tax, there shall be no withholding or deducting Contingent Compensation
Payments to be made to the Executive.

 

b)                                     For purposes of this Section 4.3, the following terms
shall have the following respective meanings:

 

(i)           “Change in Ownership or Control” shall mean a change in the
ownership or effective control of the Company or in the ownership of a
substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of
the Code.

 

(ii)          “Contingent Compensation Payment” shall mean any payment
(or benefit) in the nature of compensation that is made or made available
(under this Agreement or otherwise) to a “disqualified individual” (as defined
in Section 280G(c) of the Code) and that is contingent (within the
meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in
Ownership or Control of the Company.

 

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c)                                      The provisions of this Section 4.3 are intended to
apply to any and all payments or benefits available to the Executive under this
Agreement or any other agreement or plan of the Company under which the
Executive receives Contingent Compensation Payments.

 

4.4                       Mitigation.  The Executive shall not be required to
mitigate the amount of any payment or benefits provided for in this Section 4
by seeking other employment or otherwise. Further, except as provided in Section 4.2(a)(iii),
the amount of any payment or benefits provided for in this Section 4 shall
not be reduced by any compensation earned by the Executive as a result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.

 

4.5                       Outplacement Services.  In the event the Executive is terminated by
the Company or the Board of Directors on behalf of (other than for Cause,
Disability or death), or the Executive terminates employment because of an
Involuntary Termination, within 24 months following the Change in Control Date,
the Company shall provide outplacement services through one or more outside
firms of the Executive’s choosing up to an aggregate of $25,000, with such
services to extend until the earlier of (i) 12 months following the
termination of Executive’s employment or (ii) the date the Executive
secures full time employment.

 

5                       Disputes.

 

5.1                       Settlement of Disputes; Arbitration.  All claims by the Executive
for benefits under this Agreement or to resolve other disputes hereunder shall
be directed to the General Counsel of the Company and shall be in writing.  Any denial by the Company of a claim for
benefits under this Agreement shall be delivered to the Executive in writing
and shall set forth the specific reasons for the denial and the specific
provisions of this Agreement relied upon. 
The Company shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim. 
Any further dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in Boston,
Massachusetts, within thirty (30) days of being introduced into arbitration,
and shall be in accordance with the rules of the American Arbitration
Association then in effect.  Judgment may
be entered on the arbitrator’s award in any court having jurisdiction.

 

5.2                       Expenses.  The Company agrees to pay, as incurred, to
the full extent permitted by law, all legal, accounting and other fees and
expenses which the Executive may reasonably incur as a result of any claim or
contest (regardless of the outcome thereof) by the Company, the Executive or
others regarding the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof (including
as a result of any contest by the Executive regarding the amount of any payment
or benefits pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Code; provided, however, that (a) the amount of such fees and expenses
paid (or reimbursed) by the Company during any calendar year may not affect the
amount of fees and expenses paid (or reimbursed) by the Company in any other
calendar year, (b) payment (or reimbursement) of fees and expenses by the
Company shall be made on or before the last day of the calendar year following
the calendar year in which the fees and expenses were incurred, (c) the
Executive’s right to reasonable fees and expenses is not subject to liquidation
or exchange for another benefit and (d) this obligation shall survive the
termination of this Agreement and shall remain in effect until the applicable
statute of limitations has expired with respect to any litigation to enforce
the terms of this Agreement.

 

6                       Successors.

 

6.1                       Successor to Company.  The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business or assets of the Company expressly
to assume and agree to perform this Agreement to the same extent that the
Company would be required to perform it if no such succession had taken
place.  Failure of the Company to obtain
an assumption of this Agreement at or prior to the effectiveness of any 

 

8

 

succession shall be a breach of this Agreement and shall
constitute Involuntary Termination if the Executive elects to terminate
employment, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination.  As used in this Agreement, “Company”
shall mean the Company as defined above and any successor to its business or
assets as aforesaid which assumes and agrees to perform this Agreement, by
operation of law or otherwise.

 

6.2                       Successor to Executive.  This Agreement shall inure to the benefit of
and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.  If the Executive should die
while any amount would still be payable to the Executive or his family
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive’s estate.

 

7                       Agreement
to be Binding on Successors.  The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation, reorganization
or otherwise) to all or substantially all of the business (including pursuant
to acquisition of all or substantially of the Common Stock of the Company) or
assets of the Company (the “Acquisition”), as a condition
precedent to the Acquisition, to expressly assume and agree in
writing, with a copy to the Executive, to perform this Agreement in the
same manner and to the same extent as the Company would be required to
perform this Agreement as if no such succession had taken
place.  The Executive acknowledges and agrees, and the Company
acknowledges and agrees, that, without limitation to any other provision of
this Agreement which is also “material”, this provision is a material
term of this Agreement and an important clause benefiting the
Executive, to assure the Executive that the obligation of the Company to
provide the Executive with the existing benefits made available under
this Agreement is adhered to by any successor to the Company, and the
provision also benefits the Company in that the assurance to you afforded by
this provision is an important retention incentive to have the Executive remain
in the employment of the Company.

 

8                       Notice.  All notices, instructions and other
communications given hereunder or in connection herewith shall be in
writing.  Any such notice, instruction or
communication shall be sent either (i) by registered or certified mail,
return receipt requested, postage prepaid, or (ii) prepaid via a reputable
nationwide overnight courier service, in each case addressed to the Company, at
Candela Corporation, Attention of General Counsel, 530 Boston Post Road,
Wayland, MA 01778, and to the Executive at
[                                            ](or
to such other address as either the Company or the Executive may have furnished
to the other in writing in accordance herewith).  Any such notice, instruction or communication
shall be deemed to have been delivered 5 business days after it is sent by
registered or certified mail, return receipt requested, postage prepaid, or 1
business day after it is sent via a reputable nationwide overnight courier
service. Either party may give any notice, instruction or other communication
hereunder using any other means, but no such notice, instruction or other
communication shall be deemed to have been duly delivered unless and until it
actually is received by the party for whom it is intended.

 

9                       Miscellaneous.

 

9.1                       Employment by Subsidiary.  For purposes of this Agreement, the Executive’s
employment with the Company shall not be deemed to have terminated solely as a
result of the Executive continuing to be employed by a wholly-owned subsidiary
of the Company.

 

9.2                       Severability.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

 

9.3                       Injunctive Relief.  The Company and the Executive agree that any
breach of this Agreement by the Company is likely to cause the Executive
substantial and irrevocable damage and therefore, in the 

 

9

 

event of any such breach, in addition to such other
remedies which may be available, the Executive shall have the right to specific
performance and injunctive relief.

 

9.4                       Governing Law.  The validity, interpretation, construction
and performance of this Agreement shall be governed by the internal laws of the
Commonwealth of Massachusetts, without regard to conflicts of law principles.

 

9.5                       Waivers.  No waiver by the Executive at any time of any
breach of, or compliance with, any provision of this Agreement to be performed
by the Company shall be deemed a waiver of that or any other provision at any
subsequent time.

 

9.6                       Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but both of which
together shall constitute one and the same instrument.

 

9.7                       Tax Withholding.  Any payments provided for hereunder shall be
paid net of any applicable tax withholding required under federal, state or
local law.

 

9.8                       Release of Claims.  The Company shall have no obligation to make
any payments or provide any benefits pursuant to this Agreement unless (i) you
agree to sign and deliver to the General Counsel of the Company a release of
claims in substantially the same form as the form attached hereto as Exhibit A
(the “Release”) and (ii) the Release has become non-revocable by the
sixtieth (60th) day following the date of termination of your
employment.

 

9.9                       Entire Agreement.  This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto in respect of the
subject matter contained herein; and any prior agreement of the parties hereto
in respect of the subject matter contained herein is hereby terminated and
cancelled.  Notwithstanding the
foregoing, the provisions of the Executive’s Employment Agreement shall not be
superceded by, modified by, or subject to the terms of Section 4.3 of this
Agreement; provided, however, that except as provided in Section 4.2(b) of
this Agreement, the Executive shall in no event be entitled to receive
severance payments or benefits under the Employment Agreement if he is entitled
to receive severance payments or benefits under this Agreement.

 

9.10                 Amendments.  This Agreement may be amended or modified
only by a written instrument executed by both the Company and the Executive.

 

[The rest of this page intentionally left blank.]

 

10

 

Exhibit A: Form of
Release of Claims

 

In consideration for receiving benefits
pursuant to the Candela Corporation Executive Retention Agreement dated November     ,
2007 between you and Candela Corporation. (the “Company”) (the “Agreement”),
you, on behalf of yourself and your representatives, agents, estate, heirs,
successors and assigns, agree to and do hereby forever waive, release and
discharge the Company, and each of its affiliated or related entities, parents,
subsidiaries, predecessors, successors, assigns, divisions, owners,
stockholders, partners, directors, officers, attorneys, insurers, benefit
plans, employees and agents, whether previously or hereinafter affiliated in
any manner, as well as all persons or entities acting by, through, or in
concert with any of them (collectively, the “Released Parties”), from any and
all claims (other than “Excluded Claims” as hereinafter defeined), debts,
contracts, obligations, promises, controversies, agreements, liabilities,
demands, wage claims, expenses, charges of discrimination, harassment or
retaliation, disputes, agreements, damages, attorneys’ fees, or complaints of
any nature whatsoever, whether or not now known, suspected, claimed, matured or
unmatured, existing or contingent, from the beginning of time until the moment
you have signed this Agreement, against the Released Parties (whether directly
or indirectly), or any of them, by reason of any act, event or omission
concerning any matter, cause or thing, including, without limiting the
generality of the foregoing, any claims related to or arising out of (i) your
employment  or its termination, (ii) any
contract or agreement (express or implied) between you and any of the Released
Parties, (iii) any tort or tort-type claim, (iv) any federal, state
or governmental constitution, statute, regulation or ordinance, including but
not limited to the U.S. Constitution; Title VII of the Civil Rights Act of
1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in
Employment Act of 1967, as amended (including the Older Workers Benefit
Protection Act); the Equal Pay Act of 1963, as amended; the Americans With
Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker
Adjustment Retraining and Notification Act; the Employee Retirement Income
Security Act of 1974; the Fair Labor Standards Act; any applicable Executive
Order Programs; any similar state or local statutes or laws; and any other
federal, state, or local civil or human rights law, (v) any public policy,
contract or tort law, or under common law, (vi) any policies, practices or
procedures of the Company, (vii) any claim for wrongful discharge, breach
of contract, infliction of emotional distress, defamation, (vii) any claim
for costs, fees, or other expenses, including attorneys’ fees incurred in these
matters, (viii) any impairment of your ability to obtain subsequent
employment, and (ix) any permanent or temporary disability or loss of
future earnings.  It is acknowledged that
you may be entitled to satisfaction by the Company of claims you may presently
have, or may in the future have, for indemnification arising out of the
performance of your duties as an officer of the Company, pursuant to the terms
of the Company’s charter, or its By-laws, or pursuant to the provisions of one
or more directors’ and officers’ (D&O) polices.  Any such claim brought by you shall be considered
an Excluded Claim, but it shall not be presumed that any such claim is valid on
its face.

 

For the purpose of
implementing a full and complete release and discharge of the Released Parties,
you expressly acknowledge that this Agreement is intended to include and does
include in its effect, without limitation, all claims which you do not know or
suspect to exist in your favor against the Released Parties, or any of them, at
the moment of execution hereof, and that this Agreement expressly contemplates
the extinguishment of all such claims

 

BY
SIGNING THIS GENERAL RELEASE, YOU REPRESENT AND AGREE THAT:

 

YOU UNDERSTAND ALL
OF ITS TERMS AND KNOW THAT YOU ARE GIVING UP IMPORTANT RIGHTS, INCLUDING BUT
NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967,
AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL
PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

YOU HAVE HAD AT
LEAST 21 DAYS: (A) FROM THE DATE OF YOUR RECEIPT OF THIS RELEASE
SUBSTANTIALLY IN ITS FINAL FORM ON
                              
    ,           ;
AND (B) TO CONSIDER IT AND THE CHANGES MADE SINCE THE
                              
    ,           
VERSION OF THIS RELEASE AND SUCH CHANGES ARE NOT MATERIAL AND WILL NOT RESTART
THE REQUIRED 21-DAY PERIOD; AND

 

YOU UNDERSTAND
THAT YOU HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND
THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE
REVOCATION PERIOD HAS EXPIRED.

 

11EXHIBIT
10.1

 

TRANSITION/SEPARATION AGREEMENT

(Keith Seidman)

 

February 7, 2008

 

BY
HAND

 

Mr. Keith Seidman

9 Violet Circle

Sharon, MA 02097

 

Dear Keith:

 

This
letter is intended to confirm the agreement between you and Acme Packet, Inc.,
a Delaware corporation (the “Company”),
concerning a transition plan for your separation from the Company.  The terms of this transition and separation
from the Company are set forth below in this letter (this “Agreement”).  Notwithstanding
your eventual separation from the Company as contemplated hereby, you are fully
eligible to receive your full bonus for fiscal year 2007 calculated in
accordance with the Company’s FY 2007 Management Bonus Plan.

 

1.             Employment:  As we have discussed and subject to the
provisions of Section 3 below, the Company expects that you will continue
to be employed as an at-will employee with the Company on a full time basis and
in your current position as the Chief Financial Officer and Treasurer of the
Company until the Company shall have hired a new Chief Financial Officer and
Treasurer (such period, the “Continued Employment Period”). During the
Continued Employment Period, you will continue to be paid your current salary
and benefits, inclusive of any accrued vacation time, and the Company shall
reimburse you for all reasonable and customary business expenses that are
accrued by you in accordance with the Company’s expense reimbursement
policies.  You shall be eligible to
receive a bonus for fiscal year 2008 calculated and paid  in accordance with the Company’s FY 2008
Management Bonus Plan. Such bonus payment will be prorated based on the number
of days between January 1, 2008 and the termination date of the Continued
Employment Period divided by 366. In the event that the Company terminates your
employment for cause prior to the end of the Continued Employment Period, then
you shall not be entitled to benefits set
forth in Section 3 below or to such bonus payment.

 

2.             Consultancy:  At the Company’s option, during the period
beginning immediately after the termination of your employment with the Company
for any reason other than cause and ending on December 31, 2009 (the “Consultancy
Period”), you may be engaged by the Company, and hereby agree to serve the
Company, as a consultant to provide those services consistent with your prior
duties as the Chief Financial Officer and Treasurer of the Company and
reasonably requested by the Company, including those so requested to effect an
orderly transition to a new Chief Financial Officer of the Company. During the
Consultancy

 

 

Period, (a) you shall not be entitled to
any compensation other than as provided for in this Agreement and (b) the
Company shall reimburse you for all reasonable and customary business expenses
that are accrued by you in accordance with the Company’s expense reimbursement
policies.

 

3.             Benefits;
Vesting of Equity: Provided that you have otherwise complied with the
terms of this Agreement (including, without limitation, compliance by you with
your obligation to render consulting services pursuant to Section 2
above), upon the termination of your employment for any reason other than
cause, (a) all employee benefits provided to you as an employee of the
Company as of such date, including medical and dental insurance for you and
your family, long term disability insurance and short term disability
insurance, shall continue to be provided to you by the Company for a period of
six months following the date of such termination at the cost of the Company,
and (b) notwithstanding anything to the contrary expressed or implied in
any other agreement between you and the Company with respect to options to
purchase Common Stock of the Company (each an “Option Agreement”), (i) all
then unvested options to purchase Common Stock of the Company held by you as of
the date of such termination shall continue to vest pursuant to the terms of
the applicable option agreement between you and the Company as if you remained
employed by the Company through December 31, 2009, and (ii) all
vested options to purchase Common Stock of the Company held by you as of the
date of such termination and all options to purchase Common Stock of the
Company that shall vest pursuant to the foregoing clause

3(b)(i) on or prior to December 31, 2009 shall remain exercisable
until March 31, 2010. You and the Company agree that each Option Agreement
be, and hereby is, amended in all respects necessary in order to provide for
the continued vesting and extension of the expiration of your options set forth
in the foregoing clauses 3(b)(i) and 3(b)(ii) above. Except as
otherwise provided for herein, all other terms of each Option Agreement shall
remain unchanged and in full force and effect.

 

You acknowledge that the
consideration set forth in this Section 3 is adequate and sufficient for waiving
your rights to claims referred to below and that you would not otherwise be
entitled to the consideration outlined herein. 
You acknowledge and agree that, as of the date of this Agreement, you
have options to purchase an aggregate of 260,000 shares of the Company’s common
stock, 170,729 of which are vested as of the date hereof and all of which would
vest on or before December 31, 2009.

 

Notwithstanding anything set
forth in this Section 3, (I) in the event that you accept new
employment at any time after your departure from the Company, then the Company’s
obligation to extend your employee benefits as set forth in clause 3(a) above
shall automatically terminate, (II) in the event that your employment is
terminated by the action of the Company’s Board of Directors for cause or that
you fail to comply with your obligation under Section 2 hereof to render
consulting services to the Company, then the Company shall have no obligation
to you under the first paragraph of this Section 3, including, without limitation,
clauses (a) and (b) of such first paragraph, and (III) the
Company shall be obligated under this Section 3 only after the Release (as
defined in Section 5 below) has been executed and has become effective
(including any revocation period associated therewith).

 

4.             Full Satisfaction: 
You agree that the consideration described in this Agreement shall be in
full and complete satisfaction of any and all sums or amounts which are now or
might hereafter have become owing to you for services rendered by you during
your employment or in connection with your resignation from employment,
including without limitation expense reimbursements.

 

2

 

5.             Mutual
Release:  In exchange
for the above compensation and in consideration of the terms and conditions set
forth in this Agreement, each of you and the Company  agree
to execute a release in substantially the form attached hereto as Exhibit A (the “Release”), on and as of the date of your separation from the Company
to forever give up, waive and release each other of and from any and all
claims, charges, complaints, grievances or promises of any and every kind which
you may have up to the date of your separation from the Company against the
Company, its officers and employees, and related persons, and which the Company
may have up to the date of your separation from the Company against you.

 

6.             Confidentiality:  You also acknowledge that during the course
of your employment with the Company, you have had access to information
concerning the Company which is confidential or proprietary in nature (the “Confidential
Information”).  You agree that you will
continue to protect the Confidential Information and that you will not use or
disclose the Confidential Information in any manner.  You further acknowledge and agree that you
previously entered into a confidentiality, non-disclosure, inventions
assignment and non-competition agreement with the Company and that you are and
will continue to be bound by the terms of such agreement.

 

You  acknowledge
and agree that any breach of this confidentiality provision or the
confidentiality agreement described in the foregoing paragraph, or of the
non-disparagement clause below, would be a material breach of this Agreement of
a sort that would cause the Company irreparable injury in an amount not readily
quantifiable as damages, and that in addition to whatever legal or equitable
remedy may be available in compensation of that injury, the Company may seek,
among other things, an injunction against you and the return from you of the
consideration paid pursuant to this Agreement.

 

7.             Mutual
Non-Disparagement: You agree that you will not disparage or say
anything untruthful that could harm the reputation of the Company or any of the
people or organizations associated with it, and that you will not otherwise do
or say anything that could disrupt the good morale of the employees of the
Company or otherwise harm its business or reputation.  The Company agrees that its management team
will not, and the Company will use reasonable efforts to cause members of its
Board of Directors not to, disparage you or say anything untruthful that could
harm your reputation.

 

8.             Return
of Documents, Information, Property:  In signing this
Agreement, you give the Company assurance that, upon the termination of your
employment for cause, and if there is no termination of your employment for
cause, upon the termination of your consulting arrangement with the Company,
you will have returned to the Company any and all documents, materials and
information related to the business of the Company and its affiliates, and all
copies, and all keys and other property of the Company and its affiliates, in
your possession or control, including without limitation all computers,
laptops, mobile devices, related equipment, access cards and keys (referred to
collectively as the “Company Property”). 
You agree that after the termination of your relationship with the
Company you will not, for any purpose, attempt to access or use any computer or
computer network or system of the Company or any of its affiliates, including
without limitation their electronic mail systems, and that you will return any
Company Property that may later be determined to be in your possession.  You agree that you shall not, at any time,
and you hereby represent and warrant that you have not and will not, at any
time, alter, modify, delete, change, reconfigure or otherwise interfere with
any of such property any and all data, software or information contained in or
on such property.

 

3

 

9.             Adherence
to Prior Confidentiality Agreement:  You agree to
abide by, and prior to the date of this Agreement you have not violated the
terms of, any and all agreements entered into between you and the Company prior
to or during your employment with the Company, including the confidentiality,
non-disclosure, inventions assignment and non-competition agreement signed by
you and which is attached hereto as Exhibit B.

 

10.           Right to Seek Counsel;  Revocation Period for Release:  You have been advised of your right to
consult an attorney before you sign this Agreement and you have, in fact,
consulted an attorney in connection with the negotiation and signing of this
Agreement.  You have twenty-one (21) days
after your departure from the Company to consider whether to sign the
Release.  If the Release is not received
by the Company at the end of such twenty-one (21) day period, the obligations
of the Company under Section 2 above will be considered expired and
withdrawn.  If you execute the Release
prior to the end of the twenty-one (21) day period that will be provided to
you, you agree and acknowledge that the execution prior to the expiration of
such period was a knowing and voluntary waiver of your right to consider the
Release (and the terms and provisions of this Agreement related thereto) for a
full twenty-one (21) days, and was due to your conclusion that you had ample
time in which to consider and understand this Agreement and the Release, and in
which to review this Agreement and the Release with your counsel.  You have the right to revoke the Release
within seven (7) days of signing it, whereupon this Agreement and the
Release shall automatically be deemed to be revoked.  To revoke the Release, you must send a
written letter by certified mail to me at the Company’s address (71 Third
Avenue, Burlington, MA  01803).

 

11.           Governing
Law;  Entire Agreement:  This Agreement has been made in Massachusetts
and Massachusetts law applies to it. If any part is found to be invalid, the
remaining parts of the Agreement will remain in effect as if there were no
invalid part.  This Agreement, together
with your previous confidentiality, non-disclosure, inventions assignment and
non-competition agreement with the Company, set forth the entire agreement
between you and the Company.  You
acknowledge that no one has promised you anything that is different from what
is set forth in, and you agree that you are bound by the terms of, this
Agreement and the foregoing referenced documents.  No other promises or agreements shall be
binding upon  the Company  with
respect to the subject matter of this Agreement unless separately agreed to in
writing.

 

IN WITNES WHEREOF, each of
the undersigned hereby executes this Agreement as of the date first set forth
above.

 

 

	
  KEITH SEIDMAN

  	
  ACME PACKET, INC.

  
	
   

  
	
   

  	
   

  	
   

  
	
            /s/ Keith
  Seidman

  	
   

  	
  By:  

  	
        /s/ Andrew D. Ory

  	
   

  
	
   

  	
   

  	
  Name:  Andrew D. Ory

  
	
   

  	
   

  	
  Title:  Chief Executive Officer

  
						

 

4

 

Exhibit A

 

Mutual
Release

 

In connection with that
certain transition and separation agreement, dated as of February 7, 2008
(the “Agreement”), the undersigned, Keith
Seidman (also referred to hereinafter as the “Employee”),
forever gives up, waives and releases Acme Packet, Inc. (the “Company”) of and from any and all claims,
charges, complaints, grievances or promises of any and every kind which the
undersigned may have up through                              ,
2008, which is the date of the undersigned’s separation from the Company,
against the Company, its officers and employees, and related persons, and the
Company, forever gives up, waives and releases the undersigned of and from any
and all claims, charges, complaints, grievances or promises of any and every
kind which the Company may have up through                                ,
2008, which is the date of the undersigned’s separation from the Company,
against the undersigned, in each case arising out of the undersigned’s
employment with the Company, including without limitation his/her rights under
Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act
of 1991, M.G.L. c. 151B, the Employee Retirement Income Security Act (“ERISA”), the Equal Pay Act, the Americans with
Disabilities Act (“ADA”), the Age Discrimination in Employment Act (“ADEA”) and other federal and state statutes
prohibiting discrimination on the basis of age, sex, race, color, handicap,
religion and national origin and any common law claims, including without
limitation, claims for defamation, intentional infliction of emotional
distress, intentional interference with contract, negligent infliction of
emotional distress, personal injury, breach of contract, unpaid wages or
compensation, or claims for unreimbursed expenses.  Nothing in this release shall be construed to
affect the Equal Employment Opportunity Commission’s (the “Commission”) or any state agency’s independent right and
responsibility to enforce the law, nor does this Release affect Employee’s
right to file a charge or participate in an investigation or proceeding
conducted by either the Commission or any such state agency, although this
release does bar any claim that Employee might have to receive monetary damages
in connection with any Commission or state agency proceeding concerning matters
covered by this release.  Notwithstanding the
foregoing, nothing set forth in this release shall apply to any claims that may
not be released by law, or to any claims arising out of a breach by either the
undersigned or the Company of the undersigned’s or the Company’s respective
obligations under the Agreement and each of the undersigned and the Company
shall be entitled to enforce the respective rights under the Agreement.  This release is subject to the consideration
and revocation periods as outlined in the Agreement.

 

 

	
  KEITH SEIDMAN

  	
   

  	
  ACME PACKET, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
  Dated:

  

 

5

 

Exhibit B

 

EXECUTED CONFIDENTIALITY, NON-DISCLOSURE,

INVENTIONS ASSIGNMENT AND NON-COMPETITION AGREEMENT

 

ACME
PACKET, INC.

EMPLOYEE
CONFIDENTIALITY,

INVENTIONS
AND NON-COMPETITION AGREEMENT

 

This Agreement, dated as of February 13, 2001,
is by and between Acme Packet, Inc.,
a Delaware corporation, with an address
at 130 New Boston Street, Woburn, MA 01801
(Employer) and the person identified
on the signature page to this Agreement (Employee).

 

Employee is, or expects to become, employed by Employer or one or more
of Employer’s affiliates (such affiliates, whether now or hereafter existing,
together with Employer, are referred to herein, collectively, as the Company).

 

In consideration of, and as part of the terms of, the employment or
continued employment of Employee by the Company, the compensation paid and to
be paid by the Company to Employee, the entrusting to Employee of certain trade
secrets and proprietary information of the Company, and the mutual covenants
and promises set forth herein, Employee and Employer, for itself and for the
Company, agree as follows:

 

1.  Freedom
to Contract.  Employee represents that Employee is free to enter
into this Agreement, Employee has not made and will not make any agreements in
conflict with this Agreement, and Employee will not disclose to the Company, or
use for the Company’s benefit, any trade secrets or confidential information
which is the property of any third party.

 

2.  Confidentiality.

 

2.1  Definitions.

 

Confidential Information means (a) all Information acquired by Employee
from the Company, its other employees, its suppliers or customers, its agents
or consultants, or others, during Employee’s employment by the Company, that
relates to the present or potential businesses, products or services of the
Company, as well as any other Information (as defined below) as may be
designated by the Company as confidential or that a reasonable

 

 

person would
understand from the circumstances of the disclosure to be confidential; (b) all
Information created or acquired by Employee in the course of any Included Activity
(as defined in Section 3.1); and (c) all Derivative Information.

 

Derivative Information means all copies, digests, summaries of Information,
as well as feedback, suggestions, improvements or other Creations (as defined
in Section 3.1) derived from the Information.

 

Information means all forms and types of financial, business, marketing,
operations, scientific, technical, economic and engineering information,
whether tangible or intangible, including without limitation, patterns, plans,
compilations, devices, formulas, designs, prototypes, methods, techniques,
processes, procedures, programs, codes, know-how, computer software, databases,
product names or marks, marketing materials or programs, plans, specifications,
shop-practices, customer lists, supplier lists, engineering and manufacturing
information, price lists, costing information, employee and consulting
relationship information, accounting and financial data, profit margin,
marketing and sales data, strategic plans, trade secrets and all other
proprietary information, irrespective of the Medium in which such Information
is memorialized or communicated.

 

Medium (Media) means any communications or storage medium, regardless
of method of storage, compilation or memorialization, if any, including without
limitation, physical storage or representation (including models and
prototypes), electronic storage, graphical (including designs and drawings) or
photographic representation, or writings and in the case of information that is
not stored or otherwise memorialized, oral communication.

 

2.2  Acknowledgment.  Employee recognizes and acknowledges
that:

 

(a)           the Company’s Confidential
Information is a valuable, special and unique asset of the Company;

 

(b)           access to and knowledge of the
Confidential Information by Employee may be required so that Employee can
perform his/her duties as an employee of the Company;

 

(c)           it is vital to the Company’s
legitimate business interests that (1) the confidentiality of the
Confidential Information be preserved and (2) the Confidential Information
only be used for the benefit of the Company;

 

2

 

(d)           disclosure of the Confidential
Information to any other person or entity outside the Company or use of the
Confidential Information by or on behalf of any other person or entity could
result in irreparable harm to the Company;

 

(e)           disclosure or use beyond the
permitted scope of Confidential Information entrusted to the Company by its
customers and contractors could expose the Company to substantial damages;

 

(f)            the Confidential Information is and
shall remain the exclusive property of the Company; and

 

(g)           nothing in this Agreement shall be
construed as a grant to Employee of any rights, title or interest in, to or
under the Confidential Information.

 

2.3  Restrictions.  Except as expressly directed by the
Company, Employee shall not, during or after the term of Employee’s employment
by the Company, in whole or in part, disclose such Confidential Information to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, nor shall Employee make use of any such Confidential
Information for Employee’s own purposes or for the benefit of any person, firm,
corporation or other entity under any circumstances during or after the term of
Employee’s employment; provided
that if applicable law restricts the duration of the confidentiality and nonuse
obligations set forth in this Section 2.3 (the Confidentiality
and Non-Use Obligations) for Confidential Information that is
not also a trade secret under applicable law (Other
Confidential Information), the Confidentiality and Non-Use
Obligations as to Other Confidential Information shall remain in effect during
the term of Employee’s employment by the Company and for a period of seven (7) years
thereafter, but shall be perpetual as to trade secrets.

 

2.4  Exclusions.  The Confidentiality and Non-Use
Obligations shall not apply to such Confidential Information which Employee can
establish by clear and convincing written proof: (a) was known by Employee
both prior to employment and other than by disclosure by the Company; (b) was
lawfully in the public domain and generally known in the trade prior to its
disclosure hereunder, or becomes publicly available and generally known in the
trade other than through a breach of this Agreement or any other obligation of
confidentiality to the Company; or (c) was specifically authorized for
nonconfidential disclosure by a duly authorized executive officer of the
Company other than by authority of Employee; provided
that only the specific information that meets the exclusion shall be excluded
and not any other information that happens to appear in proximity to such
excluded portion (for example, a portion of a document may be excluded without
affecting the 

 

3

 

confidential
nature of those portions that do not themselves qualify for exclusion).

 

2.5  Required
Disclosures.  Employee agrees to notify the Company promptly upon learning
about any court order or other legal requirement that purports to compel
disclosure of any Confidential Information and to cooperate with the Company in
the exercise of the Company’s right to protect the confidentiality of the
Confidential Information before any tribunal or governmental agency.  Disclosure of Confidential Information
pursuant to a court order or other legal requirement that purports to compel
disclosure of any Confidential Information shall not alter the character of
that information as Confidential Information hereunder.

 

2.6  Return
of Confidential Information.  All Confidential Information, including without
limitation, all Derivative Information and Creations, are and shall continue to
be the exclusive property of the Company. 
Immediately upon any termination of Employee’s employment or at any time
upon the request of the Company, Employee shall deliver to the Company, or its
designee, all of such Confidential Information and all other Company
property  then in Employee’s actual or
potential possession or control in any tangible or electronic form.  If Employee and Company agree that any
specific Information or property cannot reasonably be delivered, Employee shall
provide reasonable evidence that such materials have been destroyed, including
but not limited to, the purging or erasing of any and all computer records and
data files.

 

2.7  Third
Party Information.  Employee acknowledges that the Company may have
received and may in the future receive confidential and proprietary information
from third parties subject to a duty on the Company’s part to maintain the
confidentiality of such information and, in some cases, to use it only for
certain limited purposes.  Employee
agrees that he/she owes the Company and such third parties, both during the
term of Employee’s employment and thereafter, a duty to hold all such
confidential or proprietary information in strictest confidence and not to
disclose or use it in any manner that is not consistent with the Company’s
agreement with such third parties, unless expressly authorized to do so by a
duly authorized executive officer of the Company (other than Employee, if
Employee is an executive officer of the Company).

 

3.  Intellectual
Property & Creations.

 

3.1  Definitions. Included Activity  means  at the relevant time of
determination, any activity conducted by, for or under the direction of the 

 

4

 

Company, whether
or not conducted at the Company’s facilities, during working hours or using the
Company’s resources, or which relates directly or indirectly to (a) the
business of the Company as then operated or under consideration or development
or (b) any method, program, computer software, apparatus, design, plan,
model, specification, formulation, technique, product, process (including,
without limitation, any business processes and any operational processes) or
device, then purchased, sold, leased, used or under consideration or
development by the Company. Creations means
all ideas, discoveries, improvements, inventions (including without limitation
discoveries of new technology and improvements to existing technology),
Confidential Information, know-how, innovations, writings, works of authorship,
compilations and other developments or improvements, whether or not patented or
patentable, copyrightable, or reduced to practice or writing, which arise out
of any Included Activity.

 

3.2  Assignment.  Employee hereby sells, transfers and
assigns to (and the following shall be the exclusive property of) the Company,
or its designee(s), the entire right, title and interest of Employee in and to
all Creations made, discovered, invented, authored, created, developed,
originated or conceived by Employee, solely or jointly, (i) during the
term of Employee’s employment with the Company or (ii) on or before the
first anniversary of the date of termination of Employee’s employment with the
Company.  Employee acknowledges that all
copyrightable materials developed or produced by Employee within the scope of
Employee’s employment by the Company constitute works made for hire, as that
term is defined in the United States Copyright Act 17 U.S.C. § 101.

 

3.3  Disclosure &
Cooperation.  Employee shall communicate promptly and disclose to
the Company, in such form as the Company may reasonably request, all
information, details and data pertaining to any Creations, and Employee shall
execute and deliver to the Company or its designee(s) such formal
transfers and assignments and such other papers and documents and shall give
such testimony as may be deemed necessary or required of Employee by the
Company or its designee to develop, preserve or extend the Company’s rights
relating to any Creations and to permit the Company or its designee to file and
prosecute patent applications and, as to copyrightable material, to obtain
copyright registrations thereof.

 

3.4  Exclusion.  If any Creation fully
qualifies under any applicable state or federal law that (a) restricts the
enforcement of the provisions of Sections 3.2 or 3.3 by an employer against an
employee and (b) prohibits the 

 

5

 

waiver of such
employee rights by contract, then as to such qualifying Creations, the
provisions of Sections 3.2 and 3.3 shall only apply to the extent, if any, not
prohibited by such law.

 

4.  Non-Competition &
Non-Interference.

 

4.1  During
the Term of Employment.  During Employee’s employment by the Company, Employee
will comply with all policies and rules that may from time to time be
established by the Company, and will not engage directly or indirectly in any
business or enterprise which is in any way competitive or conflicting with the
interests or business of the Company.  In
addition, in consideration of Employee’s employment by the Company, Employee
recognizes that Employee owes a duty of loyalty to the Company and agrees that
Employee will not take personal advantage (whether directly or indirectly
through Employee’s family members or affiliates) of any business opportunity
which is in the same or a closely-related line of business as that engaged in
by the Company during the term of this Agreement.  Employee understands and agrees that he/she
is required to devote his/her full time and use his/her best efforts in the
course of Employee’s employment with the Company and to act at all times in the
best interests of the Company.

 

4.2  Acknowledgment.  Employee understands and recognizes that (i) his/her
working for a competitor of the Company would lead to the inevitable disclosure
of the Company’s Confidential Information; (ii) in the course of Employee’s
employment with the Company, customers and others may come to recognize and
associate Employee with the Company, its products and services, and that
Employee will thereby benefit from the Company’s goodwill; and (iii) if
Employee were to engage in competition with the Company, directly or
indirectly, Employee would thereby usurp the Company’s goodwill.

 

4.3  Competition
Generally.  Noncompetition Period means the period commencing upon
termination of Employee’s employment with the Company, irrespective of the
reason or absence of reason for such termination, and ending two years after
such termination; provided  that
the period shall be extended for so long as Employee violates the
noncompetition obligation set forth herein and for any period(s) of time
required for litigation to enforce its provisions.  Employee agrees that, during the
Noncompetition Period, Employee shall not, directly or indirectly: (i) solicit,
service, accept orders from, or otherwise have business contact with any person
or entity who has, within the one-year period immediately prior to such
termination of Employee’s employment, been a customer (including, without
limitation, a 

 

6

 

reseller or end
user of products) of the Company, if such contact could directly or indirectly
divert business from or adversely affect the business of the Company; (ii) interfere
with the contractual relations between the Company and any of its employees; (iii) work
for or have an interest in a company that competes with the Company, directly
or indirectly, in products, market, or services anywhere in the Territory; or (iv) employ
or cause to be employed in any capacity, or retain or cause to be retained as a
consultant, any person who was employed by the Company at any time during the
six (6) month period ended on the date of termination of Employee’s
employment.  Employee agrees to inform
the Company of the name and address of any employer(s) Employee may have
or any business with which Employee may be involved, directly or indirectly,
within the Noncompetition Period. 
Employee further agrees to provide any such employer(s) with a copy
of this Agreement.  Territory
means  any place within the Commonwealth of
Massachusetts, the rest of the region known as New England, the rest of the
United States, or anywhere else in the world.

 

4.4  Disparagement.  Employee agrees that during the course of
employment and after the termination of employment with the Company, Employee
will not disparage the Company, its products, services, agents or employees.

 

4.5  Reasonability.  Employee understands and
agrees that because of the nature of the Company’s products, services, and
customers, because of Employee’s position with the Company, and because the
Company’s business is or may become international in scope, the duration of the
Noncompetition Period is reasonable and necessary.  Employee understands and agrees that although
his/her authority may or may not from time to time extend to the entire
Territory, the information Employee may learn in the course of employment and
the goodwill to which Employee may be exposed belong exclusively to the Company
and have implications and applications that are international in scope.  Accordingly, Employee agrees that the scope of
the geographical restriction on competition with the Company in the Territory
is reasonable and necessary.  Employee
represents that he/she has, and brings to his/her employment with the Company,
marketable skills which will enable Employee to secure employment and earn a
living for the duration of this Agreement without competing with the Company
directly or indirectly.  Accordingly,
Employee agrees that any harm to Employee caused by the enforcement of this Agreement
will be outweighed by the harm to the Company should this Agreement not be
enforced.  If at any time any of the
provisions of this Section 4 shall be deemed invalid or unenforceable or
are prohibited by the laws of the jurisdiction where they are to be performed
or enforced, by reason of being vague or unreasonable as to duration or 

 

7

 

geographic scope
or scope of activities restricted, or for any other reason, such provisions
shall be considered divisible and shall become and be immediately amended to
include only such restrictions and to such extent as shall be deemed to be
reasonable and enforceable by the court or other body having jurisdiction over
this Agreement; and the Company and Employee agree that the provisions of this Section 4,
as so amended, shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.

 

5.  Rights
Conferred.  Nothing
contained in this Agreement shall be construed as giving Employee any legal or
equitable rights against the Company or any subsidiary or affiliated entity or
any director, officer, employee, or agent thereof except for such rights as are
expressly provided herein.  Nothing contained
in this Agreement shall be construed (i) to alter the at-will nature of
the employment relationship between the Company and Employee, (ii) as a
contract for continuing employment or to confer on Employee any right of
continued employment for a particular term of time, (iii) to obligate the
Company to continue Employee’s employment, or (iv) to require cause for
the termination of the employment relationship.

 

6.  Enforcement.  Employee agrees and
acknowledges that the Company will suffer irreparable injury and damage and
cannot be reasonably or adequately compensated in monetary damages for the loss
by the Company of its benefits or rights under this Agreement as the result of
a breach, default or violation by Employee of Employee’s obligations under
Sections 2, 3 or 4 of this Agreement.  Accordingly,
the Company shall be entitled, in addition to all other remedies which may be
available to it (including monetary damages), to injunctive and other available
equitable relief, without bond, in any court of competent jurisdiction to
prevent or otherwise restrain or terminate any actual or threatened breach,
default or violation by Employee of any provision contained in Sections 2, 3 or
4 of this Agreement or to enforce any such provision.

 

7.  Governing
Law & Jurisdiction.  This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the Commonwealth
of Massachusetts (without reference to principles of conflicts or choice of law
that would cause the application of the internal laws of any other jurisdiction).  Any dispute concerning or action to enforce
this Agreement shall be brought in Massachusetts.  Employee expressly consents to and agrees to
subject himself/herself to the jurisdiction of the courts in Massachusetts,
federal or state, for purposes of determining any and all rights or obligations
under this Agreement.

 

8

 

8.  Notices.  All notices, requests,
instructions or other documents to be given hereunder shall be in writing or by
written telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by certified mail,
return receipt requested, postage prepaid (effective five business days after
dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv) sent
by fax followed within 24 hours by sending confirmation by one of the foregoing
methods (effective upon receipt of the fax in complete, readable form),
addressed to the Company at the address set forth above and to Employee at the
address set forth in the Company’s records or at such other address as such
party may have supplied for the purpose pursuant to this Section 8.

 

9.  Captions.  The captions of sections or
subsections of this Agreement are for reference only and shall not affect the
interpretation or construction of this Agreement.

 

10.  Severability.  If any provision of this
Agreement shall, in whole or in part, be determined to be invalid,
unenforceable or void for any reason, such determination shall affect only the
portion of such provision determined to be invalid, unenforceable or void and
shall not affect in any way the remainder of such provision or any other
provision of this Agreement, and the invalid, unenforceable or void provision
shall be enforceable to the fullest extent possible to reflect the parties
intentions hereunder.

 

11.  Binding
Effect; Benefits; Assignment.  This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors, and
permitted assigns.  This Agreement may be
assigned, with or without consent of Employee, by the Company to any person,
partnership, corporation or other entity, including without limitation, any
person, partnership, corporation or other entity which succeeds to the business
of the Company or which has purchased certain assets of the Company.  Employee may not assign Employee’s rights or
delegate Employee’s obligations under this Agreement and any such attempted
assignment or delegation shall be void and of no effect.  Nothing in this Agreement is intended to or
shall confer any rights or remedies on any third party other than the Employee,
the Company and their respective heirs, successors and permitted assigns.  This Agreement shall survive any and all
changes in Employee’s employment with the Company.

 

12.  Entire
Agreement; Amendment; Waiver.  This Agreement sets forth the sole and
entire agreement and understanding between the parties hereto with respect to
the specific matters contemplated and addressed 

 

9

 

hereby.  No prior agreement, whether written or oral,
shall be construed to change or affect the operation of this Agreement in accordance
with its terms, and any provision of any such prior agreement which conflicts
with or contradicts any provision of this Agreement is hereby revoked and
superseded. This Agreement may be amended only by a written instrument executed
both by Employee and by an executive officer of the Company (other than
Employee if Employee is an executive officer). No consent to or waiver of
any breach, default or violation in the performance of any obligation of
Employee hereunder, and no failure by the Company to complain of any such
breach, default or violation, shall be effective unless it is in writing and
executed by an executive officer of the Company (other than Employee if
Employee is an executive officer).  No
such consent, waiver or failure to complain shall be deemed to be a consent to
or waiver of any other breach, default or violation of either the same or any
other obligation of Employee hereunder, whether occurring prior to or after
such consent, waiver or failure to complain.

 

13.  Acknowledgment.  Employee acknowledges that
this Agreement is a condition of Employee’s employment with the Company, and
that Employee has had a full and adequate opportunity to read, understand and
discuss with Employee’s advisors, including legal counsel, the terms and conditions
contained in this Agreement prior to signing hereunder.

 

IN WITNESS WHEREOF, the parties hereto have signed this Agreement as an
instrument under seal as of the date written above.

 

	
   

  	
   

  	
  ACME PACKET, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Robert G.
  Ory

  
	
   

  	
   

  	
  Name:  Robert
  G. Ory

  
	
   

  	
   

  	
  Title:  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Keith
  Seidman

  
	
   

  	
   

  	
  Name:  Keith
  Seidman

  
						

 

10

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