<PAGE>   1
                                                                   Exhibit 10.07


                           STOCK RESTRICTION AGREEMENT



         This Agreement is made this 10th day of October, 1997, between
ArrowPoint Communications, Inc., a Delaware corporation (the "Company"), and
Peter Piscia (the "Employee").

         In consideration of the mutual promises and covenants contained in this
Agreement and for other valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:

         1. PURCHASE OF SHARES. The Company shall issue and sell to the
Employee, and the Employee shall purchase from the Company, subject to the terms
and conditions set forth in this Agreement, 70,000 shares (the "Shares") of
common stock, $.001 par value, of the Company ("Common Stock"), at a purchase
price of $.01 per share. The aggregate purchase price for the Shares shall be
paid by the Employee by check payable to the order of the Company or such other
method as may be acceptable to the Company. Upon receipt of payment by the
Company for the Shares, the Company shall issue to the Employee one or more
certificates in the name of the Employee for that number of Shares purchased by
the Employee. The Employee agrees that the Shares shall be subject to the
Purchase Option set forth in Section 2 of this Agreement and the restrictions on
transfer set forth in Section 5 of this Agreement. The Shares are issued
pursuant to the terms of the 1997 Stock Incentive Plan of the Company and are
subject to the terms thereof.

         2. PURCHASE OPTION.

            (a) In the event that the Employee ceases to be employed by the
Company for any reason prior to August 31, 2002, the Company shall have the
right and option (the "Purchase Option") to purchase from the Employee, for the
sum of $0.01 per share (the "Option Price"), up to the total number of Shares
that have not vested according to the vesting schedule in Section 3 (the
"Vesting Schedule").

            (b) For purposes of this Agreement, employment with the Company
shall include employment with a parent or subsidiary of the Company.

         3. VESTING.

            (a) The Shares shall vest in the amount of 20% of the total number
of Shares on August 31, 1998 and on the last day of each full month thereafter
in the amount of 1.6667% of the total number of Shares.

            (b) In the event of as Acquisition (as defined below), then 50% of
the number of Shares which are not then vested shall become vested immediately
prior to the closing of the Acquisition.

            (c) For the purposes of this Agreement, "Acquisition" shall mean any
(i) merger or consolidation which results in the voting securities of the
Company outstanding

<PAGE>   2

immediately prior thereto representing immediately thereafter (either
by remaining outstanding or by being converted into voting securities of
the surviving or acquiring entity) less than a majority of the combined voting
power of the voting securities of the Company or such surviving or acquiring
entity outstanding immediately after such merger or consolidation, (ii) sale of
all or substantially all the assets of the Company or (iii) sale of shares of
capital stock of the Company, in a single transaction or series of related
transactions, representing at least 80% of the voting power of the voting
securities of the Company.

            (d) The Company may in its discretion accelerate the Vesting
Schedule at any time.

         4. EXERCISE OF PURCHASE OPTION AND CLOSING.

            (a) The Company may exercise the Purchase Option by sending to the
Employee (or his estate), within 60 days after the termination of the employment
of the Employee with the Company, a written notice of exercise of the Purchase
Option. Such notice shall specify the number of Shares to be purchased. If and
to the extent the Purchase Option is not so exercised by the giving of such a
notice within such 60-day period, the Purchase Option shall automatically expire
and terminate effective upon the expiration of such 60-day period.

            (b) Within 10 days after his receipt of the Company's notice of the
exercise of the Purchase Option pursuant to subsection (a) above, the Employee
(or his estate) shall (in accordance with the provisions of the joint Escrow
Instructions attached hereto) tender to the Company at its principal offices the
certificate or certificates representing the Shares which the Company has
elected to purchase, duly endorsed in blank by the Employee or with duly
endorsed stock powers attached thereto, all in form suitable for the transfer of
such Shares to the Company. Upon its receipt of such certificate or
certificates, the Company shall deliver or mail to the Employee a check in the
amount of the aggregate Option Price therefor.

            (c) After the time at which any Shares are required to be delivered
to the Company for transfer to the Company pursuant to subsection (b) above, the
Company shall not pay any dividend to the Employee on account of such Shares or
permit the Employee to exercise any of the privileges or rights of a stockholder
with respect to such Shares, but shall, in so far as permitted by law, treat the
Company as the owner of such Shares.

            (d) The Option Price may be payable, at the option of the Company,
in cancellation of all or a portion of any outstanding indebtedness of the
Employee to the Company or in cash (by check) or both.

            (e) The Company shall not purchase any fraction of a Share upon
exercise of the Purchase Option, and any fraction of a Share resulting from a
computation made pursuant to Section 4 of this Agreement shall be rounded to the
nearest whole Share (with any one-half Share being rounded upward).

         5. RESTRICTIONS ON TRANSFER.

                                       2
<PAGE>   3



            (a) Except as otherwise provided in subsection (b) below, the
Employee shall not, during the term of the Purchase Option, sell, assign,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively "transfer"), any of the Shares, or any interest therein,
unless and until such Shares are no longer subject to the Purchase Option.

            (b) Notwithstanding the foregoing, the Employee may transfer (i) any
or all of his Shares to his spouse or children or to a trust established for the
benefit of his spouse, children or himself or (ii) any or all of his Shares
under his will, PROVIDED that such Shares shall remain subject to this Agreement
(including without limitation the restrictions on transfer set forth in this
Section 5 and the Purchase Option) and such permitted transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Agreement.

         6. ESCROW. The Employee and the Company shall, upon the execution of
this Agreement, execute joint Escrow Instructions in the form appended hereto.
The joint Escrow Instructions shall be delivered to the Secretary of the
Company, as escrow agent thereunder. The Employee shall deliver to such escrow
agent the certificate(s) evidencing the Shares and a stock assignment duly
endorsed in blank. Such materials shall be held by such escrow agent pursuant to
the terms of such joint Escrow Instructions.

         7. EFFECT OF PROHIBITED TRANSFER. The Company shall not be required
(a) to transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Agreement,
or (b) to treat as owner of such Shares or to pay dividends to any transferee to
whom any such Shares shall have been so sold or transferred.

         8. RESTRICTIVE LEGEND. All certificates representing the Shares
shall have affixed thereto the following legend, in addition to any other
legends that may be required under federal or state securities laws:

         "The shares of stock represented by this certificate are subject to
         restrictions on transfer and an option to purchase set forth in a
         certain Stock Restriction Agreement between the Corporation and the
         registered owner of these shares (or his predecessor in interest), and
         such Agreement is available for inspection without charge at the office
         of the Secretary of the Corporation."

         9. INVESTMENT REPRESENTATIONS. The Employee represents, warrants and
covenants as follows:

            (a) The Employee is purchasing the Shares for his own account for
investment only, and not with a view to, or for sale in connection with, any
distribution of the Shares in violation of the Securities Act of 1933 (the
"Securities Act"), or any rule or regulation under the Securities Act.

            (b) The Employee has had such opportunity as he has deemed adequate
to obtain from representatives of the Company such information as is necessary
to permit him to evaluate the merits and risks of his investment in the Company.


                                       3
<PAGE>   4

            (c) The Employee has sufficient experience in business, financial
and investment matters to be able to evaluate the risks involved in the purchase
of the Shares and to make an informed investment decision with respect to such
purchase.

            (d) The Employee can afford a complete loss of the value of the
Shares and is
able to bear the economic risk of holding such Shares for an indefinite period.

            (e) The Employee understands that (i) the Shares have not been
registered under the Securities Act and are "restricted securities" within the
meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be sold,
transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available;
(iii) in any event, the exemption from registration under Rule 144 will not be
available for at least one year and even then will not be available unless a
public market then exists for the Common Stock, adequate information concerning
the Company is then available to the public, and other terms and conditions of
Rule 144 are complied with; and (iv) there is now no registration statement on
file with the Securities and Exchange Commission with respect to any stock of
the Company and the Company has no obligation or current intention to register
the Shares under the Securities Act.

            (f) A legend substantially in the following form will be placed on
the certificate representing the Shares:

                  "The shares represented by this certificate have not been
                  registered under the Securities Act of 1933, as amended, and
                  may not be sold, transferred or otherwise disposed of in the
                  absence of an effective registration statement under such Act
                  or an opinion of counsel satisfactory to the corporation to
                  the effect that such registration is not required."

         10. ADJUSTMENTS FOR STOCK SPLITS, STOCK DIVIDENDS, ETC.

            (a) If from time to time during the term of the Purchase Option
there is any stock split-up, stock dividend, stock distribution or other
reclassification of the Common Stock of the Company, any and all new,
substituted or additional securities to which the Employee is entitled by reason
of his ownership of the Shares shall be immediately subject to the Purchase
Option, the restrictions on transfer and other provisions of this Agreement in
the same manner and to the same extent as the Shares, and the Option Price shall
be appropriately adjusted.

            (b) If the Shares are converted into or exchanged for, or
stockholders of the Company receive by reason of any distribution in total or
partial liquidation, securities of another corporation, or other property
(including cash), pursuant to an Acquisition, then the rights of the Company
under this Agreement shall inure to the benefit of the Company's successor and
this Agreement shall apply to the securities or other property received upon
such conversion, exchange or distribution in the same manner and to the same
extent as the Shares provided that (i) to account for the acceleration of
vesting under Section 3(b) above, on each vesting date subsequent to the
Acquisition, one-half of the amount of securities or other property that would
have otherwise vested in accordance with the original Vesting Schedule shall
become vested and

                                       4
<PAGE>   5

(ii) the Vesting Schedule shall be subject to further acceleration following
the Acquisition pursuant to Section 3(d).

         11. WITHHOLDING TAXES. If the Employee elects, in accordance with
Section 83(b) of the Internal Revenue Code of 1986, as amended, to recognize
ordinary income in the year of acquisition of the Shares, the Company will
require at the time of such election an additional payment for withholding tax
purposes based on the difference, if any, between the purchase price for such
Shares and the fair market value of such Shares as of the day immediately
preceding the date of the purchase of such Shares by the Employee.

         12. MISCELLANEOUS.

            (a) 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, and each other provision of this
Agreement shall be severable and enforceable to the extent permitted by law.

            (b) WAIVER. Any provision contained in this Agreement may be waived,
either generally or in any particular instance, by the Board of Directors of the
Company; provided that the Company may not waive, or otherwise limit or reduce
its rights under, the Purchase Option or accelerate the Vesting Schedule without
the consent of the holders of a majority of the then outstanding shares of
Series A Convertible Preferred Stock of the Company (if any).

            (c) BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the Company and the Employee and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 5 of this
Agreement.

            (d) NO RIGHTS TO EMPLOYMENT. Nothing contained in this Agreement
shall be construed as giving the Employee any right to be retained, in any
position, as an employee of the Company.

            (e) NOTICE. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand, sent via a reputable nationwide overnight courier service or mailed by
first class certified or registered mail, return receipt requested, postage
prepaid, to the Company or the Employee at their addresses set forth on the
signature page hereto. Notices provided in accordance with this Section 12 shall
be deemed delivered upon personal delivery, one business day after being sent
via a reputable nationwide overnight courier service, or two business days after
deposit in the mail.

            (f) PRONOUNS. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.

            (g) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties, and supersedes all prior agreements and
understandings, relating to the subject matter of this Agreement.

                                       5
<PAGE>   6


            (h) Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Employee.

            (i) Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of Delaware.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

         ArrowPoint Communications, Inc.

         By: /s/Chin-Cheng Wu
            ---------------------------------
            Chin-Cheng Wu
            President


         Address: 235 Littleton Road
                  Westford, MA 01886



         Peter Piscia


         /s/Peter Piscia
         -------------------------------------

         Address: 9 Liberty Road
                  Medway, MA 02053



                                       6