Exhibit
10.4


ACME
PACKET, INC.


INCENTIVE STOCK
OPTION AGREEMENT

(Form of Incentive Stock Option Agreement)


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


1.             Grant  of  Option.  Pursuant to the Plan, the Company grants to
the Optionee an option (the “Option”) to purchase from the Company all
or any number of an aggregate of <Number of Shares> shares, subject to
adjustment pursuant to Section 8 of the Plan (the “Option  Shares”),
of the Company’s common stock, $.001 par value per share, at a price of
$<price> per share.  The Option is
granted as of <Date of Grant> (the “Grant  Date”).


2.             Character  of  Option.  The Option is intended to be treated as an “incentive
stock option” within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”).


3.             Duration  of  Option.  Unless subject to earlier expiration or
termination pursuant to the terms of the Plan, the Option shall expire on the
ten year anniversary of the Grant Date.


4.             Exercise  of  Option.


(a)           Vesting Schedule.  The
Option may be exercised, at any time and from time to time until its expiration
or termination, for any or all of those Option Shares in respect of which the
Option shall have become exercisable, in accordance with the provisions set
forth below in this Section 4, on or at any time prior to the date of any such
exercise.  Subject to the provisions of
the Plan (including, without limitation, the provisions of Section 7.1(e) of
the Plan), the Option shall become exercisable for (i) 25% of the Option Shares
on [____________] (the “First  Vesting  Date”), and (ii) for
the remaining Option Shares in a series of twelve (12) quarterly installments
thereafter, with each installment being as nearly equal as practicable (as
determined by the Company in its reasonable discretion), with the first of such
quarterly installments becoming exercisable on the first day of the first
calendar quarter after the First Vesting Date and an additional of such quarterly
installments becoming exercisable on the first day of each calendar quarter
thereafter (other than the last of such quarterly installments which shall
become exercisable on the third anniversary of the First Vesting Date if such
third anniversary is later than the first day of the calendar quarter in which
such last 









 



 


installment would have been
otherwise exercisable) until the Option shall have become exercisable for all
of the Option Shares(1).  Notwithstanding
anything expressed or implied to the contrary in the foregoing provisions of
this Section 4(a), (A) the exercisability of the Option shall, as provided in
Section 4(b) below, be automatically Accelerated under certain circumstances
and (B) the exercisability of the Option may, as provided in Section 7.1(d) of
the Plan, at any time be Accelerated in the discretion of the Committee.


(b)           Acceleration of Vesting.  Notwithstanding
anything in Section 4(a) above to the contrary but subject to the provisions of
Section 4(c) below, in the event that (A) a Change of Control occurs prior to
the time that the Option is exercisable in full for all of the Option Shares,
(B) the Optionee is an employee of the Company immediately prior to such Change
of Control and (C) (i) the Optionee suffers any material adverse change in authorities, duties or responsibilities, (ii) the
Optionee voluntarily terminates his employment with the Company following any
relocation of the Optionee (without his written consent) by the Company to a
location that increases Optionee’s commute prior to such relocation by more
than fifty (50) miles or (iii) the Company terminates the Optionee’s employment
with the Company for any reason or no reason (other than Cause, as such term is
defined in Section 4(c) below), in the case of any of the foregoing clauses
(i), (ii) or (iii) at any time within 365 days after the occurrence of such
Change of Control, then the exercisability of the Option shall be automatically
Accelerated such that the Option shall become exercisable for an additional number
of Option Shares equal to fifty percent (50%) of the then Unvested Option
Shares (as defined below in Section 4(c) below).  The foregoing provisions of this Section 4(b)
shall be implemented ratably across all Unvested Option Shares that are subject
to the Option immediately prior to automatic Acceleration pursuant to this
Section 4(b) regardless of when the Option would have otherwise become
exercisable for such Unvested Option Shares pursuant to Section 4(a) above.
Notwithstanding anything express or implied to the contrary in the foregoing
provisions of this Section 4(b), the Option may, as provided in Section 7.1(d)
of the Plan, at any time be further accelerated at the discretion of the
Committee.


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






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



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(d)           Definitions.


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


“Unvested  Option  Shares” shall mean, at the
relevant time of reference thereto, those Option Shares for which the Option has
not yet become exercisable at such time pursuant to Section 4(a) and without
giving effect to the provisions of Section 4(b) above.


5.             Transfer  of  Option.  Other than as expressly permitted by the
provisions of Section 7.1(f) of the Plan, the Option may not be transferred
except by will or the laws of descent and distribution and, during the lifetime
of the Optionee, may be exercised only by the Optionee.


6.             Incorporation  of  Plan
Terms.  The Option is granted
subject to all of the applicable terms and provisions of the Plan, including,
but not limited to, the limitations on the Company’s obligation to deliver
Option Shares upon exercise set forth in Section 9.1 (Violation of Law),
Section 9.2 (Corporate Restrictions on Rights in Stock), Section 9.3 (Investment
Representations) and Section 9.7 (Tax Withholding).


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


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


 


	
  ACME PACKET, INC.

  	
   

  	
  OPTIONEE

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Optionee’s Address:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 



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Exhibit A


2006 EQUITY INCENTIVE
PLAN