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EXHIBIT 10.45 ADVANCED FIBRE COMMUNICATIONS, INC.
STOCK OPTION AGREEMENT RECITALS A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or of the
board of directors of any Parent or Subsidiary and consultants and other
independent advisors who provide services to the Corporation (or any Parent
or Subsidiary). B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporations grant of an option to Optionee. C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix. NOW, THEREFORE, it is hereby agreed as follows: 1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from
time to time during the option term specified in Paragraph 2 at the Exercise
Price. 2. OPTION TERM. This option shall have a term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6. 3. LIMITED TRANSFERABILITY. If this option is designated an
Incentive Option in the Grant Notice, then this option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionees death and may be exercised,
during Optionees lifetime, only by Optionee. However, if this option is
designated a Non-Statutory Option in the Grant Notice, then this option may,
in connection with the Optionees estate plan, be assigned in whole or in part
during Optionees lifetime to one or more members of the Optionees immediate
family or to a trust established for the exclusive benefit of one or more such
family members. The assigned portion shall be exercisable only by the person or
persons who acquire a proprietary interest in the option pursuant to such
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for this option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.




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4. DATES OF EXERCISE. This option shall become exercisable for
the Option Shares in one or more installments as specified in the Grant
Notice. As the option becomes exercisable for such installments, those
installments shall accumulate and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of
the option term under Paragraph 5 or 6. 5. CESSATION OF SERVICE. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable: (i) Should Optionee cease to remain in Service for any
reason (other than death, Permanent Disability or Misconduct) while
this option is outstanding, then Optionee shall have a period of three
(3) months (commencing with the date of such cessation of Service)
during which to exercise this option, but in no event shall this
option be exercisable at any time after the Expiration Date. (ii) Should Optionee die while this option is
outstanding, then the personal representative of Optionees estate or
the person or persons to whom the option is transferred pursuant to
Optionees will or in accordance with the laws of descent and
distribution shall have the right to exercise this option. Such right
shall lapse, and this option shall cease to be outstanding, upon the
EARLIER of (A) the expiration of the twelve (12)- month period
measured from the date of Optionees death or (B) the Expiration Date. (iii) Should Optionee cease Service by reason of
Permanent Disability while this option is outstanding, then Optionee
shall have a period of twelve (12) months (commencing with the date of
such cessation of Service) during which to exercise this option. In
no event shall this option be exercisable at any time after the
Expiration Date. (iv) During the limited period of post-Service
exercisability, this option may not be exercised in the aggregate for
more than the number of vested Option Shares for which the option is
exercisable at the time of Optionees cessation of Service. Upon the
expiration of such limited exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be
outstanding for any vested Option Shares for which the option has not
been exercised. However, this option shall, immediately upon
Optionees cessation of Service for any reason, terminate and cease to
be outstanding with respect to any Option Shares in which Optionee is
not otherwise at that time vested or for which this option is not
otherwise at that time exercisable. 2




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(v) Should Optionees Service be terminated for
Misconduct, then this option shall terminate immediately and cease to
remain outstanding. 6. SPECIAL ACCELERATION OF OPTION. (a) This option, to the extent outstanding at the time of a
Corporate Transaction but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of the Corporate Transaction, become exercisable for all of
the Option Shares at the time subject to this option and may be exercised for
any or all of those Option Shares as fully-vested shares of Common Stock. No
such acceleration of this option, however, shall occur if and to the extent:
(i) this option is, in connection with the Corporate Transaction, either to
be assumed by the successor corporation (or parent thereof) or to be replaced
with a comparable option to purchase shares of the capital stock of the
successor corporation (or parent thereof) or (ii) this option is to be
replaced with a cash incentive program of the successor corporation which
preserves the spread existing on the unvested Option Shares at the time of
the Corporate Transaction (the excess of the Fair Market Value of those
Option Shares over the aggregate Exercise Price payable for such shares) and
provides for subsequent pay-out in accordance with the option
exercise/vesting schedule set forth in the Grant Notice. The determination
of option comparability under clause (i) shall be made by the Plan
Administrator, and such determination shall be final, binding and conclusive. (b) Immediately following the Corporate Transaction, this
option shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation (or parent thereof) in connection with
the Corporate Transaction. (c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately
after such Corporate Transaction, to apply to the number and class of
securities which would have been issuable to Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such
Corporate Transaction, and appropriate adjustments shall also be made to the
Exercise Price, PROVIDED the aggregate Exercise Price shall remain the same. (d) This Agreement shall not in any way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets. 7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporations receipt of
consideration, appropriate adjustments shall be 3




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made to (i) the total number and/or class of securities subject to this
option and (ii) the Exercise Price in order to reflect such change and
thereby preclude a dilution or enlargement of benefits hereunder. 8. STOCKHOLDER RIGHTS. The holder of this option shall not have
any stockholder rights with respect to the Option Shares until such person
shall have exercised the option, paid the Exercise Price and become a holder
of record of the purchased shares. 9. MANNER OF EXERCISING OPTION. (a) In order to exercise this option with respect to all or
any part of the Option Shares for which this option is at the time
exercisable, Optionee (or any other person or persons exercising the option)
must take the following actions: (i) Execute and deliver to the Corporation a
Notice of Exercise for the Option Shares for which the option is
exercised. (ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms: (A) cash or check made payable to the
Corporation; (B) a promissory note payable to the Corporation,
but only to the extent authorized by the Plan Administrator in
accordance with Paragraph 13; (C) shares of Common Stock held by Optionee (or
any other person or persons exercising the option) for the
requisite period necessary to avoid a charge to the Corporations
earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or (D) to the extent the option is exercised for
vested Option Shares, through a special sale and remittance
procedure pursuant to which Optionee (or any other person or
persons exercising the option) shall concurrently provide
irrevocable written instructions (I) to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased shares plus
all applicable Federal, state and local income and employment
taxes 4




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required to be withheld by the Corporation by reason of
such exercise and (II) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction. Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Notice of Exercise delivered to
the Corporation in connection with the option exercise. (iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if
other than Optionee) have the right to exercise this option. (iv) Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee)
for the satisfaction of all Federal, state and local income and
employment tax withholding requirements applicable to the option
exercise. (b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto. (c) In no event may this option be exercised for any fractional
shares. 10. COMPLIANCE WITH LAWS AND REGULATIONS. (a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance. (b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals. 5




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11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionees assigns and the legal representatives, heirs and
legatees of Optionees estate. 12. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to
be given or delivered to Optionee shall be in writing and addressed to Optionee
at the address indicated below Optionees signature line on the Grant Notice.
All notices shall be deemed effective upon personal delivery or upon deposit in
the U.S. mail, postage prepaid and properly addressed to the party to be
notified. 13. FINANCING. The Plan Administrator may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse
promissory note payable to the Corporation. The terms of any such promissory
note (including the interest rate, the requirements for collateral and the terms
of repayment) shall be established by the Plan Administrator in its sole
discretion. 14. CONSTRUCTION. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option. 15. GOVERNING LAW. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of Delaware without
resort to that States conflict-of-laws rules. 16. EXCESS SHARES. If the Option Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock which may
without stockholder approval be issued under the Plan, then this option shall be
void with respect to those excess shares, unless stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock issuable
under the Plan is obtained in accordance with the provisions of the Plan. 17. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the event
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant: -     This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option is
exercised for one or more Option Shares: (A) more than three (3)
months after the 6




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date Optionee ceases to be an Employee for any reason other than
death or Permanent Disability or (B) more than twelve (12) months
after the date Optionee ceases to be an Employee by reason of
Permanent Disability. -       No installment under this option shall qualify for
favorable tax treatment as an Incentive Option if (and to the extent)
the aggregate Fair Market Value (determined at the Grant Date) of the
Common Stock for which such installment first becomes exercisable
hereunder would, when added to the aggregate value (determined as of
the respective date or dates of grant) of the Common Stock or other
securities for which this option or any other Incentive Options
granted to Optionee prior to the Grant Date (whether under the Plan or
any other option plan of the Corporation or any Parent or Subsidiary)
first become exercisable during the same calendar year, exceed One
Hundred Thousand Dollars ($100,000) in the aggregate. Should such One
Hundred Thousand Dollar ($100,000) limitation be exceeded in any
calendar year, this option shall nevertheless become exercisable for
the excess shares in such calendar year as a Non-Statutory Option. -       Should the exercisability of this option be accelerated
upon a Corporate Transaction, then this option shall qualify for
favorable tax treatment as an Incentive Option only to the extent the
aggregate Fair Market Value (determined at the Grant Date) of the
Common Stock for which this option first becomes exercisable in the
calendar year in which the Corporate Transaction occurs does not, when
added to the aggregate value (determined as of the respective date or
dates of grant) of the Common Stock or other securities for which this
option or one or more other Incentive Options granted to Optionee
prior to the Grant Date (whether under the Plan or any other option
plan of the Corporation or any Parent or Subsidiary) first become
exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. Should the applicable One
Hundred Thousand Dollar ($100,000) limitation be exceeded in the
calendar year of such Corporate Transaction, the option may
nevertheless be exercised for the excess shares in such calendar year
as a Non-Statutory Option. -      Should Optionee hold, in addition to this option, one
or more other options to purchase Common Stock which become
exercisable for the first time in the same calendar year as this
option, then the foregoing limitations on the exercisability of such
options as Incentive Options shall be applied on the basis of the
order in which such options are granted. 18. LEAVE OF ABSENCE. The following provisions shall apply upon the
Optionees commencement of an authorized leave of absence: 7




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(a) The exercise schedule in effect under the Grant Notice
shall be frozen as of the first day of the authorized leave, and this
option shall not become exercisable for any additional installments of
the Option Shares during the period Optionee remains on such leave. (b) Should Optionee resume active Employee status within
sixty (60) days after the start date of the authorized leave, Optionee
shall, for purposes of the exercise schedule set forth in the Grant
Notice, receive Service credit for the entire period of such leave.
If Optionee does not resume active Employee status within such sixty
(60)-day period, then no Service credit shall be given for the period
of such leave. (c) If the option is designated as an Incentive Option in
the Grant Notice, then the following additional provision shall apply: -       If the leave of absence continues for more than
ninety (90) days, then this option shall automatically convert to
a Non-Statutory Option under the Federal tax laws on the ninety-first
(91st) day of such leave, unless the Optionees reemployment rights
are guaranteed by statute or by written agreement. Following
any such conversion of the option, all subsequent exercises of
such option, whether effected before or after Optionees return
to active Employee status, shall result in an immediate taxable
event, and the Corporation shall be required to collect from
Optionee the Federal, state and local income and employment
withholding taxes applicable to such exercise. (d) In no event shall this option become exercisable for
any additional Option Shares or otherwise remain outstanding if
Optionee does not resume Employee status prior to the Expiration Date
of the option term. 8




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EXHIBIT I NOTICE OF EXERCISE I hereby notify Advanced Fibre Communications, Inc. (the
Corporation) that I elect to purchase shares of the Corporations
Common Stock (the Purchased Shares) at the option exercise price of $
per share (the Exercise Price) pursuant to that certain option (the
Option) granted to me under the Corporations 1996 Stock Incentive Plan on
     , 199 . Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a
condition for exercise. Alternatively, I may utilize the special
broker-dealer sale and remittance procedure specified in my agreement to
effect payment of the Exercise Price. ___________________, 199__
Date Optionee Address: Print name in exact manner
it is to appear on the
stock certificate: Address to which certificate
is to be sent, if different
from address above: Social Security Number: Employee Number:




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APPENDIX The following definitions shall be in effect under the Agreement: A. AGREEMENT shall mean this Stock Option Agreement. B. BOARD shall mean the Corporations Board of Directors. C. CODE shall mean the Internal Revenue Code of 1986, as amended. D. COMMON STOCK shall mean the Corporations common stock. E. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party: (i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of
the Corporations outstanding securities are transferred to a person
or persons different from the persons holding those securities
immediately prior to such transaction, or (ii) the sale, transfer or other disposition of all or
substantially all of the Corporations assets in complete liquidation
or dissolution of the Corporation. F. CORPORATION shall mean Advanced Fibre Communications, Inc., a Delaware
corporation. G. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance. H. EXERCISE DATE shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement. I. EXERCISE PRICE shall mean the exercise price per share as specified in
the Grant Notice. J. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice. K. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions: A-1




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(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
the price is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If
there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists. (ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no
closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists. L. GRANT DATE shall mean the date of grant of the option as specified in
the Grant Notice. M. GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby. N. INCENTIVE OPTION shall mean an option which satisfies the requirements
of Code Section 422. O. MISCONDUCT shall mean the commission of any act of fraud, embezzlement
or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive
of all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary). P. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422. Q. NOTICE OF EXERCISE shall mean the notice of exercise in the form
attached hereto as Exhibit I. A-2




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R. OPTION SHARES shall mean the number of shares of Common Stock subject
to the option as specified in the Grant Notice. S. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice. T. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain. U. PERMANENT DISABILITY shall mean the inability of Optionee to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more. V. PLAN shall mean the Corporations 1996 Stock Incentive Plan. W. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
Board acting in its administrative capacity under the Plan. X. SERVICE shall mean the Optionees performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee,
a non-employee member of the board of directors or a consultant or independent
advisor. Y. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
Stock Exchange. Z. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A-3




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ADDENDUM
TO
STOCK OPTION AGREEMENT The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement dated 2- (the Option
Agreement) by and between Advanced Fibre Communications, Inc. (the
Corporation) and 1- (Optionee) evidencing the stock option (the Option)
granted on such date to Optionee under the terms of the Corporations 1996 Stock
Incentive Plan, and such provisions shall be effective immediately. All
capitalized terms in this Addendum, to the extent not otherwise defined herein,
shall have the meanings assigned to them in the Option Agreement. INVOLUNTARY TERMINATION FOLLOWING
CORPORATE TRANSACTION 1. To the extent the Option is, in connection with a Corporate
Transaction, to be assumed or replaced with a comparable option in accordance
with Paragraph 6 of the Option Agreement, the Option shall not accelerate upon
the occurrence of that Corporate Transaction, and the Option shall accordingly
continue, over Optionees period of Service after the Corporate Transaction, to
become exercisable for the Option Shares in one or more installments in
accordance with the provisions of the Option Agreement. However, immediately
upon an Involuntary Termination of Optionees Service within twelve (12) months
following such Corporate Transaction, the Option (or any replacement grant), to
the extent outstanding at the time but not otherwise fully exercisable, shall
automatically accelerate so that the Option shall become immediately exercisable
for all the Option Shares at the time subject to the Option and may be exercised
for any or all of those Option Shares as fully vested shares. The Option shall
remain so exercisable until the EARLIER of (i) the Expiration Date or (ii) the
expiration of the one (1)-year period measured from the date of the Involuntary
Termination. 2. For purposes of this Addendum, an INVOLUNTARY TERMINATION shall
mean the termination of Optionees Service by reason of: (i) Optionees involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or (ii) Optionees voluntary resignation following (A) a change in
Optionees position with the Corporation (or Parent or Subsidiary employing
Optionee) which materially reduces Optionees level of responsibility, (B) a
reduction in Optionees level of compensation (including base salary, fringe
benefits and participation in any corporate-performance based bonus or
incentive programs) by more than fifteen percent (15%) or




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(C) a relocation of Optionees place of employment by more than fifty (50)
miles, provided and only if such change, reduction or relocation is
effected by the Corporation without Optionees consent. 3. The provisions of Paragraph 1 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of Optionees Service within twelve (12) months after the Corporate
Transaction and shall supersede any provisions to the contrary in Paragraph 5 of
the Option Agreement. IN WITNESS WHEREOF, Advanced Fibre Communications, Inc. has caused
this Addendum to be executed by its duly-authorized officer, and Optionee has
executed this Addendum, all as of the Effective Date specified below. ADVANCED FIBRECOMMUNICATIONS, INC.By:Title:1-, OPTIONEEEFFECTIVE
DATE:,
199
 2.




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ADDENDUM
TO
STOCK OPTION AGREEMENT The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement dated 2- (the Option
Agreement) by and between Advanced Fibre Communications, Inc. (the
Corporation) and 1- (Optionee) evidencing the stock option (the Option)
granted on such date to Optionee under the terms of the Corporations 1996 Stock
Incentive Plan, and such provisions shall be effective immediately. All
capitalized terms in this Addendum, to the extent not otherwise defined herein,
shall have the meanings assigned to them in the Option Agreement. INVOLUNTARY TERMINATION FOLLOWING
CHANGE IN CONTROL 1. The Option shall not accelerate upon the occurrence of a Change
in Control, and the Option shall, over Optionees continued period of Service
after the Change in Control, continue to become exercisable for the Option
Shares in accordance with the provisions of the Option Agreement. However,
immediately upon an Involuntary Termination of Optionees Service within twelve
(12) months following the Change in Control, the Option, to the extent
outstanding at the time but not otherwise fully exercisable, shall automatically
accelerate so that the Option shall become immediately exercisable for all the
Option Shares at the time subject to the Option and may be exercised for any or
all of those Option Shares as fully vested shares. The Option shall remain so
exercisable until the EARLIER of (i) the Expiration Date or (ii) the expiration
of the one (1)-year period measured from the date of the Involuntary
Termination. 2. For purposes of this Addendum, a CHANGE IN CONTROL shall be
deemed to occur in the event of a change in ownership or control of the
Corporation effected through either of the following transactions: (i) the acquisition, directly or indirectly, by any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended) of securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporations outstanding securities pursuant to a tender or exchange offer made
directly to the Corporations stockholders which the Board does not recommend
such stockholders to accept, or (ii) a change in the composition of the Board over a period
of thirty-six (36) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the




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beginning of such period or (B) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such election or
nomination was approved by the Board. 3. For purposes of this Addendum, an INVOLUNTARY TERMINATION shall
mean the termination of Optionees Service by reason of: (i) Optionees involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or (ii) Optionees voluntary resignation following (A) a change in
Optionees position with the Corporation (or Parent or Subsidiary employing
Optionee) which materially reduces Optionees level of responsibility, (B) a
reduction in Optionees level of compensation (including base salary, fringe
benefits and participation in any corporate-performance based bonus or incentive
programs) by more than fifteen percent (15%) or (C) a relocation of Optionees
place of employment by more than fifty (50) miles, provided and only if such
change, reduction or relocation is effected by the Corporation without
Optionees consent. 4. The provisions of Paragraph 1 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of Optionees Service within twelve (12) months after the Change in
Control and shall supersede any provisions to the contrary in Paragraph 5 of the
Option Agreement. IN WITNESS WHEREOF, Advanced Fibre Communications, Inc. has caused
this Addendum to be executed by its duly-authorized officer, and Optionee has
executed this Addendum, all as of the Effective Date specified below. ADVANCED FIBRE COMMUNICATIONS, INC.By:Title:1-, OPTIONEEEFFECTIVE
DATE: ,
199
 2.




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ADDENDUM
TO
STOCK OPTION AGREEMENT The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement dated 2- (the Option
Agreement) by and between Advanced Fibre Communications, Inc. (the
Corporation) and 1- (Optionee) evidencing the stock option (the Option)
granted on such date to Optionee under the terms of the Corporations 1996 Stock
Incentive Plan, and such provisions shall be effective immediately. All
capitalized terms in this Addendum, to the extent not otherwise defined herein,
shall have the meanings assigned to them in the Option Agreement. LIMITED STOCK APPRECIATION RIGHT 1. Optionee is hereby granted a limited stock appreciation right
exercisable upon the following terms and conditions: - Optionee shall have the unconditional right (exercisable at
any time during the thirty (30)-day period immediately following a Hostile Take-
Over) to surrender the Option to the Corporation, to the extent the Option is at
the time exercisable for vested shares of Common Stock. In return for the
surrendered Option, Optionee shall receive a cash distribution from the
Corporation in an amount equal to the excess of (A) the Take-Over Price of the
shares of Common Stock which are at the time vested under the surrendered Option
(or surrendered portion) over (B) the aggregate Exercise Price payable for such
shares. - To exercise this limited stock appreciation right, Optionee must,
during the applicable thirty (30)-day exercise period, provide the Corporation
with written notice of the option surrender in which there is specified the
number of Option Shares as to which the Option is being surrendered. Such
notice must be accompanied by the return of Optionees copy of the Option
Agreement, together with any written amendments to such Agreement. The cash
distribution shall be paid to Optionee within five (5) days following such
delivery date, and neither the approval of the Plan Administrator nor the
consent of the Board shall be required in connection with such option surrender
and cash distribution. Upon receipt of such cash distribution, the Option shall
be cancelled with respect to the Option Shares for which the Option has been
surrendered, and Optionee shall cease to have any further right to acquire those
Option Shares under the Option Agreement. The Option shall, however, remain
outstanding and exercisable for the balance of the Option Shares (if any) in
accordance with the terms of the Option Agreement, and the Corporation shall
issue a new stock option agreement (substantially in the same form of the
surrendered Option Agreement) for those remaining Option Shares.




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- In no event may this limited stock appreciation right be
exercised when there is not a positive spread between the Fair Market Value of
the Option Shares and the aggregate Exercise Price payable for such shares.
This limited stock appreciation right shall in all events terminate upon the
expiration or sooner termination of the option term and may not be assigned or
transferred by Optionee. 2. For purposes of this Addendum, the following definitions shall be
in effect: - A HOSTILE TAKE-OVER shall be deemed to occur in the event
any person or related group of persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporations outstanding securities pursuant
to a tender or exchange offer made directly to the Corporations stockholders
which the Board does not recommend such stockholders to accept. - The TAKE-OVER PRICE per share shall be deemed to be equal to
the GREATER of (A) the Fair Market Value per Option Share on the option
surrender date or (B) the highest reported price per share of Common Stock paid
by the tender offeror in effecting the Hostile Take-Over. However, if the
surrendered Option is designated as an Incentive Option in the Grant Notice,
then the Take-Over Price shall not exceed the clause (A) price per share. IN WITNESS WHEREOF, Advanced Fibre Communications, Inc. has caused
this Addendum to be executed by its duly-authorized officer, and Optionee has
executed this Addendum, all as of the Effective Date specified below. ADVANCED FIBRE COMMUNICATIONS, INC.By:Title:1-, OPTIONEEEFFECTIVE
DATE:
, 199
 2.