EXHIBIT 10.42

ADVANCED FIBRE COMMUNICATIONS

NOTICE OF GRANT OF STOCK OPTION

     Notice is hereby given of the following stock option grant (the “Option”)
to purchase shares of the Common Stock of ADVANCED FIBRE COMMUNICATIONS (the
“Corporation”):

     OPTIONEE:
                                                                                                    

     GRANT DATE:
                                                                                                    

     GRANT NUMBER:                      OPTION PRICE: $
                                         per share

     VESTING COMMENCEMENT DATE:
                                                                                

     NUMBER OF OPTION SHARES:
                                                                        shares

     EXPIRATION DATE:
                                                                                                    

     TYPE OF OPTION:                        Incentive Stock Option

                     Non-Statutory Stock Option

     DATE EXERCISABLE: Immediately Exercisable

VESTING SCHEDULE: The Option Shares shall be unvested and subject to repurchase
by the Corporation at the Option Price paid per share. As Optionee remains in
Service (as defined in the attached Stock Purchase Agreement), the Optionee
shall acquire a vested interest in, and the Corporation’s Repurchase Right will
accordingly lapse with respect to, (i) 25% of the Option Shares one (1) year
after the Vesting Commencement Date and (ii) the balance of the Option Shares in
equal successive monthly installments over each of the next thirty-six (36)
months of Service thereafter. In no event will any additional Option Shares vest
after the Optionee’s cessation of Service.

     Optionee understands that the Option is granted pursuant to the
Corporation’s 1993 Stock Option/Stock Issuance Plan, as amended (the “Plan”). By
signing below, optionee agrees to be bound by the terms and conditions of the
Plan and the terms and conditions of the Option as set forth in the Stock Option
Agreement attached hereto as Exhibit A. Optionee understands that any Option
Shares purchased under the Option will

 

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be subject to the terms and conditions set forth in the Stock Purchase Agreement
attached hereto as Exhibit B.

     Optionee hereby acknowledges receipt of a copy of the Plan in the form
attached hereto as Exhibit C.

     REPURCHASE RIGHTS. THE OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES
ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE
RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS
ASSIGNS UPON ANY PROPOSED SALE, ASSIGNMENT, TRANSFER, ENCUMBRANCE OR OTHER
DISPOSITION OF THE OPTION SHARES OR UPON TERMINATION OF SERVICE WITH THE
CORPORATION. THE TERMS AND CONDITIONS OF SUCH RIGHTS ARE SPECIFIED IN THE
ATTACHED STOCK PURCHASE AGREEMENT.

     NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue in the Service of the
Corporation for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation or the Optionee, which rights
are hereby expressly reserved by each, to terminate Optionee’s Service at any
time for any reason whatsoever, with or without cause.

                                        , 199                    
  Date

ADVANCED FIBRE COMMUNICATIONS

By: ________________________________________

Title: _____________________________________

____________________________________________
Optionee

Address: ____________________________________________

____________________________________________

Exhibit A: Stock Option Agreement
Exhibit B: Stock Purchase Agreement
Exhibit C: 1993 Stock Option/Stock Issuance Plan

 

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EXHIBIT A

STOCK OPTION AGREEMENT

 

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EXHIBIT B

STOCK PURCHASE AGREEMENT

 

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EXHIBIT C

1993 STOCK OPTION/STOCK ISSUANCE PLAN