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                                                                  EXHIBIT 10.26

                             ASSIGNMENT OF SUBLEASE

     THIS ASSIGNMENT OF SUBLEASE (this "Assignment") is entered into as of the
17th day of September, 1998, by and between PATHNET, INC., a Delaware
corporation ("Assignor") and AVANEX, INC., a California corporation
("Assignee").

                                    RECITALS

     A.   Jackson-Shaw Partners No. 33 Ltd., as landlord ("Jackson-Shaw") and
KLA Instruments Corporation, n/k/a KLA-Tencor Corporation, as tenant
("Sublessor") are parties to that certain Commercial Lease Agreement executed
by Landlord on June 21, 1989, concerning certain premises located at 405
International Parkway, Richardson, Texas (the "Building"), as amended by an
Amendment, Modification and Ratification of Lease Between Jackson-Shaw and
Sublessor dated July 13, 1989, a Second Amendment Modification and Ratification
of Lease dated June 29, 1990 between Garlan Real Estate Corporation, successor
in interest to Jackson-Shaw, as landlord ("Garlan") and Sublessor, and a Third
Amendment of Commercial Real Estate Lease Agreement dated on or about August
28, 1995 between Garlan and Sublessor (together, the "Master Lease", a copy of
which is attached hereto as Exhibit A).

     B.   Sublessor, as sublessor, and Assignor, as sublessee, are parties to
that certain Sublease Agreement dated October 16, 1997, as amended by an
Amendment to Sublease dated January, 1998 (as amended, the "Sublease"), a copy
of which is attached hereto as Exhibit B, concerning certain premises
designated as Suite 209 at the Building, as more particularly described in the
Sublease (the "Premises").

     C.   Assignor has entered into a lease of certain other space (the "New
Lease") and desires to vacate the Premises and assign the Sublease to Assignee
as of the commencement of the New Lease.

     D.   The parties hereto desire that the Sublease be assigned to Assignee
and that Assignee assume all obligations under the Sublease, each on the terms
and conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual promises of the parties and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

     1.   Assignment. Effective as October 1, 1998 (the "Effective Date"),
          Assignor hereby assigns to Assignee all of Assignor's right, title and
          interest in the Sublease, and Assignee hereby assumes from Assignor
          all of the obligations of the sublessee accruing under the Sublease
          from and after the Effective Date.

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     2.   Terms of Assignment. All provisions, terms and conditions of the
          Sublease shall apply to Assignee's occupancy of the Premises,
          including, without limitation, the Sublease Term, Minimum Monthly
          Rent, Additional Rent and any other charges, payments or rent owed by
          the sublessee thereunder, but excluding the Security Deposit set forth
          in Article 6 of the Sublease, and the Prepaid Rent set forth in
          Section 5.4 of the Sublease. Assignee shall pay all Minimum Monthly
          Rent, Additional Rent, and any other charges, payments or rent owed
          under the Sublease directly to Sublessor as required by the Sublease.

     3.   Security Deposit. Within ten (10) days after the date hereof, Assignee
          will deposit with Assignor a security deposit in the amount of TWELVE
          THOUSAND FOUR HUNDRED AND EIGHTY AND 39/100 DOLLARS (12,480.39) (the
          "Security Deposit"). The Security Deposit, which shall not bear
          interest to Assignee, shall be considered as security for the payment
          and performance by Assignee of all of Assignee's obligations,
          covenants, conditions and agreements under the Sublease. In the event
          of any breach or default by Assignee of any of the terms of the
          Sublease, Assignor shall have the right, but shall not be obligated,
          to apply all or any portion of the Security Deposit to cure such
          breach or default, in which event Assignee shall be obligated promptly
          to deposit with Assignor the amount necessary to restore the Security
          Deposit to the amount held by Assignor immediately prior to such
          advance by Assignor. Upon the expiration of the Sublease Term,
          Assignor shall (provided that Assignee is not in default under the
          terms of the Sublease) return and pay back the Security Deposit to
          Assignee, less such portion thereof as Assignor shall have retained to
          make good any breach or default by Assignee with respect to any of
          Assignee's aforesaid obligations, covenants, conditions or agreements.

     4.   Acceptance of Premises. Assignee hereby agrees to accept the Premises
          in their "as-is, where-is" condition, and acknowledges that Assignor
          has made no representation or warranty concerning the Premises or the
          suitability of the Premises for Assignee's intended uses. Assignor
          will leave the Premises broom clean but is under no obligation to make
          any other improvements, or perform any other activities, in
          preparation for Assignee's occupancy of the Premises.

     5.   Modification of Sublease: Extension of Term. Notwithstanding anything
          herein or in the Sublease to the contrary, Assignee shall have no
          right or authority to modify or amend the Sublease in any manner, and
          shall have no right or authority to extend the Sublease beyond the
          Termination Date.

     6.   Notices under Lease. Assignor and Assignee each agrees to provide to
          the other copies of any and all notices received by such party in
          connection

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          with the Sublease or the Premises within twenty four (24) hours of
          receipt thereof.

     7.   Indemnity by Assignor. Assignor hereby agrees to indemnify and hold
          Assignee harmless from and against any and all loss, claims, damages
          or expenses, including, without limitation, reasonable attorneys' fees
          and costs of suit, arising out of Assignor's occupancy of the Premises
          or under the Sublease, to the extent accruing prior to the Effective
          Date. This paragraph shall survive the expiration or sooner
          termination of the Sublease.

     8.   Indemnity by Assignee. Assignee hereby agrees to indemnify and hold
          Assignor harmless from and against any and all loss, claims, damages
          or expense, including, without limitation, reasonable attorneys' fees
          and costs of suit, arising out of Assignee's occupancy of the Premises
          or under the Sublease, to the extent accruing on or after the
          Effective Date. This paragraph shall survive the expiration or sooner
          termination of the Sublease.

     9.   Assignor's Remedies. In addition to all other remedies available to
          Assignor at law, equity or set forth herein, in the event of a breach
          or default by Assignee of any of the provisions of the Sublease,
          Assignor shall have all the remedies of Sublessor as set forth in the
          Sublease.

     10.  Brokerage. Each of Assignor and Assignee represents and warrants that
          it has dealt with no broker, finder, agent or other person in
          connection with this transaction except that Assignor has dealt with
          The Enright Company, and Assignee has dealt with The Staubach Company.
          Each party shall pay its respective broker a fee pursuant to a
          separate agreement. Each party hereby agrees to indemnify and hold the
          other party harmless from a breach of the representation in this
          paragraph. The terms of this paragraph shall survive the expiration or
          sooner termination of the Sublease.

     11.  Consent of Landlord. The effectiveness of this Assignment shall be
          contingent on the approval of Sublessor and the landlord under the
          Master Lease.

     12.  No Amendment. This Assignment may not be modified except by an
          agreement in writing executed by both parties hereto.

     13.  Entire Agreement. This Assignment contains the entire agreement of the
          parties as to the matters described herein, and no other
          representations, warranties, promises or agreements, whether oral or
          written, have been made or relied upon by either party.


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14.  Successors and Assigns. This Assignment shall be binding upon, and shall
     inure to the benefit of, Assignor and Assignee and their respective
     successors and assigns.

15.  Governing Law. This Assignment shall be governed by the laws of the State
     of Texas, other than its choice of law principles.

16.  Definitions. All capitalized terms not defined herein shall have the
     meanings given to such terms in the Sublease.

EXECUTED as of the day and year first written above.

                                        ASSIGNOR:

                                        PATHNET, INC.


                                        By: /s/ MICHAEL A. LUBIN
                                           -------------------------------------
                                           Name:  Michael A. Lubin
                                           Title: Vice President & General
                                                  Counsel

                                        ASSIGNEE:

                                        AVANEX, INC.


                                        By: /s/ SIMON CAO
                                           -------------------------------------
                                           Name:  Simon Cao
                                           Title: President


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