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                                                                    EXHIBIT 10.8

NOTE: Information in this document marked with an "[*]" has been omitted and
filed separately with the Commission. Confidential treatment has been requested
with respect to the omitted portions.

                            FRAME PURCHASE AGREEMENT

                         FOR OPTO ELECTRONIC COMPONENTS

                                     BETWEEN

                               AVANEX CORPORATION

                                       AND

                                     ALCATEL

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This Agreement is made the 31st day of July 2003, between:

AVANEX CORPORATION, a Delaware corporation having a place of business at 40919
Encyclopedia Circle, Fremont, California 94538, United States of America,
(hereinafter referred to as "Supplier").

and

ALCATEL, a French Company organized and existing under the laws of France,
having its registered office 54 rue La Boetie 75008 Paris France, (hereinafter
"Alcatel") acting on behalf of its controlled companies as defined by Article L
233-1 of the French "Code de Commerce", (hereinafter the "Buyer") represented by
acting as;

WITNESSETH:

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CONTENTS.

1.       Definitions.

2.       Scope.

3.       Purchase Orders - Logistic - Minimum Quantities.

4.       Place - Date of Delivery.

5.       Risk.

6.       Price and Payment terms

7.       Acceptance And Rejection.

8.       Warranty.

9.       Reporting And Reviews.

10.      Quality

11.      Environmental requirements

12.      Support.

13.      Manufacturing Change.

14.      Intellectual Property.

15       Liability.

16.      Insurance.

17.      Term And Termination.

18.      Force Majeure.

19.      Invalidity.

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20.      Waiver.

21.      Survival Of Obligations.

22.      Entire Agreement - Amendments.

23.      Assignment.

24.      Subcontractors.

25.      Headings.

26.      Hierarchy of documents.

27.      Notices.

28.      Confidentiality.

29.      Applicable Law

30.      Business Practices

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WHEREAS

a.       Supplier is experienced in the manufacture and supply of Opto
         Electronic Components suitable for application in the manufacture of
         terrestrial and submarine telecommunication systems equipment.

b.       Buyer which is a major manufacturer in terrestrial and submarine
         telecommunication systems equipment desires to purchase Opto Electronic
         Components.

c.       Supplier and Buyer are mutually desirous of entering into this Frame
         Agreement for the supply of such Opto Electronic Components
         (hereinafter referred to as "Products") by Supplier to Buyer, on the
         following terms and conditions of trade and upon Purchase Orders.

NOW IT IS HEREBY AGREED AS FOLLOWS:

1.       DEFINITIONS. Except as otherwise defined below, initially capitalized
         terms used herein shall have the definitions assigned to such terms in
         the Share Acquisition and Asset Purchase Agreement or the Supply
         Agreement in connection with which this Agreement is entered into by
         and between the Parties.

1.1      "Agreement" shall mean this Frame Purchase Agreement and its Exhibits.

1.2      "Delivery" shall mean delivery in accordance with this Agreement.

1.3      "Party" shall mean either Supplier or Buyer.

1.4      "Product" includes the components, standard and custom listed in
         Exhibit A1 for terrestrial and A2 for submarine in volume production.
         The products under development are excluded from the scope of this
         Agreement.

1.5      "Purchase Order" shall mean a Purchase Order from Buyer with reference
         to this Agreement or a Purchase Order placed by a Contract Manufacturer
         (CM) or a LSP Logistic Service Provider (LSP) in each case as requested
         by buyer.

1.6      " Day" shall mean calendar day.

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1.7      "Buyer" shall mean any controlled companies of Alcatel as defined in
         article L 233-1 of the French "Code de Commerce" as well as their
         contract manufacturers (CM) and / or Logistics Service Providers (LSP)
         which have accepted in writing to abide by the terms and conditions of
         this Agreement, including but not limited to payment and
         confidentiality obligations.

2.       SCOPE.

2.1      Supplier hereby agrees to the supply and Buyer agrees to the purchase
         of Products, such supply to be on the terms and conditions hereinafter
         set forth, for Submarine components, the provision attached in exhibit
         D shall have precedent over the terms & conditions of this Agreement.
         Supply of Products shall be by way of Purchase Orders placed by Buyer
         upon Supplier.

2.2      Products may only be delivered against Purchase Orders issued by Buyer
         or its CMs or LSPs as indicated by Buyer. Purchase Orders shall be
         placed in writing by either printed Purchase Order or letter and either
         posted or transmitted by facsimile, or both, or by EDI when mutually
         agreed.

3.       PURCHASE ORDERS - LOGISTIC - MINIMUM QUANTITIES

3.1      Purchase Orders

The Purchase Orders will be confirmed by Supplier [*] ([*]) business days after
the receipt of the Purchase Order for standard Products and not later than [*]
([*]) days for custom Products; provided that supplier's failure to confirm any
such Purchase Order within the forgoing time periods shall be deemed Supplier's
acceptance of the relevant Purchase Order.

3.2      Logistics

[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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         3.2.1. Supplier and Buyer will agree to put in place collaborative
         forecasting and communication programs in order to meet Buyer's
         flexibility requirements and Supplier's visibility needs as well as to
         reduce delivery lead times.

         3.2.2 Unless otherwise agreed between Supplier and Buyer, Buyer shall
         have the option of implementing either Option 1 or Option 2 below with
         respect to any Product, provided however, that Buyer may not
         concurrently order the same Product under Option 1 and Option 2. Option
         1 will apply unless Supplier and Buyer execute a logistics agreement,
         in which case Buyer and Supplier will implement Option 2.

               A. Option 1   No Logistics Agreement.

               Purchase Orders will be placed by Buyer. The Purchase Order lead
               time is indicated in Exhibit C.

               Buyer may cancel - in whole or in part - an accepted order prior
               to the agreed delivery date subject to a minimum prior written
               notice to Supplier as mentioned in Exhibit C [*] except as set
               forth in Exhibit C for custom Products.

               Buyer may reschedule a Purchase Order - in whole or in part -
               prior to the agreed delivery date subject to a minimum prior
               written notice to Supplier as mentioned in Exhibit C [*] except
               as set forth in Exhibit C for custom Products.

               B. Option 2 Logistics Agreement

               Provided a logistic agreement is executed between Supplier and
               Buyer regarding the list of concerned Products, the type of
               Products (standard or custom as indicated in Exhibit B), the
               required buffer stock (if any) per Product, Buyer and Supplier
               shall implement the following Option 2, unless Buyer and
               Supplier agree to implement other logistics conditions.

[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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1. Standard Products

- Buyer will provide Supplier with non-binding six (6) month rolling forecasts,
updated on a monthly basis .Such forecast shall represent a good faith
expectation of Buyer's anticipated needs and will be used by Supplier for
manufacturing planning purposes.

               The Purchase Order lead time is indicated in Exhibit C. Buyer may
               cancel, in whole or in part, purchase orders prior to the agreed
               delivery date subject to a minimum prior written notice to
               Supplier as mentioned in Exhibit C [*].

               Buyer may reschedule, in whole or in part, a Purchase Order prior
               to the agreed delivery date subject to a minimum prior written
               notice to Supplier as mentioned in Exhibit C [*].

               2. Custom Products

               Buyer will provide Supplier with non-binding, six (6) month
               rolling forecasts, updated on a monthly basis. Such forecast
               shall represent a good faith expectation of Buyer's anticipated
               needs and will be used by Supplier for manufacturing planning
               purposes. The first weeks of any such forecast corresponding to
               the manufacturing lead-time (as specified in Exhibit C) shall be
               a binding commitment of Buyer to purchase (hereinafter referred
               to as the "Demand Plan").

               -  The Purchase Order lead-time is indicated in Exhibit C.

               -  Buyer may cancel - in whole or in part - Purchases Order or a
                  Demand Plan, prior to the agreed delivery date subject to a
                  minimum prior written notice to Supplier as mentioned in
                  Exhibit C [*] except as provided in Exhibit C.

               -  Buyer may reschedule - in whole or in part - a Purchase Order
                  or a Demand Plan prior to the agreed delivery date subject to
                  a minimum prior written notice to Supplier as mentioned in
                  Exhibit C [*] except as provided in Exhibit C.

[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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               -  Supplier shall immediately cease to incur expense against the
                  cancelled or decreased Purchase Order or Demand Plan as of the
                  date of receipt of Buyer's prior notice as set forth in
                  Exhibit C.

3.4      Minimum quantities

No minimum quantity will apply to any individual Purchase Order, except as may
be mutually agreed between Supplier and Buyer.

4.       PLACE, DATE OF DELIVERY.

The Products shall be delivered as set forth in article 6 below.

Without prejudice to any other rights and remedies, if Supplier's delay exceeds
[*] (other than due to an Event of Force Majeure or Buyer's or its agents acts
or omissions), Buyer may cancel the affected portion of Products [*].

5.       TITLE AND RISK OF LOSS.

Title and risk of loss in the Products shall pass to Buyer as set forth in
article 6 below.

[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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6.       PRICE AND PAYMENT TERMS

6.1      Price and delivery

6.1.1.   Supplier shall invoice Buyer at the prices set forth in the applicable
         Exhibit B. The prices stated in this Exhibit are maximum prices for the
         Products ordered for delivery during the relevant time period.

         If, at any time, [*], then [*].

         The prices set forth in the applicable Exhibit B are stated in Euro
         (the "Original Currency").

6.1.2.   Supplier shall deliver the Products in accordance with the following
         International Chamber of Commerce Incoterms 2000:

           (i) FCA (Supplier's factory), provided that Buyer and Supplier may
           mutually agree upon other shipping terms for Products desired by
           Buyer in territories other than:

               EU
               CANADA
               CHINA
               USA

           (ii) Title to and risk of loss in the Products pass to Buyer upon
           delivery of Products to Buyer under Section 6.1.2(i) above.

6.2      Payments terms

6.2.1    Payment shall be made in the Original Currency, unless otherwise agreed
         by Supplier and Buyer.

         In this later case, the exchange rule will be as follows: if during
         three (3) consecutive months the average exchange rate varies by more
         than [*] percent ([*]%) Buyer shall notify Supplier before the 10th of
         the month of the variation (M). The new exchange rate will be
         implemented for the Purchase Orders placed from the first day of the
         following month (M+1) and for deliveries starting the first day of M+2.

[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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           Ex rate     1 Euro = 1 USD

6.2.2    Payment shall be made within [*] after the date of supplier invoice,
         invoice being made not sooner than the date of shipment, unless
         otherwise agreed between Buyer and Supplier.

7.       ACCEPTANCE AND REJECTION.

7.1      Supplier shall use commercially reasonable efforts to provide Buyer
         with reasonable assistance and information at Buyer's sole cost and
         expenses, that Buyer may reasonably request in performing Buyer's test
         under Section 7.5 below.

7.2      Buyer shall have [*] after the date of receipt of each shipment of
         product by Supplier to Buyer under Section 6 above to inspect the
         products for any patent defect such as non conformity in quantity or
         type of Product as set forth in the relevant Purchase Order. In the
         event that any shipment contains any such defect, Buyer shall have the
         right to reject the affected portion of the Products with respect to
         such Purchase Order.

7.3      Failure by Buyer to provide written notice of rejection within [*] of
         the date of receipt with respect to any shipment or part thereof in
         accordance with Section 7.1 above, shall be deemed Buyer's acceptance
         of the relevant shipment, or portion thereof, not subject to its
         written notice of rejection. Such acceptance shall not impair the
         warranties set forth in this Agreement.

7.4      Supplier agrees to promptly replace any non-conforming shipment or part
         thereof under section 7.2 above.

7.5      Buyer shall have the right to screen and test the ordered Products in
         order to retain such items it can accept.

7.6      Buyer shall notify Supplier of any hidden or epidemic failure rates
         within [*] after the date the hidden or epidemic failure becomes
         apparent by Buyer.

[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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7.7      Supplier shall notify Buyer within [*] if the date the hidden or
         epidemic failure becomes apparent and which Supplier is aware of in the
         relevant Product.

8.       WARRANTY.

Supplier warrants that the Products to be provided under this Agreement are new.

Supplier warrants that the Products shall meet the applicable specifications and
shall be free from defects resulting from faulty design, materials or
workmanship [*] from the date of delivery to Buyer under Section 6.1.2 above.

The returned material will be only accepted upon RMA procedure, RMA number being
given within no more than [*].

Supplier's sole obligation under this warranty shall be to [*].

This warranty shall not apply, inter alia, to defects or deterioration in
Products caused by or attributable to (i) utilization otherwise than in
accordance with instructions furnished by Supplier, or (ii) improper maintenance
and/or storage, or (iii) Products modification not provided for by Supplier.

THE FOREGOING WARRANTY SETS FORTH THE ENTIRE LIABILITY AND OBLIGATIONS OF
SUPPLIER, SUPPLIER AFFILIATED COMPANIES AND THEIR RESPECTIVE SUPPLIERS FOR
DEFECTS OR DEFICIENCIES IN THE PRODUCTS, WHETHER BASED ON BREACH OF WARRANTY, OR
OTHERWISE. THE WARRANTIES SET FORTH OR LIMITED HEREIN ARE THE SOLE AND EXCLUSIVE
WARRANTIES AND ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED, STATUTORY
OR OTHERWISE, INCLUDING WARRANTIES OF NONINFRINGEMENT, FITNESS FOR PARTICULAR
PURPOSE AND MERCHANTABILITY, ACCURACY OR TITLE. TO THE EXTENT AN IMPLIED
WARRANTY CANNOT BE EXCLUDED, SUCH WARRANTY IS LIMITED IN DURATION TO THE
WARRANTY PERIOD.

[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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9.       REPORTING AND REVIEWS.

Unless otherwise agreed, Supplier and Buyer will review on a quarterly basis
Supplier and the Buyer's performance under this Agreement. Such reviews shall
include, but not be limited to:

9.1.     Supplier's performance in respect of quality, on-time deliveries, price
         levels and lead times;

9.2.     If applicable, Buyer's performance in respect of notifying Rolling
         Forecasts and placing subsequent Purchase Orders.

9.3.     opportunities to enhance specifications for performance improvement.

9.4.     Buyer and Supplier each appoint contract coordinators as indicated in
         Exhibit B.

9.5.     Length of any Demand Plan, to the extent a six (6) month, rolling
         forecast is insufficient to permit Supplier to meet delivery, volume or
         pricing commitments agreed to with respect to Products under such
         Demand Plan.

10.      Quality

10.1     Quality Certification

         Supplier is responsible for utilizing processes, in the supply of the
         products and services covered in this Agreement, that are certified to
         ISO 9000 or planned to be certified ISO 9000 with a specified
         timeframe. Alcatel reserves the right to invoke the requirement for TL
         9000 registration with a mutually specified timeframe for compliance.

10.2     Quality Requirements

         Supplier is responsible for insuring that products furnished hereunder
         by Supplier have undergone or have been subject to Supplier's quality
         assurance and quality control activities and procedures, which may
         include performance measurements, testing, quality process reviews or
         inspections. Supplier's quality management system shall be capable of
         early and prompt detection of actual or potential and foreseeable
         material deficiencies, trends or conditions which could result in
         unsatisfactory quality, and for timely and effective corrective action.

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         Supplier is responsible for insuring that his suppliers and
         subcontractors maintain a quality system that supports the ISO 9000
         quality system requirements. The Supplier shall not appoint any
         subcontractor to carry out all or part of its obligations hereunder
         without having previously informed the Buyer.

         Buyer is entitled to conduct audits at Supplier's factories including
         its subcontractors' factories with, not less than, five (5) business
         days prior notice to Supplier. Types of audits that may be conducted
         include, but are not limited to, quality system audits, product
         specific audits, and process audits, provided that (i) Buyer may only
         conduct any such audit no more than twice during any twelve month
         period, (ii) the duration of such audit shall not exceed five (5)
         business days; and (iii) all costs and expenses related to such audit
         shall be borne exclusively by Buyer.

         Nothing contained herein will diminish Supplier's obligation to deliver
         defect-free material, under any warranty, or any other provision of
         this Agreement.

         Upon Buyer's request, Supplier shall provide Buyer with a certificate
         of conformance and/or test results and quality records with respect to
         Supplier's quality and/or ISO obligations under this Article 10.

         In addition, Supplier is responsible for complying with additional
         quality requirements as designated by any local agreements between
         Supplier and Buyer, as mutually agreed between the Parties.

11.      ENVIRONMENTAL REQUIREMENTS.

Supplier is responsible for complying with industry standards regarding
environmental care as well as with the specific standards required per
Supplier's region.

[*]

More specifically, Supplier is responsible for compliance with the substances
and product end of live European regulations.

[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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In addition, Supplier is responsible for complying with additional environmental
standards as designated by any local agreements between Supplier and Buyer.

12.      SUPPORT.

12.1     Supplier shall on a commercially reasonable basis, provide repair
         services and replacement parts for the Products, until the earlier of
         [*].

12.2     For as long as Buyer [*], Supplier will [*].

12.3     If for any reason during the term of this Agreement, Supplier intends
         to cease manufacturing or supplying Products conforming to the then
         current specification, Supplier shall give Buyer at least [*] prior
         written notice of its intention to cease manufacturing or supplying the
         Products in order for Buyer, at its option, to place an all last time
         buy. The delivery of such an all last time buy shall take place within
         [*] of the date of Supplier's notice of discontinuation.

13.      CHANGES.

13.1     Either Supplier or Buyer may request variations to any part of this
         Agreement, any Specifications, the obligations contained within this
         Agreement. All such requests must be made in writing.

13.2     The Party receiving such a request shall promptly (within no more than
         thirty (30) days) advise the other Party in writing of the effects of
         the proposed change upon the terms of this Agreement and the Products,
         in the event the proposed variation be implemented.

13.3     The Party receiving the request shall also promptly (within no more
         than thirty (30) days) advise the other Party whether or not it wishes
         to proceed with the proposed variation.

13.4     Until such time as any variation is formally agreed in writing and
         signed by an authorized representative of each Party, Supplier shall
         continue to perform and be paid as if such variation had not been
         requested or recommended.

[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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13.5     Notwithstanding the foregoing, if Supplier intends to change the
         manufacturing process or construction of the Products ("Manufacturing
         Change"), for example in order to solve essential products or costs
         problems, Supplier shall notify Buyer of any such change. If the
         Manufacturing Change involves a change of manufacturing location or a
         major construction or process change, such Manufacturing Change shall
         require Buyer's written consent before it is implemented.

14.      INTELLECTUAL PROPERTY

Supplier shall (i) defend or settle, at its option and expense, any claim of
infringement against Buyer alleging that the Product furnished under this
Agreement constitutes an infringement of any patent, copyright or trademark or
any other Intellectual Property rights of the third party introducing such
claim, (ii) reimburse Buyer for all damages and costs awarded in such proceeding
or settlement against Buyer and actually paid by Buyer; provided that Supplier
must be notified promptly in writing of any matter giving rise to possible claim
under this section and must be given the control and direction in the defense
and/or settlement of such claim, with counsel of Supplier's choice at Supplier's
sole expense.

If said Product, or any part thereof, is held to constitute an infringement in
such suit, and the making, use and/or sale of said Product or part is enjoined,
or said suit is settled on the basis of an undertaking to terminate such making,
use and/or sale of said Product as is alleged to constitute an infringement,
Supplier shall at its own expense and own choice, either (i) procure for Buyer
the right to continue using such Product; or (ii) send non-infringing
replacement Product; or (iii) modify said Product so that it becomes
non-infringing; or (iv) refund (the amount Buyer is required to refund to
Buyer's customer for the sale of the infringing product/Price Buyer received for
the Product from such customer) multiplied by the price paid by Buyer to
Supplier for such Product.

Supplier shall not be liable to Buyer under this section, if the infringement
proceeding or claim involves Products made, provided or modified by Supplier in
compliance with the requirements or specification of Buyer; or arises from (i) a
use for which the Product was not designated, or (ii) an alteration or
modification of the Product in question made by other than by Supplier or a
combination or use of that Product with another product which alteration,
modification or combination has caused the infringement action.

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The sale of any Product by Supplier shall not in any way confer upon Buyer, any
license under any patent claims of Supplier covering combination of Said Product
with other devices or elements, or the process or method of making such Products
or under any other intellectual property right of Supplier except the right to
use and resell the Products supplied hereunder.

The foregoing states the sole and exclusive remedy of Buyer and the entire
liability of Supplier for infringement of any intellectual property rights
arising out of this Agreement. In no event will the liability of Supplier under
this Section 14 exceed the total purchase price paid by Buyer to Supplier for
the affected products.

15.      LIABILITY.

15.1     Neither Supplier nor the Buyer shall be liable to the other for any
         special, indirect, incidental or consequential damages of any kind in
         contract or in tort including but not limited to loss of use, data,
         profit, income, business, anticipated savings, reputation as well as
         financing costs or increase in operating costs.

15.2     Alcatel shall not be held liable for the performance or non-performance
         or otherwise of any Purchase Orders of a Buyer and will not have any
         liability for damages resulting from any act or omission of a Buyer.
         Each Buyer will remain fully liable for all acts or omissions under its
         Purchase Order and will not be liable for any acts or omission under
         any other Purchase Orders.

16.      INSURANCE.

16.1     Insurance

Supplier will keep its business and properties insured at all times in
accordance with Supplier's then current insurance policies for its business and
properties involved in similar transactions as under this Agreement.

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During the term of this Agreement, all insurance must be maintained with
reputable insurers having a Standards and Poor's rating or Best's rating of [*]
in such amounts and with such limits and deductibles usually carried by persons
engaged in the same or similar business, but in any case, shall comply with the
Minimum Insurance Requirements detailed in this section.

Supplier shall be responsible for the payment of any deductible applicable under
the insurance policies indicated in this section.

         Buyer shall be named as additional insured on the General Liability
         insurance policies. Such policies should contain a "Cross Liability"
         provision.

         Supplier will provide to Buyer, upon Buyer's request with certificates
         of insurance, confirming that Supplier is compliant with its
         obligations under this clause. Supplier will provide Buyer with
         certificates of insurance at each renewal.

         Supplier will notify Buyer of any changes in terms, conditions and
         termination of such policies not less than 15 days after notification
         from the insurer.

Minimum Insurance Requirements

Without limiting its liability under this contract,
        Supplier will have to arrange the following insurance policies:

         General and Product liability - Minimum sum insured of USA$[*] per
         occurrence. This policy shall be in an occurrence basis.

Compulsory insurance (such as auto, workers' compensation, etc.)

16.2     Risk Management

         Supplier will use commercially reasonable efforts to maintain
         appropriate risk management programs on a site by site basis.

[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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         Supplier will have loss prevention inspections to be carried out at
         Supplier's production premises at least once per year, at Supplier's
         costs, by a specialized engineering consultant (independent or of his
         property insurer) and will address a copy of the complete loss
         prevention and underwriting report to Supplier and Buyer. This report
         should in particular comprise an estimate for the downtime and scenario
         in case of a maximum foreseeable loss.

16.3     Survival

         The provisions of this section shall survive the expiration of the term
         or sooner termination of this Agreement for a period of one (1) year
         thereafter.

17.      TERM AND TERMINATION.

This Agreement shall remain effective as of the Share Acquisition Closing as
such term is defined in the Share Acquisition and Asset Purchase Agreement (the
"Effective Date") for a period of three (3) years and shall thereafter be
automatically renewed for successive periods of one (1) year, unless a ninety
(90) days prior written notice of non-renewal is served by either party to the
other.

(i) Exhibits A, B and C will only apply to any purchase orders placed by Buyer
to Seller or, by the contract manufacturers or logistic service providers, from
January 1, 2003 until December 2003 as well as to purchase orders already placed
for delivery of the Products from January 1, 2003 until December 31, 2003; and

(ii) Alcatel and Supplier will agree upon new Exhibits A, B and C for each
subsequent year no later than December 31 of each year.

(iii) If Alcatel and Supplier do not agree on new Exhibits A, B and C by
December 31 of each year, the Exhibits A, B and C from the prior year will apply
until the parties agree on new Exhibits A, B and C.

17.1     Supplier or Buyer may terminate any Purchase Order immediately by
         notice in writing to the other Party if:

       17.1.1              the other Party commits any material breach or
                           persistent breach of any of the provisions of the
                           Purchase Order that is not remedied within 30
                           (thirty) days of written notification by the other
                           Party; or

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       17.1.2              in the limits authorized by law: an encumbrance takes
                           possession or a receiver or an administrative
                           receiver or administrator is appointed over any of
                           the property or assets of the other Party; or the
                           other Party makes any voluntary arrangement with its
                           creditors or becomes subject to an administration
                           order; or the other Party goes into liquidation
                           (except for the purposes of amalgamation,
                           reconstruction or other reorganization and in such
                           manner that the company resulting from the
                           reorganization effectively agrees to be bound by or
                           to assume the obligations imposed on that Party under
                           this Agreement) or either Party ceases to carry on
                           business.

18.      FORCE MAJEURE.

18.1     Neither Supplier nor a Buyer shall be liable hereunder to the other for
         any loss, injury, delay or damage suffered or incurred by the other
         Party due to fire, storm, explosion, acts of God, war, supervening
         legislation, governmental or other regulations and directions,
         shortages of necessary equipment, materials, labor caused by third
         party strikes, or any other cause beyond the reasonable control of
         either Party which could not be prevented and foreseen ("Force
         Majeure") and any failure or delay by either Party in the performance
         of any of its obligations under this Agreement due to any of the
         foregoing causes shall not be considered a breach of this Agreement and
         shall not give rise to any liability.

18.2     Should the delivery of any of the Products be directly delayed by force
         majeure, the time for delivery of those Products so delayed shall be
         extended by Buyer (provided that Supplier shall have first given Buyer
         prompt written notice after Supplier becoming aware of such cause) for
         a reasonable period having regards to the effect of the delaying cause
         upon the manufacture of the Products and Buyer's intended use of the
         Products delayed. However, Supplier shall do everything practicable to
         remedy any delay.

18.3     In the event that a circumstance of force majeure continues for a
         period of 6 (six) weeks then the Party not subject to force majeure
         shall have the right to terminate the uncompleted portion of those
         Purchase Orders so affected at no cost or liability to itself.

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19.      INVALIDITY.

Should any part of this Agreement be declared invalid and, or, unenforceable for
any reason whatsoever, such part shall be deemed to be severed from this
Agreement, and replaced with a valid and enforceable provision which reflects
the original intention of the Parties to the maximum extent permitted under law
and the remaining portion of this Agreement shall not be prejudiced and shall
continue in full force and effect.

20.      WAIVER.

No delay, neglect or forbearance by either Party in enforcing against the other
any term or condition of this Agreement shall be, or be deemed to be, a waiver,
nor shall it in any way prejudice any right of that Party under this Agreement.

21.      SURVIVAL OF OBLIGATIONS.

Notwithstanding termination of this Agreement, the Clauses detailed below shall
remain in full force and effect: Law, Headings, Intellectual Property, Support,
Warranty, Quality Assurance, Liability, Invalidity, Waiver, Survival Of
Obligations, Whole Agreement, Assignment, Subcontractors, intellectual property.

22.      ENTIRE AGREEMENT, AMENDMENTS.

22.1     This Agreement, as implemented by Purchase Orders is the sole and
         complete statement of the obligations of the Parties as to the sale and
         purchase of Products and supersedes all previous agreements and
         understandings between the Parties relating to the Products, and may
         not be modified except by an instrument in writing signed by the duly
         authorized representatives of the Parties. This Agreement may not be
         modified by the general sale or purchase conditions of either Party.

22.2     Any purported variation and/or addition to this Agreement shall be
         agreed in writing and signed by authorized signatories on behalf of
         both Parties.

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23.      ASSIGNMENT.

After prior written information to the other Party, either Buyer or Supplier may
assign the Agreement or any Contract to any other Buyer or affiliated company as
defined on the front page of the Agreement.

24.      SUBCONTRACTORS.

[*] Supplier shall be free to appoint any subcontractor to carry out all or part
of its obligations but only after notice to Buyer; provided that such
subcontractors agree in advance in writing to abide by confidentiality
obligations set forth in this Agreement. Notwithstanding the foregoing, Supplier
shall remain directly and solely liable to Buyer for any acts or omissions of
any such subcontractor performing obligations on behalf of Supplier hereunder,
including but not limited to the confidentiality obligations.

25.      HEADINGS.

Headings in this Agreement are for convenience and shall not be used in the
interpretation or construction of this Agreement.

26.      HIERARCHY OF DOCUMENTS.

In case of any discrepancy or ambiguity between the Agreement and a Purchase
Order, the Agreement shall prevail over the Purchase Order and all other
documents related thereto.

27.      NOTICES.

27.1     Any notice, consent or communications required to be given or served
         hereunder shall be given or served by sending it by facsimile and
         confirming by first class mail to:

         In the case of Supplier:

[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

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<PAGE>

      Avanex Corporation
      40919 Encyclopedia Circle
      Fremont, CA 94538, USA
      Attention: Chief Executive Officer
      Fax: 510-897-4189

         In the case of Buyer:

      Alcatel
      54, rue La Boetie
      75008, Paris, France
      Attention: General Counsel
      Fax No.: 011-331-4076-1435

         or such other address as may be given in writing from time to time by
         either Party.

27.2     Any notice, consent or communication so sent shall be deemed to have
         been given or served on the second business day following the day of
         sending.

28.      CONFIDENTIALITY

28.1     Both for the duration of this Agreement and after termination or
         completion of this Agreement the Parties hereto shall keep the contents
         of this Agreement confidential and shall maintain the confidentiality
         of all information provided or made available to each by the other and
         shall use it only for the fulfillment of their respective obligations
         under this Agreement. Information covered by this provision includes,
         without limitation, information disclosed orally or in writing and
         information stored on disc or any other medium. Notwithstanding the
         foregoing, either Party shall be entitled to disclose both the
         existence and terms of this Agreement to (i) attorneys, accountants,
         and similar agents of a Party which are bound by non-use and
         non-disclosure obligations and (ii) other third parties, bound in
         writing to non-use and non-disclosure obligations, in connection with a
         merger, acquisition, investment round or similar corporate
         reorganization or capitalization of a Party.

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<PAGE>

28.2     The above shall not apply to any information to the extent that such
         information:

       28.2.1              is or becomes freely available to the public without
                           breach of an obligation of confidentiality hereunder;
                           or

       28.2.2              lawfully received by the receiving Party from a third
                           Party without breach of obligation or confidence; or

       28.2.3              can be shown to have been in the lawful possession of
                           the receiving Party prior to receipt from the
                           disclosing Party or to have been developed by the
                           receiving Party independently of receipt from the
                           disclosing Party; or

       28.2.4              is required by order of the Court to be disclosed;

28.3     Subject to Confidentiality and notwithstanding termination of this
         Agreement the obligations of confidentiality contained hereunder shall
         continue to subsist for a period of 5 (five) years from the date of
         this Agreement.

29.      APPLICABLE LAW - SETTLEMENT OF DISPUTES

This Agreement shall be governed by the laws of France. Any dispute arising out
of this Agreement shall be finally settled under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by three (3) arbitrators
appointed in accordance with said Rules, in New York City, New York. The
arbitration, agreements, evidence and any other materials used by either Party
in the course of making their case before such arbitrators will be in the
English language

30.      BUSINESS PRACTICES.

Supplier recognized having been made fully acquainted with Alcatel statement of
Business Practices dated March 11th, 2003 (as may be updated from time to time)
http://www.alcatel.com and undertakes to apply the principles set out therein
with respect to the performance of this Agreement, in particular with reference
to non-discrimination of employees, combating bribery of domestic and foreign
public officials, protection of international human rights and environmental
responsibility.

                                       24
<PAGE>

Supplier recognizes that violation of such principles which constitute a breach
of any applicable laws, rules, judgments or orders or similar legally imposed
requirements to which Buyer and Supplier are subject shall be deemed a breach of
this contract.

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<PAGE>

Executed in two original copies

   For Alcatel:                                     For Avanex Corporation:
   Name                                             Name
   AL Scaillierez                                   Anthony Florence
   Acting as                                        Acting as
   Buyer                                            Supplier

   Signature                                        Signature

   /s/ AL SCAILLIEREZ                               /s/ ANTHONY FLORENCE

   Date  31/07/03                                   Date 7/31/03

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