<PAGE>
                                                                   Exhibit 10.39

October 3, 2001

Mr. Jeff Friedman
1546 11th Avenue
San Francisco, California 94132

Dear Jeff:

This letter sets forth the substance of the separation agreement (the
"Agreement") that Oplink Communications, Inc. (the "Company") is offering to you
to aid in your employment transition.

     1.   Separation. Your last day of work with the Company and your employment
termination date will be November 4, 2001 (the "Separation Date"). Between today
and the Separation Date, you will be on a paid leave of absence and will not be
expected to report to work, although you agree to make yourself available to the
Company by telephone to assist in transitional matters as reasonably requested
by the Company.

     2.   Accrued Salary And Paid Time Off. On the Separation Date, the Company
will pay you all accrued salary, and all accrued and unused vacation earned
through the Separation Date, subject to standard payroll deductions and
withholdings. You are entitled to these payments by law. As of the Separation
Date, your accrued vacation balance will be thirteen (13) days.

     3.   Severance Payments. Although the Company has no policy or procedure
requiring payment of any severance benefits, the Company will pay you, as
severance, the equivalent of three (3) months of your base salary in effect on
the Separation Date, subject to standard payroll deductions and withholdings.
This amount will be paid in a lump sum within ten (10) days of the Separation
Date, provided that you have signed and returned this Agreement to the Company
by that date. The Company acknowledges and agrees that your base salary in
effect on the Separation Date is $200,000 per year.

     4.   Health Insurance. To the extent provided by the federal COBRA law or,
if applicable, state insurance laws, and by the Company's current group health
insurance policies, you will be eligible to continue your group health insurance
benefits at your own expense. Later, you may be able to convert to an individual
policy through the provider of the Company's health insurance, if you wish.

     5.   Stock Options. During your employment with the Company, the Company
granted you two options (the "Options") to purchase shares of the Company's
common stock subject to a vesting schedule. As part of this Agreement, on the
Separation Date, the Company will accelerate the vesting of the Options such
that you will be vested in all shares subject to the Options that would have
vested had you remained employed through November 4, 2002. Additionally, on the
Separation Date, the Company will amend the Options to provide that you are
permitted to exercise any vested shares subject to the Options on or before
February 4, 2004. Except as set forth in this paragraph 5, the Options will
continue to be governed by the applicable stock option agreements and plan
documents. You are advised by the Company to seek independent legal advice with
respect to tax issues regarding the Options. The Company makes no representation
regarding any such tax issues. In order to receive the accelerated vesting


                                       1.

<PAGE>

and amendment described in this paragraph 5, on the Separation Date, you must
sign the Separation Date Release attached hereto as Exhibit A.

     6.   Reference. The Company agrees to provide you with the reference letter
attached hereto as Exhibit B. Additionally, the Company agrees to inform any
potential employers that you were terminated in connection with a reduction in
force. You agree to direct any such inquiries to me or any subsequent CEO.

     7.   Other Compensation Or Benefits. You acknowledge that, except as
expressly provided in this Agreement, you will not receive any additional
compensation, severance or benefits after the Separation Date, with the sole
exception of any benefit the right to which has vested under the express terms
of a Company benefit plan document.

     8.   Expense Reimbursements. You agree that, within ten (10) days of the
Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek reimbursement. The Company will reimburse you
for these expenses pursuant to its regular business practice.

     9.   Return Of Company Property. You agree that unless otherwise agreed, by
the Separation Date, you shall return to the Company all Company documents (and
all copies thereto) and other Company property in your possession or control,
including, but not limited to: Company files, notes, memoranda, correspondence,
agreements, draft documents, notebooks, logs, drawings, records, plans,
proposals, reports, forecasts, financial information, sales and marketing
information, research and development information, personnel information,
specifications, computer-recorded information, tangible property and equipment,
credit cards, entry cards, identification badges and keys; and any materials of
any kind that contain or embody any proprietary or confidential information of
the Company (and all reproductions thereof in whole or in part).

     10.  Proprietary Information Obligations. You acknowledge your continuing
obligations under your Proprietary Information and Inventions Agreement (a copy
of which is attached hereto as Exhibit C.

     11.  Confidentiality. The provisions of this Agreement will be held in
strictest confidence by you and the Company and will not be publicized or
disclosed in any manner whatsoever; provided, however, that: (a) you may
disclose this Agreement to your immediate family; (b) the parties may disclose
this Agreement in confidence to their respective attorneys, accountants,
auditors, tax preparers, and financial advisors; (c) the Company may disclose
this Agreement as necessary to fulfill standard or legally required corporate
reporting or disclosure requirements; and (d) the parties may disclose this
Agreement insofar as such disclosure may be necessary to enforce its terms or as
otherwise required by law. In particular, and without limitation, you agree not
to disclose the terms of this Agreement to any current or former Company
employee, unless necessary to effectuate the terms of this agreement.

     12.  Nondisparagement. Both you and the Company's officers agree not to
disparage the other party, and the other party's officers, directors, employees,
shareholders and agents, in


                                       2.

<PAGE>

any manner likely to be harmful to them or their business, business reputation
or personal reputation; provided that both you and the Company may respond
accurately and fully to any question, inquiry or request for information when
required by legal process.

     13.  Release By You. Except as otherwise set forth in this Agreement, you
hereby release, acquit and forever discharge the Company, its parent,
subsidiaries, and affiliated companies, and their officers, directors, agents,
servants, employees, attorneys, shareholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys fees, damages, indemnities and obligations of
every kind and nature, in law, equity, or otherwise, known and unknown, arising
out of or in any way related to agreements, events, acts or conduct at any time
prior to and including the date this Agreement is signed, including but not
limited to: all such claims and demands directly or indirectly arising out of or
in any way connected with your employment with the Company or the termination of
that employment; claims or demands related to salary, bonuses, commissions,
stock, stock options, or any other ownership interests in the Company, vacation
pay, fringe benefits, expense reimbursements, severance pay, or any other form
of compensation; claims pursuant to any federal, state or local law, statute or
cause of action including, but not limited to, the federal Civil Rights Act of
1964, as amended; the federal Americans with Disabilities Act of 1990; the
California Fair Employment and Housing Act, as amended; the California Labor
Code; tort law; contract law; wrongful discharge; discrimination; retaliation;
harassment; fraud; defamation; emotional distress; and breach of the implied
covenant of good faith and fair dealing.

     14.  Release By The Company. The Company hereby releases, acquits and
forever discharges you and your agents, successors, assigns, attorneys and
affiliates from any and all claims, liabilities, demands, causes of action,
costs, expenses, attorneys' fees, damages, indemnities and obligations of any
kind and nature, in law, equity or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, arising out of or in any way related to
agreements, events, acts or conduct at any time within the authorized course and
scope of your employment with the Company.

     15.  Waiver Of Unknown Claims. In giving these releases, which include
claims that may be unknown to the parties at present, the parties acknowledge
that they have read and understand Section 1542 of the California Civil Code
which reads as follows: "A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his settlement
with the debtor." The parties expressly waive and relinquish all rights and
benefits under that section and any law of any jurisdiction of similar effect
with respect to their release of any unknown claims against the other party.

     16.  Arbitration. All disputes, claims and causes of action, in law or
equity, arising from or relating to this Agreement or its enforcement,
performance, breach or interpretation shall be resolved solely and exclusively
by final and binding arbitration before Judicial Arbitration and Mediation
Services, Inc. ("JAMS") in San Jose, California, using a single arbitrator,
under the then-existing JAMS rules. However, neither party shall be prevented
from obtaining injunctive relief in court to prevent irreparable harm pending
the conclusion of any such arbitration.


                                       3.

<PAGE>

     17.  Miscellaneous. This Agreement, including all exhibits and the proposed
amendment set forth in paragraph 5, constitutes the complete, final and
exclusive embodiment of the entire agreement between you and the Company with
regard to this subject matter. It is entered into without reliance on any
promise or representation, written or oral, other than those expressly contained
herein, and it supersedes any other such promises or representations. This
Agreement may not be modified or amended except in a writing signed by both you
and a duly authorized officer of the Company. This Agreement will bind the
heirs, personal representatives, successors and assigns of both you and the
Company, and inure to the benefit of both you and the Company, their heirs,
successors and assigns. The failure to enforce any breach of this Agreement
shall not be deemed to be a waiver of any other or subsequent breach. For
purposes of construing this Agreement, any ambiguities shall not be construed
against either party as the drafter. If any provision of this Agreement is
determined to be invalid or unenforceable, in whole or in part, this
determination will not affect any other provision of this Agreement and the
provision in question will be modified by the court so as to be rendered
enforceable in a manner consistent with the intent of the parties insofar as
possible. This Agreement will be deemed to have been entered into and will be
construed and enforced in accordance with the laws of the State of California as
applied to contracts made and to be performed entirely within California. This
agreement may be executed in counterparts which shall be deemed to be part of
one original, and facsimile signatures shall be equivalent to original
signatures.


                                       4.

<PAGE>

If this Agreement is acceptable to you, please sign below return the original to
me.

I wish you the best in your future endeavors.

Sincerely,

OPLINK COMMUNICATIONS, INC.


By:
   -------------------------------------------------------
    Fred Fromm


Exhibit A - Separation Date Release
Exhibit B - Reference Letter
Exhibit C - Proprietary Information and Inventions Agreement

AGREED:


----------------------------------------------------------
Jeff Friedman


                                       5.

<PAGE>

                                    EXHIBIT A

                             SEPARATION DATE RELEASE

I understand that, pursuant to the letter agreement between me and the Company,
which I signed on _________, 2001 (the "Agreement"), I am required to sign this
Separation Date Release ("Release") as a condition for receiving the stock
option vesting and stock option amendments set forth in paragraph 5 of the
Agreement. I further understand that, regardless of whether I sign this Release,
the Company will pay me all accrued salary and vacation earned through my
termination date, to which I am entitled by law.

In consideration for the stock option vesting and stock option amendments set
forth in paragraph 5 of the Agreement, I hereby release, acquit and forever
discharge the Company, and its officers, directors, agents, servants, employees,
attorneys, shareholders, successors, assigns and affiliates, of and from any and
all claims, liabilities, demands, causes of action, costs, expenses, attorneys'
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed, arising out of or in any way related to agreements, events,
acts or conduct at any time prior to and including the date this Release is
signed, including but not limited to: all such claims and demands directly or
indirectly arising out of or in any way connected with my employment with the
Company or the termination of that employment; claims or demands related to
salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law, statute or cause of action including, but not
limited to, the federal Civil Rights Act of 1964, as amended; the federal
Americans with Disabilities Act of 1990; the California Fair Employment and
Housing Act, as amended; tort law; contract law; wrongful discharge;
discrimination; harassment; fraud; defamation; emotional distress; and breach of
the implied covenant of good faith and fair dealing.

I UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS. In giving this release, which includes claims that may be unknown to me
at present, I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A general release does not extend
to claims which the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must have materially
affected his settlement with the debtor." I expressly waive and relinquish all
rights and benefits under that section and any law of any jurisdiction of
similar effect with respect to my release of any unknown or unsuspected claims I
may have against the Company.

HAVING READ AND UNDERSTOOD THE FOREGOING, I HEREBY AGREE TO THE TERMS AND
CONDITIONS STATED ABOVE.


--------------------------------------     -------------------------------------
Jeff Friedman                              Date

<PAGE>

                                    EXHIBIT B

                                REFERENCE LETTER

Dear Sir or Madam:

We are writing a recommendation for hire on behalf of Jeff D. Friedman. Mr.
Friedman worked in the capacity as General Counsel and Secretary during August
2000 until November 2001. Mr. Friedman performed diligently and exhibited
superior training and judgment in his role as General Counsel. We recommend him
for a similar position, without reservation.

Due to the extreme downturn in the economy, and the difficulties experienced in
the telecommunications industry, Oplink was required to take necessary actions
to respond to the economic climate and reduce our work force. Such actions
included outsourcing the role of General Counsel to an outside law firm.

We would be more than happy to speak to you in person if it would aid in your
hiring decision regarding Mr. Friedman.

Regards,


---------------------------------------------
Joe Liu
CEO
Oplink Communications


---------------------------------------------
Fred Fromm
President, Oplink Communications

<PAGE>

                                    EXHIBIT C

                PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT