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                                                                    EXHIBIT 10.3

                               AVANEX CORPORATION

                         SEVERANCE AGREEMENT AND RELEASE

         This Severance Agreement and Release ("Agreement") is made by and
between Avanex Corporation (the "Company"), and Bruce Pollock ("Executive").

         WHEREAS, Executive was employed by the Company as its Vice President,
Finance and IT and Chief Financial Officer;

         WHEREAS, Executive has resigned from such positions;

         WHEREAS, the Company and Executive have entered into a stock option
agreement, dated November 4, 2002 (the "Stock Option Agreement"), granting
Executive an option (the "Option") to purchase 500,000 shares of the Company's
common stock subject to the terms and conditions of the Company's 1998 Stock
Plan and the Stock Option Agreement; and

         WHEREAS, the Executive agrees to release the Company from any claims
arising from or related to Executive's service relationship;

         NOW THEREFORE, in consideration of the mutual promises made herein, the
Company and Executive (collectively referred to as "the Parties") hereby agree
as follows:

         1. Termination of Employment. Executive hereby acknowledges resignation
of his employment effective upon the close of business on November 14, 2003 (the
"Termination Date"). Executive resigns as a director, officer and fiduciary of
any and all subsidiaries, branches, divisions and affililiates of Company and
any 401(k) plans and other employee benefit plans of any of them, effective as
of the Termination Date.

         2. Payment of Salary and Expense Reimbursement. Executive acknowledges
and represents that the Company has paid all salary, wages, accrued vacation and
any and all other benefits due to Executive as of the Termination Date with the
exception of a final paycheck which Executive acknowledges receiving on November
18, 2003. Executive shall submit his final expense reports by December 1, 2003
and the Company will promptly process and pay the amounts due in accordance with
the Company's standard expense reimbursement policies and procedures.

         3. Consideration. As consideration for Executive entering into this
Agreement, the Company agrees to provide Executive with the following benefits:

                  (a) Cash Payments. Executive shall be paid severance pay equal
to his annual base salary in effect immediately prior to the Termination Date
for a period of six (6) months following the Termination Date, less applicable
withholding. The severance pay will be paid in accordance with the Company's
standard payroll practices. The payments will commence within three (3) business
days after the Effective Date.

                  (b) COBRA Payments. If Executive elects to continue his group
health insurance coverage pursuant to COBRA after the Termination Date, the
Company will pay or reimburse Executive for the COBRA premiums otherwise payable
by Executive (for coverage for himself and his eligible dependents) for

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a period of six (6) months following the Effective Date. After the six-month
coverage period, Executive will be responsible for the payment of any COBRA
premiums. The Company will not reimburse Executive for any taxable income
imputed to him because the Company has paid his COBRA premiums (or those of his
eligible dependents).

                  (c) Outplacement Services. Reasonable executive outplacement
services, to be determined at the Company's discretion, for a period of up to
six (6) months after the Effective Date.

         4. Stock Option. Executive acknowledges that, as of the Termination
Date, the Option was vested as to 125,000 of the shares subject to the Option,
and that the Option shall cease vesting as of the Termination Date. Executive
further acknowledges that the Option may be exercised for three (3) months
following the Termination Date and that the Option shall continue to be subject
to the terms of the Company's 1998 Stock Plan and the Stock Option Agreement.

         5. Release of Claims. Executive agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Executive
by the Company. Executive, on behalf of himself and his respective heirs,
executors and assigns, hereby fully and forever releases the Company and its
officers, directors, employees, investors, shareholders, administrators,
predecessor and successor corporations, and assigns, of and from any claim,
duty, obligation or cause of action relating to any matters of any kind, whether
presently known or unknown, suspected or unsuspected, that any of them may
possess arising from any omissions, acts or facts that have occurred up until
and including the effective date of this Agreement including, without
limitation:

                  (a) any and all claims relating to or arising from Executive's
employment relationship with the Company and the termination of that
relationship;

                  (b) any and all claims relating to, or arising from,
Executive's right to purchase, or actual purchase of shares of stock of the
Company;

                  (c) any and all claims for wrongful discharge of employment;
breach of contract, both express and implied; breach of a covenant of good faith
and fair dealing, both express and implied; negligent or intentional infliction
of emotional distress; negligent or intentional misrepresentation; negligent or
intentional interference with contract or prospective economic advantage; and
defamation;

                  (d) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, and the California
Fair Employment and Housing Act;

                  (e) any and all claims arising out of any other laws or
regulations relating to employment or employment discrimination; and

                  (f) any and all claims for attorneys' fees and costs.

         The Company hereby fully and forever releases Executive of and from any
claim, duty, obligation or cause of action relating to any matters of any kind,
whether presently known or unknown, suspected or unsuspected, that Company may
possess arising from any omissions, acts or facts that have occurred up until
and including the Effective Date (as defined in Section 21 below); provided,
however, that such release shall

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not extend to: (i) any obligations created by or arising out of this Agreement
or (ii) any claims or causes of action for fraud, embezzlement or criminal
conduct.

         The Company and Executive agree that the releases set forth in this
section shall be and remain in effect in all respects as a complete general
release as to the matters released. These releases do not extend to any
obligations incurred under this Agreement. Furthermore, the foregoing releases
do not waive Executive's rights to indemnification, if any, pursuant to Section
8 herein.

         The parties acknowledge that they have been advised by legal counsel
and are familiar with the provisions of California Civil Code Section 1542,
which provides 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, being aware of said Code Section, agree to expressly waive
any rights they may have thereunder, as well as under any other statute or
common law principles of similar effect.

         6. Acknowledgment of Waiver of Claims under ADEA. Executive
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Executive agrees that this waiver and release
does not apply to any rights or claims that may arise under the ADEA after the
Effective Date of this Agreement. Executive acknowledges that the consideration
given for this waiver and release is in addition to anything of value to which
Executive was already entitled. Executive further acknowledges that he has been
advised by this writing that: (a) he should consult with an attorney prior to
executing this Agreement; (b) he has twenty-one (21) days within which to
consider this Agreement; (c) he has seven (7) days following his execution of
this Agreement to revoke the Agreement; (d) this Agreement shall not be
effective until after the revocation period has expired; and (e) nothing in this
Agreement prevents or precludes Executive from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties or costs from doing so, unless
specifically authorized by federal law.

         7. Return of Company Property. Executive agrees to return all Company
property to the Company upon or prior to the Effective Date of this Agreement,
except that Company and Executive agree that Executive will retain one IBM T40
laptop computer and related items (including installed software) and that
Executive will pay the Company the sum of $1,500 to purchase such computer and
related items from the Company. Executive agrees to sign Exhibit C of the
Company's Employment, Confidential Information and Invention Assignment
Agreement.

         8. Indemnification. Executive and the Company are parties to an
Indemnification Agreement dated November 4, 2002 (the "Indemnification
Agreement") pursuant to which the Company has agreed to indemnify Executive with
respect to certain claims and expenses. Notwithstanding the provisions of
Section 5 of this Agreement, Executive shall continue to be entitled to
indemnification, in accordance with the Indemnification Agreement, the
applicable provisions of the Company's certificate of incorporation and bylaws
and any directors' and officers' liability insurance coverage in effect as of
the date hereof.

         9. Mutual Non-Disparagement. The Company agrees that its officers and
directors will refrain from any disparagement, criticism, defamation or slander
of Executive, or tortious interference with the contracts and relationships of
Executive. Executive agrees to refrain from any disparagement, criticism,

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defamation or slander of the Company or its employees, or tortious interference
with the contracts and relationships of the Company.

         10. No Cooperation. Each party agrees that it will not knowingly
counsel or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against the other party, unless under a subpoena
or other court order to do so. Each party agrees to immediately notify the other
party upon receipt of any such subpoena or court order, and to furnish, within
three (3) business days of its receipt, a copy of such subpoena or court order
to the other party. If approached by anyone for counsel or assistance in the
presentation or prosecution of any disputes, differences, grievances, claims,
charges, or complaints against the other party, each party agrees that it shall
state no more than that it cannot provide counsel or assistance.

         11. Non-Solicitation. In consideration for the severance benefits
Executive is to receive hereunder, Executive agrees that he will not, at any
time during the twelve months following the Termination Date, directly or
indirectly solicit any individuals to leave the Company's employ for any reason
or interfere in any other manner with the employment relationships at the time
existing between the Company and its employees.

         12. Tax Consequences. The Company makes no representations or
warranties with respect to the tax consequences of the payment of any sums or
provision of any benefits to Executive under the terms of this Agreement. The
Company will withhold sums from Executive's compensation hereunder sufficient to
satisfy the Company's withholding obligations. Executive agrees and understands
that he is responsible for payment, if any, of his portion of the local, state
and/or federal taxes on the sums paid hereunder by the Company and any penalties
or assessments thereon.

         13. No Admission of Liability. No action taken by the Parties hereto,
or either of them, either previously or in connection with this Agreement shall
be deemed or construed to be (a) an admission of the truth or falsity of any
claims heretofore made or (b) an acknowledgment or admission by either party of
any fault or liability whatsoever to the other party or to any third party.

         14. Costs. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with this Agreement.

         15. Arbitration and Equitable Relief.

                  (a) The Parties agree that, to the extent permitted by law,
any dispute or controversy arising out of, relating to, or in connection with
this Agreement, or the interpretation, validity, construction, performance,
breach, or termination thereof shall be settled by arbitration to be held in
Alameda County, California, in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association (the "Rules"). The arbitrator may grant injunctions or other relief
in such dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction.

                  (b) The arbitrator shall apply California law to the merits of
any dispute or claim, without reference to rules of conflict of law. The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. The parties hereto hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in California for any action or proceeding

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arising from or relating to this Agreement and/or relating to any arbitration in
which the parties are participants.

                  (c) Each party shall pay its own attorneys' fees in any such
 arbitration; provided, however, that the Company shall pay for any
administrative or filing fees, including the arbitrator's fee, that Executive
would not have otherwise incurred if the dispute was adjudicated in a court of
law, rather than through arbitration.

                  (d) THE PARTIES HERETO HAVE READ AND UNDERSTAND SECTION 15,
WHICH DISCUSSES ARBITRATION. THE PARTIES HERETO UNDERSTAND THAT BY SIGNING THIS
AGREEMENT, THEY AGREE, TO THE EXTENT PERMITTED BY LAW, TO SUBMIT ANY FUTURE
CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE
INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION
THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A
WAIVER OF THEIR RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL
DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP,
INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

                           (i)      ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF
EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT
OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR
PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

                           (ii)     ANY AND ALL CLAIMS FOR VIOLATION OF ANY
FEDERAL, STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF
THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF
1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING
ACT, AND LABOR CODE SECTION 201, et seq;

                           (iii)    ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER
LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

         16. Authority. The Company represents and warrants that the undersigned
has the authority to act on behalf of the Company and to bind the Company and
all who may claim through it to the terms and conditions of this Agreement.
Executive represents and warrants that he has the capacity to act on his own
behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement.

         17. No Representations. Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.

         18. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.

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         19. Entire Agreement. This Agreement, along with the previously
executed Employment, Confidential Information and Invention Assignment
Agreement, the Indemnification Agreement and the Stock Option Agreement,
represent the entire agreement and understanding between the Company and
Executive concerning Executive's separation from the Company, and supersede,
replace and fully discharge all obligations under any and all prior agreements
and understandings concerning Executive's relationship with the Company and his
compensation by the Company.

         20. No Oral Modification. This Agreement may only be amended in writing
signed by Executive and the Company's Chief Executive Officer.

         21. Effective Date. This Agreement will become effective (the
"Effective Date") one day after i) it has been signed by both Parties and ii)
seven days have passed since Executive signed the Agreement (provided that
Executive has not revoked the Agreement during such seven day period).

         22. Cooperation with the Company. Executive agrees to cooperate fully
with the Company, including but not limited to, responding to reasonable
requests from the Company's Chief Executive Officer, Chief Financial Officer or
the Company's legal counsel in connection with any and all existing or future
litigation related to the Company. Executive also agrees to furnish upon
reasonable request, information necessary in order to assist the Company in
meeting the Company's reporting requirements and Executive's continuing Section
16 reporting obligations on a timely manner and as prescribed by the then
current SEC and/or Nasdaq rules. Executive understands that he remains subject
to the SEC and Nasdaq prohibitions on insider trading even after the Effective
Date of this Agreement.

         23. Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

         24. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

                  (a) They have read this Agreement;

                  (b) They have been represented in the negotiation and
execution of this Agreement by legal counsel of their own choice or that they
have voluntarily declined to seek such counsel;

                  (c) They understand the terms and consequences of this
Agreement and of the releases it contains;

                  (d) They are fully aware of the legal and binding effect of
this Agreement.

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         IN WITNESS WHEREOF, the Parties have executed this Agreement.

Avanex Corporation                                    Executive

By: /s/ WALTER ALESSANDRINI                           /s/ BRUCE  POLLOCK
    Walter Alessandrini                               Bruce Pollock

Date: November 25, 2003                               Date: November 25, 2003

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