Document:

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                                                                    EXHIBIT 10.4

Mr. Claudio De Conto                                         Mr. Adriano Zuccala
General Director Administration and Control                    Managing Director
Pirelli S.p.A.                                             Corning O.T.I. S.r.l.

Mr. Walter Alessandrini                                    Mr. Lawrence D. McRae
Chairman & CEO                                             Senior Vice President
Avanex Corporation                                          Corning Incorporated

         Subject: Consent and Assignment and Assumption of Lease Agreement

Gentlemen:

Corning Incorporated ("Corning"), Avanex Corporation ("Avanex"), and Alcatel are
parties to a Share Acquisition and Asset Purchase Agreement, dated May 12, 2003
(the "Purchase Agreement"), pursuant to which Avanex agreed to purchase, and
Corning agreed to sell and assign to Avanex, certain assets of Corning and the
whole or substantially the whole business of Corning O.T.I. S.r.l. (formerly,
Optical Technologies Italia S.p.A., hereinafter "Corning OTI"), including, but
not limited to, those operations at the premises leased from Pirelli Cavi e
Sistemi S.p.A. ("Pirelli Cavi & Sistemi"), as described below. The closing of
the transactions under the Purchase Agreement is expected to occur on July 31,
2003 (the "Closing Date").

Corning OTI and Pirelli Cavi e Sistemi (which has been merged, effective as from
December 30, 2002, into Pirelli Spa, hereinafter "Pirelli") entered into a lease
agreement effective as of January 1, 2003 (the "Lease Agreement") relating to
premises located at Via Federico Fellini, San Donato Milanese (the "Milan
Premises"). Corning OTI, Pirelli and Optical Technologies The Netherlands B.V.
are also parties to a Transition Services Agreement, dated as of December 12,
2000, in connection with the acquisition by Corning of Optical Technologies USA
Corporation, which owned 100% of the issued and outstanding shares of Corning
OTI from Pirelli (the "Transition Services Agreement"). Although the Transition
Services Agreement has already expired in accordance with its terms, the parties
have continued to conduct business in accordance with the terms of the
Transition Services Agreement and have agreed to a form of agreement by which
the services contemplated by the Transition Services Agreement will continue to
be provided through December 31, 2005 at newly agreed conditions ("Services
Agreement") (a copy of which is attached).

Pursuant to the terms of the Lease Agreement(1), Corning and Corning OTI hereby
request the consent and agreement of Pirelli and its affiliates effective on and
after the Closing Date to: the assignment

--------

(1) Article 4.2 of the Lease Agreement states, in part: ". . . assignment of all
or part of the lease is not allowed, not even in the framework of an assignment
or contribution of business, unless consented in writing by Lessor; such consent
shall not be unreasonably withheld if the assignee of the business is, in the
reasonable judgment of Lessor, sufficiently reliable as to its solvency and
compliance with the obligations under this Agreement vis a vis the Lessor."

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of the Lease Agreement to Avanex, the assumption by Avanex of the obligations of
Corning and Corning OTI under the Lease Agreement, the assignment to Avanex of
the Services Agreement, and the assumption by Avanex of the obligations of
Corning, if any, and Corning OTI under the Services Agreement, and the release
of Corning and Corning OTI of such obligations under the Lease Agreement and the
Services Agreement from and after the Closing Date.

Avanex is a Delaware corporation. Its common stock is traded on the Nasdaq and
it files annual and quarterly reports with the U.S. Securities and Exchange
Commission. These reports and other information about Avanex are publicly
available at www.sec.gov. Avanex intends to create a branch office in Milan,
Italy to acquire those assets of Corning OTI acquired, including the Lease
Agreement and the Services Agreement, pursuant to the Purchase Agreement.

By executing in the space provided below, Pirelli hereby consents to the
assignment by Corning OTI and Corning of all of their rights, duties,
liabilities and obligations under the Lease Agreement to Avanex and its
registered branch office in Milan, Italy and to the assumption by Avanex of all
such rights, duties, liabilities and obligations under the Lease Agreement as of
the Closing Date, provided that such Closing Date occurs not later than December
31,2003. Pirelli acting on behalf of itself and its affiliates, also hereby
consent, subject to the above, to the assignment by Corning OTI of all of its
rights, duties, liabilities and obligations under the Services Agreement, as
amended and extended by understanding between the parties, to Avanex and its
registered branch office in Milan, Italy, and to the assumption by Avanex of all
such rights and duties, liabilities and obligations under the Services Agreement
as of the Closing Date. From and after the Closing Date, Pirelli agrees to look
only to Avanex and its registered branch office in Milan for satisfaction of all
liabilities and obligations of Corning OTI and Corning under the Lease and the
Services Agreement.

From and after the Closing Date Avanex shall be responsible towards Pirelli and
its affiliates for any act or omission of its registered branch office in Milano
in relation to the Lease Agreement and the Service Agreement. Pirelli agrees
that Avanex shall be permitted to assign the Service Agreement to a subsidiary
of Avanex so long as Avanex and its registered branch remain responsible to
Pirelli for the performance by such subsidiary of its obligations under the
Services Agreement.

Nothing in this letter is intended to affect the rights and obligations of
Corning and its Subsidiaries and Avanex under the Purchase Agreement. As between
Corning and its Subsidiaries and Avanex, in the event of any conflict between
the terms and conditions of this letter and terms and conditions of the Purchase
Agreement, the terms and conditions of the Purchase Agreement shall control.

By executing in the space provided below, Corning and Corning OTI hereby assign,
effective on the Closing Date, and Avanex hereby assumes, effective as of the
Closing Date, all rights, privileges, duties, liabilities and obligations of
Corning OTI and Corning under the Lease Agreement and the Services Agreement, as
amended and extended by understanding between the parties.

This letter agreement is governed by Italian laws. The Court of Milano will have
exclusive jurisdiction over any dispute in relation to this letter agreement.

                                      -2-

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Please execute this letter agreement in the space provided below and return a
copy to Corning Incorporated. Delivery of signatures to this Agreement by
facsimile transmission shall be legally binding and effective for all purposes,
including evidentiary purposes.

                            [SIGNATURE PAGE FOLLOWS]

                                      -3-

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IN WITNESS WHEREOF, the undersigned have executed the foregoing instrument on
the dates set forth below.

                                             CORNING INCORPORATED

                                             By:  /s/ LAURENCE D. MCRAE
                                                 -------------------------------
                                                  Senior Vice President

PIRELLI S.P.A.                               CORNING O.T.I. S.R.L.

By:   C. DE COUTO                            By:  ADRIANO ZUCCALA
Name: C. De Couto                            Name: Adriano Zuccala
Title:                                       Title: Managing Director
       --------------------------------
Date:  July 25, 2003                         Date:  July 25, 2003

AVANEX CORPORATION

By: /s/ ANTHONY A. FLORENCE
    -----------------------------------
Name:   Anthony A. Florence
Title:  Sr. Vice President, Corporate
        Affairs
Date:  July 31, 2003

                                      -4-<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                    EXHIBIT 10.5

                                 LEASE AGREEMENT

                        (unofficial English translation)

TABLE OF CONTENTS

<TABLE>
<S>                       <C>
Article 1                 Object
Article 2                 Destination of Use
Article 3                 Finishing Works
Article 4                 Sublease
Article 5                 Duration
Article 6                 Use of the Buildings
Article 7                 Rent and expenses
Article 8                 Representations and warranties of the Lessor
Article 9                 Improvements and Additions
Article 10                Maintenance
Article 11                Liability
Article 12                Insurance
Article 13                Termination
Article 14                Jurisdiction
Article 15                General
Article 16                Guarantee
</TABLE>
<PAGE>

                                 LEASE AGREEMENT

                                     BETWEEN

PIRELLI CAVI E SISTEMI S.p.A., having its corporate seat in Milano, Viale Sarca
n. 222, capital(euro)12,694,200.00 fully paid up, registered with the Milan
Companies Register, with the No. 197367 Milan Tribunal, fiscal code No.
00470500018, represented by Kevin Riddett, duly empowered in his capacity as
Managing Director of the Company (hereinafter "Lessor" or "Pirelli"),

                                       AND

CORNING O.T.I. S.r.l., having its corporate seat in Milan, Viale Sarca n. 222,
capital(euro)37,152,985.00 fully paid up, registered with the Milan Companies'
Register; fiscal code and registration No 03540780156, registered with. R.E.A.
No 958625, represented by. Adriano Zuccala, duly empowered, in his capacity as
Chairman and managing Director appointed on December 12, 2000 by the Board of
Directors of the Company (hereinafter "the Lessee" or "OTI")

                                     Whereas

(a)      Lessor has the full and free ownership of certain real estate
         properties for industrial destination located in San Donato Milanese
         (Milano), Via Federico Fellini, consisting of about 55,000 square meter
         land, on which a number of buildings for industrial, services and
         offices use are located;

(b)      on December 22, 2000 the Parties entered into a lease for some
         buildings existing on the land being the property of the Lessor,
         located in San Donato as per recital (a), of which one still to be
         built (the Technological Building as defined in paragraph 1.1(ii)
         below) and other to be restructured, indicated as "First Buildings", as
         well as new buildings to be built on another part of land, indicated

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         as the "Second Buildings", all based on a project and specifications
         agreed upon between Pirelli and OTI;

(c)      With Pirelli's consent, OTI has installed equipment and machinery owned
         by OTI, among which "clean rooms" with machinery, "clean rooms" without
         machinery, and service equipment;

(d)      OTI has communicated its decision to renounce the construction of
         "Second Buildings" to Pirelli , and has also communicated its intention
         to lease a part only of the "First Buildings", which in the meantime
         have been built and restructured by Pirelli, at the exception of the
         restructuring of the Office Building as defined in paragraph 1.1(iii)
         below, the plan of extraordinary maintenance of which is dealt with
         elsewhere in this agreement;

(e)      therefore the Parties have negotiated in good faith a new agreement for
         the buildings located in San Donato with the purpose to supersede any
         preceding understanding and agreement between the Parties with respect
         to such buildings, and wish to enter into this lease in order to
         supersede and replace the agreement entered into on December 22, 2000.

Now Therefore in consideration of the above recitals. which are an integral part
of this agreement, the Parties agree as follows:

ARTICLE 1. OBJECT

1.1      Lessor leases the real estate as listed below (hereinafter the
         "Buildings") to Lessee starting as of January 1(degree), 2003 (the
         "Effective Date"), on the terms and conditions as set forth
         hereinafter:

         (i)      part of the production building consisting of two floors for
                  an overall commercial area of about sqm. 11,000, restructured
                  (the "Production Building");

         (ii)     new technological building consisting of one underground floor
                  and two floors for an overall area of sqm.. 3,200 (the
                  "Technological Building");

         (iii)    small offices building connected to the building under (i)
                  above through a catwalk, consisting of three floors, without
                  basement, for an overall commercial area of about sqm. 1,660,
                  (the "Offices Building").

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         The Buildings under items (i), (ii) and (iii) above are marked by a
         grey broken line in the plan attached as Attachment 1.2 and by a blue
         broken line in the plans attached as Attachments "3/A" and "3/B".

1.2      Lessor furthermore grants Lessee the right to use the shared areas and
         equipments in proportion to the part of buildings occupied by Lessee,
         such shared areas and equipments consisting, among others, of the
         following: main and service driveway, internal and external parking,
         squares, green areas, fencing, lighting for parking and squares,
         sewage, disposal of sewage, plant ground, fire-fighting equipment
         (pumps area, underground ring, and fire plugs ), the power receiving
         building, (and related way), the wells and the drinking and
         non-drinking water network, goods elevators at the shared East-West
         corridor and related safety staircase and emergency liquids collecting
         and storage equipment.

         All Buildings are located in San Donato Milanese (Milan) Via Federico
         Fellini, and the area where they are is identified by a yellow
         perimeter in the plan attached as Attachment "1.2"; such area includes
         the shared parts, identified by the white areas (nether grey nor
         green); the parts identified by a blue broken line in the plan attached
         as Attachment 1.2 as well as those identified by a pink broken line in
         the plans attached as Attachments "3/A" e "3/B"are also shared parts.

1.3      The Parties acknowledge that one part of the Production Building, on
         two floors, as well as the buildings close to the entrance as
         identified by green broken line in the plan attached as Attachment 1.2
         (the Further Buildings")are excluded from the lease.

ARTICLE 2. DESTINATION OF USE

2.1      The Buildings are leased for exclusive use as industrial facilities and
         activities related thereto (such as Data Processing Centre,
         Laboratories, Warehouse, etc.). The Parties acknowledge that the
         industrial destination does not include, other than within the limits
         set forth by the applicable legislation, dangerous or polluting
         activities, which might negatively affect [jeopardize] (be they
         attributable to the Lessee or to any agent other than the Lessee,
         including by way

                                       3

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         of example noises, percussion, vibrations, radiations, magnetic fields,
         irritating non- protected lighting, gas and fine dust emissions,
         open-air storage not adequately concealed from the public and the
         houses nearby) the use of the industrial complex with respect to the
         neighbouring activities and residences.

2.2      Throughout the validity period of this agreement Lessee shall use the
         Buildings in compliance with the permits obtained by Lessee for the
         Lessee's activities and pursuant to the regulations in force from time
         to time now or in the future, Health Regulations as well as state and
         regional laws and relevant regulations, including those from the
         Municipality, requirements by the administrative authorities competent
         as to construction in general as well as those relating to the specific
         technical activity performed by Lessee.

ARTICLE 3. FINISHING WORKS

3.1      The Parties acknowledge that works of extraordinary maintenance of the
         Offices Building are in process for the purpose of rendering the
         mechanical, electrical and elevator equipments, the waterworks,
         lavatories, air conditioning, roofing, including rainspouts efficient
         and complying with the applicable laws and regulations. Plasterboard
         damaged by water are being repaired, a fire-cutting door is being
         installed, the cantilever roof is being repaired and the required
         masonry is being put in place. The above listed works are indicated in
         the technical specifications which constitute Attachment 2.

3.2      The Parties acknowledge that the works for the arrangement of the areas
         outside the Buildings as per the Project attached to the notice of
         starting works (D.I.A), including arrangement of the fencing.

3.3      The works under Paragraphs 3.1 and 3.2 shall be at Lessor's cost and
         expense, provided that the maximum amount of cost and expense to be
         sustained by Lessor for the works under paragraph 3.1 shall not exceed
         the amount of (euro) 200,000.00.

                                       4

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3.4      On or before the Effective Date, the Buildings shall be handed over [by
         Lessor] to Lessee. Handing over shall be recorded in the minutes, which
         shall be made by both parties and shall contain the description of the
         state of the Buildings.

ARTICLE 4. SUBLEASE

4.1      Lessee may sublease the areas identified by red broken lines on blue
         background in the plans attached as Attachments "3/A" and "3/B", and,
         in addition thereto, laboratories, offices or service areas up to a
         maximum of 50% of the overall leased area.

4.2      Change of destination of the Buildings is not allowed; assignment of
         all or part of the lease is not allowed, not even in the framework of
         an assignment or contribution of business, unless consented to in
         writing by Lessor; such consent shall not be unreasonably withheld if
         the assignee of the business is, in the reasonable judgement of Lessor,
         sufficiently reliable as to its solvency and compliance with the
         obligations under this agreement vis-a vis the Lessor. However sublease
         or assignment to subsidiaries - as defined in article 2359 of the
         Italian Civil Code or to other affiliates of Lessee is allowed.

ARTICLE 5. DURATION

5.1      The lease of the Buildings shall become effective on the Effective
         date. Subject to the provisions under paragraphs 5.3 and 5.4 below,
         this lease has the duration of 6 (six)years from the Effective Date.
         Subject to article 27, last sentence of Law No. 392 del 27 July 1978,
         neither Party may withdraw from the agreement before the expiry date.

5.2      Upon written request, the Lessee shall be authorized to have access to
         the Buildings before the Effective Date for the purposes of the due
         performance of the activities relating to the services and of the
         production lines as well as the activities connected with the moving.

                                       5

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5.3      On the first six year expiry, this agreement shall automatically
         renewed for a further six year period, unless the Lessee gives at least
         12 months' notice, to be communicated in writing via registered mail.
         If Corning at any time during the validity of this agreement transfers
         the direct or indirect control of Lessee to third parties, Lessor
         undertakes to negotiate in good faith, upon request by Lessee, the
         payment by Lessee of the remaining rent (provided that the Lessor is
         obliged to endeavour for the remaining term of the lease, to lease the
         Buildings to third parties; in which case, Lessor shall reimburse the
         balance, if any, of the amounts received from Lessee and the amounts
         received from the third party lessees, up to expiration of the
         respective lease [to Lessee]. Therefore if the amounts received by
         Lessor from the third party lessee is equal to, or larger than, the
         amounts received by Lessor from Lessee, Lessor shall reimburse Lessee
         the entire amount paid by Lessee to Lessor). Furthermore, Lessee shall
         reimburse the costs incurred by Lessor for (a) payments to third
         parties relating to the cleaning of the leased areas in order to
         restate such areas into the same conditions as at the beginning of the
         lease to the extent required for the purposes of leasing the areas to
         third parties and (b) for the advertising relating the availability of
         the premises for lease to third parties.

5.4      It will be a just cause for termination of this lease at any time
         without any indemnification becoming due the liquidation by Lessee and
         by Corning (other than for a non material part thereof) of the activity
         of Lessee in the field of optical components as carried out by Lessee
         at the date hereof. The termination shall be effective as of the date
         set forth in the written notice, which date shall be no earlier than 6
         (six) month from the date when the notice was sent to Lessor by Lessee.
         The notice shall be sent by registered mail with confirmation of
         receipt confirmed by fax on the same day of mailing. The provisions of
         this agreement regulating the obligations of Lessee at the expiration
         of the agreement shall apply.

ARTICLE 6. UTILIZATION OF THE BUILDINGS

6.1      Lessee acknowledges that it has seen the Buildings and has found them
         in a good state for the purposes of lease, subject to completion of the
         works as per article 3

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         above, which the Lessor shall complete by December 31, 2003, provided
         that certain minor works and finishing works may be completed at a
         later date. Paragraph 6.3 shall apply to these latter works.

6.2      At the expiry [ termination] of this agreement Lessee shall hand over
         the Buildings to Lessor free from persons and goods and in the same
         state as they were received by Lessee, save for wear and tear by use
         and additions and improvements as per article 9 below.

6.3      For the purposes of performing the works under article 3 above and for
         the duration of such works, Lessee hereby allows Lessor to enter the
         Buildings also after the Effective Date..

6.4      Lessee furthermore undertakes to allow Lessor or any other third party
         who have been granted by Lessor for any reason the use of the Further
         Buildings, access thorough the shared areas for the purposes of the
         normal use of such Further Buildings.

6.5      The Parties acknowledge that the areas described in article 1.2, and
         listed as shared areas as well as the service equipment thereto are for
         the shared use by Lessee and Lessor and that therefore such areas may
         be used by Lessee, by Lessor and by such persons to whom to Lessor or
         Lessee respectively shall grant for any reason, the use of such areas
         and equipment. The related operating costs for ordinary maintenance,
         cleaning and surveillance shall be borne by the users in proportion to
         the leased or owned areas, respectively

ARTICLE 7. RENT AND OPERATING EXPENSES

7.1      The monthly rent is (euro) 75,000.00 plus VAT as of the Effective Date.
         However until Lessee shall have entered into subleases with third
         parties for the areas listed in paragraph 4.1 above, the monthly rent
         shall be (euro) 54,166.67 plus VAT, consequent to the more limited use
         of the Buildings. Provided that the rent of monthly (euro) 75.000,00
         plus VAT shall be due starting on July 1(degrees),2003 latest.

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7.2      Lessee undertakes to pay Lessor advances on the rent due for the first
         two quarters of the lease, according to such timing and amounts as to
         allow Lessor to timely pay the invoices for the extraordinary
         maintenance works for the Offices Building, which are at Lessor's
         expense and are payable upon progress of works. The payment of the
         advances shall be effected on a monthly basis, upon prior presentation
         of the relevant documentation (copy of suppliers' invoices and progress
         of works statement)

7.3      The Parties agree that at the expiry of the 6th year lease and in case
         the lease is renewed, the rent for the further six years shall
         automatically be adjusted to make it up to the market rent, subject to
         material average increases having occurred before or at such date in
         the industrial area of San Donato and neighbouring areas with respect
         to the present market rents. For the purposes of this provision, it
         will be deemed to be "material" rent increases, increases in excess of
         20% with respect to the rent of the preceding year.

7.4      If the increases under 7.3 above have occurred, the Parties undertake
         to negotiate in good faith the new rent applicable to the subsequent
         six years of lease. If notwithstanding the increase under article 7.3
         above, the new rent has not been agreed upon within 30 days of the six-
         year expiry, the rent shall be established by an arbitrator mutually
         appointed by the Parties or, lacking agreement of the Parties, by the
         Chairman of the Milan Chamber of Commerce( who shall select the
         arbitrator among well known professionals in the field of the real
         estate lease market. In the determination of the rent the arbitrator
         shall take into account the following items in the following order: (i)
         the agreements already reached in writing by the Parties; (ii) the
         rents applicable to industrial building complexes for leases entered
         into in the preceding year, and (iii) the indications given by the
         associations in the same field. The Parties hereby undertake that they
         will treat the determinations by the arbitrator as the expression of
         their own will. Furthermore the Parties expressly agree that the
         arbitrator shall act according to his equitable judgement pursuant to
         article 1349, sentence 1, of the Italian Civil Code.

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7.5      The arbitrator shall complete the determination of the rent within 30
         days of his appointment. If the appointed arbitrator can not perform
         his task as provided for in this paragraph, the Parties shall consult
         in order to mutually agree upon another arbitrator for the same task.
         Failing to reach the agreement, paragraph 7.4.above shall apply.

7.6      The fees and expenses for the performance of the arbitrator shall be
         paid 50% by Lessee and 50% by Lessor.

7.7      The rent shall be adjusted on an annual basis according to the maximum
         amount allowed by the law, which at present is 75% of the variation,
         ascertained by ISTAT, of the consumer price index for the families of
         workers and employees .

7.8      The rent shall be paid on a quarterly basis within the 20th day of the
         due dates of January 1st, April 1st, July 1st, October 1st of each year
         at the corporate seat of Lessor.

7.9      During the validity period of this agreement. Lessee shall bear the
         expenses for the utilities, such as water, lighting, power, gas,
         heating, and conditioning of the Buildings, as well as the operating
         expenses of the shared parts as per article 1.2. The above mentioned
         plants and equipment, the services present in the Buildings as well as
         the shared areas under article 1.2 shall be operated by Lessee directly
         or thorough a facility management company. Should Lessor for any
         reason, grant the use of the Further Buildings to third parties, Lessee
         undertakes to deliver such utilities, to the extent available, to the
         third parties at a price such as to allow the recovery of the fixed and
         variable costs of the production and distribution of such utilities up
         to the point of delivery as well as the expenses for the operation of
         the shared areas under art.1.2, plus a 10% compensation for
         coordination and administration costs Any costs sustained for rendering
         the services and supplying the utilities to the tenants of the Further
         Buildings shall be borne by such tenants.

                                       9

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7.10     Lessee shall not delay or suspend payment of rent under this article
         beyond the deadlines established above, which deadlines are of the
         essence pursuant to article 1457 of the Italian Civil Code.

7.11     Any claims or objections shall have to be asserted in a separate law
         case. Furthermore Lessee shall not offset the rents against any
         Lessee's credits whatsoever .

ARTICLE 8. REPRESENTATIONS AND WARRANTIES BY LESSOR .

8.1      Lessor hereby expressly represents and warrants the following.

         (i)      Lessor has the full ownership of the Buildings and all
                  information furnished to Lessee with respect to the Buildings
                  are true, complete and correct and the use of the Buildings by
                  Lessee as described in this agreement is in no way prohibited;

         (ii)     that as of the date hereof the Buildings are fit for the use
                  and the present industrial activity of Lessee and meet the
                  technical requirements and zoning requirements for the
                  carrying out by Lessee of the activity that Lessee proposes to
                  carry out, as described in this agreement and known to Lessor;

         (iii)    the Buildings are not subject to any restriction of any kind;

         (iv)     as of the date hereof the Buildings are in compliance with the
                  laws, regulations and permits applicable to the carrying out
                  by Lessee of the activity that Lessee is proposing to carry
                  out, as described in this agreement. To this purpose, Lessor
                  shall deliver to Lessee copy of all relevant administrative
                  documentation, technical certifications and authorizations;

         (v)      Lessor has not and will not violate any applicable
                  environmental laws, as a consequence of which the occupancy of
                  the Buildings could be jeopardized or which could constitute a
                  risk pursuant to the laws on safety at work as from time to
                  time in force. Lessor furthermore undertakes, in case
                  Dangerous Materials are ascertained to be present in the
                  Building, in the shared areas or in the vicinity thereof- to
                  the extent that the vicinity is such that the occupancy of the
                  same is jeopardized or there are risks pursuant to the laws on
                  safety at work from time to time - and evidence is given that

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                  such Dangerous Materials were present before the Effective
                  Date, to promptly remove the same at Lessor's sole expenses
                  and to remain responsible for damages of any kind caused by
                  the Dangerous Materials. For the purposes of this paragraph
                  "Dangerous Materials" shall mean any material so defined by
                  the applicable legislation in force.

8.2      Each declaration in this article 8 shall be true and correct as of the
         date of January 1st and until expiry of this agreement.

ARTICLE 9. IMPROVEMENTS AND ADDITIONS

9.1      Lessee declares that it has seen the Buildings and that the Buildings
         are fit for the use planned by Lessee. Lessee undertakes to hand the
         Buildings back at the expiry of the Agreement in the same conditions,
         save for normal wear and tear.

9.2      Additions as can not be removed without damaging the Buildings and
         changes (at the exception of minor changes which do not require the
         approval of the relevant competent authorities) shall not be effected
         by Lessee without the prior consent of Lessor, which shall not
         unreasonably withheld. Subject to the provisions of article 9.3 below,
         such additions and changes shall not be removed at the expiry of the
         agreement unless Lessor expressly agrees thereto. The following non-
         removable additions have already been made by Lessee with the consent
         of Lessor: building for pumps and extractors, polishing building, gas
         bunker, nitrogen tank base, wood-work for intermediate floor and epoxy
         varnishing on floor.

9.3      The improvements and the additions made by Lessee, e.g. the raceway for
         electrical wiring, the gas piping, water piping made or added and in
         general fixed equipment shall be retained by Lessor at the end of this
         agreement. Notwithstanding articles 1592 and 1593 of the Italian Civil
         Code, all improvements, changes and additions under this article 9.3
         shall remain the ownership of the Lessor without any obligation as to
         any compensation or indemnification, which are hereby waived by Lessee.
         Provided that Lessor shall have the right at any time to require that
         they are removed and the Buildings are

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         brought back to the previous status at the expense of Lessee. The
         Parties acknowledge that the "clean rooms" in the Production Building,
         the "package"(pre-assembled)plants and the plants and removable
         equipment in the Technological Building have been already installed
         with the consent of Lessor and may be removed by Lessee at any time
         according to the requirements of production and at the end of the
         lease, if not removed earlier, shall be removed if Lessor so requests.

9.4      Lessee shall be responsible for plants and equipment and for any other
         goods that Lessee shall have put into the Buildings, including the
         "clean rooms" and shall bear any risk of loss of, or damage to, such
         plants, equipment and/or goods from the time each of them has been
         introduced into the Buildings, unless such events are attributable to
         Lessor.

ARTICLE 10. MAINTENANCE

10.1     Lessee undertakes to keep the Buildings in the same conditions as at
         the Effective Date, save for the improvements and the additions under
         article 9 above and for the reasonable wear and tear for use,
         compatible with regular and diligent maintenance and therefore shall
         have all ordinary maintenance works performed at its care for the
         purpose of keeping the Buildings, the areas and whatever handed over to
         Lessee in the same conditions as at the Effective Date. The related
         expenses, as better described in article 10.2 below, shall be borne by
         Lessee. The expense related to the shared areas shall be shared between
         Lessee and Lessor according to the same proportion as the used areas of
         the Production Building and of the Offices Building.

10.2     Expenses mentioned in paragraph 10.2 above- subject to the works under
         article 3. -, shall include the ordinary maintenance works, that is the
         works for preservation, to be performed regularly, inclusive of the
         works performed from time to time and those performed on an occasional
         basis for the purposes of reducing the progressive deterioration of the
         Buildings, plant and equipment. consequent to passing of time and use,
         such as, by way of example, the

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         restatement of plaster, painting of inside walls, maintenance of doors,
         windows and casings and parts thereof, cleaning, lubrication, tuning up
         of equipment, plants and parts thereof as well as small repairs, such
         as replacing of items of roofing, or single steps, single doors or
         windows, repairs to water plant, baths, heating and electric
         facilities.

10.3     If Lessee does not perform the repairs within a reasonable delay,
         Lessor may have such repairs performed at Lessee's expense.

10.4     Lessor shall perform the so called extraordinary maintenance pursuant
         to articles 1621 and 1622 of the Italian Civil Code. Such works shall
         include, without limitation, painting and or restoration of all or
         parts of outside walls, roofing, squares, parts of building, plants
         owned by and Lessor, replacement of all or material parts of machinery
         owned by Lessor.

10.5     The Parties acknowledge that the undertaking of Lessee to sustain the
         maintenance and repair expenses as per this article 10 has been taken
         into account in calculating the rent set forth in article 7.

10.6     Lessor shall have the right to inspect the Buildings, without
         interfering with the activities carried out therein and without
         infringing the safety regulations of the Buildings and the privacy of
         the employees of Lessee. If Lessor wishes to exercise its right to
         inspect the Buildings during the lease , Lessor shall inform Lessee by
         at least 5 working day's notice and shall ask Lessee's consent, which
         shall not be unreasonably withheld.

ARTICLE 11. LIABILITY

11.1     Lessee is hereby declared custodian of the Buildings starting on the
         Effective Date.

11.2     Lessee hereby declares Lessor exempt from any liability for direct
         and/or indirect damages to the extent that such damages are not
         consequent to facts or omissions

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         of Lessor or of the persons using the Further Buildings and shall be
         liable to the Lessor as well as to the third parties for any damages as
         follows.

         (i)      damages caused by Lessee, which are suffered by Lessor or by
                  third parties and which derive from the use of the Buildings,
                  including, by way of example damages:

                  -        deriving from the use of gas, water and electricity,

                  -        caused by vibrations, percussion, explosion, fire,
                           overpouring of solvents, varnishes or other products
                           for industrial use, pouring of water, gas leakages,
                           immissions and emissions in excess of the limits set
                           forth in the law and regulations and any damages
                           deriving from environment pollution and from any
                           unlawful or negligent use of the Buildings.

         (ii)     damages caused by Lessee's employees or by any of the persons
                  admitted, even on a temporary basis, into the Buildings.

11.3     Lessor shall not be liable for breakdown of the services or any other
         fact connected to the use or non-use of the Buildings for reasons not
         attributable to Lessor; however the Lessor shall endeavour to make good
         any such breakdowns as soon as possible.

11.4     Neither Lessor nor Lessee respectively shall be liable to the other
         Party for loss of profit, loss of use, loss of production, loss of
         contracts or for any further indirect or consequential damages suffered
         by the other Party, unless such damage has been caused by wilful
         misconduct or gross negligence.

11.5     Lessor shall endeavour to instruct and, if required, call the lessees
         and/or purchasers of the Further Buildings to order to the purpose that
         they should not cause any damage, trouble or interference whatsoever to
         the normal course of the activities of Lessee and to the propriety of
         the site. Lessee guarantees that its subleases under Article 4.1 above,
         shall not cause any damage, trouble or interference whatsoever to the
         normal activities of the other occupants of the Building or to the
         propriety of the site.

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ARTICLE 12. INSURANCE

12.1     Lessee undertakes to insure and keep insured the Building during the
         validity period of the lease against all risks connected with the lease
         and for the market values communicated by Lessor and accepted by
         Lessee.

12.2     Lessor undertakes to insure the property owned by Lessor (buildings and
         plants) for the actual value of the property against any risks not
         connected with the activity of Lessee. Such insurance shall also
         include all and any damages caused to Lessee, and to third parties by
         the buildings owned by Lessor and by the activities of Lessor, deriving
         from any cause other than the activities carried out by Lessee.

12.3     Insurance of Lessee shall include third party liability for buildings
         and all risks of loss or damage to the Building for causes attributable
         to Lessee and shall be adequate with respect to the materials used by
         Lessee and stocked in the Buildings and to the production of Lessee.

12.4     Lessee shall produce to Lessor the declaration by the Insurance
         Company(ies) containing the insurance conditions, insured risks and
         values insured. A similar declaration shall be produced by Lessor for
         Lessor's insurance.

12.5     Failure by Lessee to enter into the insurance or suspension or
         termination of the policy or inadequacy of the insured values to such
         an extent as to jeopardize the validity of the insurance, shall give
         Lessor the right to automatically adjust the values of the insurance at
         Lessee's expense. Notwithstanding such insurance made by Lessor, Lessee
         shall be obliged to reimburse Lessor the damage or part of a damage
         suffered by Lessor and attributable to Lessee.

ARTICLE 13. TERMINATION

13.1     Failure by Lessee to pay the rent under Article 7 as well as any
         material violation of any substantial obligation under this Agreement
         or under the law which is not made good within 30 days of Lessee's
         receiving the relevant notice from Lessor

                                       15

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         shall result in the termination of the agreement due to Lessee's
         default and in the consequent obligation to pay the amounts due or
         reimburse the damages - as the case may be - pursuant to Article 1456
         of the Italian Civil Code.

13.2     Failure by Lessee to obtain the consents required for its activity
         shall be deemed to be "serious reason" for withdrawal by Lessee from
         this agreement.

13.3     Should Lessor waive its right to avail itself of the termination clause
         [under 13.1], the delayed rent shall be paid by Lessee within 20 days
         subsequent to the 30 days of receipt of the relevant notice by Lessee,
         Lessor shall be entitled to be paid interest equal to prime rate by
         Credito Italiano Bank plus 3 (three).

ARTICLE 14. JURISDICTION

The Parties agree that any dispute arising out of the interpretation or the
performance of this Agreement shall be submitted to the Tribunal of Milan
exclusively.

ARTICLE 15. GENERAL

15.1     The provisions of this Agreement are valid and effective between the
         parties to the extent not in conflict with the specific provisions of
         law relating to lease to the extent mandatorily applicable.

15.2     For any purposes of this Agreement, including notices and service, the
         Parties hereby declare that they elect their domicile at the respective
         corporate seats set forth in this Agreement.

Notices via fax shall be effected to the following numbers:

         to Pirelli:         39 02 64423328
         to OTI:             39 02 64427788

15.3     This Agreement shall be registered care of Lessor; the related cost
         shall be shared by the Parties equally; Lessee may, at its option,
         request the recording provided for in Article 2643 n. 8 of the Italian
         Civil Code.

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15.4     For the purposes of Articles 34 and 35 of Law 392/1978, Lessee declares
         that the Buildings shall be utilized for activities which do not
         involve direct contact with the public (such as sales activities).

15.5     This Agreement is subject to 20% VAT pursuant to Article 31 bis of Law
         154/89, as it refers to auxiliary buildings of cadastral category D.

ARTICLE 16. GUARANTEE

Corning Inc., a company established under the laws of the state of New York,
USA, with headquarters at 1 Riverfront Plaza, 14831 New York, U.S.A (in this
Agreement "Corning" and together with its subsidiaries "Corning Group"), owning
the entire capital of the Lessee, by signing this agreement guarantees the
payment of the annual rent, initially equal to (euro) 900,000.00 plus VAT
pursuant to this agreement.

16.1     Upon Corning ceasing to own directly or indirectly the capital stock of
         Lessee, such guarantee shall be automatically terminated, on condition
         that it is replaced (i) by a guarantee of the new parent company, if
         any (as long as such new parent company at the time when replacing
         Corning in this guarantee is in a substantially similar financial
         position as Corning) or (ii) by bank guarantee securing such rental
         payment by Lessee for the remaining term of this Agreement.

16.2     Notwithstanding any of the above, if this agreement is terminated
         pursuant to Section 5.4, or under any other provision of this agreement
         following the winding up, voluntary or involuntary, in any form, of the
         optical components business of the Lessee whether or not such business
         is still within Lessee at that time or is in another part of Corning
         (save for any non material part thereof); then, upon such termination,
         all obligations of Corning under this guarantee shall terminate.

Milano, ______________________
Pirelli Cavi e Sistemi S.p.A.                         Corning O.T.I. S.r.l.

_______________________________                       __________________________
Corning Inc.
by ____________________________

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