Document:

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                                                                    EXHIBIT 10.4

                              COMPROMISE AGREEMENT

WITHOUT PREJUDICE
SUBJECT TO CONTRACT

THIS AGREEMENT is made on 21 November 2003

BETWEEN

(1)      AVANEX UK LIMITED, a company incorporated in England (registered no.
         3517183) and having its registered office at Carmelite, 50 Victoria
         Embankment, Blackfriars, London EC4Y 0DX (the "EMPLOYER")

(2)      RICHARD LAMING of 6 Braid Mount View, Edinburgh EH10 6JL (the
         "EMPLOYEE")

BACKGROUND

(A)      The Employee's employment with the Employer will terminate on 26
         November 2003.

(B)      The parties wish to compromise any claims which may be made in
         connection with the employment and make other arrangements for an
         orderly transition. This agreement does not, except to the extent
         expressly stated, vary the Service Agreement, but rather sets out terms
         for the compromise of such claims and the required arrangements.

(C)      The Employer is entering into this agreement for itself and as agent
         for all Group Members and is duly authorised in that behalf.

IT IS HEREBY AGREED as follows:

1.       DEFINITIONS

         In this agreement:

         "ADVISER" means the person referred to in clause 12.3(c);

         "GROUP" means the Employer and its Group Members;

         "GROUP MEMBER" means the Employer, any holding company of the Employer
         (as defined in s736 of the Companies Act 1985) and any subsidiary
         undertakings of the Employer or such holding company and any present or
         future subsidiary of any such holding company;

         "PAYE REGULATIONS" means the Income Tax (Employments) Regulations 1993
         (as amended, extended or replaced from time to time);

         "SERVICE AGREEMENT" means the service agreement dated 3 May 2001 as
         amended on 27 July 2001 between the Employee and the Employer;

         "TERMINATION DATE" means 26 November 2003.

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2.       TERMINATION OF EMPLOYMENT

2.1      With effect from the Termination Date the Employee will cease to be an
         employee of the Employer and shall not hold himself out as having any
         continuing connection with the Employer or with any Group Member.

2.2      On or before the Termination Date, the Employee shall, without any
         claim for damages or compensation for loss of office, resign with
         immediate effect from any office which the Employee may hold as
         director or other officer of the Employer or a Group Member by
         completing and returning to Tony Florence a letter in the form set out
         in Schedule 2. The Employee undertakes not to hold himself out as a
         director or other officer of the Employer or a Group Member. The
         Employee irrevocably appoints the Employer as attorney to execute
         letters of resignation of such offices or appointments on the
         Employee's behalf. The Employee warrants that he holds no office with
         the Employer or a Group Member other than those listed in Schedule 2.
         The Employee also warrants that he has no shareholding in the Employer
         or in any Group Member.

2.3      The Employee shall continue to carry out such duties and
         responsibilities as are assigned to him by the Employer until the
         Termination Date. In particular, but not limited to, the Employee shall
         assist in the Employer's work relating to the potential closure of the
         Livingston site. He will also provide further assistance as and when
         required by the Employer after the Termination Date to assist in the
         closure of the Livingston site if a final decision is taken to close
         that site. The Employee will, if requested prior to the Termination
         Date, prepare and provide to the Employer reasonable handover notes in
         relation to all of his outgoing work for the Employer.

2.4      On or before the Termination Date the Employee shall execute an Inland
         Revenue approved joint election agreement in respect of his options
         granted to him on 1 August 2003 as the Employee has agreed to do so
         under the terms of the pre-election agreement already entered into
         between the Employer, the Employee and Avanex Corporation.

3.       REMUNERATION

3.1      Except as set out in this agreement all entitlements to payments or
         benefits arising out of or in connection with the Employee's employment
         will cease from the Termination Date and the Employee acknowledges that
         he has no further claims in respect of them. Further, the Employer will
         not continue paying pension amounts on or after the Termination Date.

3.2      The Employee hereby agrees to surrender all stock options that he has
         in any scheme relating to the Employer or any Group Member and agrees
         that he accepts this agreement in full and final settlement of any
         claim he may have in relation to any such stock option scheme.

4.       P45

         The Employer undertakes that the Employee's P45 will have been issued
         by the Employer prior to any payment being made to the Employee under
         the terms of clause 5.

5.       SEVERANCE PAYMENT

         Subject to the Employee's compliance with his obligations under this
         agreement, the Employer shall, as compensation for loss of employment
         but without admission of

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         liability, pay to the Employee within 7 days following the later of (i)
         the date of this agreement, (ii) the Termination Date, (iii) receipt of
         the completed and signed Adviser's Certification in the form set out in
         Schedule 1 and (iv) receipt of the signed resignation letter referred
         to in clause 2.2, the sum of L212,737.50 (the "SEVERANCE PAYMENT")
         subject to prior deduction of income tax and employee's national
         insurance. Provided that (i) this agreement is executed by the Employee
         prior to 22 November 2003, (ii) the Employee is not, in the Employer's
         opinion, employed by a competitor of the Employer or any Group Member
         during the Interim Period, (iii) subject to the Employee's continual
         availability to the Employer at any time requested by the Employer
         relating to any closing issues during the Interim Period, and (iv)
         subject to the Employee's continued compliance with all of the
         obligations under this agreement, including but not limited to those
         under clause 2.3, the Employee will receive further amounts of L26,350
         paid in instalments in arrears (subject to PRIor deduction of income
         tax and employee national insurance) for each of the ten months
         following the Termination Date (the "FURTHER SEVERANCE PAYMENTS"). The
         ten month period following the Termination Date is defined as the
         "INTERIM PERIOD". All payments will cease if any of the conditions in
         this clause for payment, or any provision in this agreement generally,
         are broken or no longer apply.

6.       TAX

6.1      The Employer makes no warranty as to the taxable status of the
         Severance Payment and, accordingly, the Employee agrees that any income
         tax or employee's national insurance payable pursuant to the Severance
         Payment or Further Severance Payments and on any other benefits
         provided to the Employee pursuant to this agreement is the Employee's
         personal responsibility.

6.2      The Employee undertakes that if the Employer or any Group Member is
         called upon to account to the Inland Revenue for any income tax,
         employee National Insurance contributions, interest or penalties
         thereon arising in respect of the payments made or benefits provided
         under this agreement, other than any income tax deducted under clause 5
         above (such income tax, National Insurance contributions, interest or
         penalties referred to in this agreement as the "EXCESS TAX"), and if
         the Employer or any other Group Member pays the excess tax to the
         Inland Revenue, the Employee will, at the written request of such
         entity, immediately pay to such entity an amount equal to the excess
         tax provided that no payment of excess tax will be made to the Inland
         Revenue without particulars of any proposed payment being given to the
         Employee and the Employee being given the opportunity at his own
         expense to dispute any such payment.

6.3      If there are any continuing payments to be made under this agreement,
         they shall be reduced or extinguished, as the case may be, by the
         amount of any excess tax for which the Employer or any Group Member is
         called upon to account.

7.       SECRECY

7.1      The Employee undertakes that he will not, whether directly or
         indirectly, make, publish or otherwise communicate any disparaging or
         derogatory statements, whether in writing or otherwise, concerning the
         Employer or any Group Member or any of its or their officers,
         shareholders or employees and the Employer undertakes that it will not,
         whether directly or indirectly, make, publish or otherwise communicate
         any disparaging or derogatory statements, whether in writing or
         otherwise, concerning the Employee.

7.2      Each of the Employee and the Employer undertakes to the other that
         neither shall make any announcement, statement or comment concerning:

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         (a)      the terms of this agreement; and/or

         (b)      events during the Employee's employment with the Employer or
                  the circumstances of the termination of the Employee's
                  employment or any proposals of the Employer relating to the
                  possible closure of the Livingston site without the prior
                  consent of the Employer,

         and shall not disclose the same to any person, firm or company except
         as required by law or the rules of any relevant regulatory authority or
         in communications with their professional or financial advisers who
         have agreed to keep such terms and events and circumstances
         confidential.

8.       POST-TERMINATION RESTRICTIONS

         In consideration of the Severance Payment:-

8.1      For the purposes of this clause the following words have the following
         meanings:

         "CUSTOMER" means any person, firm, employer or other entity whatsoever:

         (i)      who or which had regular dealings with the Employer or its
                  predecessor in connection with or arising out of the business
                  of the Employer at the Termination Date or at any time in the
                  period of 12 months immediately preceding the Termination Date
                  (and shall include without limitation any person, employer or
                  other entity with whom there was an actual arrangement for a
                  joint venture with the Employer or an arrangement for the
                  provision of goods or services to, by, or in conjunction with
                  the Employer);

         (ii)     who or which is a client or customer of the Employer at the
                  Termination Date or who or which was a client or customer of
                  the Employer at any time in the period of 12 months
                  immediately preceding the Termination Date;

                  and in each case:

         (iii)    with whom or with which the Employee had material dealings in
                  the course of the Employment; or

         (iv)     of or about whom the Employee acquired Confidential
                  Information (as defined below) as set out in sub-clause 8.2 or
                  trade secrets or material knowledge or material information in
                  the course of the Employment; or

         (v)      with whom or with which any employee who was under the direct
                  or indirect supervision of the Employee had material dealings
                  in the course of his employment

         at any time in the period of 12 months immediately preceding the
         Termination Date.

         "PROSPECTIVE CUSTOMER" means any supplier, client, customer, person,
         firm, employer or other entity whatsoever with whom or with which the
         Employer or its predecessor shall during the 12 months immediately
         preceding the Termination Date have had negotiations or discussions
         regarding:

         (i)      possible investment in the Employer; or

         (ii)     having regular dealings with the Employer in connection with
                  or arising out of the business of the Employer;

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                  and in each case:

         (iii)    with whom or which during such period the Employee shall have
                  had material dealings in the course of the Employment; or

         (iv)     of whom or which during such period the Employee shall have
                  acquired Confidential Information or trade secrets or material
                  knowledge or material information in the course of the
                  Employment; or

         (v)      with whom or which during such period any employee who was
                  under the direct or indirect supervision of the Employee had
                  material dealings in the course of his employment

         during the period of 12 months immediately preceding the Termination
         Date.

         "DESIGNATED AREA" means the UK and the rest of Europe but limited to
         countries in which the Employee worked for the Employer or the Group or
         for which the Employee was responsible on behalf of the Employer or the
         Group;

         "RESTRICTED BUSINESS" means the business of the Group including but not
         limited to the design, production, research in passive optical
         components based on Fiber Bragg grating and planar lightwave circuit
         technologies but limited to the activities with which the Employee was
         concerned or involved in the course of his employment during the 12
         month period immediately prior to the Employee ceasing to be employed
         or for which the Employee has been responsible during such period;

         "RESTRICTED PERSON" means any person who is employed at the Termination
         Date or has at any time in the period of six months prior to the
         Termination Date been:

         (i)      employed by the Employer; or

         (ii)     engaged as a consultant to the Employer;

         and in either case in a senior, executive, technical, advisory or sales
         capacity in the Restricted Business;

         and who was known to or worked with the Employee during that period.

8.2      The Employee acknowledges that during his employment (and possibly also
         prior to its commencement) the Employee had access to and was entrusted
         with information in respect of the technology, business and financing
         of the Employer and that of its clients, customers, suppliers, agents
         and business associates, and likewise in relation to Group Members,
         that amounts to a trade secret, is confidential or is commercially
         sensitive (the "CONFIDENTIAL INFORMATION"). Confidential Information
         includes by way of example only:

         (a)      know-how, technical designs, techniques, drawings, diagrams or
                  specifications relating to the Employer or the Group's
                  systems, products or services;

         (b)      details of current and future activities, business strategies
                  and tactics including (without limitation) those relating to
                  products, services, management, advertising, sales and
                  marketing;

         (c)      the research and development of new systems, products or
                  services;

         (d)      external consultants, contractors and suppliers and their
                  services, designs, production and delivery capabilities;

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         (e)      clients and details of their particular requirements and
                  businesses;

         (f)      costings, profit margins, discounts, rebates, pricing, payment
                  and credit policies and other financial information and
                  procedures and systems for the foregoing whether of the
                  Employer or the Group or of any client, customer, supplier,
                  agent or business associate of the Employer or the Group.

8.3      The Employee shall keep secret and shall not at any time following the
         Termination Date use or disclose to any person any of the Confidential
         Information other than as directed or consented to by the Employer.

8.4      The restrictions contained in clause 8 shall not apply to any
         Confidential Information to the extent that the Employee:

         (a)      can demonstrate was:

                  (i)      known to the Employee prior to the commencement of
                           the employment by the Employer; or

                  (ii)     is in the public domain,

                  other than as a result of a breach of clause 8 or breach of an
                  analogous provision by any person, including other employees
                  of the Employer; or

         (b)      is required to disclose by any court or regulatory body of
                  competent jurisdiction.

8.5      Nothing in this agreement shall prevent the Employee following
         termination of his employment from using information which becomes part
         of his professional skill and knowledge and which does not include any
         Confidential Information of the Employer or the Group.

8.6      The Employee shall not either personally or by an agent and either on
         his own account or for or in association with any other person directly
         or indirectly for a period of ten months after the Termination Date:

         (a)      in competition with the Employer, be employed or engaged or
                  otherwise interested in any Restricted Business; or

         (b)      take up or hold any office in or with any business which is
                  engaged or is intended to be engaged in the Restricted
                  Business within the Designated Area; or

         (c)      in competition with the Employer, in respect of Restricted
                  Business, solicit business from or canvass or entice away or
                  endeavour to solicit business from, or canvass or entice away
                  any Customer or Prospective Customer; or

         (d)      in competition with the Employer, in respect of Restricted
                  Business, have any business dealings with, any Customer or
                  Prospective Customer; or

         (e)      interfere or take such steps as may be likely to interfere
                  with the continuance of supplies to the Employer in respect of
                  the Restricted Business (or the terms relating to such
                  supplies) from any supplier or seek to damage the relationship
                  between any such person and the Employer; or

         (f)      solicit or induce or endeavour to solicit or induce any person
                  who, on the Termination Date, was a Restricted Person to cease
                  working for or providing services to the Employer, whether or
                  not any such person would thereby commit a breach of contract;
                  or

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         (g)      employ or otherwise engage in Restricted Business any person
                  who, on the Termination Date was a Restricted Person or anyone
                  who would have been employed or engaged in such a position had
                  they not left the Employer's employment or terminated any
                  arrangement with the Employer in the 6 months prior to the
                  Termination Date.

8.7      Nothing in this clause 8 shall prevent the Employee from being engaged
         in or by, or participating in, any business or entity to the extent
         that any of the Employee's activities for such business or entity shall
         relate solely to:

         (a)      geographical locations in which the business or entity does
                  not compete or seek to compete with the Relevant Business; or

         (b)      matters of a type with which the Employee was not materially
                  concerned in the 12 months immediately preceding the
                  Termination Date.

8.8      (a)      The provisions of sub-clauses 8.6 to 8.7 inclusive shall apply
                  equally where, during the period of six (6) months prior to
                  the Termination Date, the Employee was engaged in or
                  responsible for the business of any Group Member (each of
                  which Group Member is hereinafter called "Relevant Employer").

         (b)      In addition to the covenants given by him in sub-clauses 8.6
                  to 8.7 above the Employee hereby covenants with the Employer
                  (which for the purposes of this paragraph shall act as trustee
                  for each Relevant Employer) in relation to each of the
                  sub-clauses 8.6 to 8.7 inclusive as if every reference therein
                  to the Employer was a reference to the Relevant Employer and
                  the definitions of "Customer", "Prospective Customer",
                  "Designated Area", "Restricted Business" and "Restricted
                  Person" in sub-clause 8.1 apply with the substitution of "the
                  Relevant Employer" for the Employer.

9.       NEW EMPLOYMENT

         The Employee represents and warrants that, at the date of this
         agreement, he is not employed or engaged in any business whether on
         behalf of himself or another, that he is not in receipt of any
         remuneration and that he is not in negotiations which are likely to
         lead to an offer of employment or any such engagement or to the receipt
         of remuneration and that he has not received or accepted or agreed to
         accept any such offer.

10.      COMPANY PROPERTY

         The Employee represents and warrants that except as expressly provided
         for in this agreement he will on or before the Termination Date return
         to the Employer all property, equipment, records, correspondence,
         documents, files and other information (whether originals, copies or
         extracts) belonging to the Employer or any Group Member and that the
         Employee will not retain any copies.

11.      LEGAL EXPENSES

         The Employer shall, within 14 days of receipt by it of an appropriate
         copy VAT invoice addressed to the Employee for payment by the Employer,
         pay to the Employee's solicitors, Messrs MacRoberts, the Employee's
         legal expenses relating exclusively to the negotiation and preparation
         of this agreement, up to a maximum of L2,000 plus VAT.

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12.      CLAIMS AGAINST THE EMPLOYER

12.1     Although the Employer makes no admission of any liability, the terms
         set out in this agreement have been agreed in full and final settlement
         of claims the Employee has or may have against the Employer arising out
         of the termination of his employment which he asserts including and
         limited to claims for breach of contract, unlawful deductions from
         wages, unfair dismissal, statutory redundancy payment, accrued but
         untaken holiday, a protective award.

12.2     It is further the intention of the Employee and the Employer that the
         terms set out in this agreement have been agreed in full and final
         settlement of all or any claims, costs and expenses and any rights of
         action of any kind whatsoever whether under English or European Union
         law or the laws of any other jurisdiction that the Employee has or may
         have against the Employer, Group Members and any of its or their
         officers, employees, shareholders, consultants or agents (in each case
         current or former) arising directly or indirectly out of or in
         connection with the Employee's employment by the Employer, the
         Employee's holding of any office or the termination of such employment
         or office under common law, statute or otherwise including, without
         limitation, any claim or claims the Employee may have in respect of:

         (a)      wrongful dismissal;

         (b)      equal pay;

         (c)      sex discrimination contrary to the Sex Discrimination Act
                  1975;

         (d)      race discrimination contrary to the Race Relations Act 1976;

         (e)      disability discrimination contrary to the Disability
                  Discrimination Act 1995;

         (f)      any breach of the Working Time Regulations 1998;

         (g)      any breach of the Employee's rights in respect of
                  accompaniment at disciplinary or grievance hearings;

         (h)      any breach of the Part Time Workers (Prevention of Less
                  Favourable Treatment) Regulations 2000;

         (i)      any breach of the Maternity and Parental Leave etc Regulations
                  1999;

         (j)      harassment under section 3 Protection from Harassment Act
                  1997;

         (k)      dismissal or action short of dismissal taken by the Employer
                  on grounds related to the Employee's union membership
                  activities and/or other relevant statutory provisions; and

         (l)      personal injury,

         including, for the avoidance of doubt all claims (if any) arising out
         of or in connection with the Stock Options in respect of one hundred
         and fifty thousand shares awarded to the Employee in Avanex Corporation
         on 1 August 2003.

         Further, for the avoidance of doubt, the parties acknowledge that the
         Employee is not surrendering his entitlement to exercise the Stock
         Options held by him in Alcatel / Alcatel Optronics.

         The Employee warrants that other than as described above, he has no
         Stock Options in the Employer or any Group Member.

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12.3     The Employee represents and warrants that:

         (a)      the claims and prospective claims listed at clauses 12.1 and
                  12.2 are all the claims or prospective claims which the
                  Employee believes that he has or may have against the Employer
                  or any Group Member or its or their respective shareholders,
                  officers, employees, consultants or agents (in each case
                  current or former) arising out of or in connection with his
                  employment, directorships or its or their termination;

         (b)      he has instructed the Adviser to advise whether he has any
                  claims, including without limitation claims under clauses 12.1
                  and 12.2 above, against the Employer or the persons referred
                  to in clause 12.3(a) and that he has provided the Adviser with
                  all available information which the Adviser requires in order
                  to do so;

         (c)      the Employee has received independent legal advice from a
                  relevant independent adviser as to the terms and effect of
                  this agreement and in particular its effect on the Employee's
                  ability to pursue his rights before an employment tribunal.
                  The name of the relevant independent adviser who has advised
                  the Employee is Raymond Macleod Williamson of Messrs
                  MacRoberts of 152 Bath Street, Glasgow G2 4TB;

         (d)      the Employee is advised by the Adviser that there is in force
                  and was, at the time the Employee received the advice referred
                  to above a contract of insurance or an indemnity provided for
                  members of a profession or professional body covering the risk
                  of a claim by the Employee in respect of loss arising in
                  consequence of that advice; and

         (e)      the Employee has not issued proceedings before the employment
                  tribunals, High Court, County Court, Sheriff Court or Court of
                  Session in respect of any claim in connection with his
                  employment or its termination. The Employee undertakes that
                  neither the Employee, nor anyone acting on his behalf, will
                  issue any such proceedings in respect of such claims as are
                  referred to in clauses 12.1 or 12.2, and if they do so, or if
                  any of the warranties given by him in this agreement is
                  untrue, without prejudice to any other remedy which may be
                  available the Employee agrees that if he institutes or
                  continues any such proceedings and notwithstanding this
                  agreement an award is made, the Severance Payment and Further
                  Severance Payments will be set off against the award and be
                  considered in whole or in partial satisfaction, as the case
                  may be, of any such award.

12.4     To give full effect to the provisions in clauses 12.1 and 12.2 above
         the Employee hereby agrees to refrain from instituting or continuing
         any proceedings before an Employment Tribunal in relation to any claims
         or complaints set out in clauses 12.1 or 12.2.

12.5     The Employer and the Employee agree and acknowledge that the conditions
         regulating compromise agreements in the Employment Rights Act 1996 and
         legislation specified in clauses 12.1 and 12.2 are intended to be and
         have been satisfied.

12.6     The provisions of clauses 12.1 and 12.2 shall have effect irrespective
         of whether or not the Employee is or could be aware of such claims,
         costs, expenses or rights of action at the date of this agreement and
         irrespective of whether or not such claims, costs, expenses or rights
         of action are in the express contemplation of the Employer and the
         Employee at the date of this agreement (including such claims, costs,
         expenses or rights of action of which the Employee becomes aware after
         the date of this agreement in whole or in part as a result of the
         commencement of new legislation or the development of common law).

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12.7     If any of the warranties given by the Employee in this agreement is
         untrue, or if he commits a material breach of this agreement, without
         prejudice to any other remedy which may be available to the Employer,
         the Employee undertakes to repay to the Employer, as a debt and upon
         demand, the Severance Payment.

13.      INTERPRETATION

         The headings to clauses are for convenience only and have no legal
         effect.

14.      THIRD PARTY RIGHTS

         Nothing in this agreement confers on any third party any benefits under
         the provisions of the Contracts (Rights of Third Parties) Act 1999
         except that clauses 6.2, 7.1, 7.2, 8, 12.1 and 12.2 may be enforced by:

         (a)      any officer, employee or agent of the Employer in his or her
                  own right;

         (b)      any Group Member in its own right; or

         (c)      any officer, employee or agent of any Group Member in his or
                  her own right

         directly as if parties to this agreement. The parties to this agreement
         may vary or rescind it without notifying or seeking the consent of any
         third party, and the rights conferred by section 2 of the Contracts
         (Rights of Third Parties) Act 1999 are excluded.

15.      ENFORCEMENT OF THE COMPROMISE AGREEMENT

15.1     The parties agree that they consider the provisions of this agreement
         to be valid, reasonable and enforceable.

15.2     The parties acknowledge and agree that the clauses and sub-clauses of
         this agreement are severable and that if any clause or sub-clause or
         identifiable part is held to be invalid or unenforceable by any court
         of competent jurisdiction then such invalidity or unenforceability
         shall not affect the validity or enforceability of the agreement's
         remaining clauses, sub-clauses, or parts of the agreement.

15.3     The Employee agrees that if he breaches or violates any of the terms of
         this agreement damages alone may not compensate for such breach or
         violation and that injunctive relief is reasonable and essential to
         safeguard the interests of the Employer and that an injunction in
         addition to any other remedy may accordingly be obtained by the
         Employer. No waiver of any such breach or violation should be implied
         from the forbearance or failure by the Employer to take action in
         respect of such breach or violation.

16.      WITHOUT PREJUDICE

         Notwithstanding that this agreement is marked "Without Prejudice" and
         "Subject to Contract", it will become open and binding when executed by
         both parties.

17.      ENTIRE AGREEMENT

17.1     Except for those provisions of the Service Agreement which are
         expressed in that document or herein to continue in effect, this
         agreement sets out the entire agreement

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         between the Employer and the Employee with regard to the effect of
         termination of the employment and supersedes all prior discussions
         between the parties or their advisers and all statements,
         representations, terms and conditions, warranties, guarantees,
         proposals, communications and understandings whenever given and whether
         given orally or in writing.

17.2     The Employee acknowledges that the Employer enters into this agreement
         in reliance on the Employee's warranties in clauses 2.3, 9, 10 and 12.

18.      JURISDICTION AND GOVERNING LAW

         This agreement shall be governed by English law and the courts and
         employment tribunals of England and Wales shall have non-exclusive
         jurisdiction to determine all disputes relating to this agreement.

Executed as a deed on the date first written above.

EXECUTED as a deed                  )       Director /s/ ANTHONY FLORENCE
by the Company                      )
                                    )       Director/Secretary /s/ PAUL NEGUS

in the presence of:                 )

EXECUTED AS A DEED

by the Employee: /s/ RICHARD LAMING

in the presence of:

Name: /s/ JEANETTE KING

Occupation: HR MANAGER

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                                   SCHEDULE 1

                       CERTIFICATION BY EMPLOYEE'S ADVISER

                            ADDRESSED TO THE EMPLOYER

I, Raymond Macleod Williamson

of Messrs MacRoberts, Solicitors, 152 Bath Street, Glasgow G2 4TB

certify as follows:

2.       I am a "relevant independent adviser" (as such term is defined in
         section 203 of the Employment Rights Act 1996).

3.       Before the Employee signed the agreement, I advised him as to the terms
         and effect of the agreement and in particular upon its effect on his
         ability to pursue his rights before an employment tribunal.

4.       At the time that I gave the advice referred to in paragraph 2 of this
         certificate, there was in force a contract of insurance or an indemnity
         provided for members of a profession or professional body covering the
         risk of a claim by the Employee in respect of any loss arising as a
         consequence of that advice.

Signed: /s/ RAYMOND MACLEOD WILLIAMSON

Name: Raymond Macleod Williamson

Address: 152 Bath Street

         Glasgow

         G2 4TB

Dated:   21/11/03

                                       12

<PAGE>

                                   SCHEDULE 2

                         OFFICER'S LETTER OF RESIGNATION

PRIVATE & CONFIDENTIAL

The Directors
Avanex UK Limited

Kymata Employee Nominee Limited

Dear Sirs

Please accept this letter as formal notice of my resignation as a Director of
each of the companies listed above. My resignation is to be effective
immediately.

Please arrange for particulars of my resignation to be filed with the Registrar
of Companies.

Yours faithfully

RICHARD LAMING

                                       13<PAGE>

                                                                    EXHIBIT 10.5

                               SIXTH AMENDMENT TO
                         AMENDED AND RESTATED REVOLVING
                          CREDIT AND SECURITY AGREEMENT

         THIS SIXTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AND
SECURITY AGREEMENT ("AMENDMENT") is made and entered into as of December 31,
2003 by and among AVANEX CORPORATION, a Delaware corporation ("BORROWER") and
COMERICA BANK, successor by merger to Comerica Bank-California ("BANK").

                                    RECITALS

         A.       Borrower and Bank have entered into that certain Amended and
Restated Revolving Credit and Security Agreement dated as of July 10, 2000, as
amended from time to time including, without limitation, by that certain First
Amendment to Amended and Restated Revolving Credit and Security Agreement dated
as of August 24, 2000, that certain Second Amendment to Amended and Restated
Revolving Credit and Security Agreement and Agreement Regarding Term Loan dated
as of January 2, 2001, that certain Third Amendment to Amended and Restated
Revolving Credit and Security Agreement dated as of July 19, 2001, that certain
Fourth Amendment to Amended and Restated Revolving Credit and Security Agreement
dated as of September 26, 2002, and that certain Fifth Amendment to Amended and
Restated Revolving Credit and Security Agreement dated as of June 18, 2003
(collectively, the "LOAN AGREEMENT") pursuant to which Bank has agreed to extend
and make available to Borrower a certain credit facility.

         B.       Borrower desires that Bank amend the Loan Agreement upon the
terms and conditions more fully set forth herein.

         C.       Subject to the representations and warranties of Borrower
herein and upon the terms and conditions set forth in this Amendment, Bank is
willing to so amend the Loan Agreement.

         D.       This Amendment, the Loan Agreement and the other Loan
Documents (as defined in the Loan Agreement), together with all other documents
entered into or delivered pursuant to any of the foregoing, in each case as
originally executed or as the same may from time to time be modified, amended,
supplemented, restated or superseded are hereinafter collectively referred to as
the "LOAN DOCUMENTS."

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants herein set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound, Borrower and Bank hereby agree to amend the Loan Agreement as
follows:

<PAGE>

                  1.       DEFINITIONS. Unless otherwise defined herein, all
terms defined in the Loan Agreement have the same meaning when used herein.

                  2.       AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is
hereby amended as follows:

                           a.       The defined term "Committed Line" set forth
in Section 1.1 of the Loan Agreement is hereby amended and replaced in its
entirety to read as follows:

         "`Committed Line' means Twenty Million Dollars ($20,000,000)."

                           b.       The date "December 31, 2003" set forth in
the defined term "Termination Date" in Section 1.1 of the Loan Agreement is
hereby replaced and amended in its entirety to read "December 31, 2004".

                           c.       Section 2.4 of the Loan Agreement is hereby
amended and replaced in its entirety to read as follows:

         "2.4 Interest. Borrower shall pay interest to Bank on the outstanding
and unpaid principal amount of the Revolving Credit at the floating rate per
annum equal to one and one-quarter percent (1.25%) above the Prime Rate."

                           d.       Section 8.5 of the Loan Agreement is hereby
amended as follows: (i) the amount "Fifteen Million Dollars ($15,000,000)" is
deleted from the first sentence and "Twenty Million Dollars ($20,000,000)" is
substituted therefor; (ii) the following new sentence is hereby inserted in
between the existing second and third sentences: "Borrower shall not at any time
transfer any funds from its account to the Restricted Account."; and (iii) the
last sentence is amended and restated in its entirety to read as follows:
"`Unrestricted Cash' as used herein means domestic cash and cash equivalents,
plus domestic short-term investments, plus domestic long-term investments
(including long-term investments at Munder Capital), minus trade accounts
payable, and minus the current portion of restructuring charges."

                           e.       The Compliance Certificate attached as
Exhibit C to the Loan Agreement is hereby amended consistent with the foregoing.

                  3.       RATIFICATION AND REAFFIRMATION OF LIENS. Borrower
hereby ratifies and reaffirms the validity and enforceability of all of the
liens and security interests heretofore granted pursuant to the Loan Documents,
as collateral security for the Obligations, and acknowledges that all of such
liens and security interests, and all Collateral heretofore pledged as security
for the Obligations, continues to be and remains Collateral for the Obligations
from and after the date hereof.

                  4.       REPRESENTATIONS AND WARRANTIES. Borrower represents
and warrants that its representations and warranties in the Loan Documents
continue to be true and complete in all material respects as of the date hereof
after giving effect to this Amendment (except to the extent such specifically
relate to another date) and that the execution, delivery and performance of this
Amendment are duly authorized, do not require the consent or approval of any
governmental body or regulatory authority and are not in contravention of or in
conflict with any

<PAGE>

law or regulation or any term or provision of any other agreement entered into
by Borrower. Borrower further represents and warrants that, as of the date
hereof after giving effect to this Amendment, no Event of Default has occurred
and is continuing.

                  5.       FULL FORCE AND EFFECT; ENTIRE AGREEMENT. Except to
the extent expressly provided in this Amendment, the terms and conditions of the
Loan Agreement and the other Loan Documents shall remain in full force and
effect. This Amendment and the other Loan Documents constitute and contain the
entire agreement of the parties hereto and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
between the parties, whether written or oral, respecting the subject matter
hereof. The parties hereto further agree that the Loan Documents comprise the
entire agreement of the parties thereto and supersede any and all prior
agreements, negotiations, correspondence, understandings and other
communications between the parties thereto, whether written or oral respecting
the extension of credit by Bank to Borrower and/or its affiliates. Except as
expressly set forth herein, the execution, delivery and performance of this
Amendment shall not operate as a waiver of, or as an amendment of, any right,
power or remedy of Bank under the Loan Agreement or any other Loan Document as
in effect prior to the date hereof.

                  6.       COUNTERPARTS; EFFECTIVENESS. This Amendment may be
executed in any number of counterparts, each of which when so delivered shall be
deemed an original, but all such counterparts taken together shall constitute
but one and the same instrument. This Amendment is effective as of the date
first above written; provided that, as a condition to the effectiveness of this
Amendment, Bank shall have received, in form and substance satisfactory to Bank,
the following:

                           (a)      this Amendment, duly executed by Borrower;

                           (b)      Corporate Resolutions to Borrow in
substantially the form attached hereto as EXHIBIT A;

                           (c)      an amount equal to the Bank Expenses
incurred in connection with this Amendment plus an amount equal to $6,562.50,
representing the pro-rated portion of the 0.25% commitment fee on the increased
$5,000,000 commitment amount for the period from the date of this Amendment to
the next anniversary of the Closing Date;

                           (d)      evidence that Borrower has transferred
$5,000,000 from its Morgan Stanley account to the Restricted Account; and

                           (e)      such other documents, and completion of such
other matters, as Bank may reasonably deem necessary or appropriate.

                           [signature page to follow]

<PAGE>

         IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed and delivered by its duly authorized officer as of the
date first written above.

                                           BORROWER:

                                           AVANEX CORPORATION

                                           By: /s/ WALTER ALESSANDRINI
                                           Its: President and CEO

                                           BANK:

                                           COMERICA BANK

                                           By: /s/
                                           Its:

<PAGE>

                                                                       Exhibit A

                         CORPORATE RESOLUTIONS TO BORROW

         BORROWER:         AVANEX CORPORATION

         I, the undersigned Secretary or Assistant Secretary of AVANEX
CORPORATION (the "Corporation"), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of Delaware.

         I FURTHER CERTIFY that at a meeting of the Directors of the Corporation
duly called and held, at which a quorum was present and voting, (or by other
duly authorized corporate action in lieu of a meeting), the following
resolutions were adopted.

         BE IT RESOLVED, that ANY ONE (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:

<TABLE>
<CAPTION>
     NAME                       POSITION               ACTUAL SIGNATURE
     ----                       --------               ----------------
<S>                        <C>                        <C>
__________________         __________________         ___________________

__________________         __________________         ___________________
</TABLE>

acting for and on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:

         BORROW MONEY. To borrow from time to time from COMERICA BANK ("Bank"),
on such terms as may be agreed upon between the officers, employees or agents of
the Corporation and Bank, such sum or sums of money as in their judgment should
be borrowed, without limitation.

         EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank that certain
Sixth Amendment to Amended and Restated Revolving Credit and Security Agreement
dated as of December 31, 2003 (the "Amendment") and any other documents related
to the Amendment or to that certain Amended and Restated Revolving Credit and
Security Agreement dated as of July 10, 2000 entered into between the
Corporation and Bank, as amended (collectively with the Amendment, the "Loan
Documents"), and also to execute and deliver to Bank one or more amendments,
renewals, extensions, modifications, refinancings, consolidations or
substitutions for the Loan Documents or any portion thereof.

         GRANT SECURITY. To grant a security interest to Bank in the Collateral
described in the Loan Documents, which security interest shall secure all of the
Corporation's Obligations, as described in the Loan Documents.

         LETTERS OF CREDIT. To execute letter of credit applications and other
related documents pertaining to Bank's issuance of letters of credit.

         CREDIT CARD SERVICES. To execute credit card services applications and
other related documents pertaining to Bank's credit card services.

         NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation

<PAGE>

may have an interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation with Bank, or to cause
such other disposition of the proceeds derived therefrom as they may deem
advisable.

         FURTHER ACTS. In the case of lines of credit, to designate additional
or alternate individuals as being authorized to request advances thereunder, and
in all cases, to do and perform such other acts and things, to pay any and all
fees and costs, and to execute and deliver such other documents and agreements
as they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.

         BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these Resolutions and performed prior to the passage of these Resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.

         I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.

         I FURTHER CERTIFY that a true and correct copy of the Certificate of
Incorporation of the Corporation, as amended, has been delivered to Bank, as in
full force and effect on the date hereof.

         IN WITNESS WHEREOF, I have hereunto set my hand on _________________,
2004 and attest that the signatures set opposite the names listed above are
genuine signatures.

                                              CERTIFIED TO AND ATTESTED BY:

                                              _______________________________
                                              Title:

<PAGE>

                                    EXHIBIT C
                             COMPLIANCE CERTIFICATE

TO: COMERICA BANK-CALIFORNIA

FROM: AVANEX CORPORATION

         The undersigned authorized officer of AVANEX CORPORATION hereby
certifies that in accordance with the terms and conditions of the Amended and
Restated Revolving Credit and Security Agreement between Borrower and Bank dated
as of July 10, 2000, as amended from time to time (the "Agreement"), (i)
Borrower is in complete compliance for the period ending _______________ with
all required covenants except as noted below and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct as of the
date hereof. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.

<TABLE>
<CAPTION>
         REPORTING COVENANT                                          REQUIRED                                 COMPLIES
         ------------------                                          --------                                 --------
<S>                                                           <C>                                           <C>
Quarterly financial statements (10Q)                          Quarterly within 45 days                      Yes        No
Annual (CPA Audited) (10K)                                    FYE within 90 days                            Yes        No
IP Report                                                     Quarterly within 30 days                      Yes        No
Total amount of Borrower's cash and investments               Amount:  $________                            Yes        No
Total amount of Borrower's cash and investments               Amount:  $________                            Yes        No
maintained with Bank
</TABLE>

<TABLE>
<CAPTION>
FINANCIAL COVENANT                                             REQUIRED                        ACTUAL         COMPLIES
------------------                                             --------                        ------         --------
<S>                                                           <C>                             <C>           <C>
Maintain on a quarterly basis:
     Minimum Tangible Net Worth                               $70,000,000                     $________     Yes        No
Maintain at all times:
     Minimum Unrestricted  Domestic Cash (as defined in       $50,000,000                     $________     Yes        No
     Section 8.5) (the "Minimum Cash Balance")
     Minimum Cash Balance maintained with Bank or             $20,000,000                     $________     Yes        No
     Bank's Affiliates (including  Munder Capital) and
     subject to a control agreement
</TABLE>

COMMENTS REGARDING EXCEPTIONS:  See Attached.

                                       BANK USE ONLY

                                       Received by:_____________________________
Sincerely,                                              AUTHORIZED SIGNER

                                       Date:____________________________________

_____________________________          Verified:________________________________
SIGNATURE                                             AUTHORIZED SIGNER

_____________________________          Date:____________________________________
TITLE

                                       Compliance Status         Yes        No
_____________________________
DATE

  PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.

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