Document:

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                                                                   Exhibit 10.31

                                       OEM

                                PURCHASE AND SALE
                                    AGREEMENT

                                 By and Between

                           Nortel Networks Corporation

                               Avanex Corporation

                                       and

                                  Avanex Cayman

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

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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

 1.      DEFINITIONS .......................................................  1
 2.      SCOPE .............................................................  3
 3.      EXHIBITS ..........................................................  5
 4.      NORTEL NETWORKS' PRODUCT QUALIFICATION AND
         ACCEPTANCE PROGRAM ................................................  5
 5.      PRODUCT AND PROCESS CHANGES .......................................  7
 6.      QUALITY CONTROL AND RELIABILITY REQUIREMENTS,
         SUPPLY MANAGEMENT AND NORTEL
         NETWORKS' AUDITING RIGHTS .........................................  9
 7.      PROPRIETARY COMPONENTS ............................................ 11
 8.      ORDERING .......................................................... 12
 9.      DELIVERY .......................................................... 13
10.      PRICES AND PAYMENTS ............................................... 15
11.      TITLE AND RISK OF LOSS ............................................ 16
12.      ACCEPTANCE OR REJECTION ........................................... 16
13.      WARRANTY .......................................................... 17
14.      REPAIR PROCEDURES ................................................. 20
15.      REPAIR SERVICES ................................................... 21
16.      CONTINUING AVAILABILITY OF TECHNICAL ASSISTANCE,
         REPAIR SERVICES, MAINTENANCE, REPLACEMENT
         AND REPAIR PARTS .................................................. 25
17.      TECHNICAL ASSISTANCE AND MARKETING SUPPORT ........................ 25
18.      DOCUMENTATION ..................................................... 26
19.      CONFIDENTIAL INFORMATION .......................................... 27
20.      INTELLECTUAL PROPERTY RIGHT INFRINGEMENT .......................... 29
21.      HAZARDOUS MATERIALS ............................................... 30
22.      INDEMNITY ......................................................... 30
23.      COMPLIANCE WITH LAWS .............................................. 31
24.      CONSEQUENTIAL DAMAGES ............................................. 31
25.      INSURANCE ......................................................... 32
26.      FORCE MAJEURE ..................................................... 32
27.      TERM .............................................................. 33
28.      TERMINATION AND CONTINUING RIGHTS ................................. 33
29.      NOTICES ........................................................... 34
30.      MANUFACTURING ESCROW AND CONTINGENT LICENSE ....................... 34
31.      GOVERNING LAW ..................................................... 35
32.      GENERAL ........................................................... 35

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                                    EXHIBITS

Exhibit A - Product Lists, Part I and Part II, Prices, Discounts, Availability
            Dates and FCA Delivery Locations

Exhibit B - Specifications and Acceptance Program

Exhibit C - Demand-Pull Program

Exhibit D - Repair Services Rates, FCA Repair Locations and Technical Assistance
            Rates

Exhibit E - Procedures for Orders utilizing EDI and TDI

Exhibit F - Monthly Reports

Exhibit G - Change Notification

Exhibit H - Technical Assistance

Exhibit I - RUS Debarment Certificate

Exhibit J - Marketing Support

Exhibit K - North American Free Trade Agreement - Procedures

Exhibit L - Notices

Exhibit M - Initial Avanex Press Release

                                                                          Page 2

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                         OEM PURCHASE AND SALE AGREEMENT

This OEM Purchase and Sale Agreement ("Agreement") entered into by and among
Nortel Networks Corporation, a Canada corporation with offices located at 9300
Trans Canada Highway, Saint-Laurent, Quebec, H4S I K5, Canada on behalf of
itself and its parent, Nortel Networks Corporation and Subsidiaries of Nortel
Networks Corporation, (hereinafter collectively referred to as "Nortel
Networks") and Avanex Corporation, a Delaware corporation and Avanex Cayman, a
corporation incorporated under the laws of the Cayman Islands, and a
wholly-owned subsidiary of Avanex Corporation, both with principal executive
offices located at 40919 Encyclopedia Circle, Fremont, CA, 94538, U.S.A.
(hereinafter collectively referred to as "Avanex").

WITNESSETH that the Parties hereto hereby agree as follows:

1.       DEFINITIONS
         -----------

1.1      As used herein:

a)       "ARO" means after receipt of a Purchase Order or Release.

b)       "Blanket Purchase Order" means a Purchase Order which does not set
         forth a Delivery Date.

c)       "Business Day" means any day other than a Saturday, Sunday, a
         non-working day or statutory holiday observed in the jurisdiction where
         a right is to be exercised or an obligation to be executed hereunder.

Cl)      Contract Manufacturer means a third party which enters into an
         agreement with a Nortel Networks Company to (1) manufacture in modified
         or unmodified form, a Nortel Networks product incorporating the
         Product, and (2) lease, sell, sublicense or otherwise distribute
         (directly or indirectly) through distributors such Nortel Networks
         product under Nortel Networks' or the Contract Manufacturer's own brand
         name.

d)       "Delivery Date" means the date specified in a Purchase Order or a
         Release when the Products are to be delivered to the FCA Delivery
         Location except in the event Nortel Networks elects to take delivery of
         such Products at Avanex's loading dock, in which case the Delivery Date
         shall be the date Nortel Networks takes delivery of such Products at
         Avanex's loading dock.

e)       "Demand-Pull Program" means Nortel Networks' ordering process which may
         be established by Nortel Networks pursuant to Section 8 (Ordering) and
         Exhibit C.

f)       "Documentation" means the documentation as described in Section 18.

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g)       "EDI" means the electronic data interchange procedures established in
         Exhibit E.

h)       "Effective Date" means January 1, 2000.

i)       "Exhibit" means any Exhibit listed in Section 3 hereof.

j)       "FCA Delivery Locations" means FCA delivery locations listed in Exhibit
         A, Part III.

k)       "FCA Repair Locations" means Avanex's FCA repair locations listed in
         Exhibit D, Part II.

l)       "Free Carrier" and "FCA" have the meaning set forth in the
         International Chamber of Commerce document, "INCOTERMS 1990".

m)       "Hardware" means the hardware components of the Products and any set of
         programs in machine-executable code whether residing in fixed coded
         instructions resident in read-only memory or equivalent devices forming
         part of hardware and sometimes known as firmware or whether residing in
         any other form of memory device such as `flash memory'.

n)       "Party" means Nortel Networks or Avanex and "Parties" means Nortel
         Networks and Avanex.

o)       "Prices" means the prices applicable to the Products and Repair
         Services determined in accordance with Section 10 (Prices and Payments)
         hereof, Exhibit A, Part I and Part II and Exhibit D.

p)       "Process" means a set of inter-related resources and activities which
         transform inputs into outputs; resources may include personnel,
         finance, facilities, equipment, techniques and methods.

q)       "Product" means any one of the fibre optic components, as modified by
         Avanex for Nortel Networks and listed in the Product List attached
         hereto as Exhibit A, Part I, as such Exhibit A, Part I may be modified,
         from time to time, in accordance herewith or by agreement of the
         Parties and "Products" means some or all Products.

         Whenever the term "product" is used in this Agreement with respect to
         any Avanex product, such term designates any such product listed in
         Exhibit A, Part II not yet accepted by Nortel Networks in accordance
         with Section 4 (Nortel Networks' Product Qualification and Acceptance
         Process) and "products" means some or all products.

r)       "Purchase Order" means any purchase order issued (by any means of
         transmission) or output of an electronic "paperless" process, initiated
         by Nortel Networks, in respect of the Products and accepted pursuant to
         Section 8 (Ordering).

s)       "Release" means a verbal release confirmed in writing within two (2)
         Business Days, the document issued (by any means of transmission) or
         output of an electronic "paperless" process, initiated by Nortel
         Networks, pursuant to a Blanket Purchase Order by which the Delivery
         Date for such Blanket Purchase Order or portion(s) thereof is
         requested.

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t)   "Repair Date" means the date on which the repair of a Product is completed
     as stamped on the Products in accordance with Section 14.4.

u)   "Repair Services" means in the case of Hardware, the upgrade, the repair or
     replacement of defective Hardware as set forth in Section 15 (Repair
     Services) to be performed during and after the applicable Product Warranty
     Period. For the purpose of this Agreement, "defective Hardware or Products"
     means that either the Hardware or Products does not conform to the
     Specifications, as described hereto.

v)   "Specifications" means the technical specifications and the other
     requirements listed, described or referred to in Exhibit B, Part I,
     including acceptance test specifications, which are required to be met by
     the Products and the Documentation.

w)   "Subsidiary" means a corporation in which a Party effectively owns or
     controls, and continues to own or control, directly or indirectly, more
     than fifty percent (50%) of the voting stock or shares.

x)   "Term" has the meaning ascribed to such term in Section 27 (Term) of this
     Agreement.

y)   "$" or "Dollars" means lawful money of the United States of America except
     as otherwise expressly set forth herein.

1.2  Any reference in this Agreement to another agreement shall mean such other
     agreement as executed by the Parties thereto and all amendments thereto,
     unless otherwise explicitly stated.

2.   SCOPE

2.1  From time to time Nortel Networks may request Avanex to sell the Products
     to Nortel Networks and Avanex agrees to sell such Products to Nortel
     Networks. The sale of Products by Avanex and the purchase of Products by
     Nortel Networks shall be in accordance with the terms of this Agreement and
     Exhibits thereto. The terms and conditions of this agreement shall cover
     all commercial dealings between the Parties retroactively to January 1,
     2000.

2.2  Nortel Networks shall have the right to request Avanex to customize any
     Product, product or Documentation; and Avanex, upon Nortel Networks'
     request will then utilize reasonable commercial efforts to so customize any
     such Product, product or Documentation. Customization requirements, if any,
     shall be incorporated in the Specifications and the sale and purchase of
     any customized Product, product or Documentation shall be in accordance
     with the terms and conditions of this Agreement and Exhibits thereto. At
     the time any customized Product, product or Documentation is incorporated
     in this Agreement, Exhibit A, Part II and Exhibit B shall be amended to add
     thereto the prices and the availability date and the acceptance program
     applicable to such customized Product, product or Documentation. This
     Section is also applicable to Documentation included with the Products and
     products.

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     If requested by Nortel Networks, the Products will incorporate Nortel
     Networks' reasonable branding requirements, in accordance with the
     Specifications to include, as mutually agreed and without limitation,
     Nortel Networks' name, trademark and logotype, Nortel Networks' color,
     Nortel Networks' part number as per Specifications, Nortel Networks'
     bar-codes and/or CLEI codes with each Product, packing material with Nortel
     Networks' logotype and Nortel Networks' box bar coding, applicable to each
     shipment.

2.3  Avanex hereby grants to Nortel Networks the non-exclusive worldwide right
     to distribute and sell Products, whether directly or indirectly.

2.4  Nortel Networks and Avanex may from time to time, by mutual written
     agreement, modify the Product lists contained in Exhibit A, to add thereto
     other products offered for sale by Avanex, and/or to incorporate therein
     enhancements or new features introduced in Products by Avanex. Avanex shall
     advise Nortel Networks during scheduled Product marketing reviews and shall
     upon mutually agreeable terms, offer and make available to Nortel Networks
     for incorporation in this Agreement, any new product or Product enhancement
     or new feature that Avanex makes generally available. Such notification
     shall be made by Avanex to Nortel Networks within seven (7) calendar days
     of the Avanex's internal design authorization allowing any such new
     product, enhancement or feature. If Nortel Networks accepts Avanex's offer,
     the actual incorporation in this Agreement of any such new product or any
     Product enhancement or new feature will take place only after it complies
     with Nortel Networks' acceptance requirements under Section 4 (Nortel
     Networks' Product Qualification and Acceptance Process). At the time any
     new product or Product enhancement or new feature is incorporated in this
     Agreement, Exhibit A, Part II and Exhibit B shall be amended to add thereto
     the prices and the availability date and the acceptance program applicable
     to such new product or Product enhancement or new feature.

2.5  Except for the terms and conditions set out in Section 19 "Confidential
     Information", nothing in this Agreement shall be interpreted or construed
     to limit either Party's right to perform or to continue to perform its own
     independent research, development, manufacturing or marketing of any type
     of products or systems even if such research, development, manufacturing or
     marketing pertains to technology or products similar to the Products or
     products.

2.6  Avanex accepts and acknowledges that Nortel Networks may request it to sell
     Products to Nortel Networks Companies and in such event this Agreement
     shall be deemed to extend to and for the benefit of Nortel Networks
     Companies which Nortel Networks Companies shall be entitled to exercise on
     behalf of Nortel Networks, Nortel Networks' rights in respect of the
     purchase of Products pursuant to this Agreement including, without
     limitation, the right to place Purchase Orders together with the rights
     which accrue in respect of the Products or in respect of the ordering or
     delivery of such Products. For the purposes of giving effect to the above,
     where a Nortel Networks Company purchases Products pursuant to this
     Agreement, where the context so admits, references to Nortel Networks shall
     be deemed to be to the relevant Nortel Networks Company which is ordering
     and/or purchasing Products in accordance with the terms of this Agreement.
     Each Blanket Purchase Order, Release and Purchase Order shall create rights
     and obligations solely between Avanex and the Nortel Networks Company which
     issues the Blanket Purchase Order, the Release and the Purchase Order. For
     the purpose of this Agreement, "Nortel Networks Company" shall mean
     individually or collectively: (i) a Contract Manufacturer and/or (ii) a
     joint

                                                                         Page  4

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     venture, which is a cooperative enterprise formed between a Nortel Networks
     Company and one or more other autonomous entities to address more
     effectively certain mutual business interests and opportunities; and (iii)
     a corporation or other legal entity other than a Subsidiary in which a
     Nortel Networks Company, directly or indirectly owns or controls, and
     continues to own or control, twenty percent (20%) or more of the voting
     stock or shares, or other control mechanism. Where Nortel wishes to have a
     Nortel Networks Company purchase Products under the terms and conditions of
     this Agreement, the parties shall meet to discuss, and subject to Avanex
     being reasonably satisfied as to creditworthiness and other legal and
     strategic obligations binding Avanex, the parties may amend this Agreement
     in writing to include specifically named Nortel Networks Companies.

3.   EXHIBITS

3.1  The following Exhibits, attached hereto, are an integral part of this
     Agreement and are incorporated herein by reference:

     Exhibit A -    Product Lists, Part I and Part II, Prices, Discounts,
                    Availability Dates and FCA Delivery Locations
     Exhibit B -    Specifications and Acceptance Program
     Exhibit C -    Demand-Pull Program
     Exhibit D -    Repair Services Rates, FCA Repair Locations and Technical
                    Assistance Rates
     Exhibit E -    Procedures for Orders utilizing EDI and TDI
     Exhibit F -    Monthly Reports
     Exhibit G -    Change Notification
     Exhibit H -    Technical Assistance
     Exhibit I -    RUS Debarment Certificate
     Exhibit J -    Marketing Support
     Exhibit K -    North American Free Trade Agreements - Procedures
     Exhibit L -    Notices
     Exhibit M -    Initial Avanex Press Release

3.2  Any amendment to any Exhibit shall be in the form of a revised Exhibit duly
     dated and signed by authorized representatives of the Parties and shall be
     incorporated herein by reference.

4.   NORTEL NETWORKS' PRODUCT QUALIFICATION AND ACCEPTANCE PROGRAM

4.1  Avanex undertakes to supply Products which comply with the Specifications.
     Except as otherwise set forth herein, prior to being purchased by Nortel
     Networks, the products listed in Exhibit A, Part II will undergo a program
     of evaluation, qualification and acceptance by Nortel Networks ("Acceptance
     Program") to verify their compliance with the Specifications. Products
     listed in Exhibit A, Part I have been accepted by Nortel Networks in
     accordance with this Section 4. The Acceptance Program will be conducted in
     accordance with Exhibit B, Part II.

                                                                         Page  5

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4.2  It is acknowledged by Avanex that circumstances may arise where Nortel
     Networks will desire to purchase one or more products as are listed in
     Exhibit A, Part II, prior to acceptance thereof in accordance with this
     Section 4. Such circumstances will be examined in good faith by the Parties
     on a case-by-case basis. In the event Avanex accepts to sell any one of the
     products, Nortel Networks will issue Purchase Order(s) covering same and
     the provisions of Section 4.6 shall be applicable to such Purchase Order(s)
     which, for the purpose of determining the rights and obligations of the
     Parties hereunder, shall be deemed to have been issued in respect of
     Products. Avanex shall not unreasonably refuse to accept Nortel Networks'
     Purchase Orders covering products.

4.3  Acceptance by Nortel Networks of the products will take place upon
     successful completion by Nortel Networks of its Acceptance Program. Nortel
     Networks will notify Avanex in writing of its acceptance of the products
     within three (3) Business Days from successful completion of its Acceptance
     Program.

4.4  In the event that in the course of the carrying out of the Acceptance
     Program, Nortel Networks determines that the products fail to comply with
     the Specifications, Nortel Networks will promptly notify Avanex in writing
     of such failure, with reasonable detail, and upon receipt of such notice,
     Avanex will, at its expense, take prompt and effective action to correct
     the notified deficiencies by the applicable Acceptance Date, as such term
     is hereafter defined. Product acceptance dates shall be mutually agreed
     upon by the Parties on a case-by-case basis, (herein referred to as
     "Acceptance Date"), or extensions thereof, if any, granted in writing by
     Nortel Networks. In such case, acceptance of the products will take place
     upon verification by Nortel Networks that the notified deficiencies have
     been corrected, and accepted products shall become Products hereunder and
     be deemed to be included in Exhibit A, Part I.

4.5  In the event that acceptance of the products does not take place on or
     before the Acceptance Date or extensions thereof, if any, granted in
     writing by Nortel Networks, Nortel Networks may, in addition to any other
     remedies hereunder, at law or in equity, recover all reasonable costs and
     charges it has incurred as a result of the products not being accepted by
     the Acceptance Date, including, without limitation as to the nature of such
     costs and expenses, laboratory testing cancellation charges. In addition
     Nortel Networks may, upon notice to Avanex to that effect, request that a
     design review be held between Avanex's and Nortel Networks' engineers in
     order to determine how far away the products actually are from acceptance.

4.6  In the event Avanex has accepted Nortel Networks' Purchase Order(s) for
     products pursuant to Section 4.2 hereof, Nortel Networks may, in addition
     to its rights under Section 4.5 hereof, request that Avanex provide, and in
     such event, Avanex will provide as a temporary solution, functionally
     equivalent equipment acceptable to Nortel Networks' customer(s). Once the
     products have passed acceptance, Avanex shall, at cost and expense mutually
     agreed to by the Parties, replace the functionally equivalent equipment
     with the Products, and shall invoice Nortel Networks for the price of
     Products and the agreed to costs and expenses once the Products have been
     delivered to Nortel Networks' customer(s).

                                                                         Page  6

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4.7  Avanex represents and warrants that it has identified and will use its best
     efforts to continue to identify to Nortel Networks any sole source/critical
     components incorporated into the Products.

4.8  Acceptance of the Products by Nortel Networks under this Section 4 shall
     not relieve Avanex from its obligations to manufacture, deliver, repair and
     support the Products in accordance with this Agreement.

5.   PRODUCT AND PROCESS CHANGES

5.1  Avanex shall notify Nortel Networks in writing of all proposed
     modifications and changes that affect form, fit, function, performance or
     Price (herein "Change(s)") to the Products and/or Processes. Such
     notification shall be made by Avanex to Nortel Networks within seven (7)
     calendar days of the Avanex's internal design authorization allowing any
     such Change except in the cases contemplated in Section 5.6, in which case
     Avanex shall promptly so notify Nortel Networks and initiate immediate
     action to correct the situation. The Changes which require that a notice be
     forwarded to Nortel Networks shall include, without limitation, any
     proposed Change to the Products in accordance with the classifications
     described in GR-209-CORE (herein "GR-209"). All Changes proposed outside
     the spectrum of GR-209 shall be classified as "O". Avanex shall comply with
     GR-209 except to the extent expressly set forth in this Section 5. The
     reasonable interpretation of GR-209 resides with Nortel Networks. Avanex's
     Change notifications (herein "Change Notifications") shall be in the form
     and content of Exhibit G.

5.2  Avanex's written Change Notifications shall be numbered in a single
     sequential numbering scheme and shall include the information specified in
     GR-209 including the following: a detailed list of the Products and/or
     Processes affected and associated Changes that must be implemented in
     conjunction with or prior to the notified Change, the compatibility of the
     Change with the Products and/or Processes currently deployed, a detailed
     description of the reason for the Change, the effect on the Products and/or
     Processes once the Change is implemented and the procedure of
     implementation. In addition, a detailed description of the Change, the
     consequences if the Change is not implemented and the planned
     implementation date of the Change shall be included in the Change
     Notification. Avanex will propose a disposition plan for Nortel Networks'
     and its customers' stockrooms. Nortel Networks will notify Avanex of the
     type and quantity of Products it requires for the implementation of the
     Change and location where such Products should be delivered to.

5.3  Nortel Networks reserves the right to request reasonable test data
     associated with any Product Changes. Furthermore, in the event Nortel
     Networks determines it is necessary to verify the Change prior to
     acceptance, Avanex shall supply, on loan and without charge, sufficient
     production level quality Products for such verification, or offer some
     other alternative arrangement, reasonably satisfactory to Nortel Networks,
     for such verification.

5.4  If Nortel Networks disagrees with any classification issued by Avanex,
     Avanex shall present evidence in writing, within a period of five (5)
     Business Days from Nortel Networks' request therefor, that such a
     classification is justified. If Nortel Networks still disagrees with the
     justification, Avanex shall negotiate in good faith with Nortel Networks
     until a final resolution is

                                                                         Page  7

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        mutually agreed upon by the Parties within thirty (30) calendar days
        from the date of Nortel Networks' notice of disagreement. In the event
        that thirty (30) calendar days after the date of Nortel Networks'
        notice of disagreement, the Parties still disagree on the Change
        classification, Nortel Networks' reasonable determination shall
        prevail and be final.

5.5     Avanex shall not implement a Change such as those contemplated above
        without the prior written consent of Nortel Networks, which consent may
        not be unreasonably withheld. Should Nortel Networks fail to respond
        within a period of forty (40) calendar days from the date it has
        received a notice forwarded by Avanex under this Section 5, then
        Avanex shall have the right to implement such Change.

32.12   In addition to Avanex's warranty obligations contained in Section 13
        (Warranty) and without diminishing Avanex's obligations under this
        Section 5 and Sections 6 (Quality Control and Reliability
        Requirements, Supply Management and Nortel Networks' Auditing Rights)
        and 15 (Repair Services), in the event that, during the Product
        Warranty Period or thereafter, an intrinsic design or manufacturing
        defect of the Product(s), causes an inoperative or hazardous condition
        of a nature as to require the introduction in the Product(s) of a
        Class A or AC Change, as described in GR-209, Avanex shall, as
        expeditiously as possible, at its expense, generate a Class A or AC
        Change, as applicable, to eliminate the defect, and supply such
        Change, at no charge, for installation by Nortel Networks at
        reasonable costs, at Avanex's expense, in all defective units of the
        Product(s), both installed and stocked, in accordance with a retrofit
        program negotiated by Nortel Networks with its customers. A retrofit
        program is a program that allows Nortel Networks to install the Change
        in all of Nortel Networks' stockrooms and customer locations within a
        period not to exceed one hundred and eighty (180) calendar days from
        the date such inoperative, hazardous or unsatisfactory condition first
        occurs. In the course of negotiations of the retrofit program with its
        customers, Nortel Networks shall consult closely with Avanex with a
        view to endeavor to achieve the twofold objective of customers'
        satisfaction and minimization of retrofit costs to Avanex. For the
        purpose of this Agreement, an "intrinsic design defect" is one that
        occurs even though the Product itself complies with the
        Specifications. Similarly, a "manufacturing defect" is one where
        although the Product conforms to the Specifications, and standard
        Product testing does not reveal the defect, the reliability of the
        Product over a period of time is adversely affected, and results in
        field failures at Nortel Networks' customers' sites.

        Avanex shall provide, at its expense, seed stock units to support a
        retrofit project completion within said one hundred and eighty (180)
        days in quantities determined in accordance with the following
        formulae: The one hundred and eighty (180) day period begins when all
        the details of the retrofit program are determined by Nortel Networks.

        Seed Stock Units = Material Cycle Time (Weeks) x Repair and Return Rate

        Repair and Return Rate =          Number of units to be retrofitted
                                    --------------------------------------------
                                    Change Completion Date - Implementation Date

5.7     Nortel Networks shall provide to Avanex Nortel Networks' Product
        Engineering Code, the release number of the Product and the CLEI code of
        the Product, if required, for each Product Change

                                                                         Page  8

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        under this Section 5. At Nortel Networks' request, this information
        shall be placed on the Products by Avanex in accordance with the
        Specifications.

5.8     From acceptance of the Products by Nortel Networks in accordance with
        Section 4 (Nortel Networks' Product Qualification and Acceptance
        Process), Avanex shall provide Nortel Networks with a field baseline
        report which will include: Nortel Networks' part number, Current
        Revision Level, New Revision Level, Reason for Change, Parts affected by
        Change, if applicable. This report will be updated for every Change.
        Avanex will use its best efforts to produce these updates within seven
        (7) Business Days of each Change date.

32.12   Throughout the Term, Avanex shall requalify the Products as frequently
        as is required by telecommunications industry standards in accordance
        with Bellcore Standard TR-NWT-000418, Issue 2 (Draft 3) September
        1992, or its most recent version, as applicable.

5.10    Change notices relating to Product Changes should be sent to Nortel
        Networks' System Engineering Department and Change notices relating to
        Process Changes should be sent to Nortel Networks' Quality Department.
        Avanex's Quality Department shall be responsible for the obligations
        described in this Section 5.

6.      QUALITY CONTROL AND RELIABILITY REQUIREMENTS, SUPPLY MANAGEMENT AND
        NORTEL NETWORKS' AUDITING RIGHTS

6.1     ISO 9001 Certification

6.1.1   Avanex represents and warrants that it shall seek to obtain by
        September 31, 2000, and in any event no later than December 31, 2000,
        ISO 9001 certification or any applicable improvement to that standard.
        Avanex undertakes to maintain ISO 9001 certification in effect
        throughout the Term including in respect of Avanex's quality control
        systems, and Avanex's continued failure to maintain ISO 9001
        certification for a period of forty-five (45) calendar dates from the
        loss of such certification, shall constitute a material breach by
        Avanex of its obligations hereunder.

6.1.2   In the event Avanex receives any notice of non-conformance to ISO from
        the ISO registrars, Avanex shall immediately advise Nortel Networks and
        forthwith provide Nortel Networks with (i) the list and details of the
        non-conformance and (ii) the detailed plan submitted to the ISO
        registrars including timelines and goals to achieve compliance with ISO
        9001.

6.2     Quality Control and Reliability Requirements

6.2.1   All Products delivered by Avanex to Nortel Networks shall comply with
        the Specifications including Nortel Networks' quality and reliability
        target metrics set out therein, such metrics to include, without
        limitation, Mean Time Between Failure ("MTBF"), Return Rate ("RR") and
        Supplier Product Quality Level ("SPQL"). In the event Nortel Networks
        proposes any changes or additions to such quality and reliability
        target metrics, Avanex shall not unreasonably refuse to agree or delay
        compliance with such changes.

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6.2.2    Products furnished hereunder by Avanex shall be tested and inspected by
         Avanex prior to shipment in accordance with testing and inspection
         procedures as approved by Nortel Networks. Avanex agrees to perform all
         quality control functions to ensure compliance of the Products with the
         Specifications and conformance with good commercial practice. Avanex
         warrants that all Products furnished hereunder shall meet all criteria
         set forth in the Specifications. Detailed inspection records are to be
         maintained by Avanex and made available to Nortel Networks upon
         reasonable request.

6.2.3    Avanex shall provide Nortel Networks with a monthly report covering the
         items shown in Exhibit F and any other items reasonably required by
         Nortel Networks in a format acceptable to Nortel Networks.

6.2.4    Avanex shall, within seven (7) Business Days of becoming aware of any
         such event, report to Nortel Networks by technical bulletin or report
         any potential, suspected or actual (i) defect in design and/or
         manufacturing of the Products, (ii) malfunction of the Products or of
         products similar to the Products, (iii) failure of the Products to
         conform to the Specifications or (iv) uses of the Products in
         combination with other product(s) or services which cause or have the
         potential of causing disruption in the services provided by end-users
         using the Products.

6.3      Supply Management

6.3.1    Nortel Networks may, from time to time, identify in a notice to Avanex
         those components and materials used in the manufacture of Products
         which are subject to this Section 6.3. From the date of Nortel
         Networks' notice to Avanex, all components and materials so identified
         by Nortel Networks, and the vendors of such components and materials,
         shall be reasonably approved by Nortel Networks and Avanex shall only
         use such approved components and materials procured from such approved
         vendors in its manufacture of the Products hereunder. Upon reasonable
         request of Nortel Networks, Avanex shall provide Nortel Networks with
         mutually agreeable information relating to Avanex's suppliers, insofar
         as such information is not confidential information of such suppliers.
         In the event an Avanex supplier is found to be reasonably unacceptable
         to Nortel Networks, Avanex and Nortel Networks shall work together in
         good faith to find a substitute vendor as soon as possible, without
         unnecessarily disrupting supply of the Products.

6.3.2    In the event Nortel Networks reasonably determines that components,
         materials and/or vendors are no longer approved for use in the
         manufacture of Products and so advises Avanex, Avanex shall, without
         unnecessarily disrupting supply of the Products, approve all
         substitute vendors and perform the qualification of all substitute
         components and materials to ensure that Products incorporating such
         components and materials comply with the Specifications. The selection
         of any substitute approved vendors by Avanex is subject to Nortel
         Networks' audit to assess the acceptability and establish the
         credibility of such vendors, which acceptance shall not be
         unreasonably withheld. Avanex and Nortel Networks shall work together
         in good faith to find a substitute vendor as soon as possible, without
         unnecessarily disrupting the supply of Products.

                                                                        Page  10

<PAGE>

6.3.3  Avanex's supply management Processes and records are subject to audit
       by Nortel Networks, to assess their efficiency and ensure corrective
       and preventive actions are taken internally by Avanex or externally
       with the approved vendors. Nortel Networks' audit of suppliers approved
       by Avanex, other than those recognized by Nortel Networks' Integrated
       Electronic Data Base ("IEDB") and Nortel Networks' Divisional Component
       Database ("DCD"), and of the Processes and records for non-conforming
       components and materials, may be held within thirty (30) calendar days
       of evidence of receiving non-conforming Products from Avanex.

6.4    Nortel Networks' Inspection Rights

6.4.1  Upon fifteen (15) Business Days' written notice, Nortel Networks may
       inspect or test, at all reasonable times and at Avanex's locations, any
       Products covered by this Agreement. Avanex shall provide at no
       additional cost such facilities, labor, data, specifications, manuals
       and information as are reasonably required to allow Nortel Networks to
       perform a full range of quality assurance functions without unduly
       interfering with Avanex's normal day-to-day operations. Inspection of
       Products may be performed in whole or in part prior to final assembly
       and/or completion of manufacturing or repair Processes.

6.4.2  In addition to, and without restricting, Nortel Networks' auditing and
       inspection rights described in this Section 6, Nortel Networks shall
       have the right to visit Avanex's manufacturing location(s) for the
       purpose of inspecting any of the Processes, upon fifteen (15) Business
       Days' written notice. Nortel Networks shall request inspection no more
       frequently than required by good commercial practices.

6.4.3  Nortel Networks shall keep Avanex promptly informed as to any problems
       encountered with the Products and Processes and to communicate promptly
       to Avanex any and all modifications or improvements to the Products and
       Processes suggested by any customer, employee or agent, subject to any
       confidentiality undertakings binding Nortel Networks to such customer,
       employee or agent.

6.4.4  Any exercise of, or failure by Nortel Networks to inspect Products,
       Processes and Avanex's manufacturing locations as set forth in this
       Section 6 and Section 12 (Acceptance or Rejection) shall not
       constitute, or be construed as acceptance of the Products and Processes
       by Nortel Networks or as relieving Avanex from its obligation to
       furnish all Products in compliance with this Agreement, including the
       Specifications, and the applicable Blanket Purchase Order, Release or
       Purchase Order.

7.     (INTENTIONALLY OMMITTED)

8.     ORDERING

8.1    Products will be purchased, at Nortel Networks' option, through Blanket
       Purchase Orders and Releases under the Demand-Pull Program or, absent
       such Demand-Pull Program, through Purchase Orders with a schedule of
       delivery, which may be issued by Nortel Networks, from time

                                                                        Page  11

<PAGE>

     to time, in accordance with this Agreement. The Parties acknowledge that
     such Blanket Purchase Orders, Releases and Purchase Orders shall be
     transmitted by electronic means, which is to be determined by the Parties
     in good faith. The Parties will use commercially reasonable good faith
     efforts to implement the above-mentioned electronic transmission medium as
     soon as possible. If the Parties determine in good faith that EDI is the
     most effective transmission medium, the EDI methods shall be as described
     in Exhibit E. Avanex undertakes to be compliant with the Demand-Pull
     Program by June 1, 2000, and in any event, shall be Demand-Pull compliant
     no later than June 30, 2000.

8.2  Notwithstanding that a Blanket Purchase Order, a Release or a Purchase
     Order issued in respect of Products does not refer to this Agreement, any
     such Blanket Purchase Order, Release or Purchase Order issued by Nortel
     Networks during the Term shall be deemed to have been issued pursuant to
     this Agreement and shall be deemed to incorporate and be governed solely by
     the terms and conditions set forth in this Agreement unless the Parties
     expressly agree in writing to the contrary. Any printed terms and
     conditions contained in any Blanket Purchase Order, Release or Purchase
     Order or in any Avanex acknowledgment, invoice or other documentation shall
     be deemed deleted and of no force or effect. Any additional typed and/or
     written terms and conditions contained in any Purchase Order or Release and
     any Avanex acknowledgment, invoice or other documentation shall be for
     administrative purposes only, i.e. to identify the types and quantities of
     Products to be supplied, line item Prices and total Price, delivery
     schedule, and other similar ordering data, all in accordance with the
     provisions of this Agreement.

8.3  Nortel Networks shall not be obligated to purchase any quantities of
     Products hereunder, except and only to the extent required in order to
     satisfy its obligations to purchase Products pursuant to the Demand-Pull
     Program, if any, as expressly set forth in Exhibit C. Avanex acknowledges
     that no minimum line item value or minimum order values shall apply to
     Blanket Purchase Orders, Releases or Purchase Orders issued hereunder.

8.4  Avanex undertakes to accept any Blanket Purchase Orders and Releases or
     Purchase Orders issued hereunder by Nortel Networks and Nortel Networks
     Companies, provided that such Blanket Purchase Orders and Releases or
     Purchase Orders are consistent with this Agreement. Avanex shall
     acknowledge receipt of each Blanket Purchase Order or Purchase Order within
     two (2) Business Days ARO.

8.5  Any change to the original Purchase Order or Release initiated by Nortel
     Networks after Avanex's acknowledgment and any resulting adjustments to
     prices, schedule and/or other requirements of the Purchase Order or Release
     shall be negotiated and mutually agreed upon and subsequently detailed in a
     written change to the Purchase Order or Release ("Change Order"),
     referencing the original Purchase Order or Release and executed by
     authorized representatives of Nortel Networks and Avanex. The adjustment of
     the Purchase Order or Release price shall include actual reasonable charges
     incurred by Avanex related to such work under the original Purchase Order
     or Release. No such changes shall be performed until a Change Order has
     been executed by Avanex and Nortel Networks as described above.

8.6  The Blanket Purchase Orders, Releases, or Purchase Orders shall:

                                                                        Page  12

<PAGE>

a)   reference the number of Nortel Networks' Blanket Purchase Order, Release or
     Purchase Order issued for the Products;

b)   include a signature of an authorized employee of Nortel Networks (to be
     provided by Nortel Networks);

c)   have the correct Product and options description (including item numbers
     and part numbers if shown for that item in the Product list);

d)   have the correct Price in accordance with Exhibit A of this Agreement or
     any amendments hereto;

e)   specify the exact quantity of Products to be delivered;

f)   provide tax status for each "ship-to" location including the exemption
     certificate number if tax exempt;

g)   have firm delivery schedules and a firm Delivery Date (where applicable)
     for each shipment;

h)   specify the FCA Delivery Location, "ship to" and the Nortel Networks
     location where the invoice shall be rendered for payment;

i)   specify the method of shipment including the names of carrier and broker,
     if applicable; and

j)   specify special shipping and transportation instructions, if any.

9.   DELIVERY

9.1  Products shall be delivered as follows:

     a)   Products ordered pursuant to the Demand-Pull Program shall be
          delivered by Avanex FCA Delivery Location set forth in the Release
          within a delivery lead time not to exceed one (1) Business Day from
          Nortel Networks' Release(s).

     b)   Products not ordered pursuant to the Demand-Pull Program shall be
          delivered by Avanex FCA Delivery Location set forth in the Purchase
          Order, within a delivery lead time not to exceed six (6) weeks ARO.

     No partial shipment shall be made without Nortel Networks' prior written
     consent.

9.2  Avanex shall package the Products in accordance with Nortel Networks'
     standard packing and external marking practices in compliance with the
     standards listed in Schedule B, Part III and the Specifications together
     with any modification reasonably requested by Nortel Networks with respect
     to size and external markings.

9.3  Avanex shall mark each Product listed in Exhibit A with the Avanex's model
     number and where practical, the description of the Product and the revision
     level. Each Product shall be marked, as outlined in Specifications, set
     forth in Exhibit B, Part III. When requested by Nortel Networks, Product
     shall include Nortel Networks' logotype.

                                                                        Page  13

<PAGE>

9.4    Avanex shall promptly advise Nortel Networks of any anticipated delay
       in meeting the Delivery Date specified in any Purchase Order or
       Release and shall cooperate with Nortel Networks in the implementation
       by Avanex of any reasonably appropriate action or workaround plans
       with a view to enable Nortel Networks to satisfy its customer
       requirements. Without limiting the generality of the foregoing or
       otherwise affecting Nortel Networks' rights, in the event a Nortel
       Networks customer cancels one or more orders for Products as a result
       of Avanex's delay in the delivery of Products of more than five (5)
       calendar days, Nortel Networks shall have the right to cancel, without
       charge or liability, the Purchase Order and/or Release issued to
       Avanex in respect of Nortel Networks' customer cancelled order(s).

9.5    Nortel's Purchase Commitment and Avanex's Capacity Increase Obligations

             Nortel intends to purchase specific and mutually agreed upon
             fiber optic component products from Avanex hereunder, where the
             forecasted quantity of each Product shall be that specified in
             Exhibit A, during the first twelve (12) month period of this
             Agreement (collectively "Nortel's Purchase Commitment").

             In addition, in the event that Avanex's Product delivery, pricing
             and ability to ramp-up to Nortel's demand meet or exceed Nortel's
             reasonable expectations, then Nortel may purchase an additional
             mutually agreeable quantity of Products from Avanex during the
             first twelve (12) months of the Agreement.

9.5.1  Thereafter Nortel's said commitment to purchase shall continue for the
       next twelve (12) month period of the Term of the Agreement
       (collectively "Nortel's Purchase Commitment") on the following basis:

       a)   where Avanex has complied with the performance requirements set
            out in Sub-Sections 9.5.2 and 9.5.3, to the reasonable
            satisfaction of Nortel during such first twelve (12) month
            period, Nortel's Purchase Commitment shall remain overall at the
            said same level;

       b)   where Avanex has reasonably exceeded the performance requirements
            set out in Sub-Sections 9.5.2 and 9.5.3, to the reasonable
            satisfaction of Nortel during such first twelve (12) month
            period, and subject to Nortel's other legal obligations and
            commitments, Nortel shall in good faith use reasonable commercial
            efforts to increase the percentage of business in Nortel's
            Purchase Commitment to match the level of the exceeded
            performance by Avanex, provided that Nortel makes no firm
            commitment to effect such increase;

       c)   where Avanex has failed to meet the performance requirements set
            out in Sub-Sections 9.5.2 and 9.5.3, to the reasonable
            satisfaction of Nortel, during such first twelve (12) month
            period, then the percentage of business in Nortel's Purchase
            Commitment may be decreased by Nortel to the level calculated by
            factoring in any reduced Nortel Purchase Commitment for any
            particular Product.

                                                                       Page   14

<PAGE>

        The Parties agree to meet prior to the end of the first twelve (12)
        month period of the Agreement, to discuss Avanex's performance
        hereunder and Nortel's Purchase Commitment in accordance with the
        criteria, for the next twelve (12) month period of the Agreement.

9.5.2   Nortel's Purchase Commitment may decrease (and any such decrease may
        subsequently be reversed as provided for herein) in accordance with the
        following:

        "Delayed Delivery" shall be any instance where Avanex fails to make a
        shipment that a) is in compliance with the quantity of Products in a
        Release and the delivery date of such Products in accordance with
        Section 3.4 of Exhibit C, for Products supplied pursuant to the
        Demand-Pull Program, or b) as per the mutually agreed-upon delivery
        date with respect to Products ordered under a Purchase Order.

        "Default Period" shall be any calendar week where Avanex has made a
        Delayed Delivery.

        "Delivery Default" will be deemed to occur if there are three
        consecutive Default Periods, or five Default Periods, for the same
        particular Product within any calendar quarter.

        Upon the occurrence of a Delivery Default, Nortel may, upon written
        notice to Avanex, reduce by up to ten (10) percent Nortel's Purchase
        Commitment for the particular Product for that calendar quarter.

        Upon the occurrence of a second Delivery Default for the same
        particular Product within the same calendar quarter, Nortel may, upon
        written notice to Avanex, reduce by up to an additional fifteen (15)
        percent Nortel's Purchase Commitment for the particular Product for
        that calendar quarter.

        Upon the occurrence of a third Delivery Default for the same particular
        Product within the same calendar quarter, Nortel may, upon written
        notice to Avanex, reduce by up to an additional twenty (20) percent
        Nortel's Purchase Commitment for the particular Product for that
        calendar quarter.

        In addition, and notwithstanding the terms of this Section 9.5, Avanex
        herein recognizes Nortel's need to respond to increases in demand for
        the Products, and to the extent that Avanex cannot meet such increases
        in demand, it is understood that Nortel may seek, at its sole
        discretion to have such increased demand fulfilled by another supplier.

        If, at anytime within ninety (90) days from the date of written notice
        to Avanex reducing Nortel's Purchase Commitment pursuant to the
        foregoing provisions, there are no Default Periods for three
        consecutive weeks for the particular Product, then such reduction to
        Nortel's Purchase Commitment for that particular Product will be
        reversed and returned to the original level of Nortel's Purchase
        Commitment for that particular Product prior to such reduction;
        provided, however, that if Nortel actually purchases and receives
        delivery of the total quantity by which Avanex is in default under the
        Delivery Default of that particular Product from an alternative vendor
        for that particular Product covered by that Delivery Default, and if
        such alternative vendor makes a permanent investment in capital
        equipment, personnel and supply chain commitments in order to supply
        such Products, then Nortel will have no obligation to make up the value
        of the business Avanex has lost due to such Delivery Default.

                                                                        Page  15

<PAGE>

9.5.3    Avanex agrees to commit manufacturing capacity to provide Nortel with
         the ability to increase its requirements for Products on the following
         basis. The Parties agree to review the following manufacturing capacity
         commitments early in the third quarter of calendar year 2000:

         That for all Products, Avanex commits, in each of the first, second,
         third and fourth 6-month periods of the Agreement, to a minimum
         cumulative ramp-up flex of thirty percent (30%) of the mutually agreed
         reference baseline quantities for Products tied to the Forecast run
         rates effective at the beginning of each such 6-month period (the
         "Baseline Product Quantity"). The ramp-up flex within any such 6-month
         period shall be a twenty percent (20%) flex of the Baseline Product
         Quantity in four (4) weeks, or a forty percent (40%) flex of the
         Baseline Product Quantity in eight (8) weeks.

32.12.l  In addition to Avanex respecting its obligations set out in
         Sub-Sections 9.5.2 and 9.5.3, Nortel's Purchase Commitment is further
         subject to Avanex's ability in achieving competitive pricing for
         Products and new products. Where Avanex's proposed pricing for such
         Products and new products is competitive with bona fide prices received
         by Nortel from credible qualified third-party suppliers with the
         reliable ability to supply the volumes quoted within the relevant time
         frames, the Nortel Purchase Commitment for each specific Product or new
         product shall remain at the level specified in Exhibit A. Where
         Avanex's proposed pricing for such Products or new products is not so
         competitive, the Parties shall discuss and seek to arrive at
         competitive prices, whereupon the Nortel Purchase Commitment for each
         specific Product or new product shall remain at the level specified in
         Exhibit A. The determination of whether Avanex's pricing is
         "competitive" will be made by Nortel acting in good faith, based on
         competitive factors, including, but not limited to pricing (plus or
         minus 3%) capacity to deliver, and supplier performance.

32.12.1  The Parties further agree to hold monthly operational and quarterly
         executive reviews at mutually agreed upon times and places during the
         term of the Agreement.

32.12    Nortel Networks may at any time for its convenience and without cause,
         reschedule the Delivery Date of ordered Products, provided such
         rescheduled Delivery Date shall not exceed ninety (90) Business Days
         from the date the Products were originally scheduled to be delivered.

9.7      Nortel Networks can unilaterally: (i) cancel delivery of Products under
         a Purchase Order, in whole or in part, subject to payment of a
         cancellation fee based on the purchase price applicable to the
         cancelled portion of the Purchase Order, in accordance with the
         following:

                     Delivery Date             Cancellation Fee
                     -------------             ----------------
                      2 - 4 weeks           40% of purchase price
                     >4 - 6 weeks           25% of purchase price
                     >6 - 8 weeks           10% of purchase price
                     >8 weeks               No cancellation fee

         Provided however, that if the Products are custom to Nortel Networks
         such that the Products cannot be sold to other customers of Avanex
         without costs significantly greater than the

                                                                       Page   16

<PAGE>

       Cancellation Fees set forth above, the parties shall negotiate in good
       faith the Cancellation Fee for the Purchase Order for those Products,
       provided however that Avanex has in good faith previously utilized
       reasonable commercial efforts to minimize its damages and sell such
       Products to other Avanex customers.

10.    PRICES AND PAYMENTS

10.1   Except as specifically provided herein, any charges incurred by a Party
       in performing its obligations hereunder shall be paid by that Party and
       shall not be subject to reimbursement by the other Party.

10.2   Prices applicable to Blanket Purchase Orders, Releases and Purchase
       Orders for Products and Repair Services issued hereunder shall be,
       subject to the provisions of this Section 10, the Prices as set forth
       in Exhibit A. Prices shall be firm throughout the Term except for cost
       reductions and volume discounts. The Parties shall review Prices every
       six (6) months --- retroactive to January 1, 2000 --- or sooner upon
       mutual agreement of the Parties. Nortel Networks shall promptly, using
       good faith and reasonable commercial efforts to do so no later than
       forty-five days (45) from receipt of invoice, reimburse Avanex, upon
       invoice, or shall pay directly, if so requested by Avanex, all taxes
       and charges imposed by any federal, state, or local governmental or
       taxing authority, relating to the purchase, ownership, possession, use,
       operation or relocation of Products purchased, excluding, however, all
       taxes computed upon the net income of Avanex.

10.3   Product Prices are: (a) FCA Avanex's Fremont plant; (b) stated and
       payable in US currency; (c) include packing, and other import duties
       and customs charges; and (d) exclude all applicable federal, state or
       local taxes.

10.4   Avanex further represents and warrants that the Prices charged to
       Nortel Networks for Products and Repair Services supplied hereunder are
       and will continue to be as low as those charged by Avanex, at a
       particular time, to any other party with whom Avanex has entered into
       an OEM agreement (or similar contractual arrangement), for the same
       Products and Repair Services or for products or services
       interchangeable with, or equivalent to, the Products and Repair
       Services, in the same year and in similar quantities.

10.5   To the extent that Avanex's records may be relevant in determining
       whether Avanex is complying with the requirements of this Agreement,
       Nortel Networks shall have the right, through independent Certified
       Professional Accountants acceptable to both Parties, to examine and
       audit, at most on a quarterly basis, during normal business hours, such
       records as may, under recognized accounting practices, contain
       information bearing upon the prices applicable to the providing of
       repair services similar to, or interchangeable with, the Repair
       Services to any other party or the sale of the same Products or
       products similar to, or interchangeable with, the Products to any other
       party, such records to be kept clear and accurate and in a form and
       content sufficient and adequate to permit audit as aforesaid. Nortel
       Networks shall retain such inspection and audit rights for so long as
       it will be procuring Products and Repair Services from Avanex. Such an
       audit will take

                                                                        Page  17

<PAGE>

       place under a reasonable confidentiality agreement between Avanex and
       the auditor. The auditor will disclose to Nortel only whether he / she
       found Avanex to not be in compliance with the requirements of this
       Agreement, and, if so, the amount and period of time of that
       discrepancy.

10.6   Avanex shall promptly notify and extend to Nortel Networks any
       reductions made by Avanex in its published list prices and any
       increases in discounts for Products. Such price reductions and
       increased discounts shall apply to Blanket Purchase Orders, Releases
       and Purchase Orders received by Avanex on or after the effective date
       of the price reduction. Any price decreases will be immediately applied
       to any Blanket Purchase Orders, Releases or Purchase Orders received
       and acknowledged but not delivered by Avanex, with the exception of
       partial shipments on Purchase Orders already delivered.

10.7   In an effort to provide Nortel Networks the opportunity to
       competitively and profitably offer Products in high volume
       applications, Avanex shall offer to Nortel Networks, as agreed upon by
       the Parties, additional discounts on Products set forth in Exhibit A
       for Nortel Networks' use in high volume, competitive price proposals.

10.8   Payment shall be due to Avanex from Nortel Networks forty-five (45)
       calendar days following the receipt by Nortel Networks of an invoice
       for the Products, which invoice shall be delivered to Nortel Networks
       no earlier than the Delivery Date of the Products.

10.9   Invoices for Products delivered hereunder and for any other amounts
       which may be payable hereunder shall be forwarded directly to the
       following address (unless Nortel Networks designates, in writing,
       another address):

       NORTEL NETWORKS CORPORATION
       P.O. Box 90510
       Nashville, TN 37208-0510
       U.S.A.

       Attention: Accounts Payable Dept.

11.    TITLE AND RISK OF LOSS

11.1   Title to the Products (excluding Software) and risk of loss of and
       damage to the Products will pass to Nortel Networks upon delivery FCA
       Delivery Location specified by Nortel Networks in accordance with
       Section 9 (Delivery) provided that under Section 13.6 (Warranty), 14.2
       and 14.7 (Repair Procedures), risk of loss of or damage to the
       replacement Products will pass to Nortel Networks upon the delivery
       thereof at a Nortel Networks designated destination.

12.    ACCEPTANCE OR REJECTION

12.1   Nortel Networks reserves the right to accept or reject Products ordered
       hereunder after the delivery of such Products to Nortel Networks'
       facility or, as the case may be, to a Nortel Networks customer's site.
       Products shall be deemed accepted by Nortel Networks unless Nortel
       Networks

                                                                        Page  18

<PAGE>

       notifies Avanex that such Products are rejected and provides the
       reasons for such rejection. Within thirty (30) calendar days after
       Nortel Networks' receipt thereof at its facilities or, when the
       Products are received at a Nortel Networks customer's site, as the case
       may be, upon completion of installation and testing of the Products or
       thirty (30) calendar days after such receipt of the Products at Nortel
       Networks customer's site, whichever event occurs first.

12.2   Subject to Section 12.1 above if any Products are found not to be in
       substantial conformance with this Agreement, including the
       Specifications, applicable Purchase Order or Release, and/or fail to
       meet any of the acceptance criteria specified in the applicable
       Specifications, and/or in the event an excessive failure rate (as
       defined in the Specifications) is observed by Nortel Networks with
       respect to Products contained in a lot/shipment, Nortel Networks shall
       have the right, notwithstanding the warranty provisions contained in
       this Agreement, to reject the same and cancel the affected Purchase
       Order or Release, or, at its option, require that such Products be
       replaced or repaired within ten (10) Business Days at Avanex's risk and
       expense (including shipping charges). Any notice of rejection issued by
       Nortel Networks under this Section 12.2 will include a reasonably
       complete description of the deficiencies.

12.3   Payment or acceptance by Nortel Networks under this Agreement shall not
       be deemed to constitute a waiver of the rights which Nortel Networks
       may have resulting from Avanex's delivery of faulty or defective
       Products.

13.    WARRANTY

13.1   Avanex warrants that:

       a)     Except for Products repaired in accordance with Section 15
              hereto, Products shall, at the Delivery Date, be new and free and
              clear of all security interest or other lien and other
              encumbrance other than a purchase money security interest in
              Products and products shipped by Avanex but not yet paid by
              Nortel Networks;

       b)     for a period of [*] from the Delivery Date or, [*] from the
              manufacturing date stamped on the Products, whichever period
              expires last (such period being hereinafter referred to as the
              "Product Warranty Period"), the Hardware shall be free from
              defects in materials and workmanship and shall conform to and
              operate in accordance with the Specifications;

       c)     with the exception of any notice which may be provided by Avanex
              pursuant to Section 21 (Hazardous Materials), the Hardware
              furnished by Avanex, as described in this Agreement, is safe for
              normal use, is non-toxic, presents no abnormal hazards to persons
              or their environment, and may be disposed of as normal refuse
              without special precautions;

       e)     all Products provided pursuant to this Agreement, when used in
              accordance with the Specifications and Documentation, as well as
              all and any software, systems or tools of Avanex used by it in
              the supply of Product and/or Services or performance of this

                                                                        Page  19

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

<PAGE>

              Agreement in any way, shall (1) process date and time related data
              without causing any processing interruptions, abnormal
              terminations, or changes in performance characteristics, and (2)
              shall process and manipulate all date and time related functions
              correctly. Without limiting the generality of the foregoing, all
              Products and all and any software, systems or tools of Avanex
              used by it in the supply of Product and/or Services or
              performance provided pursuant to this Agreement, shall:

              i)     correctly handle date and time related data after
                     January 1, 2000, including but not limited to accepting
                     date and time input, providing date and time output, and
                     performing ongoing operations on dates and times and
                     portions of dates and times including, but not limited to,
                     calculating, comparing and sequencing of dates and times
                     (in both forward and backward operations spanning century
                     boundaries);

              ii)    correctly handle leap year calculations (including but not
                     limited to identification of leap years, interval
                     calculations, (in both forward and backward operations
                     spanning century boundaries), day-in-year calculations,
                     day-of-the-week calculations, and week-of-the-year
                     calculations);

              iii)   correctly handle all two digit date and time related input
                     in a manner that resolves ambiguity as to century in a
                     disclosed, defined and predetermined manner.

              Avanex shall immediately notify Nortel Networks of any and all
              date or time-related bugs, errors or deficiencies in the Products
              and in all and any software, systems or tools of Avanex used by it
              in the supply of Product and/or Services or performance of this
              Agreement in any way. For the purpose of problem resolution, any
              such date or time-related bugs, errors or deficiencies shall be
              deemed (as established by the appropriate license or support
              agreement) to be bugs, errors or deficiencies of the highest
              priority level, and shall be resolved according to the procedures
              provided for such priority level;

       f)     it has developed, is the owner of and/or possesses all necessary
              rights, including, without limitation, rights in respect of third
              party software, to use and to market the Products as contemplated
              hereunder;

       g)     no license or other agreement is or will be violated by the terms
              and conditions of this Agreement;

       h)     it is either the owner or is otherwise in possession of sufficient
              licensed rights pertaining to any portion of the Products
              (including the Product Hardware) in order to allow it to satisfy
              all of its obligations hereunder;

       i)     without limiting the generality of the foregoing provisions,
              Avanex represents and warrants that it has the authority to enter
              into this Agreement and has obtained on each delivery date all
              rights and waivers necessary to sell Products to Nortel Networks
              and to grant the rights

                                                                        Page  20

<PAGE>

             granted hereunder. Avanex represents and warrants that the
             Products and the exercise of the rights granted in this
             Agreement do not infringe any third-party patent, copyright,
             trademark, trade secret or other intellectual property right.

       The warranty provisions contained in this Section 13.1 shall apply
       during and after the Product Warranty Period, except as expressly set
       forth in 13.1 b) and c) above.

13.2   This warranty does not apply to items normally consumed in operation,
       such as lamps and fuses and to any defect which has been caused by
       Nortel Networks or its customers and arises from mishandling, misuse,
       neglect or improper testing or repair.

13.3   Avanex shall, at its expense, during the Product Warranty Period,
       provide Repair Services in accordance with Section 15 (Repair Services)
       in respect of Hardware, which have failed to conform to above
       warranties.

13.4   All Hardware supplied under Section 15 (Repair Services) pursuant to
       Avanex's warranty obligations under this Section 13, shall be
       functionally equal or better than the vintage of the replaced units and
       must be backward compatible and meet the minimum field baseline.

13.5   Hardware repairs or replacements effected during the Product Warranty
       Period shall be warranted, as above provided, for the remainder of the
       Product Warranty Period or for ninety (90) days from the Repair Date,
       whichever is longer. Hardware repairs or replacements effected after
       expiry of the Product Warranty Period shall be warranted, as above
       provided, for a period of ninety (90) days after the Repair Date
       stencilled or otherwise identified in accordance with Section 14.4
       (Repair Procedures). All transportation and other expenses arising from
       shipping the non-conforming Products to, and the repaired or
       replacement Products from, Avanex shall be paid by Avanex.

13.6   Above warranty shall survive inspection, acceptance and payment. In the
       event Avanex does not so perform under the warranty provisions for
       repair or replacement in accordance with this Section, then upon Nortel
       Networks' request, and in addition to any other right available to
       Nortel Networks hereunder, Avanex shall: (a) refund to Nortel Networks
       the Price of such Products; and (b) be entitled to the return of such
       Products. All transportation and other expenses arising from shipping
       the non-conforming Products to, and the repaired or replacement
       Products from, the Delivery Location shall be paid by Avanex.

13.7   Any failure by Avanex to execute its warranty obligations as contained
       in this Section 13 and Section 15 (Repair Services) shall constitute a
       material breach of Avanex's obligations hereunder.

13.8   EXCEPT FOR THE EXPRESS WARRANTIES STATED IN THIS AGREEMENT, AVANEX
       DISCLAIMS ALL WARRANTIES ON PRODUCTS FURNISHED UNDER THIS AGREEMENT,
       INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF
       MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

                                                                      Page  21

<PAGE>

14.      REPAIR PROCEDURES

14.1     This Section 14 shall be applicable to the providing of Repair Services
         described in Section 15 by Avanex during and after the Product Warranty
         Period.

14.2     a)   Prior to returning any defective Products to the FCA Repair
              Location, Nortel Networks will notify Avanex in writing of the
              defect, if known at that time, and will request authorization
              from Avanex for the return of such Products. Upon such request,
              Avanex shall provide Nortel Networks with a Return Material
              Authorization ("RMA") number to be prominently displayed on the
              shipping container for the defective Products and advise Nortel
              Networks of the FCA Repair Location to which the Products should
              be returned.

         b)   In all cases covered in Section 15 (Repair Services), Nortel
              Networks shall then ship such Products to Avanex, freight prepaid
              and properly insured. Nortel Networks shall prepare proper export
              documentation as per Avanex's instructions, evidencing Nortel
              Networks' ownership of the Products and shall comply with the
              requirements set forth in Exhibit L (NAFTA).

14.3     Nortel Networks shall furnish the following information with Products
         returned to Avanex for Repair Services:

         i)   Nortel Networks' or the Nortel Networks Company's name and
              complete address;
         ii)  quantities and model numbers of Products being delivered for
              repair;
         iii) the nature of the defect or failure, if known;
         iv)  Avanex's above-mentioned RMA number and the Purchase Order number
              under which repairs are to be made, if Product is no longer under
              warranty;
         v)   name(s) and telephone number(s) of Nortel Networks' employee(s) or
              other designated persons to contact in case of questions about the
              Products;
         vi)  ship-to address or Nortel Networks' location to which repaired or
              replacement Products should be returned;
         vii) whether or not returned Products are under warranty.

14.4     Avanex shall date stamp each repaired and returned Product with
         the Repair Date and type of repair "pre fix" as per Bellcore GR-209
         specifications and Specifications described in Exhibit B. Hardware
         repaired by Avanex shall be stamped in accordance with requirements
         outlined in Bellcore TR-NWT-000078. Without limiting the generality of
         the foregoing, the stamping shall include the Repair Date stenciled or
         otherwise identified in a permanent manner at a readily visible
         location on the Hardware, unless otherwise directed by Nortel
         Networks.

14.5     Avanex shall promptly provide a written notice to Nortel Networks with
         the name(s) and telephone number(s) of the individual(s) to be
         contacted concerning any questions that may arise with respect to the
         Repair Services, and if required, specify any special packing of
         Products which might be necessary to provide adequate in-transit
         protection from transportation damage.

                                                                         Page 22

<PAGE>

14.6    Once Products have been repaired or replaced by Avanex, Avanex shall
        reissue to Nortel Networks an invoice for such repaired or replacement
        Products and the charges applicable to the providing of Repair Services,
        if any, as set forth in Exhibit D. Avanex's invoice shall contain the
        following:

        i)     Nortel Networks' Purchase Order number for these Repair Services;
        ii)    a detailed description of the Repair Services provided by Avanex
               and the need therefor;
        iii)   quantities and model numbers of Products repaired and associated
               repair charges;
        iv)    applicable sales or excise taxes;
        v)     total amount payable;
        vi)    address to which payment should be made.

14.7    The repaired or replacement Products shall be delivered by Avanex to the
        destination specified by Nortel Networks, freight prepaid and properly
        insured. Avanex shall prepare proper export documentation as per Nortel
        Networks' instructions, evidencing Nortel Networks' ownership of the
        Products and shall comply with the requirements set forth in Exhibit L
        (NAFTA).

14.8    Avanex shall promptly notify Nortel Networks of returned Products which
        are found by Avanex to be beyond repair. Products shall only be
        considered beyond repair after agreement of the Parties to that effect.
        All Products which are found to be beyond repair shall be returned to
        Nortel Networks.

15.     REPAIR SERVICES

15.1    Repair Services shall be available to Nortel Networks in accordance with
        the provisions contained in this Section 15 and in Section 14 (Repair
        Procedures).

15.2    This Section 15 shall be applicable to the providing of Repair Services
        by Avanex during and after the Product Warranty Period.

15.3    To order Repair Services after expiry of the applicable Product Warranty
        Period, Nortel Networks shall issue a Purchase Order and such Purchase
        Order shall contain the description of the requested Repair Services.

15.4    Repair Services shall be provided by Avanex at no charge to Nortel
        Networks during the Product Warranty Period. After expiry of the Product
        Warranty Period, Repair Services shall be at prices set forth in
        Exhibit D (Repair Services and Technical Assistance Rates) unless
        otherwise set forth in this Section 15 or unless covered by Section 5
        (Product and Process Changes).

15.5    Like-for-Like Repair Services

15.5.1  Avanex shall hold at its expense and at its Fremont, CA plant a quantity
        of spares at the module level ("Spare Buffer"), such quantity to be
        determined and agreed to by the Parties on the basis of the volume of
        Products delivered hereunder and the applicable Mean Time Between
        Failure ("MTBF") rates. In any event, the Spare Buffer to be held by
        Avanex shall be sufficient to enable immediate replacement of Products
        by Nortel Networks to its customers in all cases of failure

                                                                         Page 23

<PAGE>

         which do not fall in the category of a retrofit. Avanex's obligations
         under this Section 15.5.1 do not cover spares which may be required by
         Nortel Networks for Product retrofits or upgrades.

15.5.2   Nortel Networks will at its option provide customers with one of the
         following replacement services:

         i)    replacement of Products from the Spare Buffer after the receipt
               of defective Products; or
         ii)   in exceptional cases, replacement of the Products from the Spare
               Buffer on a "Phone-in" advance replacement basis. The
               defective Products are generally returned to Nortel Networks by
               end-user customers within sixty calendar days.

         Avanex will maintain sufficient Products in the Spare Buffer to
         accommodate both replacement services.

         Avanex will in good faith utilize reasonable commercial efforts to
         immediately replenish the Spare Buffer with Product replacements that
         are functionally equal or better than the vintage of the replaced
         Products, are backward compatible and meet the minimum field baseline,
         or with new Products, at Avanex's option.

         In cases of "catastrophic" failure, Avanex shall divert manufacturing
         output for replacement of faulty modules. Avanex must use its
         reasonable commercial efforts not to affect the delivery schedule of
         new Products but should delays in delivery occur, they shall not
         constitute a breach of this Agreement.

15.5.3   Products returned to Avanex for Repair Services shall be shipped by
         Nortel Networks freight and insurance prepaid.

15.5.4   Avanex shall track any defective Product by its unique serial number
         throughout the repair process and provide a failure analysis report as
         set forth in Exhibit F.

15.6     Same-for-Same Repair Services

         The following procedures will apply:

         a)    Products returned to Avanex for Repair Services shall be shipped
               by Nortel Networks freight and insurance prepaid.
         b)    Avanex shall track any defective Product by its unique serial
               number throughout the repair process.
         c)    Avanex shall return, after having repaired and updated the
               Products to the minimum field baseline, the exact same Products
               having the same serial number. If the serial number has to
               change for any reason, Avanex shall, on the `repair tag'
               originally provided by Nortel Networks, document the following
               information: old serial number, new serial number and
               reason(s) for change.

                                                                         Page 24

<PAGE>

         d)   Avanex shall return any repaired Products with the `repair tag'
              that was originally provided by Nortel Networks with the
              defective Products. Avanex shall provide all post-repair
              information as required on the `repair tag'.

         e)   Avanex shall complete the Same-for-Same process within ten (10)
              calendar days of having received the defective Product.

15.7    Fast Cycle Failure Analysis

15.7.1   Avanex shall perform a Fast Cycle Failure Analysis ("FCFA"), at no cost
         during the Product Warranty Period and upon mutually agreeable terms
         outside the Product Warranty Period, to Nortel Networks on Products
         which have caused any service interruption in the field or
         as may otherwise be reasonably requested by Nortel Networks. Nortel
         Networks will request a separate RMA number for each Product returned
         for a FCFA. A FCFA shall be performed by Avanex in accordance with the
         following additional requirements:

         a)   FCFA shall include a detailed root cause analysis, using
              engineering tools such as Environment Stress Screening ("ESS")
              and any other tools which may be required to determine the cause
              of the failure.
         b)   Avanex shall track any defective Product by its unique serial
              number throughout the repair process.
         c)   Avanex shall return, after having repaired and updated the
              Products to the minimum field baseline, the exact same Products
              having the same serial number. If the serial number has to change
              for any reason, Avanex shall, on the `repair tag' originally
              provided by Nortel Networks, document the following information:
              old serial number, new serial number and reason(s) for change.
              This information will also be documented in the FCFA report. The
              Products shall not be "upgraded" to other than the actual unit
              release vintage until root cause analysis is completed and the
              Products successfully pass the complete test cycle. The Products
              shall not be repaired without completion of the FCFA activity.
         d)   Avanex shall return the repaired Products with a written report
              documenting all findings as a result of the FCFA.
         e)   Avanex shall complete the FCFA process within ten (10) Business
              Days of having received the defective Products at its FCA Repair
              Location mentioned in Exhibit D herein. Nortel Networks shall
              provide all available technical information to allow Avanex to
              understand the circumstances and environmental conditions that
              led to the failure of the Products.
         f)   Avanex shall inform Nortel Networks of the return Product
              shipping information as soon as it is available. The shipping
              information will include, date shipped, carrier, waybill number
              and any other information that will help Nortel Networks expedite
              the return of the Products.
         g)   In the event that the results of the FCFA indicate deficiencies
              with the Product Hardware or Software, then Avanex will modify
              the Products to eliminate such deficiencies. Such modifications
              will be implemented in accordance with Section 5 (Product and
              Process Changes).

                                                                         Page 25

<PAGE>

15.8   Products found defective within the first ninety (90) calendar days
       from their initial utilization at customer site, (referred to as `Dead
       On Arrival' ("DOA") or Early Life Failure ("ELF")), shall be returned
       to Avanex along with the RMA documentation. Returned DOA/ELF Products
       shall, at no charge to Nortel Networks, be tested through full
       functional tests and ESS as appropriate in order to provide a root
       cause analysis, then repaired, re-furbished, upgraded to the latest
       version or release, stamped with the Repair Date and returned to Nortel
       Networks as new Products. Should the DOA/ELF occurrence represent more
       than twenty percent (20%) of the Products RR as defined in the
       Specifications, then Avanex shall, in addition to performing root cause
       analysis, implement a corrective plan of action within thirty (30)
       calendar days of this occurrence being reported. Avanex will update
       Nortel Networks in writing with the findings of the root cause analysis
       as well as with the corrective plan of action.

15.9   In case of a No Fault Found ("NFF") in respect of Products returned or
       if Nortel Networks requests re-testing of Products reasonably known to
       Nortel Networks as being in good condition, Avanex shall invoice Nortel
       Networks at the Prices specified in Exhibit D for their full functional
       tests and ESS and such Products shall be returned to Nortel Networks
       after the tests are completed, freight collect using Nortel Networks'
       designated carrier. Test turnaround time shall not exceed ten (10)
       Business Days from the date the Product is received at Avanex
       facilities and a Purchase Order number has been received from Nortel
       Networks.

15.10  Should the Product failures classified by Avanex as NFF represent more
       than twenty percent (20%) of the Products RR as defined in the
       Specifications, then Avanex shall, in addition to performing a root
       cause analysis, implement a corrective plan of action within thirty
       (30) calendar days of this occurrence being reported. Avanex will
       update Nortel Networks in writing with the findings of the root cause
       analysis as well as with the corrective plan of action.

15.11  Emergency Replacement Products

       In emergency situations threatening continuity of service or Nortel
       Networks end-user's in-service date, Avanex shall in good faith, at
       Nortel Networks' option, utilize reasonable commercial efforts to
       deliver to Nortel Networks or its end-users emergency replacement
       Products within twenty-four (24) hours of Nortel Networks' request,
       which may be conveyed to Avanex by telephone or facsimile. All Products
       supplied under this Section shall be functionally equal or better than
       the vintage of the replaced units and must be backward compatible and
       meet the minimum field baseline. Emergency replacement Products shall
       be delivered via next day service and, for Products not under warranty,
       invoiced at rates then current for Products. Nortel Networks agrees to
       pay such invoices within forty-five (45) calendar days. In addition to
       above twenty-four (24) hour emergency replacement service, Avanex shall
       make available to Nortel Networks at a price premium specified in
       Exhibit D, a 24 hours a day/7 days a week emergency replacement
       service for cases where Nortel Networks cannot deliver from its
       emergency stock. Under this service, Avanex will in good faith utilize
       reasonable commercial efforts to ship new units to the destination
       designated by Nortel Networks, freight collect using Nortel Networks'
       designated carrier within three (3) hours of Nortel Networks' verbal
       request, such verbal request to be confirmed by Nortel Networks in
       writing and transmitted by facsimile or other means of communications,
       prior to

                                                                         Page 26

<PAGE>

     shipment of the units by Avanex. In the case of shipment outside of the
     United States, Avanex shall prepare proper export documentation as per
     Nortel Networks' instructions, evidencing Nortel Networks' ownership of the
     Product; customs clearance and duty fees (as applicable) shall be the
     responsibility of Nortel Networks. This emergency service shall be
     available to Nortel Networks through the following Avanex's emergency
     telephone number: 1-877-928-2639.

16.  CONTINUING AVAILABILITY OF TECHNICAL ASSISTANCE, REPAIR SERVICES,
     MAINTENANCE, REPLACEMENT AND REPAIR PARTS

16.1 In no event shall the Products be discontinued until after the expiry of a
     period of twelve (12) months, or such other period as may be agreed upon by
     the Parties, from Nortel Networks' written consent and Avanex shall accept
     all Releases and Purchase Orders submitted by Nortel Networks within such
     period for any such affected Products, regardless of quantity.

16.2 During, and for a period of five (5) years after the expiry or termination
     of this Agreement, Avanex agrees to provide Repair Services on all Products
     ordered hereunder and to offer for sale to Nortel Networks, functionally
     equivalent maintenance, replacement and repair parts as may be necessary
     for the continued maintenance of the Products, including discontinued
     Products.

16.3 Avanex, upon supply discontinuance notices from its suppliers, of any sole
     source/critical components incorporated into the Products, shall notify
     Nortel Networks immediately upon receipt of such notice. Avanex shall
     endeavor to have its suppliers provide notices one (1) year in advance of
     discontinuance. Avanex and Nortel Networks shall determine the quantity of
     such components to be ordered as last time buy to cover for Nortel
     Networks' spare parts requirements. Avanex and Nortel Networks will
     determine the quantity of such components to be ordered as last time buy to
     cover for spare maintenance, replacement and repair parts requirements as
     described in Section 15 (Repair Services). Furthermore, should the
     unavailability of a component require Avahex to develop a replacement
     product, Avanex will jointly decide with Nortel Networks on last time buys
     for such component to ensure continuity of supply until the replacement
     product is approved by Nortel Networks and ready to be manufactured. The
     provisions contained in this Section 16.3 shall be applicable for a period
     of five (5) years after the expiry or termination of this Agreement.

16.4 During, and for a period of five (5) years after the expiry or termination
     of this Agreement, Avanex agrees to provide technical assistance in
     accordance with Section 17 (Technical Assistance and Marketing Support).

17.  TECHNICAL ASSISTANCE AND MARKETING SUPPORT

17.1 Technical assistance consists of those services described in this Section
     and in Exhibit H.

17.2 Product training shall be provided by Avanex to Nortel Networks as set
     forth in Exhibit H.

17.3 In addition, Avanex shall provide Nortel Networks with Product training
     documentation and related information material as set forth in Exhibit H,
     Part II.

                                                                         Page 27

<PAGE>

17.4 All technical assistance rendered during the Product Warranty Period shall
     be provided to Nortel Networks at no charge. In all other cases, Avanex's
     current rates applicable to technical assistance are those set forth in
     Exhibit D. Any technical assistance which Avanex shall provide to Nortel
     Networks or its customers shall be pursuant to a written request from
     Nortel Networks' designated personnel, or such other individual that Nortel
     Networks may from time to time designate. The availability or performance
     of technical assistance under this Section 17, shall not be construed as
     altering or affecting Avanex's other obligations under this Agreement,
     including under Sections 6 (Quality Control and Reliability Requirements,
     Supply Management and Nortel Networks' Audit Rights), 13 (Warranty) and 5
     (Product and Process Changes).

17.5 Avanex shall provide technical assistance as set forth in Exhibit H, Part
     II in order to facilitate the providing by Nortel Networks of technical
     assistance to its customers. In order to facilitate Nortel Networks'
     support of its customers, Avanex shall, subject to Section 17.4 hereof,
     provide to designated Nortel Networks personnel only for a period of five
     (5) years following the expiration of this Agreement, telephone access to
     qualified Avanex's technical personnel twenty-four (24) hours per day,
     seven (7) days per week, every day of the year.

17.6 It shall be Nortel Networks' responsibility to provide `first line'
     technical assistance to its customers as described in Exhibit H, Part I.

17.7 Avanex's failure to provide technical assistance in any material respect as
     required under this Section 17 shall constitute a material breach of
     Avanex's obligations hereunder.

17.8 In order to assist Nortel Networks in its Product related marketing
     activities, Avanex shall provide Nortel Networks with marketing support in
     accordance with Exhibit J.

18.  DOCUMENTATION

18.1 The Product Documentation shall be developed by Avanex in accordance with
     the Specifications, and be made suitable for Nortel Networks' customers by
     including Nortel Networks-specific items such as warranty, logos, Product
     names and drawings. A hard copy and an electronic version of the
     documentation marked "Draft" shall be provided to Nortel Networks for
     review. After two (2) weeks, Nortel Networks shall return the draft
     documentation with comments. These reasonable comments shall be integrated
     by Avanex into the Documentation, so long as they do not affect the
     Specifications. An ordering section shall be provided by Nortel Networks to
     Avanex in both the hard and electronic form for inclusion by Avanex into
     the Documentation. The Documentation shall be ready for release to
     customers by the end of the corresponding Acceptance Program. Updated
     versions of the ordering section shall be provided by Nortel Networks as
     the product line(s) develop(s) and new configurations pass the Acceptance
     Program.

18.2 Avanex shall provide, at no charge to Nortel Networks, for each Product
     delivered one (1) set of the following Product Documentation in accordance
     with the Specifications: all Product descriptions, planning guides,
     operations manuals, installation manuals, and maintenance manuals

                                                                         Page 28

<PAGE>

     normally provided by Avanex to customers to facilitate their installation.
     use, and maintenance of the Products.

18.3 Avanex shall supply to Nortel Networks, at no additional charge, hard and
     electronic copies of Avanex's Product Documentation (i.e., manuals,
     application notes and sales collateral) and any technical assistance
     reasonably required by Nortel Networks to adapt such Documentation to
     Nortel Networks' standard format. Avanex shall also continue to provide to
     Nortel Networks, at no additional charge, during the Term of this Agreement
     any updates to Avanex's Product Documentation, as soon as they are
     available.

18.4 Avanex hereby grants to Nortel Networks, at no cost, the right to use,
     copy, modify and translate promotional material, the Product Documentation
     furnished hereunder and other material made generally available by Avanex
     to its end-users and to use such material to further Nortel Networks'
     Product marketing efforts.

18.5 Any modifications to the Product Documentation shall be notified to Nortel
     Networks by Avanex as described in Section 5 (Product and Process Changes).

19.  CONFIDENTIAL INFORMATION

19.1 It is expected that the Parties will disclose to each other certain
     business, marketing, technical, scientific or other information of any
     Party, including, without limitation, Specifications and Software which, at
     the time of disclosure, is designated as confidential (or like
     designation), is disclosed in circumstances of confidence, or would be
     understood by the Parties, exercising reasonable business judgment, to be
     confidential information ("Confidential Information") and each Party
     recognizes the value and importance of the protection of the other's
     Confidential Information. All Confidential Information owned or controlled
     by one Party and disclosed to the other Party shall remain solely the
     property and a trade secret of the disclosing Party, and its
     confidentiality shall be maintained and protected by the other Party with
     the same degree of care used to protect its own proprietary and
     confidential information of a similar nature, but no less than reasonable
     care, to prevent the unauthorized use, dissemination or publication of the
     Confidential Information. Except to the extent required or expressly
     permitted by this Agreement, both Parties agree not to duplicate or use in
     any manner the other's Confidential Information or to disclose it to any of
     their employees not having a need to know for the purposes of this
     Agreement or to any third party. In addition, the receiving Party shall not
     (i) attempt to or assist others to develop or produce any product based on
     or utilizing such Confidential Information, (ii) make any other use of such
     Confidential Information in any way or for any purpose other than to
     exercise the receiving Party's rights or to perform the receiving Party's
     obligations under this Agreement, or, (iv) reverse engineer any of the
     disclosing Party's Products, products, or any portions thereof.

     The receiving Party's employees having a need to know the Confidential
     Information for the purpose of this Agreement may receive disclosure of the
     Confidential Information provided such employees are bound by
     confidentiality obligations no less stringent than those set forth in this
     Section 19. The confidentiality provisions contained herein shall survive
     the expiration or termination of this Agreement for a period of ten (10)
     years.

                                                                         Page 29

<PAGE>

19.2   Confidential Information shall not include information which:

       a)   now is, or hereafter becomes, available to the public through no act
            or omission of the receiving Party; or
       b)   is documented as being known by the receiving Party prior to its
            disclosure by the other Party; or
       c)   is independently developed by the receiving Party by persons who
            have not had access to the Confidential Information and without
            recourse to any Confidential Information received under this
            Agreement and is so documented; or
       d)   is lawfully obtained by the receiving Party from a third party or
            parties without breach of confidentiality obligations or is
            disclosed hereafter to the receiving Party by a third party who did
            not acquire the information directly or indirectly from the
            disclosing Party; or
       e)   is disclosed in response to a valid order of a court or other
            governmental body or any political subdivision thereof, but only to
            the extent and for the purpose of such order and only if the
            receiving Party, to the extent possible, first notifies the
            disclosing Party, of such order and permits and reasonably assists
            it in seeking an appropriate protective order.

19.3   Subject to the provisions of Sections 19.1 and 19.2 above, nothing in
       this Agreement shall be interpreted or construed to limit either
       Party's right to perform or to continue to perform its own independent
       research, development, manufacturing or marketing of any type of
       Products or systems even if such research, development, manufacturing
       or marketing pertains to technology or products similar to the
       Products.

19.4   Prior to the publication or use by a Party hereto of any advertising,
       sales promotions, press releases or other publicity matters relating to
       the Products or this Agreement in which the name or logo of the other
       Party is mentioned or language from which the connection of said name
       can be reasonably inferred or implied, each Party shall obtain the
       prior written consent of the other Party. Terms, conditions and general
       information of this Agreement shall be held in confidence by both
       Parties and only disclosed as may be agreed to by both Parties or as
       may be required to meet securities disclosure or export permit
       requirements. Neither Party shall make public statements or issue
       publicity or media releases with regard to this Agreement or the
       relationship between the Parties without the prior written approval of
       the other Party.

19.5   Notwithstanding any provision contained herein, Nortel Networks shall
       retain all right, title and interest in and to, the Nortel Networks
       corporate name, trademarks, logos, color and part number (the "Nortel
       Brands") and other proprietary rights related to the Nortel Brands.

19.6   The Parties acknowledge and agree that a breach of this Agreement may
       result in irreparable and continuing harm to the disclosing Party for
       which there may be no adequate remedy at law. In the event of a breach
       or a threatened or intended breach of this Agreement by the receiving
       Party, the disclosing Party shall be entitled to seek preliminary
       injunctions unilaterally without notice, and final injunctions with
       notice, enjoining and restraining such breach, or threatened or
       intended breach, and to such other rights and remedies as are available
       at law or in equity to the disclosing Party except as expressly set
       forth herein.

                                                                         Page 30

<PAGE>

20.    INTELLECTUAL PROPERTY RIGHT INFRINGEMENT

20.1   Avanex shall defend and indemnify Nortel Networks and Nortel Networks
       Companies (including their directors, officers, employees and agents)
       against any and all claims brought against Nortel Networks (including,
       without limitation, claims by third parties, distributors, end users
       and contractors against Nortel Networks), and shall hold Nortel
       Networks and Nortel Networks Companies harmless from all corresponding
       damages, liabilities, settlements, costs and expenses (including
       attorney's fees) arising out of any claim that the use, copying,
       licensing, sublicensing, sale and/or distribution of any Product
       delivered hereunder or the exercise of any of the rights granted in
       this Agreement infringes any third-party patent, copyright, trademark,
       trade secret or other intellectual property right (herein "Infringement
       Claim"). Similarly, Nortel Networks shall defend and indemnify Avanex
       to the extent Nortel Networks' systems and products are the direct
       cause of an Infringement Claim relating to systems-level intellectual
       property. (Need to discuss this last wording further). Each Party, as
       the case may be, shall give the other prompt notice of, and authority
       to defend or settle, any such Infringement Claim and shall give, at
       such other Party's reasonable expense, reasonable information and
       assistance. Avanex will notify Nortel Networks if Avanex is subject to
       any claim or lawsuit in respect of patent, copyright, trade secret or
       other intellectual property right infringement regarding any Product
       delivered hereunder or any part thereof.

20.2   When notified of an action or motion that seeks to restrict the use,
       copying, licensing, sublicensing, sale and/or distribution of any
       Product delivered hereunder or the exercise of any of the rights
       granted hereunder, Avanex may, (and in the case of a judgment, order or
       injunction that restricts the use, copying, licensing, sublicensing,
       sale and/or distribution of any Product delivered hereunder or the
       exercise of any of the rights granted hereunder, shall), at its option
       and expense, (a) obtain the right for Nortel Networks, Nortel Networks
       Companies, distributors, end users and contractors to use, copy,
       license, sublicense sell and/or distribute any Product delivered
       hereunder or exercise any of the rights granted hereunder, (b)
       substitute other functionally equivalent product that does not
       infringe, or (c) modify such Product so that it no longer infringes.

20.3   The indemnity obligations under the foregoing provisions shall survive
       the termination or expiration of this Agreement.

20.4   The foregoing indemnification obligations by Avanex shall not be
       applicable in the event the Infringement Claim arises solely from:

       a)    compliance of the Product with Nortel Networks' or Nortel Networks
             Companies' designs; or

       b)    modification by Nortel Networks or Nortel Networks Companies of the
             Product; or

       c)    use of the Product by Nortel Networks or Nortel Networks
             Companies in combination with other products not provided by Avanex
             provided the infringement arises from such combination and such
             combination was not authorized by or actually known to Avanex.

                                                                         Page 31

<PAGE>

20.5   Nothing contained in this Agreement shall be deemed to grant, either
       directly or indirectly or by implication, any license under any patents
       or patent applications of Avanex, except that Nortel Networks shall
       have the normal non-exclusive, royalty-free license to use that which
       is implied, or otherwise arises by operation of law, in the use,
       copying, licensing, sublicensing, sale and/or distribution of the
       Products.

21.    HAZARDOUS MATERIALS

21.1   Avanex shall identify and list in a notice forwarded to Nortel Networks
       all of the hazardous or toxic materials which may be contained in the
       Products prior to shipping the Products. For the purposes of this
       Section 21.1, the hazardous and/or toxic materials shall be those
       mentioned in the following: the Toxic Substances Control Act, Resource
       Conservation and Recovery Act of 1976, Hazardous Materials
       Transportation Act, Occupational Safety and Health Act of 1970,
       Comprehensive Environmental Response, Compensation and Liability Act of
       1980, Consumer Product Safety Act, Radiation Control for Health and
       Safety Act of 1968, Clean Air Act, and Clean Water Act.

32.12  Avanex shall periodically, but no less than annually, review the
       pertinent regulations and the materials contained in the Products and
       update the lists of hazardous and/or toxic materials accordingly.

32.12  Avanex hereby warrants to Nortel Networks that, with the exception of
       the notice referred to above, the Products furnished by Avanex, as
       described in this Agreement, are safe for normal use, are non-toxic,
       present no abnormal hazards to persons or their environment, and may be
       disposed of as normal refuse without special precautions.

21.4   Avanex shall indemnify Nortel Networks for any expenses (including the
       cost of substitute materials, less accumulated depreciation) that
       Nortel Networks may incur by reason of the recall or prohibition
       against continued use or disposal of the Products furnished by Avanex,
       whether such recall or prohibition is directed by Avanex, or occurs
       under compulsion of law. Nortel Networks shall cooperate with Avanex to
       facilitate and minimize the expense of any recall or prohibition
       against use of the Products directed by Avanex or under compulsion of
       law.

21.5   Avanex shall indemnify, defend and hold harmless Nortel Networks from
       any claims, demands, suits, judgments, liabilities, costs and expenses
       (including, without limitation, reasonable attorneys' fees) which
       Nortel Networks may incur under any of the laws, rules and regulations
       referred to in Section 21.1 or any amendment to said statutes by reason
       of Nortel Networks' acquisition, use, sale or disposal of the Products
       furnished by Avanex. Nortel Networks shall give Avanex prompt notice
       of, and authority to defend or settle any such claim, demand, suit,
       judgement or liability and shall give, at Avanex's reasonable expense,
       reasonable information and assistance.

22.    INDEMNITY

                                                                         Page 32

<PAGE>

22.1    General

22.1.1  Each Party shall indemnify and save harmless as "Indemnitees" the other
        and its employees, officers and directors from and against any and all
        fines, penalties, losses, costs, damages, injuries, claims, expenses or
        liabilities as a result of injury to, or death of, any person, or
        damage to, or loss or destruction of, any property, arising out of, or
        resulting from, or in connection with, this Agreement or the
        performance of this Agreement and caused by the negligence or willful
        misconduct of the indemnifying Party or a contractor or an agent of the
        indemnifying Party or an employee of any one of them (hereinafter
        individually and collectively "Liabilities").

22.1.2  Upon request of an Indemnitee, the other Party shall, at no cost or
        expense to such Indemnitee, defend or settle any suit or other legal
        proceeding asserting a claim for Liabilities, and the other Party shall
        pay any reasonable costs and attorneys' fees that may be incurred by
        such Indemnitee in connection with any such claim, proceeding or suit.

22.1.3  The Indemnitee shall as soon as practicable notify the other Party of
        the assertion of any such claim of which the Indemnitee is aware and
        the other Party shall (a) keep the Indemnitee subject to any such claim
        fully informed as to the progress of such defense, and (b) afford such
        Indemnitee, each at its own expense, an opportunity to participate
        fully with the other Party in the defense or settlement of any such
        claim, but the other Party shall have sole control of any such
        settlement or defense.

22.2    Product Liability

22.2.1  In addition to, and without limiting the generality of, the provisions
        contained in Section 22.1, Avanex shall indemnify and save harmless
        Nortel Networks and its customers from and against any and all losses,
        costs, damages and liabilities (including, without limitation,
        reasonable attorneys' fees) and amounts agreed upon in settlement or
        awarded in connection with any claim, suit or proceeding which arises
        from any injury or death to persons or loss of or damage to property
        and which is caused by a Product only to the extent that the Product
        caused such injury, death, loss or damage.

22.2.2  Upon request of Nortel Networks, Avanex shall, at no cost or expense to
        Nortel Networks, defend or settle any suit or other legal proceeding
        asserting a claim, suit or proceeding described in Section 22.2.1, and
        Avanex shall pay any reasonable costs and attorneys' fees that may be
        incurred by Nortel Networks and its customers in connection with any
        such claim, proceeding or suit.

22.2.3  Nortel Networks shall as soon as practicable notify Avanex of the
        assertion of any such claim, proceeding or suit of which Nortel
        Networks is aware and Avanex shall (a) keep Nortel Networks fully
        informed as to the progress of such defense, and (b) afford Nortel
        Networks, each at its own expense, an opportunity to participate fully
        with Avanex in the defense or settlement of any such claim, proceeding
        or suit, but Avanex shall have sole control of any such settlement or
        defense.

23.     COMPLIANCE WITH LAWS

                                                                         Page 33

<PAGE>

23.1   Avanex represents and warrants that it complies with and shall continue
       to comply with and has obtained and will continue to maintain in effect
       all licenses and permits required by, and Products shall be in
       conformance with, all applicable laws and governmental orders and
       regulations in effect in Canada and the United States at the time of
       the Delivery Date applicable thereto.

24.    CONSEQUENTIAL DAMAGES

24.1   Neither Party shall be liable pursuant to this Agreement for any
       incidental or consequential damages or for any damages for loss of
       profits or revenues to the extent such damages have been unforeseeable
       to the Party, except that (a) Avanex shall pay, without limitation, all
       litigation costs, reasonable attorneys' fees, settlement payments and
       any damages awarded resulting from any suit, claim or proceeding as set
       forth in Section 20 (Intellectual Property Right Infringement) and (b)
       Avanex shall hold Nortel Networks and Nortel Networks Companies
       harmless from any damages Nortel Networks and the Nortel Networks
       Companies have incurred as a result of Avanex's breach of the warranty
       set forth in Section 13.1 i).

25.    INSURANCE

32.12  Avanex shall procure and maintain in full force and effect during the
       period that this Agreement is in effect and for a period of [*]
       thereafter, with an insurance company a Comprehensive General
       Liability insurance policy with third party liability coverage
       protecting Nortel Networks and Nortel Networks Companies against any
       loss, liability or expense due to bodily injury, death or property
       damage arising out of this Agreement or Products delivered hereunder,
       to the extent such loss, liability or expense is due to the negligence
       of Avanex. Such policy shall have a combined single limit of a minimum
       of [*], shall provide coverage worldwide and shall not be restricted
       to occurrences in the country of insurer of Avanex. Nortel Networks
       and Nortel Networks Companies shall be additional insureds under such
       insurance policy.

25.2   Nortel Networks may at its own expense, and upon [*] written notice
       increase the foregoing minimum amount in order to comply with Nortel
       Networks' obligations to any customer of any Products provided any
       such increase shall not exceed an amount equal to [*] of the
       applicable minimum amounts and shall be subject to the availability of
       such insurance.

25.3   Such policy shall be endorsed to be primary insurance and shall provide
       that it will not be cancelled or altered without [*] prior written
       notice to Nortel Networks. Not later than [*] following the execution
       of this Agreement, Avanex shall furnish Nortel Networks with a
       certificate of such insurance and evidence that the premiums therefore
       have been paid. Maintenance of such insurance and the performance by
       Avanex of its obligations under this Section 25 shall not relieve
       Avanex of liability under the indemnity provisions set forth in this
       Agreement.

26.    FORCE MAJEURE

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     with the Commission. Confidential treatment has been requested with
     respect to the omitted portions.

<PAGE>

26.1    If the performance of any obligation under this Agreement or a Release
        or Purchase Order is interfered with by reason of any circumstances
        beyond the reasonable control of the Party affected, including, without
        limitation, fire, explosion, power failure, acts of God, war,
        revolution, civil commotion, delays of the other Party in the
        performance of any of its obligations hereunder, acts of the public
        enemy, or any law, order, regulation, ordinance or requirement of any
        government or legal body, and labor difficulties, including without
        limitation, delays in procuring adequate supplies, strikes, slowdowns,
        picketing or boycotts; then the Party affected shall be excused from
        such performance for a period equal to the delay resulting from any
        such causes and such additional period as may be reasonably necessary
        to allow the Party to resume its obligations, (and the other Party
        shall likewise be excused from performance of its obligations to the
        extent such Party's obligations relate to the performance which was
        interfered with). The Party so affected shall make reasonable efforts
        to remove such causes of nonperformance; provided, however, in the
        event any such cause of nonperformance extends for more than thirty
        (30) Business Days, Nortel Networks shall have the right, without
        obligation or liability, to cancel any Release or Purchase Order
        affected by such cause.

26.2    Either Party shall notify the other Party in writing within ten (10)
        Business Days after becoming aware of the occurrence of any force
        majeure event which may cause any delay or failure on the part of such
        Party to perform its obligations hereunder.

27.     TERM

27.1    This Agreement shall become effective on the Effective Date and shall
        remain in effect for a period of twenty-four (24) months and will be
        automatically renewed for successive twelve (12) month period(s) unless
        one Party gives to the other Party a notice to the effect that this
        Agreement will not be renewed, all such period(s) being referred to
        herein as "Term", unless and until terminated in accordance with this
        Agreement.

28.     TERMINATION AND CONTINUING RIGHTS

28.1    The Agreement may be terminated upon notice by one Party, at its sole
        discretion, in the event the other Party is affected by any one of the
        following events:

        a)  the institution by one Party of insolvency, receivership or
            bankruptcy proceedings or any other material proceedings for the
            settlement of its debts, including, without limitation, a
            reorganization, a compromise, an arrangement or assignment for
            the benefit of its creditors; the institution of such
            proceedings against a Party which such Party has failed to
            resolve in its favor within thirty (30) Business Days after
            appropriate services of process; a Party making a general
            assignment for the benefit of creditors; or a Party's dissolution
            or ceasing to do business in the normal course; or

        b)  has a substantial part of its assets seized; or

        c)  assigns the Agreement or any part thereof in violation of Section
            32.4 (Assignment);

                                                                         Page 35

<PAGE>

        the affected Party is obliged to immediately give notice to the other of
        the occurrence of any such event.

28.2    The Agreement and/or any Purchase Order or Release may be terminated, in
        whole or in part, by Nortel Networks, upon written notice to Avanex, in
        the event another party acquires a controlling interest in Avanex or a
        majority equity participation in Avanex, without a prior written
        guarantee from such party to Nortel Networks that such party will
        continue to abide by the terms of this Agreement.

28.3    The Agreement and/or any Purchase Order or Release may be terminated,
        in whole or in part by either Party, upon a thirty (30) calendar day
        written notice, in the event the other Party fails to execute any one
        of its material obligations hereunder and fails to remedy the default
        within said period of thirty (30) calendar days.

28.4    Above termination rights shall be in addition to other termination
        rights contained herein, and shall be without prejudice to the rights
        or claims one Party may have against the other with respect to the
        performance, nonperformance, or breach of such Party's obligations
        hereunder, and shall not operate so as to extinguish any rights or
        obligations which arose prior to the date of termination, and each
        Party shall have the right to pursue each and every available remedy at
        law and in equity, including, without limitation, withholding payments
        of any amount owed by Nortel Networks to Avanex pending resolution of
        any claims made by Nortel Networks in good faith against Avanex.

28.5    In the event this Agreement is terminated by Avanex for default by
        Nortel Networks or for any other reason hereunder, Nortel Networks and
        its customers shall thereafter retain such rights, as may be necessary
        in order to allow Nortel Networks and its customers to provide Product
        support and maintenance to their end-user customers, provided however
        the Products, in respect of which support and maintenance services will
        be provided, have been paid for by Nortel Networks.

28.6    This Agreement may be terminated upon agreement of the Parties to that
        effect.

28.7    Notwithstanding any termination or expiry of this Agreement, the
        provisions of Sections 1 (Definitions), 5 (Product and Process
        Changes), 7 (Proprietary Components), 10 (Prices and Payments), 13
        (Warranty), 16 (Continuing Availability of Technical Assistance, Repair
        Services, Maintenance, Replacement and Repair Parts), 19 (Confidential
        Information), 20 (Intellectual Property Right Infringement), 22
        (Indemnity), 24 (Consequential Damages), 25 (Insurance) 28 (Termination
        and Continuing Rights), 30 (Manufacturing Escrow and Contingent
        License) and all consequent rights, obligations and liabilities, shall
        survive the termination or expiry of this Agreement.

29.     NOTICES

29.1    Unless explicitly set forth in this Agreement, any and all notices or
        other information to be given by one of the Parties to the other
        hereunder shall be sent by registered or certified mail, postage
        prepaid, return receipt requested, by confirmed fax, by hand delivery
        or by email to the other Party at the addresses set forth in Exhibit L.
        Each Party shall use commercially reasonable best efforts to use
        electronic media to transmit information pursuant to this Agreement.

                                                                         Page 36

<PAGE>

29.2    Notices given pursuant to Section 29.1 shall be deemed to have been
        received five (5) Business Days after mailing if given by mail, and one
        business day after sending if given by telecopy and upon delivery if
        given by hand.

29.3    Either Party may change its address at any time by giving fifteen (15)
        Business Days prior written notice to the other Party as provided above.

30.     MANUFACTURING ESCROW AND CONTINGENT LICENSE

32.12   In the event Avanex acquires a controlling interest in one of its
        competitors for the Products or new products, or that one of its
        competitors for the Products or new products acquires a controlling
        interest in Avanex such that the combined entity provides greater than
        [*] of a Product or new product to Nortel Networks, then Avanex
        warrants that it will in good faith utilize its reasonable commercial
        efforts to execute an escrow agreement for the intellectual property
        underlying the affected Product or new product to Nortel Network's
        reasonable satisfaction.

31.     GOVERNING LAW

31.1    The validity, construction, interpretation and performance of this
        Agreement and the rights and obligations of the Parties and any
        purchase made hereunder shall be governed by the courts and laws of the
        State of New York, except for its rules with respect to the conflict of
        laws. The application of the U.N. Convention on Contracts for the
        International Sale of Goods is specifically excluded from this
        Agreement.

32.     GENERAL

32.1    Severability

        If any of the provisions of this Agreement shall be adjudged invalid or
        unenforceable, such invalidity or unenforceability shall not invalidate
        or render this Agreement unenforceable, but rather this Agreement shall
        be construed as if not containing the particular invalid or
        unenforceable provision or provisions, and the rights and obligations
        of the Parties shall be construed and enforced accordingly, provided
        that, in the event either Nortel Networks or Avanex would not have
        entered into this Agreement without such provision, that Party shall
        have the right to terminate this Agreement upon written notice to the
        other Party.

32.2    North America Free Trade Agreement - Procedures

        Avanex shall assist Nortel Networks in performing all administrative
        actions required to qualify Products for preferential treatment under
        the rules of any applicable trade pursuant to the procedures set out in
        Exhibit K.

                                                                         Page 37

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     with the Commission. Confidential treatment has been requested with
     respect to the omitted portions.

<PAGE>

32.3    Debarment Certificate

        At no additional charge to Nortel Networks, Avanex shall comply with
        any applicable import requirements and with any third party
        requirements specifically set forth herein or any document referenced
        herein. In addition, Avanex shall as soon as practicable, upon written
        request of Nortel Networks, provide a properly executed certificate in
        the form attached as Exhibit I (as such form may be modified from time
        to time by the United States Rural Utilities Service) and in accordance
        with the requirements specified therein with respect to any Products
        furnished by Avanex and which Nortel Networks provides to a customer
        which requires Nortel Networks to provide a similar certificate.
        Products and services furnished by Avanex shall be in conformance with
        all applicable laws and governmental orders and regulations in effect
        at the time of shipment thereof or the performance of such services,
        including, without limitation, the following United States laws and
        regulations: Veterans Readjustment Assistance Act of 1972,
        Rehabilitation Act of 1973, and the clauses set forth in Federal
        Acquisition Regulation (subject to "Avanex," "Subcontractor" and
        "Contract" used in such clauses meaning Nortel Networks, Avanex and
        Agreement, respectively) 52.219-8, 52.219-9, 52.219-13, 52.220-4,
        52.2221, 52.222-4, 52.222-20, 52.222-26, [subparagraphs b(1)-b(11)],
        52.222-35 and 52.222-36.

32.4    Assignment

        Subject to Section 28.2, neither Party shall assign or otherwise
        transfer all or any part of this Agreement or any rights or payments to
        be made hereunder, or any interest herein, without the prior written
        consent of the other Party, except that either Party may assign or
        subcontract any of its rights or obligations hereunder to any of its
        Subsidiaries or successor corporations.

32.5    Waiver

        Except as specifically provided for in a waiver signed by duly
        authorized representatives of Nortel Networks and Avanex, failure by
        either Party at any time to require performance by the other Party or
        to claim a breach of or to enforce any provision of this Agreement
        shall not be construed as affecting any subsequent breach or the right
        to require performance with respect thereto or to claim a breach with
        respect thereto and shall not constitute a waiver of such provisions or
        the right of such Party to enforce each and every provision.

32.6    Interim Waiver

        For the period beginning on the Effective Date and ending on April 28,
        2000, Nortel Networks agrees to waive the obligations of Avanex under
        Sections 4.5, 5.1, 5.2, 6.2.3, 6.2.4, 9.1, and 9.4 of this Agreement.

32.7    Avanex Initial Press Release

        Nortel Networks agrees and consents, pursuant to Section 19.4 of this
        Agreement, to Avanex's issuing the press release set forth in Exhibit M
        hereto, which shall not be issued unless Nortel Networks is notified
        prior to its issuance.

                                                                         Page 38

<PAGE>

32.8    Independent Contractors

        Nortel Networks, Nortel Networks Companies and Avanex are independent
        contractors in all relationships and actions under and contemplated by
        this Agreement. This Agreement shall not be construed to create or to
        authorize the creation of any employment, partnership or agency
        relation, or to authorize Nortel Networks, Nortel Networks Companies or
        Avanex to enter into or make any commitment, agreement, representation
        or warranty binding on the other, or to allow one Party to accept
        service of any legal process addressed to, or intended for, the other
        Party. Nothing contained in this Agreement shall limit, in any manner,
        Nortel Networks or Avanex's right to enter into other agreements with
        other parties.

32.9    Section Headings

        Section headings are inserted herein for convenience only and shall not
        affect the meaning or interpretation of this Agreement or any provision
        hereof.

32.10   Nortel Networks' Authority to enter into Agreement

        Nortel Networks Corporation represents and warrants that it has full
        power and authority to enter into this Agreement on behalf of all
        Nortel Networks Companies (now and hereafter a party to this Agreement)
        and that each Nortel Network Company is fully bound by the terms and
        conditions of this Agreement as if it was a signatory to this
        Agreement.

32.11   Entire Agreement

        This Agreement, including Exhibits A through M attached hereto,
        comprises all the terms, conditions and agreements of the Parties
        hereto with respect to the subject matter herein, and save as expressly
        provided herein, may not be altered or amended except in writing signed
        by authorized representatives of each Party hereto. This Agreement
        cancels and supersedes all prior agreements and communications on the
        said subject matter.

32.12   Counterparts

        This Agreement may be executed in one or more counterparts, all of
        which shall be considered one and the same agreement.

                                                                         Page 39

<PAGE>

32.12    Telecopy Execution and Delivery

         A facsimile, telecopy or other reproduction of this Agreement may be
         executed by one or more Parties, and an executed copy of this Agreement
         may be delivered by one or more Parties by facsimile or similar
         electronic transmission device pursuant to which the signature of or on
         behalf of such Party can be seen, and such execution and delivery shall
         be considered valid, binding and effective for all purposes. At the
         request of any Party, all Parties hereto agree to execute an original
         of this Agreement as well as any facsimile, telecopy or other
         reproduction hereof.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
and year last written below.

<TABLE>
<CAPTION>

AVANEX CORPORATION                                    NORTEL NETWORKS CORPORATION
<S>    <C>                                            <C>  <C>
By:   /s/ Walter Alessandrini                         By:  /s/ David Wilson
      -----------------------------------------            ----------------------------------------
                    (Signature)                                  (Signature)

Name: Walter Alessandrini                             Name: David Wilson
      -----------------------------------------             ---------------------------------------
                    (Printed Name)                               (Printed Name)

Title: President and Chief Executive Officer          Title: Senior Counsel
       ----------------------------------------              --------------------------------------

Date:  4/28/00                                        Date:  4/28/00
       -----------------------------------------             ---------------------------------------

                                                      By:  /s/E.G. Parker
                                                           ----------------------------------------
                                                                 (Signature)

AVANEX CAYMAN                                         Name: E.G. Parker
                                                            ---------------------------------------
                                                                 (Printed Name)

By:   /s/Jessy Chao                                   Title: Supply Management Support Services
      -----------------------------------------              --------------------------------------
                    (Signature)
                                                      Date: April 28, 2000
Name: Jessy Chao                                            ---------------------------------------
      -----------------------------------------
                      (Printed Name)

Title: President
       ----------------------------------------

Date: 4/28/00
      -----------------------------------------
</TABLE>

                                                                         Page 40

<PAGE>

                                    EXHIBIT A

              PRODUCT LISTS, PART I AND PART II, PRICES, DISCOUNTS,
                  AVAILABILITY DATES AND FCA DELIVERY LOCATIONS

Part I: Product List: Accepted Products, Prices and Discounts

Part I: Product List: Accepted Products, Prices and Discounts

CPC Code        Description            12-Month Volume         Price in US$
--------        -----------            ---------------         ------------
  [*]                [*]                     [*]                    [*]
  [*]                [*]                     [*]                    [*]
  [*]                [*]                     [*]                    [*]
  [*]                [*]                     [*]                    [*]
  [*]                [*]                     [*]                    [*]
  [*]                [*]                     [*]                    [*]
  [*]                [*]                     [*]                    [*]
  [*]                [*]                     [*]                    [*]

Part II:   Product List: Non-accepted products, Prices, Discounts and
           Availability Dates

To be determined

Part III:  FCA Delivery Locations

Avanex Corporation
40919 Encyclopedia Circle
Fremont, CA
94538
U.S.A

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

<PAGE>

                                    EXHIBIT B

                      SPECIFICATIONS AND ACCEPTANCE PROGRAM

PART I:  SPECIFICATIONS

1.   Document Identification:

                                      [*]

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

<PAGE>

                                      [*]

2.   Certification

Avanex shall use reasonable due diligence to pursue the certifications listed
below (as applicable) as soon as new or modified designs have passed Avanex's
production release milestone, and this without prejudice to Nortel Networks'
Acceptance Program outlined in Exhibit B, Part II. Avanex and Nortel Networks
shall arrange for joint submission to the regulatory bodies and Nortel Networks
shall repay to Avanex the additional costs incurred through the joint
submissions. All Changes to existing designs that could invalidate any one of
the certifications shall be discussed

                                                                          Page 2

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     with the Commission. Confidential treatment has been requested with
     respect to the omitted portions.

<PAGE>

between Avanex and Nortel Networks as part of the Change Notification procedure
even if they do not require a production release.

The list of required certifications will be mutually agreed to in good faith and
may include those below:
CEMark
UK Type Approval
UL / CSA / EN safety
FCC parts 15 and 101

Should other certifications be required, they shall be discussed between Avanex
and Nortel Networks. Avanex shall use its reasonable commercial efforts in
supporting Nortel Networks' regulatory activities.

Support groups: Avanex's Product Engineering group

                Nortel Networks' Design Engineering group.

PART II:  PRODUCT ACCEPTANCE PROGRAM

1.   In order to verify that the products or modified Products meet the
     applicable Specifications, Nortel Networks will undertake an Acceptance
     Program covering verification and product integrity testing.

2.   Avanex shall loan to Nortel Networks, [*] Nortel Networks, up to a maximum
     of [*], and beyond that, upon mutually agreeable terms, the products
     necessary to perform the Acceptance Program and shall provide support to
     the Nortel Networks group during the testing. Such support includes
     diligence in replacing failed products, availability of technically
     knowledgeable individuals to discuss testing results and teaming of at
     least one Avanex individual with the Nortel Networks testing group for all
     tests to occur on Avanex's premises. Nortel Networks shall endeavor to
     limit as much as possible the products needed for the acceptance in terms
     of number of components and duration of the loan by taking into
     consideration design commonalties with already accepted Products.

3.   As a minimum, each new design shall be tested by Nortel Networks Design
     Engineering team.

4.   Primeships:

     Nortel Networks Design Engineering group is prime for the verification
     testing; Avanex's Engineering department in Fremont, CA is prime for
     supporting Nortel Networks' Acceptance Program.

PART III: PRODUCT MARKING

1.   Serial number: bar-coded serial number, as per relevant Specifications

                                                                          Page 3

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

<PAGE>

2.   Manufacturing date stamp: Avanex stamps date as agreed upon by the parties.

3.   Avanex's model number as agreed upon by the parties.

4.   Nortel Networks' CPC will also be placed on the module.

5.   Repair Date Stamp: Bellcore TR-NWT-000078 (issue 3, December 1991), section
     12.2. The location code for Avanex ("LL") and how Avanex rubber stamps this
     shall be mutually agreed to.

6.   Product marking and packaging requirements pursuant to this Agreement:

     a)   [*]
     b)   [*]
     c)   [*]
     d)   [*]

     Avanex shall package the Products for shipment in accordance with [*]
     standard packing practices, with any modifications specified by Nortel
     Networks and agreed to by Avanex, related to the size and external markings
     (including branding) of the boxes. [*] shall be responsible for any damage
     to Products including damage caused by packing noncompliant with [*]
     requirements.

7.   Cables: As per relevant Specifications.

                                                                          Page 4

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

<PAGE>

                                    EXHIBIT C

                               DEMAND-PULL PROGRAM

1.   SCOPE

1.1  This Exhibit C sets forth the terms and conditions applicable to the
     ordering of Products pursuant to the Demand-Pull Program.

2.   NORTEL NETWORKS' RESPONSIBILITIES

2.1  For Products that are ordered under the Demand-Pull Program Nortel Networks
     shall, on the first business day of each week during the Term, provide
     Avanex with a [*] forecast ("Forecast") of its Product requirements, if
     any. Concurrently with its presentation of the first Forecast to Avanex,
     Nortel Networks shall issue a Blanket Purchase Order for the quantity of
     Products shown for [*] of such Forecast which Blanket Purchase Order shall
     be updated as required. Releases for Products covered by a Blanket Purchase
     Order issued under this Section will be issued in accordance with Nortel
     Networks' designated purchasing department representative's weekly demands.

2.2  Attachment A sets forth the applicable Product stocking requirements stated
     on a Target Finished Goods ("Target FG") and Target Work-In Process
     (modules, dies components and parts) ("Target WIP") basis, (collectively
     referred to as "Target Products Total Stock"). The Target Products Total
     Stock will be jointly established by the Parties in writing based on the
     run rate and agreed upon number of weeks, as referred to in Section 3.2
     hereof, taking into consideration the Avanex's Products manufacturing lead
     time as well as the unique component purchasing lead time, all as stated in
     Attachments A and B hereof. The Target Products Total Stock shall be
     jointly monitored and may be revised by agreement of the Parties in writing
     as fluctuations in the run rate so require and Attachment A updated
     accordingly. The Forecasts shall be used by the Avanex for planning
     purposes only, and Nortel Networks shall not be obligated to purchase any
     Products covered by Forecasts and Blanket Purchase Orders issued by Nortel
     Networks except as expressly set forth in the immediately following
     paragraph.

4.1  Nortel Networks' obligation to purchase Products under this Agreement or
     otherwise shall be limited to the purchase of the Target Products Total
     Stock as shown in Attachment A as revised from time to time in accordance
     with Section 2.2 hereof as well as for associated quantities of unique
     components inside of the lead times specified in Attachment B.

4.1  If the Target FG is inactive for more than [*], the Parties
     shall negotiate towards reaching a mutually acceptable agreement in respect
     of the disposition of the Target Products Total Stock or portion thereof.

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

<PAGE>

2.5     It is acknowledged by the Parties that although Products have been
        included in Attachment A, any such Products may, from time to time at
        Nortel Networks' option, be purchased by Nortel Networks otherwise than
        pursuant to the Demand-Pull Program and in such event, Nortel Networks
        will issue Purchase Orders for its requirements for such Products.

3.      AVANEX'S RESPONSIBILITIES

3.1     Avanex shall manufacture the Target Products Total Stock in accordance
        with the run rate as set forth in Attachment A which may be revised as
        provided hereunder but shall only deliver Products per latest written
        instruction from Nortel Networks.

3.2     Avanex shall maintain Target FG and Target WIP quantities representing
        a maximum of [*], respectively, of the run rate set forth in
        Attachment A which may be revised as provided hereunder.

3.3     Avanex's manufacturing operations and processes shall be established
        and maintained throughout the Term so as to ensure that Avanex's
        manufacturing capacity may be increased from the then applicable Target
        Product Total Stock, in accordance with the terms of Section 9.5.3 of
        the Agreement.

3.4     Products ordered pursuant to the Demand-Pull Program shall be
        delivered FCA Avanex's Fremont plant, within [*] from Nortel Networks'
        Release(s) communicated to Avanex via facsimile.

3.5     Avanex shall provide to Nortel Networks' designated Purchasing
        Department representative a weekly report of Avanex's Actual Products
        Total Stock status.

4.      CANCELLATION OF THE DEMAND-PULL PROGRAM

4.1     Nortel Networks may terminate the Demand-Pull Program in whole or in
        part by means of a written notice to that effect, forwarded to Avanex
        at least [*] in advance. Should the Demand-Pull Program be terminated,
        the applicable Blanket Purchase Order will be closed after disposition
        of the Target Product Total Stock in accordance with this Section 4.
        Should the Demand-Pull Program be terminated the applicable delivery
        lead time to the Product affected by the termination will be agreed
        upon by the Parties but shall in no event exceed [*] ARO.

4.2     Nortel Networks' obligation to purchase under this Agreement shall be
        that stated in Section 2.3 hereof.

4.3     Nortel Networks' obligation to purchase under this Agreement shall be
        reduced by the amount of Products that can be purchased by Purchase
        Orders or that may be purchased by other customers of Avanex. In
        addition, Avanex shall use all reasonable endeavors to minimize any
        such costs by, inter alia, returning components to suppliers or reducing
        cancellation costs to suppliers, and such savings will be passed on to
        Nortel Networks.

                                                                          Page 2

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

<PAGE>

N.B.:  To be completed by the Parties once Avanex becomes Demand-Pull compliant.

                                  ATTACHMENT A

                                                                 WEEK:  ________

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CPC NO.    DESCRIPTION    RUN    TARGET    TARGET    ACTUAL    ACTUAL    LEAD
                          RATE   FG STK     WIP      FG STK      WIP     TIME
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           NORTEL NETWORKS                  _________________________
           APPROVAL:
           DATE: ____________

           SUPPLIER APPROVAL:               _________________________
           DATE: _____________

           ____

                                                                          Page 3

<PAGE>

                                  ATTACHMENT B

                                 BOM of Products

                              * = Unique Components

                                                                          Page 4

<PAGE>

                                   EXHIBIT D

REPAIR SERVICES RATES, FCA REPAIR LOCATIONS AND TECHNICAL ASSISTANCE RATES

I.    TECHNICAL ASSISTANCE RATES

      1.  Training

          a)  Avanex offers installation and maintenance training at its
              offices, or optionally at Nortel Networks site.

II.   FCA REPAIR LOCATIONS

      a)  Avanex's Fremont, CA location

III.  REPAIR SERVICES RATES

      1.  Advance Replacement Service

          Avanex shall, at the request of Nortel Networks, deliver an advance
          replacement of such Products providing that:

          a)   Nortel Networks pays the freight expense on the returned Product;
               Avanex pays the freight expense for the advance replacement.

          b)   Service charges applied: To be mutually agreed to in good faith
               by the Parties.

      2.  No Fault Found

          To be mutually agreed to in good faith by the Parties

      3.  Verification or Certification Test

          Nortel Networks may return a Product for operational verification
          tests for a charge to be mutually agreed upon in good faith by the
          Parties.

<PAGE>

    4.  Out of Warranty Repairs

        Nortel Networks may return a Product for repairs not covered under
        warranty, during the Term, for a charge to be mutually agreed upon in
        good faith by the Parties.

                                                                          Page 2

<PAGE>

                                    EXHIBIT E

                   PROCEDURES FOR ORDERS UTILIZING EDI AND TDI
                               (Rev NAESGA_970321)

                                     PART I
                ELECTRONIC DATA INTERCHANGE ("EDI") TRANSMISSION

This Part I of Exhibit E contemplates EDI transmissions of information and
Purchase Orders, Blanket Purchase Orders, Transaction Set 850 Releases or
EDIFACT 2.0 P.O. Releases (collectively, in this Exhibit E, "Orders"),
acknowledgments and invoices. The EDI transactions shall be governed by the
Agreement, as modified by this Part I of Exhibit E. This Part I of Exhibit E
shall not apply to Orders delivered solely in hard copy document form.

EDI transactions shall be made through a third-party computer network with which
the Nortel Networks Companies and Avanex have a services agreement ("Network").
EDI transactions shall be made in accordance with the version of either 1) the
American National Standards Institute ("ANSI") Business Data Interchange
Standards ANSI X12, or 2) Electronic Data Interchange for Administration,
Commerce and Transportation Issue No. 2.0 ("EDIFACT"), which each Nortel
Networks Company then utilizes, inclusive of transaction sets or comparable
EDIFACT electronic messages, data dictionary, data elements and transmission
control. Each party shall be responsible for its respective costs incurred in
sending and receiving EDI transmissions.

Avanex shall access at least once on each business day the Network to determine
whether it has received any Orders (ANSI X12, Transaction Set 850 or EDIFACT 2.0
ORDERS). A functional Acknowledgment of Receipt of Transmission (ANSI X12,
Transaction Set 997) or an EDIFACT functional Acknowledgment Receipt of P.O.
Message shall be transmitted immediately upon receipt of an EDI Order. A full
Transaction Acknowledgment (ANSI X12, Transaction Set 855 or EDIFACT 2.0 ORDSP)
shall be transmitted by Avanex within two (2) Business Days after transmittal of
the functional Acknowledgment of Receipt of Transmission. Each Order shall
contain and each full Transaction Acknowledgment shall confirm the price,
quantity, Product description by part number, FCA Delivery Location, location to
which the invoice shall be rendered for payment, method of shipment, Delivery
Date.

To reschedule, cancel or otherwise change an Order, a Nortel Networks Company
shall transmit a Purchase Order Change (ANSI X12, Transaction Set 860 or EDIFACT
2.0 ORDCHG) and Avanex shall transmit a Purchase Order Change Acknowledgment
(ANSI X12, Transaction Set 865 or EDIFACT 2.0 ORDSP) to the appropriate Nortel
Networks Company within two (2) Business Days after receipt by Avanex of the
Purchase Order Change.

Any forecast information shall be sent using ANSI X12, Transaction Set 830 with
a quantity status code of "D" shown in the applicable time period field or
EDIFACT 2.0 DELFOR with a delivery plan status indicator of 4. A Transaction Set
830 Release (ANSI X12, Transaction Set 830 with a quantity status code of "C"
shown in the applicable time period field on such Transaction Set) or EDIFACT
2.0 DELFOR with a delivery plan status indicator of 1 shall be transmitted by a
Nortel Networks Company

<PAGE>

to confirm a Delivery Date for specific quantities of Products covered by a
Blanket Purchase Order, where that Nortel Networks Company requires Avanex to
send an Advanced Shipment Notice (ANSI X12, Transaction Set 856 or EDIFACT 2.0
DESADV) prior to shipment. Upon receipt of such Transaction Set 830 Release or
EDIFACT 2.0 DELFOR, Avanex shall transmit to the Nortel Networks Company such
Advanced Shipment Notice not less than the number of days agreed upon between
the FCA Delivery Location and Avanex prior to shipment of the quantity of
Products covered by such Transaction Set 830 Release or EDIFACT 2.0 DELFOR.

Each Nortel Networks Company ordering under this Agreement shall access the
Network at least once on each Business Day to determine whether it has received
any "Invoices" (ANSI X12, Transaction Set 810 or EDIFACT 2.0 INVOIC). A
functional Acknowledgment of Receipt of Transmission (ANSI X12, Transaction Set
997 or comparable EDIFACT 2.0 electronic message) shall be transmitted
immediately upon receipt of an Invoice.

Neither Party shall have any liability to the other for Orders or Invoices
erroneously transmitted to or received due to the malfunction of or a defect in
the Network or other causes beyond a Party's reasonable control. If either Party
receives a distorted EDI transmission, it shall immediately contact the Network
to reject the distorted transmission and request that such transmission be
resent. If Avanex receives an Order by EDI transmission stating a quantity
and/or price significantly higher or lower than the typical quantity and/or
Price shown on Orders issued by that Nortel Networks Company ordering location,
Avanex shall immediately contact such ordering location to confirm the accuracy
of the electronically transmitted Order.

Each Party shall adopt as its signature an electronic identification consisting
of symbol(s) or code(s) which shall be affixed to or contained in each document
transmitted by such Party ("Signatures"). Each Party agrees that its Signature
shall be sufficient to verify that such Party originated and authorized such
document. Each Party shall use reasonable efforts to not disclose the Signature
of the other Party to any unauthorized third party.

Any document properly transmitted pursuant to this Part I of Exhibit E shall be
deemed to be a "writing" or "in writing", and any such document when containing,
or to which there is affixed, a Signature ("Signed Documents") shall be deemed
for all purposes (a) to have been duly authorized and executed and (b) to
constitute an "original" when printed from electronic files or records
established and maintained in the normal course of business. The Parties agree
not to contest the validity or enforceability of Signed Documents under the
provisions of any applicable law relating to whether certain agreements are to
be in writing or signed by the Party to be bound thereby. Signed Documents, if
introduced as evidence on paper in any judicial, arbitration, mediation or
administrative proceedings, shall be admissible as between the Parties to the
same extent and under the same conditions as other business records originated
and maintained in documentary form.

                                                                          Page 2

<PAGE>

                                     PART II
                 TECHNICAL DATA INTERCHANGE ("TDI") TRANSMISSION

This Part II of Exhibit E contemplates the electronic transmission of various
types of data files, including but not limited to engineering and material
specifications, drawings, computer-aided designs ("CADs"), models, plot and flat
files ("Technical Data Interchange" or "TDI"). The TDI transmissions between
each Nortel Networks Company and Avanex shall be governed by the Agreement and
this Part II of Exhibit E.

TDI transmissions shall be made through a third-party computer network with
which each of the Nortel Networks Companies and Avanex have a services agreement
("Network"). Each Party shall be responsible for its respective costs incurred
in sending and receiving TDI transmissions.

Each Party shall access the Network at least once on each Business Day to
determine whether it has received any TDI transmissions.

Each Party acknowledgesand agrees the other shall not have any liability for
TDI transmissions erroneously transmitted to or received by it due to a
malfunction of or a defect in the Network or other causes beyond either Party's
reasonable control. If either Party receives a distorted TDI transmission, it
shall immediately contact the Network to reject the distorted transmission and
request that such transmission be resent.

The Parties shall comply with such security precautions and rules as may be
initiated by the Network to protect TDI transmissions from unauthorized access.
The Parties shall treat each TDI transmission as confidential information under
the applicable provisions of the Agreement.

Each Party shall adopt as its signature an electronic identification consisting
of symbol(s) or code(s) which shall be affixed to or contained in each document
transmitted by such Party ("Signature"). Each Party agrees that its Signature
shall be sufficient to verify that such Party originated such document. Each
Party shall use reasonable efforts to not disclose the Signature of the other
Party to any unauthorized third party.

                                                                          Page 3

<PAGE>

                                    EXHIBIT F

                                 MONTHLY REPORTS

1.   Avanex will provide monthly reports in the following areas:
     a)   Repair and Return;
     b)   Baseline Report;
     c)   General Business.

2.   Avanex shall provide a Unit Failure Analysis report on all field returned
     Products and a Component Failure Analysis report on a monthly basis to
     Nortel Networks' Repair Manager, to Nortel Networks' Quality Manager and
     to Nortel Networks' Product Brand Manager. This report which will be
     issued no later than three (3) Business Days after the start of every
     month shall contain the following information:

     a)   The number of Products delivered to Nortel Networks (on a per PEC
          level) in previous month.
     b)   The number of Products returned to Avanex (on a per PEC level) in
          previous month.
     c)   The number of Products delivered to Nortel Networks (on a per PEC
          level) year to date.
     d)   The number of Products returned to Avanex (on a per PEC level) year
          to date.
     e)   The number of Products delivered to Nortel Networks (on a per PEC
          level) to date.
     f)   The number of Products returned to Avanex (on a per PEC level) to
          date.
     g)   Pareto of replacement devices of current month per PEC code.
     h)   Pareto of replacement devices cumulative per PEC code.
     i)   Post Repair Information on a per unit basis returned to Avanex for
          repair under the "like-for-like" program for the previous month to
          include the following information:
          - Symptoms of replacement devices per unit;
          - Cumulative In-service time (in months) per PEC code;
          - Annualized replacement rate per PEC code.
     j)   Trend chart in time of replacement rate value (RpR)
     k)   Actual MTBF measurement. Actual annualized MTBF will be calculated
          from the cumulative replacement rate recorded monthly. Based on
          results, additional requirements can be determined upon agreement of
          both Parties.
     l)   On Time service level for 1) Repair and Return 2) Retrofit 3) FCFA
          4) RMA.

     For all occurrences of Product failure in the field, analysis results,
     corrective actions and implementation plan have to be included in the
     monthly report.

3.   From the date the Products will have successfully passed the Acceptance
     Program in accordance with Section 4 of the Agreement, Avanex shall
     provide to Nortel Networks' Repair Manager, to Nortel Networks' Quality
     Manager and to Nortel Networks' Product Brand Manager a monthly "Minimum
     Field Baseline" report indicating the minimum applicable release level
     (number) for the in-service operation of the Products and a "New Product
     Shipped Baseline". The reports shall contain aforementioned information
     for all current and previous releases of the Products:

<PAGE>

     a)   backward and forward compatibility;
     b)   upgradability from any release to any other release;
     c)   the current Product releases.

4.   From the date the Products will have successfully passed the Acceptance
     Program in accordance with Section 4 of the Agreement, Avanex shall
     provide to Nortel Networks' Product Brand Manager a monthly "General
     Business" report which includes the following information:

     a)   Number of Products (on a per PEC level) delivered to Nortel Networks
          in the previous month.
     b)   Total business in dollars on a per PEC level delivered to Nortel
          Networks in the previous month.
     c)   Number of Products (on a per PEC level) delivered year to date to
          Nortel Networks.
     d)   Total business in dollars on a per PEC level delivered year to date
          to Nortel Networks.
     e)   Number of Products (on a per PEC level) delivered to date to Nortel
          Networks.
     f)   Total business in dollars on a per PEC level delivered to date to
          Nortel Networks.
     g)   Total number of shipments that were missed or delivered short by
          Avanex in the previous month.
     h)   Price in effect on a per PEC level in the previous and current months.
     i)   Prices paid for Nortel Networks proprietary components in the last
          month.
     j)   Total number of PRS and CSR raised in the previous month against the
          Products and a summary of each problem.
     k)   Total number of calls received from the Nortel Networks Customer
          Service center in the previous month.

5.   In addition to the above, Nortel Networks may, from time to time, request
     that Avanex provides detailed Unit Failure Analysis and Component Failure
     Analysis reports.

                                                                          Page 2

<PAGE>

                                    EXHIBIT G
                               Chance Notification
                                    (Example)

                                                                     Page 1 of 2
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------
1.   SUPPLIER INFORMATION:                                        2.   PRODUCT CHANGE NOTICE:
                                                                                   1997xxxx
                                                                       ISSUE:      01
<S>  <C>                    <C>  <C>                      <C>     <C>   <C>      <C>
-----------------------------------------------------------------------------------------------------
3.   ISSUE DATE:            4.   PRODUCT IDENTIFICATION:
                                 MAJOR SYSTEM    :
                                 SUB SYSTEM      :
                                 HWARE: ?    FWARE: ?    SWARE: ?    PLUGIN: ?

-----------------------------------------------------------------------------------------------------
5.   NEW PROD     RLSE      7.   NEW CLEI CODE         6.   OLD PROD   RLSE       8.   OLD CLEI CODE
     NTxxxxxx     tbd            tbd                        NTxxxxxx   xx               xxxxxxxxx

-----------------------------------------------------------------------------------------------------
9.   ASSOCIATED PRODUCTS OR CHANGES AFFECTED:

-----------------------------------------------------------------------------------------------------
10.  DRAWING NUMBER:                                           11.   CHANGE CLASSIFICATION:
     ADxxxxxx                                                        A/AC/B . . . . . . .

-----------------------------------------------------------------------------------------------------
12.  CLASSIFICATION SUBSTANTIATION:

-----------------------------------------------------------------------------------------------------
13.  REASON FOR CHANGE:

-----------------------------------------------------------------------------------------------------
14.  DESCRIPTION OF CHANGE:

     VERIFICATION PROCEDURES:

     BACKOUT PROCEDURES:

-----------------------------------------------------------------------------------------------------
15.  EFFECT OF CHANGE:
     Enhanced features and easier installability.
     SAFETY HAZARD: ?      FIRE HAZARD: ?       SRVC AFFCTG: ?    TRANS AFFCTG: ?
     MNTNCE AFFCTG: ?      RELIA AFFCTG: ?      POWR AFFCTG: ?    TRAF AFFCTG: ?

-----------------------------------------------------------------------------------------------------
16.  MATERIAL AFFECTED:

-----------------------------------------------------------------------------------------------------
17.  DOCUMENTATION AFFECTED:

-----------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                                                     Page 2 of 2

--------------------------------------------------------------------------------
18.   IMPLEMENTATION DATE:                    19. CHANGE COMPLETION DATE:
      MM/DD/YY                                      N/A

--------------------------------------------------------------------------------

20.   MODIFICATION LOCATION:
      N/A
      TRIALED: N (Field Lab Na)
--------------------------------------------------------------------------------
21.   INSTALLATION HOURS AND MATERIAL COST:
--------------------------------------------------------------------------------
      HOURS: N/A
      COST : N/A

--------------------------------------------------------------------------------
22.   LOCATION AND QUANTITY OF EQUIPMENT:
      N/A

--------------------------------------------------------------------------------
23.   ATTACHMENTS:
      None

--------------------------------------------------------------------------------
24.   COMMENTS:

                                                                          Page 2

<PAGE>

                                    EXHIBIT H

                              TECHNICAL ASSISTANCE

I.   Technical Assistance by Nortel Networks

1.   It shall be Nortel Networks' responsibility to provide "first line" (Level
     1) technical assistance and support to its customers at its own cost.
     Nortel Networks' customers will not contact Avanex directly. Nortel
     Networks will at its option provide any of the following services to its
     customers as Level 1 support.

     Level 1 Support:

     a)  Telephone Service Desk
     b)  On site support
     c)  Preventative maintenance
     d)  Monitor alarms/malfunctions
     e)  Corrective action and logging
     f)  Product alarm knowledge
     g)  Escalate and report problems
     h)  Remote modem access
     i)  Communication junction to allow Avanex access to customers' sites
     j)  Log and track problems on Nortel Networks CSR database
     k)  Isolate subsystem faults
     l)  Product temporary system solutions
     m)  Software upgrade loads distribution to customers
     n)  Multi-vendor product expertise
     o)  Local spares holding
     p)  Board and module swap
     q)  Manage return of defective units to Avanex
     r)  Provide Product training to Nortel Networks customers

II.  Technical Assistance by Avanex

1.   Avanex shall at no cost to Nortel Networks, provide Product training
     information and Documentation upon terms to be mutually agreed to.

2.   As Nortel Networks accepts additional Products under this Agreement, Avanex
     shall provide to Nortel Networks' personnel, at no charge to Nortel
     Networks, upon mutually agreeable terms, training and training
     documentation on such additional Products such that Nortel Networks'
     personnel shall be able to train other Nortel Networks personnel and
     customers.

3.   Any additional training which Nortel Networks may require from Avanex for
     its own benefit or for the benefit of its customers shall be requested by
     Nortel Networks, and carried out by Avanex, at times and places and in
     accordance with prices as agreed upon between Nortel Networks and Avanex at
     the time such training is requested by Nortel Networks.

<PAGE>
4.   Telephone access to qualified Avanex's technical personnel with the
     following structure:

     a)  Non-Urgent Technical Support: Pager service will be available
         Monday to Friday between the hours of 8 a.m. and 6 p.m. EST (The
         waiting period for qualified technical assistance shall not exceed
         thirty (30) minutes). At all other times, voice-mail service shall
         be available at the same number. The telephone number to reach
         Avanex's non-urgent technical support personnel at all times will
         be provided by Avanex.

     Avanex shall advise Nortel Networks of any telephone number change for this
     service at least thirty (30) calendar days prior to the change.

5.   Once Nortel has provided Level 1 Support to its customers, and such Level 1
     Support does not completely remedy the problem which is the object of the
     customers' call, then Avanex, at Nortel's request, shall provide, to Nortel
     Networks and to Nortel Networks' customers, at no charge, from Monday to
     Friday between the hours of 8 a.m. and 6 p.m. EST, "Second line" (Level 2)
     technical assistance which will include the following services:

     Level 2 Support:

     a)  Provide assistance at the request of Nortel Networks
     b)  Provide Avanex technical support contacts (24 hours a day)
     c)  Log and track problems using Nortel Networks' PRS system
     d)  Isolate subsystem and design faults (in-house)
     e)  Perform in-house simulation and testing
     f)  Provide remote modem access to Nortel Networks' Technical Service
         Center
     g)  Deliver Software upgrades and Software builds to Nortel Networks'
         distribution center
     h)  Perform escalation and reporting to Nortel Networks
     i)  Provide Emergency Site Support (at customer/Nortel Networks site)
     j)  Perform Root Cause Analysis
     k)  Provide Spare Buffer (at Nortel Networks' premises)
     l)  Maintain Emergency Spares holding, (at Avanex's premises)
     m)  Update Engineering Changes (ECs) on PAS
     n)  Provide design authority support interfaces
     o)  Analyze and resolve design problems (Hardware and Software)
     p)  Prepare patches and modifications
     q)  Incorporate patches into new builds, test perform sanity checks and
         deliver the builds and Hardware to Nortel Networks' distribution
         center
     r)  Provide Product temporary solutions
     s)  In-house simulation
     t)  Database problem solution
     u)  Third party product support

6.   Notwithstanding any provision set forth in this Exhibit H and/or the
     Agreement, Avanex will provide on-site support and assistance at no cost to
     Nortel Networks in the following cases:

                                                                          Page 2

<PAGE>

     a)   Where Nortel Networks is unable to resolve a problem through normal
          maintenance activities and technical support is provided remotely by
          Avanex.
     b)   Where Nortel Networks is able to resolve a problem but cannot
          determine the root cause of the problem.
     c)   Where a problem with the Product leads a customer to specifically
          request technical presence.
     d)   Where a problem with the Product exists in the field and Avanex's
          presence is requested by Nortel Networks Senior Management.

     However, Nortel Networks will reimburse Avanex for its actual and
     reasonable expenses according to the technical assistance rates as set
     forth in Exhibit D in cases where the problem which initiated the
     requirement for the on-site support is attributed to reasons that are not
     related to a fault or deficiency in the Products.

7.   Any other technical support which Avanex shall provide to Nortel Networks
     or its customers shall be pursuant to a written request from Nortel
     Networks' designated personnel, or such other individual designated, from
     time to time, by Nortel Networks. Such support shall be at prices set forth
     in Exhibit D and on terms and conditions agreed upon by the Parties.

8.   Technical assistance support will be provided remotely to Nortel Networks
     and/or to the customer in conjunction with Nortel Networks, but not by
     Avanex alone (unless authorized in writing to do so by Nortel Networks).

9.   Avanex will provide Nortel Networks with a template of required information
     to be supplied by Nortel Networks when referring a problem for resolution.

10.  Avanex will document all known problems and deficiency (service reports
     [SR] referred by Nortel Networks and discovered by development) with the
     Products in Nortel Networks' PRS database.

11.  Avanex will provide Pager Response Time and Mobilization based on the
     Problem Classification as prescribed in the following table.

       ========================== ===================== =======================
       Problem Classification*    Pager Response Time   Mobilization
       -------------------------- --------------------- -----------------------
       E1 & E2                    [*]                   [*]
       -------------------------- --------------------- -----------------------
       S1 & S2                    [*]                   [*]
       -------------------------- --------------------- -----------------------
       Non service affecting      [*]                   [*]
       ========================== ===================== =======================

     *Problem Classifications are as defined below:

     The turnaround times for response and closure of SRs are summarized below.

       ========================== ===================== =======================
       SR Priority                SR Response           SR Closure
       -------------------------- --------------------- -----------------------
       E1/E2                      [*]                   [*]
       -------------------------- --------------------- -----------------------
       E3/E4                      [*]                   [*]
       -------------------------- --------------------- -----------------------
       MJ                         [*]                   [*]
       -------------------------- --------------------- -----------------------

                                                                          Page 3

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

<PAGE>

      ---------------------- --------------------------- --------------------
        MN                   [*]                          [*]
      ====================== =========================== ====================

     The progress of the SR resolution is continually updated in the CSDS
     database. Information concerning the SR is exchanged between the Technical
     Services representative and the customer until an acceptable solution is
     achieved.

12.  Avanex will provide support consistent with the Problem Classification
     Definitions as defined below. Target resolution date is from service report
     (SR) opened, not the date the PRS is referred to Avanex.

13.  Problem Classification:

     E1      Emergency Outage/System Fail

      - Resolution Objective             = [*]

      - Escalation                       = [*]

      - Updates to Nortel Networks       = [*]

      - Written report at point of closure to E3

     E2      Potential Traffic Degradation or Outage

      - Resolution Objective             = [*]

      - Escalation                       = [*]

      - Updates to Nortel Networks       = [*]

      - Written report at point of closure to E3

     E3      E1 Follow-up (Opened internally)

      - Target Resolution                = [*]

      - Updates to Nortel Networks       = [*]

                                                                          Page 4

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

<PAGE>

     E4   E2 Follow-up (Opened internally)

      - Target Resolution                        = [*]

      - Updates to Nortel Networks               = [*]

     MJ   Major-Serious Service Affecting Incident or Operational Impact

      - Immediate Objective                      = [*]

      - Escalation                               = [*]

      - Target Resolution                        = [*]

      - Updates to Nortel Networks               = [*]

     MN   Minor Non-Service Affecting Query or Service Request

      - Procedural Deficiencies

      - Documentation Flaws

      - Operational Product Improvement

14.  The following will be the PRIORITY LEVEL DEFINITIONS.

     E1   Emergency Outage/System Fail

      - System or Major System Inoperative

      - Major Loss of Service

      - (Escalation into Nortel Networks and customer management)

     E2   Potential Traffic Degradation or Outage

      - Potential/Partial Loss of Service

      - Management System Down/UnAvailable

      - Loss of Redundancy/Redundant System

     E3   E1 Follow-up (not raised by customer)

                                                                          Page 5

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

<PAGE>

      - An E3 is opened after closure of an E1

      - Root Cause Analysis (RCA) performed

     E4   E2 Follow-up (not raised by customer)

      - An E4 is opened after closure of an E2

      - Root Cause Analysis (RCA) performed

     MJ   Major-Serious Service Affecting Incident or Operational Impact

      - Traffic errors

      - Hardware or Software lockups/unusable

      - Any fault that prevents traffic from being put into service

     MN   Minor Operational Impact

      - Procedural Deficiencies

      - Documentation Flaws

      - Operational Product Improvement.

                                                                          Page 6

<PAGE>

                                    EXHIBIT I

                                       RUS

                              DEBARMENT CERTIFICATE

                                   S A M P L E

--------------------------------------------------------------------------------

CERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY AND VOLUNTARY
EXCLUSION - LOWER TIER COVERED TRANSACTIONS

--------------------------------------------------------------------------------

This certification is required by the regulations implementing Executive Order
12549, Debarment and Suspension, 7 CFR Part 3017, Section 3017.510,
Participants' responsibilities. The regulations were published as Part IV of the
January 30, 1989, Federal Register (pages 4722-4733).

(BEFORE COMPLETING CERTIFICATION, READ INSTRUCTIONS ON REVERSE)

(1)  The prospective lower tier participant certifies, by submission of this
     proposal, that neither it nor its principals is presently debarred,
     suspended, proposed for debarment, declared ineligible, or voluntarily
     excluded from participation in this transaction by any Federal department
     or agency.

(2)  Where the prospective lower tier participant is unable to certify to any of
     the statements in this certification, such prospective participant shall
     attach an explanation to this proposal.

--------------------------------------------------------------------------------
Organization Name                PR/Award Number or Project Name

--------------------------------------------------------------------------------
Name and Title of Authorized Representative

--------------------------------------------------------------------------------
Signature                        Date
--------------------------------------------------------------------------------

<PAGE>

Instructions For Certification

1.   By signing and submitting this form, the prospective lower tier participant
     is providing the certification set out on the reverse side in accordance
     with these instructions.

2.   The certification in this clause is a material representation of fact upon
     which reliance was placed when this transaction was entered into. If it is
     later determined that the prospective lower tier participant knowingly
     rendered an erroneous certification, in addition to other remedies
     available to the Federal Government, the department or agency with which
     this transaction originated may pursue available remedies, including
     suspension and/or debarment.

3.   The prospective lower tier participant shall provide immediate written
     notice to the person to which this proposal is submitted if at any time the
     prospective lower tier participant learns that its certification was
     erroneous when submitted or has become erroneous by reason of changed
     circumstances.

4.   The terms "covered transaction", "debarred", "suspended", "ineligible",
     "lower tier covered transaction", "participant", "person", "primary covered
     transaction", "principal", "proposal", and "voluntarily excluded", as used
     in this clause, have the meanings set out in the Definitions and Coverage
     sections of ruffles implementing Executive Order 12549. You may contact the
     person to which this proposal is submitted for assistance in obtaining a
     copy of those regulations.

5.   The prospective lower tier participant agrees by submitting this form that,
     should the proposed covered transaction be entered into, it shall not
     knowingly enter into any lower tier covered transaction with a person who
     is debarred, suspended, declared ineligible, or voluntarily excluded from
     participation in this covered transaction, unless authorized by the
     department or agency with which this transaction originated.

6.   The prospective lower tier participant further agrees by submitting this
     form that it will include this clause titled "Certification Regarding
     Debarment, Suspension, Ineligibility and Voluntary Exclusion - Lower Tier
     Covered Transactions", without modification, in all lower tier covered
     transactions and in all solicitations for lower tier covered transactions.

7.   A participant in a covered transaction may rely upon a certification of a
     prospective participant in a lower tier covered transaction that it is not
     debarred, suspended, ineligible, or voluntarily excluded from the covered
     transaction, unless it knows that the certification is erroneous. A
     participant may decide the method and frequency by which it determines the
     eligibility of its principals. Each participant may, but is not required
     to, check the Non-procurement List.

8.   Nothing contained in the foregoing shall be construed to require
     establishment of a system of records in order to render in good faith the
     certification required by this clause. The knowledge and information of a
     participant is not required to exceed that which is normally possessed by a
     prudent person in the ordinary course of business dealings.

9.   Except for transactions authorized under paragraph 5 of these instructions,
     if a participant in a covered transaction knowingly enters into a lower
     tier covered transaction with a person who is suspended, debarred,
     ineligible, or voluntarily excluded from participation in this transaction,
     in addition to other remedies available to the Federal Government, the
     department or agency with which this transaction originated may pursue
     available remedies, including suspension and/or debarment.

                                                                          Page 2

<PAGE>

                                    EXHIBIT J

                                MARKETING SUPPORT

Nortel Networks may, at its option, request Avanex to provide the following
marketing support at no cost:

1.   Avanex will assist Nortel Networks in providing point-by-point responses to
     RFQs (Request for Quotations) and RFIs (Request for Information) with
     respect to the Products.

2.   Avanex will review and provide feedback on promotional material.

3.   Avanex will make available a reasonable number of non-operational demo
     units, up to a maximum of six (6) units, which have the same "Look" as the
     final Products.

<PAGE>

                                    EXHIBIT K

                NORTH AMERICAN FREE TRADE AGREEMENT - PROCEDURES

1.1   Avanex shall perform all administrative actions required to qualify
      Products and maintain qualification for preferential treatment under the
      rules of any applicable trade treaty between Canada, USA and Mexico
      including, without limitation, the North American Free Trade Agreement
      ("NAFTA"). If a Product qualifies under NAFTA, Avanex shall prepare and
      distribute a NAFTA Exporter's Certificate of Origin according to Sections
      1.2 and 1.3 below, whichever applies, and any other documents required.
      Avanex shall respond to NAFTA Exporter's Certificate of Origin
      questionnaires and assist each Nortel Networks Company in resolving any
      Product eligibility issues. Any penalties and costs resulting from a NAFTA
      Exporter's Certificate of Origin subsequently being determined to be
      invalid shall be acquitted upon terms to be mutually agreed to by the
      Parties.

1.2   If a NAFTA Exporter's Certificate of Origin is prepared for each shipment,
      Avanex shall (a) retain the original NAFTA Exporter's Certificate of
      Origin in Avanex's files with appropriate backup documentation, (b) attach
      a copy of the Exporter's Certificate of Origin to the customs/shipping
      documents for the qualifying Product, and (c) mark these customs/shipping
      documents with the legend: "Copy of the NAFTA Exporter's Certificate of
      Origin attached."

1.3   If a blanket NAFTA Exporter's Certificate of Origin is prepared, Avanex
      shall: (a) retain the original NAFTA Exporter's Certificate of Origin in
      Avanex's files with appropriate backup documentation, (b) mark the
      customs/shipping documents for the qualifying Product with the legend:
      "Copy of blanket NAFTA Exporter's Certificate of Origin on file at Nortel
      Networks customs offices in Milton, Ontario (Canada) and in Tonawanda, NY
      (USA)," and (c) mail copies of the blanket NAFTA Exporter's Certificate of
      Origin to the following offices:

      Canada:                                               USA:
      Nortel Networks Corporation                           Nortel Networks Inc.
      Dept. 1560                                            77 Oriskany Drive
      901 Steeles Avenue                                    Tonawanda, NY, 14150
      Milton, Ontario, Canada L9T 4B6                       USA

<PAGE>

                                    EXHIBIT L

                                     NOTICES

AVANEX:             Avanex Corporation
                    40919 Encyclopedia Circle
                    Fremont, CA
                    94538

    U.S.A.
                    Attention: Jim Pickering, Vice President of Quality
    Facsimile No:   (510) 897-4189

NORTEL NETWORKS:    Nortel Networks Corporation
                    3500 Carling Avenue
                    Nepean, Ontario
                    Canada K2H 8E9
                    Attention: Senior Counsel, Supply Management &
                               Microelectronics
    Facsimile No:   (613) 763-1552

    and:            Nortel Networks Corporation
                    9300 Trans Canada Highway
                    St. Laurent, QC
                    Canada H4S 1K5

                    Attention: Director of Purchasing and Component Engineering
    Facsimile No:   (514) 818-3222.

<PAGE>

                                    EXHIBIT M

                          INITIAL AVANEX PRESS RELEASE

To be determined by the parties in good faith as soon as practicable after April
28, 2000.<PAGE>
<TABLE>
                                                                                                                         EXHIBIT 4.1

<S>                                                      <C>                                                  <C>

                                                              Overhill Farms, Inc.
                                              INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA

This certifies that                                                                                               CUSIP 690212 10 5

                                                                                                                 SEE REVERSE SIDE
                                                                                                             FOR CERTAIN DEFINITIONS

is the registered holder of

                       fully paid and non-assessable shares of the Common Stock, $0.01 par value per share, of

                                                             Overhill Farms, Inc.

transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.

This  certificate  is not valid unless  countersigned  by the Transfer Agent and
registered by the Registrar.

COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR

by ____________________________________

     IN WITNESS WHEREOF the said  Corporation has caused this  certificate to be
signed by its duly  aluthorized  officers and its Corporate  Seal to be hereunto
affixed.

               /s/ James Rudis                                                                                /s/ Richard A. Horvath
                  PRESIDENT                                                                                           SECRETARY

                                                     COUNTERSIGNED AND REGISTERED:
                                                     AMERICAN STOCK TRANSFER & TRUST COMPANY
                                                     TRANSFER AGENT AND REGISTRAR

                                                     by ________________________________________________

</TABLE>

<PAGE>

<TABLE>
<S>                                                                                     <C>

         The Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and
relative, participating, optional, or other special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Such requests shall be made to the Corporation's Secretary at the
principal office of the Corporation.

         KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, OR DESTROYED THE CORPORATION WILL REQUIRE A BOND FOR
INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.

         The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though
they were written out in full according to applicable laws or regulations:

         TEN COM  --  as tenants in common                          UNIF GIFT MIN ACT --  __________________Custodian _____________
         TEN ENT  --  as tenants by the entireties                                          (Cust.)                     (Minor)
         JT TEN   --  as joint tenants with right of                                      under Uniform Gifts to Minors
                      survivorship and not as tenants                                     Act______________________________________
                      in common                                                                      (State)

                                Additional abbreviations may also be used though not in the above list.

         FOR VALUE RECEIVED, ___________________________________- hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

----------------------------------------

----------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
                             (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------ Shares of

the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint

                                                               Attorney to transfer the said stock on the books of the within
------------------------------------------------------------
named Corporation with full power of substitution in the premises.

DATED _______________________

                                                                       X
                                                                        ------------------------------------------------------

In presence of

----------------------------
Siganture(s) Guaranteed By:

BY:  ________________________________________________

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17
Ad-15.

</TABLE>

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