Document:

Fourth Amendment to the Preferred Stock Rights Agreement

 Exhibit 4.2 
 FOURTH AMENDMENT 
 to the 
 PREFERRED STOCK RIGHTS AGREEMENT 
 between 
 AVANEX CORPORATION 
 and

 COMPUTERSHARE TRUST COMPANY, N.A. 
 formerly known as 
 EQUISERVE TRUST COMPANY, N.A. 
 This Fourth Amendment (the “Fourth Amendment”) to the Preferred Stock Rights Agreement is made and entered into as of March 6, 2006
between AVANEX CORPORATION, a Delaware corporation (the “Company”), and COMPUTERSHARE TRUST COMPANY, N.A., formerly known as EQUISERVE TRUST COMPANY, N.A., a national banking association, as Rights Agent (the “Rights Agent”).

 RECITALS 
 WHEREAS, the
Company and the Rights Agent entered into the Preferred Stock Rights Agreement dated as of July 26, 2001, as amended as of March 18, 2002, May 12, 2003 and May 16, 2005 (the “Rights Agreement”); 
 WHEREAS, Section 27 of the Rights Agreement provides that, prior to the Distribution Date (as defined in the Rights Agreement), the Company may
supplement or amend the Rights Agreement in any respect without the approval of any holders of Rights; 
 WHEREAS, the Company and certain
Investors of the Company (as defined below) intend to enter into a Securities Purchase Agreement (the “Purchase Agreement”) pursuant to which the Company will issue to the Investors Common Stock of the Company and warrants to purchase
Common Stock of the Company (the issuance of such Common Stock, and the issuance of Common Stock of the Company upon exercise of such warrants, are referred to hereafter as the “Securities Issuances”); 
 WHEREAS, on March 6, 2006, the Board of Directors of the Company resolved to amend the Rights Agreement, among other things, to render the Rights
inapplicable to the Securities Issuances and the other transactions contemplated by the Purchase Agreement; and 

 WHEREAS, the Company intends to modify the terms of the Rights Agreement in certain respects as set forth
herein, and in connection therewith, is entering into this Fourth Amendment and directing the Rights Agent to enter into this Fourth Amendment. 
 NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 
 1. Capitalized Terms. All capitalized, undefined terms used in this Fourth Amendment shall have the meanings assigned thereto in the Rights Agreement. 
 2. Amendment. Section 1(a) of the Rights Agreement is hereby amended by adding the following new paragraph to the end of Section 1(a):

 “Notwithstanding anything in this Agreement that might otherwise be deemed to the contrary, none of the investors of
the Company listed on Exhibit D attached hereto (the “Investors”), nor any of their Affiliates or Associates, shall be deemed to be an Acquiring Person solely by reason of (i) the approval, execution or delivery of, or the
consummation of the transactions contemplated by, (A) the Securities Purchase Agreement dated on or about March 6, 2006, by and among the Company and the Investors, including any amendment or supplement thereto (the “Purchase
Agreement”), or (B) the Transaction Documents (as defined in the Purchase Agreement); or (ii) the announcement or consummation of the Purchase Agreement or the Transaction Documents or the announcement or issuance of the Securities
(as defined in the Purchase Agreement).” 
 3. Effective Date. This Fourth Amendment shall become effective as of the date first
above written but such effectiveness is contingent upon (a) the execution of this Fourth Amendment by the Company and authorization by the Board of Directors of the Company approving the Fourth Amendment, and (b) the execution and delivery
of this Fourth Amendment by the Rights Agent. 
 4. Effect of Amendment. Except as expressly provided herein, the Rights Agreement
shall be and remain in full force and effect. 
 5. Governing Law. This Fourth Amendment shall be governed by, construed and enforced
in accordance with the laws of the State of Delaware without reference to the conflicts or choice of law principles thereof. 
 6.
Counterparts. This Fourth Amendment may be executed in separate counterparts, each of which when executed and delivered is an original but all of which taken together constitute one and the same instrument. 
 7. Fax Transmission. A facsimile, telecopy or other reproduction of this Fourth Amendment may be executed by one or more parties hereto, and an
executed copy of this Fourth Amendment may be delivered by one or more parties hereto by facsimile or similar instantaneous electronic transmission device pursuant to which the signature of or on behalf of 

  

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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
hereto, all parties hereto agree to execute an original of the Fourth Amendment as well as any facsimile, telecopy or other reproduction thereof. 
 8. Certification. The undersigned officer of the Company, being an appropriate officer of the Company and authorized to do so by resolution of the Board of Directors of the Company duly adopted and approved at a meeting held
March 6, 2006, hereby certifies to the Rights Agent that this amendment is in compliance with Section 27 of the Rights Agreement. 
  

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 IN WITNESS WHEREOF, the Company and the Rights Agent have caused this Fourth Amendment to be duly
executed as of the day first above written. 
  

			
	AVANEX CORPORATION
		
	By:	 	  
		
	Name:	 	________________________________________
		
	Title:	 	________________________________________
	
	 COMPUTERSHARE TRUST COMPANY,
N.A.
  
 formerly known as

	
	EQUISERVE TRUST COMPANY, N.A.,
	as Rights Agent
		
	By:	 	  
		
	Name:	 	________________________________________
		
	Title:	 	________________________________________

 EXHIBIT D 
 Investors 
 Fort Mason Master, LP 
 Fort Mason Partners, LP 
 Capital Ventures International 
 HBK Master Fund L.P. 
 Kings Road Investments Ltd. 
 Portside Growth and Opportunity Fund, Ltd. 
 SF Capital Partners Ltd. 
 GLG North American Opportunity Fund 
 GLG Capital Appreciation Fund

 GLG North American Equity Fund 
 GLG Technology Fund

 GLG European Opportunity FundSecurities Purchase Agreement, dated as of March 6, 2006

 Exhibit 10.1 
 SECURITIES PURCHASE AGREEMENT 
 SECURITIES PURCHASE AGREEMENT (the
“Agreement”), dated as of March 6, 2006, by and among Avanex Corporation, a Delaware corporation, with headquarters located at 40919 Encyclopedia Circle, Fremont, California 94538 (the “Company”), and the
investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”). 
 WHEREAS: 
 A. The Company and each Buyer desire to enter into this transaction to purchase the
Purchased Shares (as defined below) set forth herein pursuant to a currently effective shelf registration statement on Form S-3, which has at least $70,000,000 in unallocated securities registered thereunder (Registration Number 333-117443) (the
“Registration Statement”), which Registration Statement has been declared effective in accordance with the Securities Act of 1933, as amended (the “1933 Act”), by the United States Securities and Exchange Commission
(the “SEC”). 
 B. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in
this Agreement, (i) that aggregate number of shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”), set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which
aggregate amount for all Buyers together shall be 24,075,000 shares of Common Stock and shall collectively be referred to herein as the “Purchased Shares”) and (ii) a warrant representing the right to acquire initially up to
that number of additional shares of Common Stock set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers (which aggregate amount for all Buyers together shall be initially 7,222,500 shares of Common Stock and shall
collectively be referred to herein as the “Warrants”), in substantially the form attached hereto as Exhibit A (as exercised, collectively, the “Warrant Shares”). 
 C. The Purchased Shares, the Warrants and the Warrant Shares are collectively referred to herein as the “Securities”. 
 NOW, THEREFORE, the Company and each Buyer hereby agree as follows: 
 1. PURCHASE AND SALE OF PURCHASED SHARES AND WARRANTS. 
 (a) Purchase of Purchased
Shares and Warrants. 
 (i) Purchase. Subject to the satisfaction (or waiver) of the conditions set forth in
Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing Date (as defined below), (x) the number of Purchased Shares as is set forth
opposite such Buyer’s name in column (3) on the Schedule of Buyers and (y) Warrants to acquire up to that number of Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers, (the
“Closing”). 

 (ii) Closing. The date and time of the Closing (the “Closing
Date”) shall be 10:00 a.m., New York City Time, on March 9, 2006 (or such other date as is mutually agreed to by the Company and each Buyer) after notification of satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 6 and 7 below at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022. 
 (iii) Purchase Price. The aggregate purchase price for the Purchased Shares and the Warrants to be purchased by each Buyer at the Closing (the “Purchase Price”) shall be the amount set forth opposite such
Buyer’s name in column (5) of the Schedule of Buyers. 
 (b) Form of Payment. On the Closing Date,
(i) each Buyer shall pay its Purchase Price to the Company for the Purchased Shares and the Warrants to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Company’s
written wire instructions and (ii) the Company shall (A) cause EquiServe Trust Company, N.A., the Company’s transfer agent (the “Transfer Agent”) through the Depository Trust Company (“DTC”) Fast
Automated Securities Transfer Program, to credit such aggregate number of Purchased Shares that such Buyer is purchasing as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers to such Buyer’s or its
designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system and (B) deliver to such Buyer the Warrants (in the amounts as such Buyer shall request) such Buyer is purchasing, in each case duly executed on
behalf of the Company and registered in the name of such Buyer or its designee. 
 2. BUYER’S REPRESENTATIONS AND WARRANTIES.

 Each Buyer represents and warrants with respect to only itself that: 
 (a) Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) and otherwise to carry out its obligations hereunder and
thereunder. 
 (b) Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to
the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of
the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company’s
representations and warranties contained herein. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities. 
 (c) No Governmental Review. Such
Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made 

  

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any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon
or endorsed the merits of the offering of the Securities. 
 (d) Validity; Enforcement. This Agreement has been duly
and validly authorized by all necessary action on the part of such Buyer, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with
its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies. 
 (e) No Conflicts. The execution, delivery and performance by such
Buyer of this Agreement and the consummation by such Buyer of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder. 
 (f) Residency; Domicile. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers. The
investment advisor making the investment decisions for such Buyer is domiciled in that jurisdiction specified below its address on the Schedule of Buyers. 
 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 
 Except as otherwise set forth on
the schedules attached hereto, the Company represents and warrants to each of the Buyers that: 
 (a) Organization and
Qualification. The Company and its “Subsidiaries” (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest) are entities duly
organized and validly existing. The Company and its Significant Subsidiaries (as defined under Rule 1-02(w) of Regulation S-X) are in good standing under the laws of the jurisdiction in which they are formed. The Company and its Subsidiaries have
the requisite power and authorization to own their properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse
Effect. As used in this Agreement, “Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations or condition (financial or otherwise) of the 

  

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Company and its Subsidiaries, taken as a whole, or on the transactions contemplated hereby and by the other Transaction Documents or by the agreements and
instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents (as defined below). The Company has no Subsidiaries except as set forth on
Schedule 3(a). 
 (b) Authorization; Enforcement; Validity. The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement, the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), the Warrants, and each of the other agreements entered into by the parties hereto in connection
with the transactions contemplated by this Agreement (collectively, the “Transaction Documents”) and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by
the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Warrants and the reservation for issuance and the issuance of the Warrant Shares issuable upon
exercise of the Warrants, have been duly authorized by the Company’s Board of Directors (the “Board”) and no further filing, consent, or authorization is required by the Company, the Board or its stockholders. This Agreement
and the other Transaction Documents of even date herewith have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies. 
 (c) Issuance of Securities. The issuance of the Purchased Shares and the
Warrants are duly authorized and upon issuance of the Purchased Shares and Warrants in accordance with the terms of the Transaction Documents shall be free from all taxes, liens and charges with respect to the issue thereof. As of the Closing, a
number of shares of Common Stock shall have been duly authorized and reserved for issuance which equals 120% of the maximum number of shares of Common Stock issuable upon exercise of the Warrants. Upon exercise in accordance with the Warrants, the
Warrant Shares will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, and upon issuance of the Warrant Shares in accordance with the terms of the Transaction Documents shall be free from all taxes, liens
and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. The issuance by the Company of the Securities has been registered under the 1933 Act, the Securities are being issued
pursuant to the Registration Statement and all of the Securities are freely transferable and tradable by the Buyers without restriction. The Registration Statement is effective and available for the issuance of the Purchased Shares thereunder and
the Company has not received any notice that the SEC has issued or intends to issue a stop-order with respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened in writing to do so. The “Plan of Distribution” section under the Registration Statement permits the issuance and sale of the Securities hereunder. 
 (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions 

  

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contemplated hereby and thereby (including, without limitation, the issuance of the Purchased Shares and the Warrants and reservation for issuance and
issuance of the Warrant Shares) will not (i) result in a violation of the Certificate of Incorporation (as defined in Section 3(r)) of the Company, any capital stock of the Company or Bylaws (as defined in Section 3(r)) of the Company
or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, except to the extent such conflict, default or termination right would not reasonably be expected to have a Material Adverse Effect
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the Nasdaq National Market (the “Principal
Market”)) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected except to the extent such violation would not reasonably be expected to have a
Material Adverse Effect. 
 (e) Consents. Except as set forth on Schedule 3(e), the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof, other than (i) the filing with the SEC of the prospectus supplement required by the Registration Statement pursuant to Rule 424(b)
under the 1933 Act (the “Prospectus Supplement”) supplementing the base prospectus forming part of the Registration Statement (the “Prospectus”) and (ii) the application(s) to the Principal Market for the
listing of the Purchased Shares and the Warrant Shares for trading thereon in the time and manner required thereby. Other than the items in (i) and (ii), all consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date, and the Company and its Subsidiaries are unaware of any facts or circumstances which might prevent the Company from obtaining or
effecting any of the registration, application or filings pursuant to the preceding sentence. The Company is not in violation of the listing requirements of the Principal Market and has no knowledge of any facts which would reasonably lead to
delisting or suspension of the Common Stock in the foreseeable future. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency thereof. 
 (f) Acknowledgment Regarding
Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity of arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and
thereby and that no Buyer is (i) an officer or director of the Company, (ii) an “affiliate” of the Company (as defined in Rule 144 under the 1933 Act) or (iii) to the knowledge of the Company, a “beneficial owner”
of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a 

  

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Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely
incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and
its representatives. 
 (g) Placement Agent’s Fees. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other than, in each case, for persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby. The Company
shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim. The Company acknowledges that it has engaged
Banc of America Securities as placement agent (the “Agent”) in connection with the sale of the Securities. Other than the Agent, the Company has not engaged any placement agent or other agent in connection with the sale of the
Securities. 
 (h) No Integrated Offering. None of the Company, its Subsidiaries, any of their affiliates, and any
Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are
listed or designated. None of the Company, its Subsidiaries, their affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would cause the offering of the Securities to be integrated
with other offerings. 
 (i) Dilutive Effect. The Company understands and acknowledges that the number of Warrant
Shares issuable upon exercise of the Warrants will increase in certain circumstances. The Company further acknowledges that its obligation to issue the Warrant Shares upon exercise of the Warrants in accordance with this Agreement and the Warrants
is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company, subject to the provisions of the Transaction Documents and applicable law. 
 (j) Application of Takeover Protections; Rights Agreement. The Company and the Board have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) (the “Poison Pill Amendment”), or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the jurisdiction of its formation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance
of the Securities and any Buyer’s ownership of the Securities; provided that the Poison Pill Amendment is subject to execution by the Transfer Agent, as Rights Agent thereunder, in order to become effective. 
 (k) SEC Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has filed all reports,
schedules, forms, statements and other 

  

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documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof
and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered to the Buyers
or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system that has been requested by each Buyer. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates,
the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the
time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to
the Buyers which is not included in the SEC Documents, including, without limitation, information referred to in Section 2(e) of this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading. 
 (l) Absence of Certain Changes. Except as disclosed in Schedule 3(1) or in the SEC Documents listed in Schedule 3(1), since June 30, 2005, there has been no material adverse change and no material adverse
development in the business, properties, operations, condition (financial or otherwise), results of operations or prospects of the Company or its Subsidiaries. Except as disclosed in Schedule 3(1) or in the SEC Documents listed in Schedule
3(1), since June 30, 2005, the Company has not (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in excess of $100,000 outside of the ordinary course of business or (iii) had capital
expenditures, individually or in the aggregate, in excess of $100,000. The Company has not taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company is not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at
the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(1), “Insolvent” means (i) the present fair saleable value of the Company’s assets is less than the amount required to pay the
Company’s total indebtedness, (ii) the Company is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) the Company intends to incur or
believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) the Company has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is
proposed to be conducted. 
  

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 (m) No Undisclosed Events, Liabilities, Developments or Circumstances. Except as
set forth on Schedule 3(m), no event, liability, development or circumstance has occurred or exists, or is contemplated to occur with respect to the Company or its Subsidiaries or their respective business, properties, prospects, operations
or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly announced. 
 (n) Conduct of Business; Regulatory Permits. Neither the Company nor its
Subsidiaries is in violation of any term of or in default under its Certificate of Incorporation or Bylaws or their organizational charter or certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in
violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the
foregoing, except for possible violations which would not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or
requirements of the Principal Market and has no knowledge of any facts or circumstances which would reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. Since June 30, 2005,
(i) the Common Stock has been designated for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or
oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. 
 (o) Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or
other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. 
 (p) Sarbanes-Oxley Act. The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002
that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that 

  

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are effective as of the date hereof, except where such noncompliance would not have, individually or in the aggregate, a Material Adverse Effect. 

(q) Transactions With Affiliates. Except as set forth in the SEC Documents and other than the grant of stock options disclosed
on Schedule 3(r), none of the officers, directors or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries that would require disclosure pursuant to Item 404 of Regulation S-K
promulgated under the 1933 Act (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any such officer, director, or employee
has a substantial interest or is an officer, director, trustee or partner. 
 (r) Equity Capitalization. As of the date
hereof, the authorized capital stock of the Company consists of (i) 300,000,000 shares of Common Stock, of which 151,497,629 shares were issued and outstanding as of March 3, 2006, 14,632,611 shares were subject to outstanding options
granted pursuant to the Company’s stock option and purchase plans as of March 3, 2006, 20,133,527 shares were reserved for issuance pursuant to the Company’s stock option and purchase plans as of March 3, 2006 and 42,071,022
shares are reserved for issuance pursuant to securities (other than the Warrants) exercisable or exchangeable for, or convertible into, shares of Common Stock and (ii) 10,000,000 shares of preferred stock, $0.001 par value, of which as of the
date hereof, none are issued and outstanding. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Except as disclosed in the SEC Documents or on Schedule 3(r):
(i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any share capital of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional share capital of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any share capital of the Company or any of its
Subsidiaries; (ii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing indebtedness of the Company or any of its Subsidiaries or by which the Company or
any of its Subsidiaries is or may become bound; (iii) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company; (iv) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (v) there are no outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (vi) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (vii) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other than 

  

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those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do
not or would not have a Material Adverse Effect. Except as disclosed in Schedule 3(r): (i) none of the Company’s share capital is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or
permitted by the Company and (ii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities. The Company has furnished to the Buyer true, correct and complete
copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”), and the Company’s Bylaws, as amended and as in effect on the date hereof (the
“Bylaws”), and the terms of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto. 
 (s) Indebtedness and Other Contracts. Except as disclosed in Schedule 3(s), neither the Company nor any of its Subsidiaries
(i) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument would result in a Material Adverse Effect, (ii) is in violation of
any term of or in default under any contract, agreement or instrument relating to any indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iii) is a party
to any contract, agreement or instrument relating to any indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. 
 (t) Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any
court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company, the Common Stock or any of the Company’s Subsidiaries or any of the
Company’s or the Company’s Subsidiaries’ officers or directors in their capacities as such, that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. 
 (u) Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. 
 (v)
Employee Relations. (i) Except as set forth on Schedule 3(v), neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The Company and its Subsidiaries
believe that their relations with their employees are good. No executive officer of the Company (as defined in Rule 501(f) of the 1933 Act) has notified the Company that such officer intends to leave the Company or otherwise terminate such
officer’s employment with the Company. No executive officer of the Company, to the knowledge of the Company, is, or is now expected to be, in violation of any 

  

 10 

 
material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract
or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. 
 (ii) The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. 
 (w) Title. Except as set forth on Schedule 3(w), the Company and its Subsidiaries have good
and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries. Any real property and facilities
held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries. 
 (x) Intellectual Property Rights. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets
and other intellectual property rights (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted, except where the failure to so own or possess would not reasonably be expected to result in a
Material Adverse Effect. Except as set forth in Schedule 3(x), which expirations or terminations would not reasonably be expected to result in a Material Adverse Effect, none of the Company’s Intellectual Property Rights have expired or
terminated, or are expected to expire or terminate, within three years from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of others. There
is no claim, action or proceeding being made or brought, or to the knowledge of the Company, being threatened, against the Company or its Subsidiaries regarding its Intellectual Property Rights. The Company is unaware of any facts or circumstances
which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual
properties. 
 (y) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with any and all
Environmental Laws (as hereinafter defined), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The
term “Environmental Laws” means all federal, state, local or 

  

 11 

 
foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively,
“Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes,
decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder. 
 (z) Subsidiary Rights. Except as set forth in Schedule 3(z), the Company or one of its Subsidiaries has the unrestricted
right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary. 
 (aa) Tax Status. The Company and each of its Subsidiaries (i) has made or filed all foreign, federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. 
 (bb) Internal Accounting Controls. Except as set forth in the SEC Documents, the Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with
management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any
differences. 
 (cc) U.S. Real Property Holding Corporation. The Company is not, nor has ever been, a U.S. real
property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Buyer’s request. 
 (dd) Alcatel/Corning Stockholders’ Agreement. Pursuant to Section 2.2 of the Stockholders’ Agreement between the
Company, Alcatel and Corning Incorporated, dated as of July 31, 2003, (i) so long as Alcatel owns (together with its affiliates) 5% or more of the outstanding Common Stock, Alcatel is required to take such action (and shall cause its
affiliates that beneficially own Common Stock to take such action) as may be required so that all Common Stock beneficially owned by Alcatel (or any such affiliate of Alcatel) from time to time are voted 

  

 12 

 
on all matters to be voted by holders of Common Stock in the manner as recommended by a majority of the Board (subject to an exception for any Avanex
Transaction Proposal (as defined in such Stockholders’ Agreement) between the Company and any competitor of Alcatel listed on Schedule I of such Stockholders’ Agreement) and (ii) so long as Corning Incorporated owns (together with its
affiliates) 5% or more of the outstanding Common Stock, Corning Incorporated is required to take such action (and shall cause its affiliates that beneficially own Common Stock to take such action) as may be required so that all Common Stock
beneficially owned by Corning Incorporated (or any such affiliate of Corning Incorporated) from time to time are voted on all matters to be voted by holders of Common Stock in the manner as recommended by a majority of the Board. 
 (ee) Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) other than the Agent, sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) other than the Agent, paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company.

 (ff) Disclosure. The Company confirms that neither it nor, to its knowledge, any other Person acting on its behalf
has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information. The Company understands and confirms that each of the Buyers will rely on
the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each press release issued by the Company during the twelve (12) months preceding the date of this Agreement which contained results of operations or financial condition information of the Company for
a completed quarterly or annual fiscal period was, at the time of release, accurate in all material respects. 
 4. COVENANTS.

 (a) Best Efforts. Each party shall use its best efforts timely to satisfy each of the conditions to be satisfied by
it as provided in Sections 6 and 7 of this Agreement. 
 (b) Prospectus Supplement and Blue Sky. On or before the
execution of this Agreement, the Company shall have delivered, and as soon as practicable after the Closing the Company shall file, the Prospectus Supplement with respect to the Purchased Shares as required under and in conformity with the 1933 Act,
including Rule 424(b) thereunder. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to the Buyers at
the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date. The 

  

 13 

 
Company shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or “Blue Sky” laws
of the states of the United States following the Closing Date. 
 (c) Reporting Status. Until the date on which the
Buyers shall have sold all the Warrant Shares and none of the Warrants is outstanding (the “Reporting Period”), the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act in the time frames
required by and in compliance with the 1934 Act, the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would otherwise permit such
termination. 
 (d) Use of Proceeds. The Company will use the proceeds from the sale of the Securities for working
capital and general corporate purposes. 
 (e) Listing. The Company shall promptly secure the listing of all of the
Purchased Shares and Warrant Shares upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed (subject to official notice of issuance) and shall maintain such listing of all Warrant
Shares from time to time issuable under the terms of the Transaction Documents. The Company shall use its best efforts to maintain the Common Stocks’ authorization for quotation on the Principal Market. Neither the Company nor any of its
Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations
under this Section 4(f). 
 (f) Fees. Subject to Section 8 below, at the Closing, the Company shall reimburse
HBK Master Fund L.P. (a Buyer) for its reasonable expenses incurred in connection with this Agreement and the Transaction Documents, including, without limitation, reasonable legal fees and expenses, up to a maximum of $50,000, which amount shall be
withheld by such Buyer from its Purchase Price at the Closing. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or broker’s commissions (other than for Persons engaged by any Buyer)
relating to or arising out of the transactions contemplated hereby, including, without limitation, any fees or commissions payable to the Agent. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear
its own expenses in connection with the sale of the Securities to the Buyers. 
 (g) Pledge of Securities. The Company
acknowledges and agrees that the Securities may be pledged by a Purchaser in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or
any other Transaction Document; provided that an Investor and its pledgee shall be required to comply with the provisions of the 1933 Act in order to effect a sale, transfer or assignment of 

  

 14 

 
Securities to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by an Investor. 
 (h) Disclosure of Transactions and Other
Material Information. On or before 8:30 a.m., New York time, on March 7, 2006, the Company shall issue a press release reasonably acceptable to the Buyers disclosing all material terms of the transactions contemplated hereby. On or before
8:30 a.m., New York Time, on the second Business Day following the date of this Agreement, the Company shall file a Current Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by
the 1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement (and all schedules to this Agreement) and the form of Warrant) (including all attachments, the “8-K Filing”). From and
after the filing of the 8-K Filing with the SEC, no Buyer shall be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or any of its respective officers, directors, employees or agents, that is not
disclosed in the 8-K Filing. The Company shall not disclose the identity of any Buyer in any filing with the SEC except as required by the rules and regulations of the SEC thereunder. The Company shall not, and shall cause each of its Subsidiaries
and its and each of their respective officers, directors, employees and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the filing of the 8-K Filing with the
SEC without the express written consent of such Buyer. In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents, in addition to any other
remedy provided herein or in the Transaction Documents, a Buyer shall notify the Company, and if the Company does not make public disclosure of such material nonpublic information within twenty four (24) hours of such notification, such Buyer
shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, nonpublic information without the prior approval by the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees or agents. No Buyer shall have any liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents for any such disclosure. Subject to the
foregoing, neither the Company nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release). 
 (i) Dilutive Issuances. For long as any Warrants remain outstanding, the Company shall not, in any manner, enter into or affect any
Dilutive Issuance (as defined in the Warrants) if the effect of such Dilutive Issuance is to cause the Company to be required to issue upon exercise of any Warrant any shares of Common Stock in excess of that number of shares of Common Stock which
the Company may issue upon exercise of the Warrants without breaching the Company’s obligations under the rules or regulations of the Eligible Market (as defined in the Warrants). Until the Stockholder Approval has been obtained, the Company
shall not, in any manner, enter into or affect any Dilutive Issuance if the effect of such Dilutive Issuance would, 

  

 15 

 
but for the application of the Exercise Floor Price (as defined in the Warrant) cause the Exercise Price (as defined in the Warrant) to be reduced below the
Exercise Floor Price. 
 (j) Corporate Existence. So long as any Buyer beneficially owns any Securities, the Company
shall not be party to any Fundamental Transaction (as defined in the Warrants) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Warrants. 
 (k) Reservation of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the
purpose of issuance, after the Closing Date, 120% of the number of shares of Common Stock issuable upon exercise of the Warrants. 
 (l) Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any governmental entity, except where such violations would not result, either
individually or in the aggregate, in a Material Adverse Effect. 
 (m) Additional Issuances of Securities. 

(i) For purposes of this Section 4(m), the following definitions shall apply. 
 (1) “Convertible Securities” means any stock or securities (other than Options) convertible into or exercisable or
exchangeable for shares of Common Stock. 
 (2) “Options” means any rights, warrants or options to subscribe
for or purchase shares of Common Stock or Convertible Securities. 
 (3) “Common Stock Equivalents” means,
collectively, Options and Convertible Securities. 
 (ii) From the date hereof until the date that is 30 Business Days
following the date hereof, other than in connection with the issuance of any Excluded Securities (as defined in the Warrants), the Company will not, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or
announce any offer, sale, grant or any option to purchase or other disposition of) any of its or its Subsidiaries’ equity or equity equivalent securities, including without limitation any debt, preferred stock or other instrument or security
that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant, disposition or announcement being referred to as a
“Subsequent Placement”). 
 (n) Stockholder Approval. The Company shall provide each stockholder
entitled to vote at a special or annual meeting of shareholders of the Company (the “Stockholder Meeting”), which initially shall be promptly called and held not later than October 15, 2006 (the “Stockholder Meeting
Deadline”), a proxy statement, substantially in the form which has been previously reviewed by the Buyers and a counsel of their choice at the expense of the Company, soliciting each such stockholder’s affirmative vote at the
Stockholder Meeting for approval of 

  

 16 

 
resolutions (the “Resolutions”) providing for the Company’s issuance of all of the Securities as described in the Transaction Documents
in accordance with applicable law and the rules and regulations of the Principal Market (such affirmative approval being referred to herein as the “Stockholder Approval” and the date such approval is obtained, the
“Stockholder Approval Date”), and the Company shall use its reasonable best efforts to solicit its stockholders’ approval of the Resolutions and to cause the Board to recommend to the stockholders that they approve the
Resolutions. The Company shall be obligated to seek to obtain the Stockholder Approval by the Stockholder Meeting Deadline. If, despite the Company’s reasonable best efforts the Stockholder Approval is not obtained on or prior to the
Stockholder Meeting Deadline, the Company shall cause an additional Stockholder Meeting to be held each twelve month period thereafter until such Stockholder Approval is obtained, provided that if the Board does not recommend to the stockholders
that they approve the Resolutions at any such Stockholder Meeting and the Stockholder Approval is not obtained the Company shall cause an additional Stockholder Meeting to be held each calendar quarter thereafter until such Stockholder Approval is
obtained. 
 5. REGISTER; TRANSFER AGENT INSTRUCTIONS. 
 (a) Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it
may designate by notice to each holder of Securities), a register for the Warrants in which the Company shall record the name and address of the Person in whose name the Warrants have been issued (including the name and address of each transferee)
and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.

 (b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Transfer Agent, and any
subsequent transfer agent, to issue certificates or credit shares to the applicable balance accounts at DTC, registered in the name of each Buyer or its respective nominee(s), for the Warrant Shares in such amounts as specified from time to time by
each Buyer to the Company upon exercise of the Warrants in the form of Exhibit B attached hereto (the “Irrevocable Transfer Agent Instructions”). The Company represents and warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5 will be given by the Company to the Transfer Agent, and any subsequent transfer agent with respect to the Securities, and that the Securities shall otherwise be freely
transferable on the books and records of the Company as and to the extent provided in this Agreement and the other Transaction Documents. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a
Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this
Section 5, that a Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required. 
  

 17 

 6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. 
 Closing Date. The obligation of the Company hereunder to issue and sell the Purchased Shares and the related Warrants to each Buyer
at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole
discretion by providing each Buyer with prior written notice thereof: 
 (i) Such Buyer shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the Company. 
 (ii) Such Buyer and each other Buyer
shall have delivered to the Company the Purchase Price (less, in the case of HBK Master Fund L.P., the amounts withheld pursuant to Section 4(g)) for the Purchased Shares and the related Warrants being purchased by such Buyer at the Closing by
wire transfer of immediately available funds pursuant to the wire instructions provided by the Company. 
 (iii) The
representations and warranties of such Buyer shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all
respects) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and such Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date. 
 7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE. 
 Closing Date. The obligation of each Buyer hereunder to purchase the Purchased Shares and the related Warrants at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing
the Company with prior written notice thereof: 
 (i) The Company shall have (A) executed and delivered to such Buyer
each of the Transaction Documents, (B) electronically delivered the Purchased Shares being purchased by such Buyer at the Closing pursuant to this Agreement, and (C) executed and delivered the Warrants (in such amounts as such Buyer shall
request) being purchased by such Buyer at the Closing pursuant to this Agreement. 
 (ii) Such Buyer shall have received the
opinions of Wilson Sonsini Goodrich & Rosati, Professional Corporation, the Company’s outside counsel, dated as of the Closing Date, in form reasonably acceptable to the Buyers. 
 (iii) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form of
Exhibit B attached hereto, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent. 
  

 18 

 (iv) The Company shall have delivered to such Buyer a certificate evidencing the
formation and good standing of the Company and each of its Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within 10 days of the Closing Date.

 (v) The Company shall have delivered to such Buyer a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business, as of a date within 10 days of the Closing Date. 
 (vi) The Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation as certified by the Secretary of
State of the State of Delaware within ten (10) days of the Closing Date. 
 (vii) The Company shall have delivered to
such Buyer a certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Board in a form reasonably acceptable to such Buyer,
(ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the form attached hereto as Exhibit C. 
 (viii) The representations and warranties of the Company shall be true and correct in all material respects (except for those
representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as
may be reasonably requested by such Buyer in the form attached hereto as Exhibit D. 
 (ix) The Company shall have
delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding as of a date within five days of the Closing Date. 
 (x) The Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not have been suspended,
as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the SEC or the
Principal Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market. 
 (xi)
The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities, including, without limitation, any approvals or notifications required by the Principal Market.

  

 19 

 (xii) The Poison Pill Amendment shall have been executed by the Transfer Agent, as Rights
Agent thereunder, and shall be in full force and effect. 
 (xiii) The Principal Market shall not have raised any objections
requiring any material amendment, in the discretion of the Buyers, to any of the Transaction Documents. 
 (xiv) The Company
shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request. 
 8. TERMINATION. In the event that the Closing shall not have occurred with respect to a Buyer on or before three (3) Business Days from the date hereof due to the Company’s or such Buyer’s
failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching party’s failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such
breaching party at the close of business on such date without liability of any party to any other party; provided, however, this if this Agreement is terminated pursuant to this Section 8, the Company shall remain obligated to
reimburse the non-breaching Buyers for the expenses described in Section 4(g) above. 
 9. MISCELLANEOUS. 
 (a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of
this Agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Delaware, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR
THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.  
 (b) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon 

  

 20 

 
the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. 
 (c) Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. 
 (d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in
any other jurisdiction. 
 (e) Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written
agreements between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision
of this Agreement may be amended other than by an instrument in writing signed by the Company and the holders of at least a majority of the Purchased Shares (the “Required Holders”), and any amendment to this Agreement made in
conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement
is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the applicable Securities then outstanding. No consideration shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents or holders of the Warrants, as the case may be. The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. 
 (f) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such
communications shall be: 
 If to the Company: 
 Avanex Corporation 
 409l9 Encyclopedia Circle 
 Fremont, California 94538 
 Telephone:     (510) 897-4188 
 Facsimile:       (510) 897-4189 
 Attention:       General Counsel 
  

 21 

 Copy to: 
 Wilson, Sonsini, Goodrich & Rosati, P.C. 
 650 Page Mill Road 
 Palo Alto, CA 94304 
 Telephone:     (650) 493-9300 
 Facsimile:       (650) 493-6811 
 Attention:       Daniel J. Weiser, Esq. 
                         Burke F. Norton, Esq. 
 If to the Transfer Agent: 
 EquiServe Trust Company, N.A. 
 250 Royall Street 
 Canton, MA 02021 
 Telephone:     (781) 575-3452 
 Facsimile:
     (781) 575-2152 
 Attention:       Greg Veliotis 

If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule
of Buyers, 
 with a copy (for informational purposes only) to: 
 Schulte Roth & Zabel LLP 
 919 Third Avenue 
 New York, New York 10022 
 Telephone:     (212) 756-2000 
 Facsimile:      (212) 593-5955 
 Attention:       Eleazer N. Klein, Esq. 
 or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing
the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above, respectively. 
 (g) Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Warrants. The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Required Holders, including by way of a Fundamental Transaction (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Warrants). A
Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights. 
  

 22 

 (h) No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. 
 (i) Survival. Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the
Buyers contained in Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive the Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

 (j) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby. 
 (k) Indemnification. (i) In consideration of each
Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and
hold harmless each Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the
Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and
arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status of such Buyer or holder of the Securities
as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. 
 (ii)
Promptly after receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including any governmental action or 

  

 23 

 
proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim for indemnification in respect thereof is to be made against any
indemnifying party under this Section 9(k), deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnitee; provided, however, that an Indemnitee shall have the right to
retain its own counsel with the fees and expenses of not more than one counsel for such Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion of the Indemnitee, the representation by such counsel of the Indemnitee and the
indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceeding. Legal counsel referred to in the immediately preceding sentence
shall be selected by the Investors holding at least a majority of the Purchased Shares. The Indemnitee shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Indemnified Liabilities by
the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnitee that relates to such action or Indemnified Liabilities. The indemnifying party shall keep the Indemnitee fully apprised at all
times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however,
that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such Indemnified Liabilities or litigation. Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver
written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnitee under this Section 9(k), except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. 
 (iii) The indemnification required by this
Section 9(k) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills become due or Indemnified Liabilities become due. 
 (iv) The indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of the Indemnitee
against the indemnifying party or others, and (y) any liabilities the indemnifying party may be subject to pursuant to the law. 
 (l) No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

  

 24 

 (m) Remedies. Each Buyer and each holder of the Securities shall have all rights
and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any
rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other
rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the
Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security. 
 (n) Payment Set Aside. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the
other Transaction Documents or the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy
law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not occurred. 
 (o) Independent Nature of Buyers’
Obligations and Rights. The obligations of each Buyer under any Transaction Document are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any
other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Buyers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Buyer confirms
that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. 
 [Signature Page Follows] 
  

 25 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	COMPANY:
	
	AVANEX CORPORATION
		
	 By:
	 	  
		 	 Name:
 Title:

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYERS:
	
	HBK MASTER FUND L.P.
		
	 By:
	 	  
		 	 Name:
 Title:

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYERS:
	
	FORT MASON MASTER, LP
		
	 By:
	 	  
		 	 Name:
 Title:

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYERS:
	
	FORT MASON PARTNERS, LP
		
	 By:
	 	  
		 	 Name:
 Title:

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYERS:
	
	CAPITAL VENTURES INTERNATIONAL
		
	 By:
	 	  
		 	 Name:
 Title:

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	KINGS ROAD INVESTMENTS LTD.
		
	 By:
	 	  
		 	 Name:
 Title:

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYERS:
	
	PORTSIDE GROWTH AND OPPORTUNITY FUND
		
	 By:
	 	  
		 	 Name:
 Title:

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYERS:
	
	SF CAPITAL PARTNERS LTD.
		
	 By:
	 	  
		 	 Name:
 Title:

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYERS:
	
	GLG NORTH AMERICAN OPPORTUNITY FUND
		
	 By:
	 	  
		 	 Name:

		 	 Title:

  

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYERS:
	
	GLG TECHNOLOGY FUND
		
	 By:
	 	  
		 	 Name:

		 	 Title:

  

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYERS:
	
	GLG EUROPEAN OPPORTUNITY FUND
		
	 By:
	 	  
		 	 Name:

		 	 Title:

  

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYERS:
	
	GLG CAPITAL APPRECIATION FUND
		
	 By:
	 	  
		 	 Name:

		 	 Title:

  

 [Signature Page to Securities Purchase Agreement] 

 IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYERS:
	
	GLG NORTH AMERICAN EQUITY FUND
		
	 By:
	 	  
		 	 Name:

		 	 Title:

  

 [Signature Page to Securities Purchase Agreement] 

 SCHEDULE OF BUYERS 
  

												
	(1)	  	(2)	  	(3)	  	(4)	  	(5)	  	(6)
	 Buyer
	  	 Address and
 Facsimile Number
	  	Number of
Purchased
Shares	  	 Number of
 Warrant
Shares
	  	Purchase Price	  	 Legal Representative’s Address
and
Facsimile Number

	HBK Master Fund L.P.	  	 c/o HBK Investments L.P.
 300 Crescent Court, Suite
700
 Dallas, TX 75201
 Attn: Legal (PP)
 Telephone: 214-758-6107
 Facsimile: 214-758-1207
 Residence: Cayman Islands
	  	7,500,000	  	2,250,000	  	$	15,000,000.00	  	 Schulte Roth & Zabel LLP
 919 Third Avenue

New York, New York 10022
 Attention: Eleazer Klein, Esq.
 Facsimile: (212) 593-5955
 Telephone: (212) 756-2376

						
	Fort Mason Master, LP	  	 c/o Fort Mason Capital, LLC
 456 Montgomery
Street
 22nd Floor
 San Francisco, CA 94104
 Attn: Marshall Jensen and
     KC Lynch
 Telephone 415-249-3380
 Facsimile 415-249-3389
 Residence: Cayman Islands
	  	2,347,750	  	704,325	  	$	4,695,500.00	  	
						
	Fort Mason Partners, LP	  	 c/o Fort Mason Capital, LLC
 456 Montgomery
Street
 22nd Floor
 San Francisco, CA 94104
 Attn: Marshall Jensen and
     KC Lynch
 Telephone 415-249-3380
 Facsimile 415-249-3389
 Residence: Delaware
	  	152,250	  	45,675	  	$	304,500.00	  	
						
	Capital Ventures International	  	 c/o Heights Capital Management
 101 California

Suite 3250
 San Francisco, CA 94111
 Attn: Sam Winer and Martin Kobinger
 Telephone: 415-403-6500
 Facsimile: 415-403-6525
 Residence: Cayman Islands
	  	2,000,000	  	600,000	  	$	4,000,000.00	  	
						
	Kings Road Investments Ltd.	  	 c/o Polygon Investment Partners LP
 598 Madison
Avenue
 New York, NY 10128
 Attn: Erik Caspersen and Brandon
Jones
 Telephone: (212) 359-7304
 Facsimile: (212)
359-7303
 Residence: Cayman Islands
	  	4,000,000	  	1,200,000	  	$	8,000,000.00	  	

												
						
	Portside Growth and Opportunity Fund	  	 c/o Ramius Capital Group LLC
 666 Third Avenue, 26th
Floor
 New York, NY 10017
 Attn: Jeffrey Smith
 Owen Littman
 Telephone: 212-845-7955
 Facsimile: 212-845-7999
 Residence: Cayman Islands
	  	3,600,000	  	1,080,000	  	$	7,200,000.00	  	
						
	SF Capital Partners Ltd.	  	 c/o Stark Offshore Management, LLC
 3600 South Lake
Drive
 St. Francis, WI 53235
 Attn: Brian Davidson
 Telephone: (414) 294-7000
 Facsimile: (414) 294-7700
 Residence: British Virgin Islands
	  	2,250,000	  	675,000	  	$	4,500,000.00	  	
						
	GLG North American Opportunity Fund	  	 Walker House
 PO Box 908 GT
 George Town, Grand Cayman Caymand Islands
 Residence: Cayman
Islands
  
 with copy to:
  
 GLG Partners LP
 One Curzon Street
 London W1J 5HB
 Attn: Tim
Kuschill
 Telephone: 020 7016 7439
 Facsimile: 020 7408
4379
	  	921,500	  	276,450	  	$	1,843,000.00	  	
						
	GLG Technology Fund	  	 c/o Mastack Trust Limited
 30 Herbert Street

Dublin 2, Ireland
 Residence: Cayman Islands
  
 with copy to:
  
 GLG Partners LP
 One Curzon Street
 London W1J 5HB
 Attn: Tim Kuschill
 Telephone: 020 7016 7439
 Facsimile: 020 7408 4379
	  	315,000	  	94,500	  	$	630,000.00	  	
						
	GLG European Opportunity Fund	  	 c/o Mastack Trust Limited
 30 Herbert Street

Dublin 2, Ireland
 Residence: Cayman Islands
  
 with copy to:
  
 GLG Partners LP
 One Curzon Street
 London W1J 5HB
 Attn: Tim Kuschill
 Telephone: 020 7016 7439
 Facsimile: 020 7408 4379
	  	48,500	  	14,550	  	$	97,000.00	  	

												
						
	GLG Capital Appreciation Fund	  	 c/o Mastack Trust Limited
 30 Herbert Street

Dublin 2, Ireland
 Residence: Ireland
  
 with copy to:
  
 GLG Partners LP
 One Curzon Street
 London W1J 5HB
 Attn: Tim Kuschill
 Telephone: 020 7016 7439
 Facsimile: 020 7408 4379
	  	550,000	  	165,000	  	$	1,100,000.00	  	
						
	GLG North American Equity Fund	  	 c/o Mastack Trust Limited
 30 Herbert Street

Dublin 2, Ireland
 Residence: Ireland
  
 with copy to:
  
 GLG Partners LP
 One Curzon Street
 London W1J 5HB
 Attn: Tim Kuschill
 Telephone: 020 7016 7439
 Facsimile: 020 7408 4379
	  	390,000	  	117,000	  	$	780,000.00	  	
						
		  		  		  		  			  	
						
		  	TOTAL	  	24,075,000	  	7,222,500	  	$	48,150,00.00

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