VP Operations - Offer of Employment

EXHIBIT 10.18


October 8, 2002


Paul Negus

1709 Milton Street

Redwood City, CA 94061

OFFER OF EMPLOYMENT


Dear Paul:

I am pleased to offer you a position with Avanex (the " Company" ) as its Vice President, Operations. This is a full-time, regular, exempt position of considerable responsibility, integral to our continued business development and success. In this position you will be expected to devote your full business time, attention and energies to the performance of your duties with the Company.


The specifics of this offer are as follows:


Base Salary: You will be compensated at a bi-weekly rate of $7,500.00, paid every other Friday, in accordance with the Company' s normal payroll procedures. (This represents an equivalent annual rate of pay of $195,000.00). The first and last payment by the Company to you will be adjusted, if necessary, to reflect a commencement or termination date other than the first or last working day of a pay period.


Incentive Bonus: For fiscal year 2003, there is no formal incentive bonus program for senior executives. To the extent that any such bonuses are awarded for FY2003 and subsequent years, it will be at the discretion of the Board of Directors and you will be considered along with the other senior executive for any such discretionary bonuses based on the criteria established by the Board.


Stock Options: On your first day of employment, you will be granted a stock option under the Company' s 1998 Stock Plan (the " Plan" ) to purchase 250,000 shares of the Company' s Common Stock at an exercise price equal to the then current fair market value on the date of grant, as determined under the Plan (the " Option" ). The shares subject to the Option shall vest as follows:

1. 12/48 th of the shares subject to the Option shall vest twelve (12) months after the date of commencement of employment and 1/48 th of the shares subject to the Option shall vest monthly thereafter, so that the Option shall be fully vested and exercisable four (4) years from the date of commencement of employment, subject to your continued service to the Company on the relevant vesting dates. 2. If Avanex terminates your employment for any reason except good cause during the first twelve (12) months after your employment begins, your options will be treated as having vested beginning with the first full month of employment at the rate of 1/48 th per month, and ending on the day of your termination. For this purpose, " good cause" is defined as (1) any act of personal dishonesty taken by you in connection with your responsibilities as an employee and intended to result in your substantial personal enrichment, (2) your conviction of a felony that is injurious to Avanex, or (3) a willful act by you that constitutes gross misconduct and which is injurious to Avanex.

3. If you terminate your employment with Avanex for any reason during the first twelve (12) months after your employment begins, no shares subject to your Option will have vested and you will not be entitled to exercise any portion of the shares of your Option.

4. The acceleration of vesting and post-termination periods of exercisability of your Option will be substantially comparable to those that are contained in the standard form of option agreement generally applicable to Avanex' s other senior executives.

5. In all other respects, the Option shall be subject to the terms, definitions and provisions of the Plan and the stock option agreement by and between you and the Company, both of which documents are incor ...