Master Equipment Lease Agreement

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FINANCIAL INNOVATORS



FINOVA Capital Corporation

10 Waterside Drive

Farmington, Connecticut 06032-3065

(860) 676-1818







MASTER LEASE No. S7280, dated June 2, 1999



FINOVA Capital Corporation ("we", "us" or "FINOVA") agrees to lease to Avanex Corporation ("you" or "Lessee") and you agree to lease from us, the Equipment described in any schedule to this Lease (a "Schedule"). The Equipment also includes any replacement parts, repairs, additions and accessories that you may add to the Equipment. We may treat any Schedule as a separate lease containing all of the provisions of this Lease.



1. PURCHASING AND INSTALLING THE EQUIPMENT



We will purchase the Equipment from the Supplier you chose. The Supplier

will deliver the Equipment to you at your expense. You will properly

install the Equipment at your expense at the location(s) indicated in the



2. TERM



- The Term of each Schedule begins when any of the Equipment on that

Schedule is delivered to you, or a later date that we agree to in



- The Term continues until you fully perform in all material respects

all of your obligations under this Lease and the Schedule.



- If the Equipment is not delivered, installed and accepted by you by

the date indicated in the Schedule, we may terminate this Lease and

the Schedule as to the Equipment that was not delivered, installed

and accepted by giving you 10 days written notice of termination.



- Before we make any progress payment or final payment for the

Equipment on any Schedule, we require the following:



- That no payment is past due to us under any lease, loan or other

financial arrangement that you or any guarantor have with us.



- That you are complying in all material respects with all the terms

of this Lease.



- That we have received all the documents we requested, including the

signed Schedule and Delivery and Acceptance Certificate.



- That there has been no material adverse change in your financial

condition, business, operations or prospects, or that of any

guarantor, from the condition that you disclosed to us in your

application for credit.



3. RENT



- The rent is indicated on the Schedule. The rent is payable

periodically in advance from time to time (for example, monthly).

You agree that you owe us the total of all of these rent payments

over the Term of the Schedule.



- The first rent payment is due at the beginning of the Term or at a

later date that we agree to in writing. Subsequent rent payments are

due on the same day of each successive period until you pay us in

full all of the rent and any other charges or expenses you owe us.



- If the first rent payment is due later than the beginning of the

Term, you will also pay us interim rent on the first rent payment

date. The interim rent will be for the period from the beginning of

the Term until the date that the first rent payment is due. Interim

rent will be calculated at the same rate as the regular rent

payment, but on a daily basis for the number of days for which

interim rent is due.



- YOUR OBLIGATION TO PAY US ALL RENT IS ABSOLUTE AND UNCONDITIONAL.

YOU ARE NOT EXCUSED FROM PAYING THE RENT, IN





FULL, FOR ANY REASON. YOU AGREE THAT YOU HAVE NO DEFENSE FOR FAILURE

TO PAY THE RENT AND YOU WILL NOT MAKE ANY COUNTERCLAIMS OR SETOFFS

TO AVOID PAYING THE RENT.



4. NON-CANCELABLE LEASE. YOU AGREE THAT YOU MAY NOT CANCEL OR TERMINATE

THIS LEASE OR ANY SCHEDULE.



5. PROTECTION OF OUR INTEREST IN THE EQUIPMENT; FEES.



- The Equipment is our property. It will remain our property. You will

not own the Equipment unless the Schedule gives you an option to

purchase the Equipment and you have exercised that option and paid

us in full for the Equipment and any other amounts you may owe us.

If we request, you will put labels supplied by us stating "PROPERTY

OF FINOVA" on the Equipment where they are clearly visible.



- You give us permission to add to this Lease or any Schedule the

serial numbers and other information about the Equipment.



- While this Lease is intended to be a lease (and not a loan), you

grant us a security interest in the Equipment to protect our

interest in the Equipment if this Lease is later determined to be a

security agreement. You give us permission to file this Lease or a

Uniform Commercial Code financing statement, at your expense, in

order to perfect this security interest. You also give us permission

to sign your name on the Uniform Commercial Code financing

statements where this is permitted by law.



- You will pay our cost to do searches for other filings or judgments

against you or your affiliates. You will also pay any filing,

recording or stamp fees or taxes resulting from filing this Lease or

a Uniform Commercial Code financing statement. You will also pay our

fees in effect from time to time for documentation, administration

and Termination of this Lease.



- At your expense, you will defend our ownership rights in the

Equipment against, and keep the Equipment free of, any legal

process, liens, security interests, attachments, levies and

executions. You will give us immediate written notice of any legal

process, liens, attachments, levies or executions, and you will

indemnify us against any loss that results to us from these causes.



- You will notify us at least 15 days before you change the address of

your principal executive office.



- You will promptly sign and return additional documents that we may

request in order to protect our interest in the Equipment.



- The Equipment is personal property and will remain personal

property. You will not incorporate it into real estate and will not

do anything that will cause the Equipment to become part of real

estate or a fixture.



6. CARE, USE, LOCATION AND ALTERATION OF THE EQUIPMENT



- You will make sure that the Equipment is maintained in good

operating condition, and that it is serviced, repaired and

overhauled when this is necessary to keep the Equipment in good

operating condition. All maintenance must be done according to the

Supplier's or Manufacturer's requirements or recommendations. All

maintenance must also comply with any legal or regulatory



- You will maintain service logs for the Equipment, if applicable, and

permit us to inspect the Equipment, the service logs and service

reports. You give us permission to make copies of the service logs

and service reports.



- We will give you prior notice if we, or our agent, want to inspect

the Equipment or the service logs or service reports. We may inspect

it during regular business hours. If we find during an inspection

that you are not complying with this Lease, you will pay our travel,

meals and lodging costs, our salary costs, and the costs and fees of

our agents for reinspection. You will promptly cure any problems

with the Equipment that are discovered during our inspection.



- You will use the Equipment only for business purposes. You will obey

all legal and regulatory requirements in your use of the Equipment.











- You will make all additions, modifications and improvements to the

Equipment that are required by law or government regulation.

Otherwise, you will not alter the Equipment without our written

permission. You will replace all worn, lost, stolen or destroyed

parts of the Equipment with replacement parts that are as good or

better than the original parts. The new parts will become our

property upon replacement.



- You will not remove the Equipment from the location indicated in the

Schedule without our written permission.



7. RETURN OF EQUIPMENT. Unless otherwise stated in the Schedule:



- You must give us written notice at least 60 days before the end of

the Term if you want to purchase the equipment from us (assuming the

Schedule provides you with an option to purchase the Equipment).



- You must give us written notice at least 60 days before the end of

the Term if you want to return the Equipment to us.



- If you do not give us written notice at least 60 days before the end

of the Term either that you want to purchase or that you want to

return the Equipment, you will continue to rent the Equipment and

this Lease and the Schedule will be automatically extended until 120

days after we receive your notice. The rent will be the fair market

rental value of the Equipment, as determined by us. Unless we notify

you otherwise, the fair market rental value will not exceed the rent

then being charged under this Lease and the Schedule.



- If you do give us 60 days written notice that you want to purchase

the Equipment but you do not pay us the purchase price, you will

continue to rent the Equipment. The rent will be the fair market

rental value of the Equipment, as determined by us. You will

continue to pay us this rent until you have paid the purchase price

for the Equipment. The rent payments will not be credited to the

purchase price.



- If you do give us 60 days written notice that you want to return the

Equipment to us, but you do not return the Equipment in compliance

with the return conditions contained in the next paragraph, you will

continue to rent the Equipment. The rent will be the fair market

rental value of the Equipment, as determined by us. You will

continue to pay us this rent until you have returned the Equipment

to us in compliance with these return conditions.



- Return conditions: - You will return the Equipment, freight and

insurance prepaid by you, to us at a location we request in the

United States of America. It will be returned in good operating

condition, as required by section 6 above. The Equipment will not be

subject to any liens when it is returned.



- You will pack or crate the Equipment for shipping in the

original containers, or comparable ones. You will do this

carefully and follow all recommendations of the Supplier and

the Manufacturer as to packing or crating.



- You will also return to us the plans, specifications,

operating manuals, software documentation, discs, warranties

and other documents furnished by the Manufacturer or Supplier.

You will also return to us all service logs and service

reports, as well as all written materials that you may have

concerning the maintenance and operation of the Equipment.



- At our request, you will provide us with up to 60 days free

storage of the Equipment at your location, and upon prior

notice and during normal business hours (except in a case of

an Event of Default in which case no notice is due) you will

let us (or our agent) have access to the Equipment in order to

inspect it and sell it.



- You will pay us what it costs us to repair the Equipment if

you do not return it in the required condition.







8. RISK OF LOSS



- You have the complete risk of loss or damage to the Equipment. Loss

or damage to the Equipment will not relieve you of your obligation

to pay rent.



- If any Equipment is lost or damaged, you have two choices (although

if you are in default under this Lease, we and not you will have the

two options). The choices are:



(1) Repair or replace the damaged or lost Equipment so that, once again,

we own Equipment in good operating condition and have clear title to



(2) Pay us the present value (as of the date of payment) of the

remaining rent payments and our residual interest in the Equipment.

We will calculate the present value using a discount rate of five

(5%) percent per year. Once you have paid us this amount and any

other amount that you may owe us, you (or your insurer) may keep the

Equipment for salvage purposes, on an "AS IS, WHERE IS" basis.



9. INSURANCE



- Until you have properly returned the Equipment to us, you will keep

it insured. The amount of the insurance, the coverage, and the

insurance company must be acceptable to us.



- If you do not provide us with written evidence of insurance that is

acceptable to us, we may buy the insurance ourselves, at your

expense. You will promptly pay us the cost of this insurance. We

have no obligation to purchase any insurance. Any insurance that we

purchase will be our insurance, and not yours, and may insure the

Equipment beyond the end of the Term.



- Insurance proceeds may be used to repair or replace damaged or lost

Equipment or to pay us the present value of the rent and our

residual interest in the Equipment. (See section 8, "Risk of ...