AVANEX CORPORATION RESTRICTED STOCK UNIT AGREEMENT UNDER 1999 DIRECTOR OPTION PLAN

EXHIBIT 10.1

AVANEX CORPORATION

RESTRICTED STOCK UNIT AGREEMENT

UNDER 1999 DIRECTOR OPTION PLAN

Avanex Corporation (the “Company”) hereby grants you, [                              ] (the “Grantee”), the number of Restricted Stock Units indicated below under the Company’s 1999 Director Option Plan (the “Plan”). The date of this Agreement is              , 2006 (the “Grant Date”). Subject to the provisions of Appendix A (attached hereto) and of the Plan, the principal features of this grant are as follows:

Your signature below indicates your agreement and understanding that this grant is subject to all of the terms and conditions contained in this Restricted Stock Unit Agreement (the “Agreement”), including Appendix A, and the Plan. Important additional information on vesting and forfeiture of the Restricted Stock Units covered by this grant is contained in paragraphs 4 through 7 of Appendix  A. PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS AGREEMENT. YOU AGREE TO EXECUTE THIS AGREEMENT AS A CONDITION TO RECEIVING ANY SHARES .

APPENDIX A

TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS

UNDER 1999 DIRECTOR OPTION PLAN

1. Grant . The Company hereby grants to the Grantee under the Plan at the per share price of $.001, equal to the par value of a Share, the number of Restricted Stock Units indicated in the Notice of Grant, subject to all of the terms and conditions in this Agreement and the Plan.

2. Payment of Purchase Price . When the Restricted Stock Units are paid out to the Grantee, the purchase price will be deemed paid by the Grantee for each Restricted Stock Unit through the past services rendered by the Grantee, and will be subject to the appropriate tax reporting and, if applicable, appropriate tax withholding.

3. Company’s Obligation to Pay . Each Restricted Stock Unit has a value equal to the Fair Market Value of a Share on the date of grant. Unless and until the Restricted Stock Units have vested in the manner set forth in paragraphs 4 or 5, the Grantee will have no right to payment of such Restricted Stock Units. Prior to actual payment of any vested Restricted Stock Units, such Restricted Stock Units will represent an unsecured obligation. Payment of any vested Restricted Stock Units will be made in Shares.

4. Vesting Schedule . Except as otherwise provided in paragraph 5 of this Agreement, the Restricted Stock Units awarded by this Agreement are scheduled to vest in accordance with the vesting schedule set forth in the Notice of Grant. Restricted Stock Units scheduled to vest on any such date actually will vest only if the Grantee continues to be a Director through such date.

5. Change of Control Acceleration . In the event of a Change of Control of the Company that occurs while the Restricted Stock Units granted pursuant to this Agreement remain outstanding, 100% of such outstanding Restricted Stock Units shall accelerate and become fully vested and earned immediately prior to such Change of Control in accordance with Section 10 of the Plan.

6. Payment after Vesting . Any Restricted Stock Units that vest in accordance with paragraphs 4 or 5 will be paid to the Grantee (or in the event of the Grantee’s death, to his or her estate) in Shares as soon as practicable following the date of vesting, subject to paragraph 9.

7. Forfeiture . Notwithstanding any contrary provision of this Agreement, the balance of the Restricted Stock Units that have not vested pursuant to paragraphs 4 or 5 at the time the Grantee ceases to be a Director will be forfeited and automatically transferred to and reacquired by the Company at no cost to the Company. The Grantee shall not be entitled to a refund of the price paid for the Restricted Stock Units forfeited to the Company pursuant to this paragraph 7.

8. Death of Grantee . Any distribution or delivery to be made to the Grantee under this Agreement will, if the Grantee is then deceased, be made to the administrator or executor of the Grantee’s estate. Any such administrator or executor must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

9. Withholding of Taxes . Should the Company have any withholding obligations with respect to the Restricted Stock Units or the Shares issued in payment thereof, the Company (or the employing Parent

or Subsidiary) will withhold a portion of the Shares otherwise issuable in payment for vested Restricted Stock Units that have an aggregate market value sufficient to pay the minimum federal, state and local income, employment and any other applicable taxes required to be withheld by the Company (or the employing Parent or Subsidiary) with respect to the Shares. No fractional Shares will be withheld or issued pursuant to the grant of Restricted Stock Units and the issuance of Shares thereunder; any additional withholding necessary for this reason will be done by the Company through the Grantee’s paycheck, if any, or through direct payment by the Grantee to the Company in the form of cash, check or other cash equivalent. Accordingly, to the extent the Fair Market Value of the number of whole Shares withheld by the Company exceeds the withholding taxes, the Company will pay the Grantee the difference. The Company (or the employing Parent or Subsidiary) may instead, in its discretion, withhold an amount necessary to pay the applicable taxes from the Grantee’s paycheck or require the Grantee to pay an amount necessary to pay the applicable taxes directly to the Company (or the employing Parent or Subsidiary), in each case with no withholding of Shares. In the event the withholding requirements are not satisfied thr