Restructuring Agreement

RESTRUCTURING AGREEMENT



This Restructuring Agreement (the " Agreement ") is entered into as of December 2, 2004, among Bookham Technology plc, a public limited company incorporated under the laws of England and Wales (" Bookham plc "), Bookham, Inc., a Delaware corporation (" Bookham, Inc. " and, together with Bookham plc and its other subsidiaries whose names appear on the signature pages hereto, the " Bookham Parties "), Nortel Networks UK Limited (" NNUKL ") and Nortel Networks Corporation (" Nortel Networks ").



WHEREAS, Bookham plc has issued a Series B Senior Secured Note dated November 8, 2002 in aggregate principal amount of $30,000,000.00 (the " Series B Note "), which is currently held by NNUKL;



WHEREAS, Bookham, Inc. issued to NNUKL a Series A-1 Senior Unsecured Convertible Note dated September 10, 2004 in the principal amount of $20,000,000.00 (the " Series A-1 Note ");



WHEREAS, Bookham plc and NNUKL desire to amend and restate the Series B Note in the form of Exhibit A hereto (the " Series B-1 Note ");



WHEREAS, Bookham, Inc. and NNUKL desire to amend and restate the Series A-1 Note in the form of Exhibit B hereto (the " Series A-2 Note ");



WHEREAS, the parties desire to amend certain security agreements and enter into certain new agreements to provide that the collateral pledged to secure the obligations under the Series B Note shall also be pledged to secure the obligations under the Series B-1 Note and the Series A-2 Note and that Bookham, Inc. and its subsidiaries pledge certain additional assets to secure the various obligations of Bookham, Inc., Bookham plc and the guarantors under each of the Series A-2 Note and the Series B-1 Note; and



WHEREAS, the parties desire that Bookham plc pledge certain real property located at Caswell, U.K. to secure the obligations under the Series A-2 Note and Series B-1 Note;



NOW THEREFORE, in consideration of the mutual premises hereinafter set forth and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:



1. Agreements . Contemporaneously with the execution and delivery of this Agreement:





(a) Bookham plc shall deliver to NNUKL the Series B-1 Note which amends and restates the Series B Note;



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(b) Bookham, Inc. shall deliver to NNUKL the Series A-2 Note which amends and restates the Series A-1 Note;



(c) Each of the Bookham Parties and Nortel Networks shall execute and deliver an agreement that amends and restates the U.S. Security Agreement dated as of November 8, 2002 between Bookham plc, certain subsidiaries of Bookham plc and Nortel Networks in the form attached hereto as Exhibit C (as amended, the " U.S. Security Agreement ");



(d) Bookham plc and NNUKL shall execute and deliver a Debenture relating to the real property at Caswell, U.K., in the form attached hereto as Exhibit D ;



(e) Bookham plc, NNUKL and Nortel Networks shall execute an amendment to the Debenture relating to real property at Paignton, U.K. dated November 8, 2002 between Bookham plc and Nortel Networks in the form attached hereto as Exhibit E ;



(f) Bookham, Inc. shall cause Bookham (Canada) Inc. to execute and deliver and Nortel Networks shall execute and deliver, and shall cause NNUKL to execute and deliver, an agreement that amends and restates the Security Agreement dated as of November 8, 2002 between Bookham (Canada) Inc. and Nortel Networks, in the form attached hereto as Exhibit F .



2. Post-Signing Actions . (a) Within 14 calendar days of the execution and delivery of this Agreement, and to the extent permitted by applicable law, Bookham, Inc. shall (i) cause all of the outstanding capital stock or other equity interests of Bookham International Ltd., a company organized in the Cayman Islands that is a wholly-owned subsidiary of Bookham, Inc., to be pledged, in favor of NNUKL, on a first priority basis (to the extent such priority is contemplated by applicable law) as security for the Obligations (as defined in the U.S. Security Agreement) of Bookham, Inc. and its subsidiaries under the Series B-1 Note and the Series A-2 Note and the Security Agreements, pursuant to an agreement reasonably acceptable to Nortel Networks, (ii) cause such pledges to be perfected under the laws of the Cayman Islands and (iii) deliver to NNUKL an opinion from Maples and Calder, Cayman counsel to Bookham, Inc., addressed to NNUKL in substantially the form of Exhibit G .





(b) As soon as reasonably practicable after the execution of this agreement, and to the extent permitted by applicable law, Bookham, Inc. shall cause the property, plant and equipment (including real property) located in China that is owned by subsidiaries of Bookham, Inc. (including Bookham Technology (Shenzhen) (FFTZ) Co. Ltd. and New Focus Pacific (SHIP) Co. Ltd.) to be mortgaged or pledged on a first-priority basis (to the extent such priority is contemplated by applicable law) for the benefit of NNUKL as security for the Obligations of Bookham, Inc. and its subsidiaries under the Series B-1 Note and the Series A-2 Note and the Security Agreements to the extent that such assets may be legally pledged and to perfect such security interests (to the extent perfection is contemplated by applicable law) pursuant to agreements and documents in each case reasonably acceptable in form and substance to Nortel Networks. Such agreements and documents shall limit the sales and transfers of such assets consistent with the restrictions set forth in the U.S. Security Agreement, except that they shall permit Bookham, Inc. and its subsidiaries to enter into one or more "sale-leaseback" or similar transactions relating to such assets on the terms and conditions set forth in Section 2.06(d) of the U.S. Security Agreement.



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(c) Within 5 Business Days after Bookham, Inc. complies with its obligations under Section 2(b) of this Agreement, Nortel Networks shall cause NNUKL to waive, release or take such other action as is necessary to discharge any lien or equitable charge over the capital stock or other equity securities of Bookham International Ltd. granted for the benefit of NNUKL.





(d) Within 5 Business Days of a request from Nortel Networks, Bookham, Inc. shall, and shall cause its subsidiaries to, execute and deliver such English law security documents (together with all other connected or ancillary documents required for the creation and perfection of the security interest created thereunder) as Nortel Networks may reasonably request. Such security documents shall be on terms and conditions satisfactory to Nortel Networks (acting reasonably) and only create security interests in favor of NNUKL over assets that are expressly stated as being the subject of the security interests under the U.S. Security Agreement.



(e) As soon as reasonably practicable after the execution of this Agreement (but in no event later than 30 calendar days after the execution of this Agreement), and to the full extent permitted by applicable law, Bookham, Inc. shall cause Bookham (Switzerland) AG to execute and deliver and Nortel Networks shall execute and deliver, and shall cause certain of its subsidiaries to execute and deliver, an agreement pursuant to which, to the full extent permitted by applicable law, the Swiss Assets (as defined in the Bill of Sale dated November 8, 2002 by and among Bookham (Switzerland) AG, Nortel Networks and certain subsidiaries of Nortel Networks), all Improvements (as defined in the Intellectual Property Agreement) to the Intellectual Property and all property, plant and equipment that is then or thereafter owned by Bookham (Switzerland) AG, excluding Excluded Equipment (as defined in the ...