March 31, 2005 San Jose, CA -- Bookham, a provider of optical components, modules, and subsystems, today announced that it has entered into an agreement with Nortel Networks to amend the current supply agreement and secured loan notes between Bookham and Nortel. As part of the agreement, Bookham expects to receive orders from Nortel Networks for shipment over the next twelve months for approximately $50 million of products Bookham is discontinuing as part of its transfer of product assembly production to Shenzhen, China.

Bookham also expects to receive purchase order commitments from Nortel for current products covering its demand over the next twelve months. In addition, Bookham and Nortel have agreed to product pricing increases and amended payment terms for a 12-month period.

The companies are working to finalize the amount of the purchase commitment for the ongoing products, which is expected to be completed in the next 15 days. The agreement will expire on April 29, 2005 if definitive documentation is not entered into before then.

The companies also agreed to adjustments in the collateral and prepayment provisions for a 12-month period for the senior secured loan notes between Bookham and Nortel.

As a result of this agreement, Bookham anticipates that revenue, gross margin and operating cash burn will improve significantly beginning in the fourth quarter of fiscal 2005, ending July 2, 2005. Bookham will update its financial guidance for the fourth fiscal quarter during its regularly scheduled third quarter financial results conference call.

"We believe this arrangement will enable us to provide enhanced delivery service to Nortel," contends Giorgio Anania, president and CEO of Bookham. "This agreement will also enable Bookham to maintain its schedule for the successful transfer of production capabilities to China."