Exhibit 10.40
 CONSULTING AGREEMENT BETWEEN BOOKHAM, INC., AVANEX CORPORATION AND GIOVANNI
BARBAROSSA
 th
 RECITALS
       AGREEMENT
 Termination of Employment; Release
 (a)
    
    Effective as of the Closing Date, Consultant will resign from his position as
President and Chief Executive Officer of the Company and any of its subsidiaries. The
parties agree that, as of the Closing Date, all rights and obligations of Consultant
and the Company with respect to such employment shall terminate, except for the
continuing obligations of both parties under this Agreement, the Change of Control
Agreement, the Release Agreement (as described below), or any plan, program, policy,
corporate governance document, agreement, award or other arrangement of the Company or
its affiliates (each, a Company Arrangement).(b)
    
    As of the Closing Date, all existing equity awards granted to Consultant by the
Company shall become fully vested, exercisable and nonforfeitable, and will otherwise
be treated no less favorably than any other outstanding equity awards.(c)
    
    As of the Closing Date, Company or Parent will pay Consultant all base salary
and any accrued but unused vacation in accordance with Company policies based on
Consultants employment up to and including the Closing Date.(d)
    
    Contingent upon Consultant (i) executing a Separation and Release Agreement
(the Release Agreement), in the form attached hereto as Exhibit A, within thirty (30)
days after the Closing Date, and (ii) not revoking or challenging the enforceability of
the Release Agreement, Consultant shall be entitled to the payments and benefits
described in the Release Agreement (in addition to the compensation provided
hereunder).(e)
    
    Nothing in this Agreement or the Release Agreement is intended to waive or
release Consultant from any and all obligations to Company or Parent under any
confidentiality, proprietary or non-disclosure agreement, or any obligation created by
statutory or common law to protect any intellectual property or proprietary information
of Company or Parent.
 Appointment as Consultant and Director
 (a)
    
    Consultant agrees to serve as a consultant to the Parent, and Parent agrees to
so engage Consultant, commencing as of the Closing Date and ending on the twelve (12)
month anniversary of the Closing Date, unless such service is earlier terminated
pursuant to Section 5 below (the Consulting Term).(b)
    
    Parent shall also cause Consultant to be appointed to the Board of Directors of
Parent to serve as a Class I director until the annual meeting of stockholders to be
held in 2011.




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Consulting Services
 (a)
    
    Consulting Fees. Parent will pay Consultant a consulting fee at the
rate of $30,000 per month, which shall be paid no less frequently than on a monthly
basis. For Consultants service as a member of Parents Board of Directors, Consultant
will be provided compensation no less favorable than compensation provided to other
non-employee directors.(b)
    
    Independent Contractor. Consultant understands and agrees that, during
the Consulting Term, he will be an independent contractor and he will not be considered
an employee of Parent or the Company. No Federal, state and local income taxes or
payroll taxes of any kind shall be withheld or paid by Parent on Consultants behalf,
and Consultant acknowledges that he shall not be treated as an employee with respect to
the consulting services performed hereunder for Federal, State and local tax purposes.
Consultant agrees to pay, and be solely responsible for, any applicable Federal, State
and local taxes that are imposed on him for the consulting fees provided hereunder.(c)
    
    Authority. Consultant understands and agrees that he is not authorized
to enter into any contracts or agreements on behalf of Parent or the Company, or to
otherwise create obligations of the Parent or Company to third parties, unless
expressly authorized to do so by Parent or the Company.(d)
    
    Expenses. Parent shall reimburse Consultant for the reasonable
expenses actually incurred by him during the Consulting Term in performing the
consulting services described hereunder, upon submission by him of sufficient
substantiation of such expenses, subject to the terms and conditions of Companys
written policies with respect to expense reimbursements (as provided in advance to
Consultant). At the expiration of the Consulting Term, Parent shall, upon the
presentation of an itemized invoice from an executive outplacement firm, reimburse
Consultant for costs incurred by Consultant in the engagement of such outplacement firm
used for a search for a new position for Consultant as a Chief Executive Officer. To
the extent such payments constitute a taxable benefit or reimbursement that is subject
to Section 409A of the Internal Revenue Code (Section 409A), they shall be paid or
provided in accordance with Section 409A, including but not limited to the following
provisions: (i) the amount of any such expense reimbursement or in-kind benefit
provided during the Consultants taxable year shall not affect any expenses eligible
for reimbursement in any other taxable year; (ii) the reimbursement of the eligible
expense shall be made no later than the last day of the Consultants taxable year that
immediately follows the taxable year in which the expense was incurred; and (iii) the
right to any reimbursement shall not be subject to liquidation or exchange for another
benefit or payment.
 Attorney Fees
 Termination
 (a)
    
    The Consulting Term may be terminated by either Parent or Consultant at any
time upon thirty (30) days prior written notice to the other, provided, however, that
Consultant may not terminate the Consulting Term before the sixth (6) month anniversary
of the Closing Date.
 (i)
    
    In the event of either (x) a termination of the Consulting
Term by Parent for Cause (as described in paragraph (c) below) or (y) a
voluntary termination of the Consulting Term by Consultant, the Parent will
only pay the consulting fees earned by the Consultant prior to the effective
date of such a termination.(ii)
    
    In the event that the Consulting Term is terminated by Parent
for any reason other than Cause (or in the event of Consultants death),
Parent shall make a lump sum cash payment to Consultant (or, in the event of
his death, to his estate) in an amount equal to the remaining consulting fees
that would otherwise have been payable through the end of the Consulting Term.
Such payment shall be made within thirty (30) days of the termination date.




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(b)
    
    Upon termination of the Consulting Term for any reason, Consultant shall
continue to retain all of his rights and obligations under this Agreement, the Change
of Control Agreement and the Release Agreement, and shall retain all of his rights
under the existing terms of any Company Arrangement.(c)
    
    Cause. For purposes of this Agreement, Cause will mean:
 (i)
    
    Any act of personal dishonesty taken by Consultant in
connection with Consultants responsibilities hereunder and intended to result
in substantial personal enrichment of Consultant;(ii)
    
    Consultants conviction of a felony that is injurious to
Parent;(iii)
    
    A willful act by Consultant which constitutes gross
misconduct and which is injurious to Parent, after there has been delivered to
Consultant a written notice from the Chairman of the Board of Directors of
Parent which describes the nature of such misconduct and Consultant has not
cured such misconduct (if capable of cure) within two (2) weeks of such
written notice;(iv)
    
    Consultants willful and continued failure to perform the
duties and responsibilities hereunder after there has been delivered to
Consultant a written demand for performance from the Chairman of the Board of
Directors of Parent which describes the basis for the belief that Consultant
has not substantially performed such duties and responsibilities, and
Consultant has not corrected such failure within two (2) weeks of such written
demand.
 (d)
    
    This Agreement (except for Section 4 hereof) shall be null and void if the
Closing described in the Merger Agreement does not occur on or before the six (6) month
anniversary of the date of this Agreement.
 Notices




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Indemnity; D&O Insurance
 Arbitration
 Governing Law
 Entire Agreement.
 Assignment
 Waiver
 Severability
 Counterparts
  BOOKHAM INCORPORATEDBy:Name:Title:AVANEX CORPORATIONBy:Name:Title: GIOVANNI BARBAROSSA




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EXHIBIT A  SEPARATION AND RELEASE AGREEMENT




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(a)
    
    He has been advised in writing to consult with an attorney prior to executing this
Release, and has had the opportunity to do so;(b)
    
    He is aware of certain rights to which he may be entitled under the Act;(c)
    
    In exchange for executing this Release, Consultant will receive severance pay to which
he would otherwise not be entitled, and in addition to the compensation and benefits that
he earned as an employee of Company;(d)
    
    By signing this Agreement, he will not waive rights or claims under the Act which may
arise after the execution of this Agreement;(e)
    
    He has been given a period of at least 21 days to consider this Release, and
understands that if he does not sign this Release he will not receive the severance pay
described in paragraph 2 above; and(f)
    
    Executive further acknowledges that he has a period of seven days from the date of
execution in which to revoke this Release by written notice to Kathy Zwickert, Parents VP
of HR. In the event Consultant does not exercise his right to revoke this Release, the
Release shall become effective on the date immediately following the seven day revocation
period described above.
  BOOKHAM INCORPORATEDBy:Name:
    
    
    
    
    
    Title:AVANEX CORPORATIONBy:Name:
    
    
    
    
    
    Title:GIOVANNI BARBAROSSA