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                                                                     EXHIBIT 4.2

          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

Nortel Networks Corporation
8200 Dixie Road, Suite 100
Dept. 0019, GMS 036/NO/163
Brampton, Ontario, Canada L6T 5P6

November 8, 2002

Bookham Technology plc
90 Milton Park
Abingdon, Oxfordshire X14, 4RY
United Kingdom

Ladies and Gentlemen:

       Reference is made to the Acquisition Agreement, dated as of October 7,
2002, between Nortel Networks Corporation and Bookham Technology plc (the
"ACQUISITION AGREEMENT") and the Exhibits and Schedules thereto. Capitalized
terms used but not defined in this Letter Agreement have the meanings set forth
in the Acquisition Agreement.

       The Purchaser and the Seller hereby agree to the following:

(1)    The Acquisition Agreement shall be modified and amended as follows.

       (A)  SECTION 2.05 shall be replaced in its entirety with the following:

            SECTION 2.05. CLOSING. Subject to the terms and conditions of this
            Agreement, the sale and purchase of the Assets, and the assumption
            of the Assumed Liabilities pursuant to Section 2.02, as contemplated
            hereby shall take place at a closing (the "CLOSING") to be held at
            5:59 p.m., New York City time, on Friday, November 8, 2002, at the
            offices of Cleary, Gottlieb, Steen & Hamilton located at One Liberty
            Plaza, New York, New York (the "CLOSING DATE").

       (B)  SECTION 5.06 shall be replaced in its entirety with the following:

            SECTION 5.06. INSURANCE. Effective 5:59 p.m. (New York City time) on
            the Closing Date, the Business shall cease to be insured by the
            insurance policies of the Seller and the Selling Subsidiaries. With
            respect to events or circumstances

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            covered by insurance coverage written on an "occurrence basis," the
            Seller and the Selling Subsidiaries shall have no Liability for
            occurrences that take place on and after 5:59 p.m. (New York City
            time) on the Closing Date. With respect to insurance coverage
            written on a "claims made basis," the Seller and the Selling
            Subsidiaries shall have no Liability under such insurance coverage
            for claims made after 5:59 p.m. (New York City time) on the Closing
            Date.

       (C)  The words "Within thirty (30) days of the date of this Agreement,"
            at the opening of SECTION 5.08(e) shall be replaced in their
            entirety with the words "At the Closing,".

       (D)  SECTION 5.23(a)(i)(D) shall be replaced in its entirety with the
            following:

            (D) holding up to [**] percent ([**]%) of the equity interests in
            any Person which produces or sells Competitive Products.

       (E)  SECTION 6.01(b)(ii)(B) shall be replaced in its entirety with the
            following:

            (B) hiring such Employees or Transferring Employees identified
            through such employment searches other than the Employees listed on
            APPENDIX 6.01(b) hereto who the Seller may not hire, employ or
            engage other than through a Permitted Engagement pursuant to
            generalized employment searches or otherwise; and

       (F)  The first sentence of SECTION 6.04(a) shall be replaced in its
            entirety with the following:

            Prior to the Effective Date, the Seller shall reduce the number of
            Employees listed in SECTION 3.12(a) of the SELLER DISCLOSURE
            SCHEDULE with a work location in Canada from 358 to 271 and shall
            reduce the number of Employees listed in SECTION 3.12(a) of the
            SELLER DISCLOSURE SCHEDULE with a work location in the United States
            from 16 to 12 (for an aggregate reduction in the number of Employees
            listed on SECTION 3.12(a) of the SELLER DISCLOSURE SCHEDULE of 91).

       (G)  Notwithstanding anything to the contrary in SECTION 6.04(a) or
            SECTION 6.04(b): (i) the Interim Employee Information shall be
            provided to the Purchaser no later than ten (10) Business Days prior
            to the Effective Date; (ii) the Interim Employee Information shall
            not include the Vacation Information; and (iii) the Seller shall
            provide the Purchaser with the Vacation Information and the Updated
            Employee Information on November 6, 2002.

(2) The Purchaser and the Seller agreed to make certain changes to the Ancillary
Agreements and the Real Estate Agreements and Assignments (collectively, the
"ACQUISITION AGREEMENT EXHIBITS") as evidenced by such Acquisition Agreement
Exhibits as executed on the Closing Date.

(3)    The SELLER DISCLOSURE SCHEDULE shall be modified and amended as follows:

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       (A)  SECTION 1.01(E): CERTAIN THIRD PARTY LICENSES. SECTION 1.01(e) of
            the SELLER DISCLOSURE SCHEDULE shall be amended by adding to it the
            following:

            1.   Cross License Agreement of Intellectual Property Rights, dated
                 February 19, 1999, between Nortel PLC and IOC International PLC
                 (and Integrated Optical Components Limited).

            2.   Amendment to License Agreement (SC-11 Cement License), dated
                 October 8, 2002, among Northern Telecom Limited, 561158 Ontario
                 Limited and Victor Steinberg.

       (B)  SECTION 1.01(g): Transferred Passive Patents. SECTION 1.01(g) of the
            SELLER DISCLOSURE SCHEDULE shall be in the form attached hereto.

       (C)  SECTION 1.01(h): Transferred Patents. SECTION 1.01(h) of the SELLER
            DISCLOSURE SCHEDULE shall be in the form attached hereto.

       (D)  SECTION 2.01(a)(iii): Owned Equipment. SECTION 2.01(a)(iii) of the
            SELLER DISCLOSURE SCHEDULE shall be in the form attached hereto.

       (E)  SECTION 2.01(a)(vii): Third Party Licenses Exclusive to the
            Business. SECTION 2.01(a)(vii) of the SELLER DISCLOSURE SCHEDULE
            shall be amended by adding to it the following:

            1.   All rights associated with the Amendment to License Agreement -
                 SC-11 Cement, dated October 8, 2002, among Northern Telecom
                 Limited, 561158 Ontario Limited and Victor Steinberg ("SC-11
                 AMENDMENT"), other than rights under Paragraph 2 of the SC-11
                 Amendment, which rights Seller and the Selling Subsidiaries
                 expressly retain and do not assign to Purchaser.

       (F)  SECTION 2.01(a)(viii): OTHER SELLER CONTRACTS. SECTION 2.01(a)(viii)
            of the SELLER DISCLOSURE SCHEDULE shall be amended as follows:

            1.   by reclassifying the following agreement from "Customer
                 Agreement under negotiation" to "Customer Agreement":

                 (i)  Item 33. Framework Purchase Agreement to which Agilent
                      Technologies Deutschland GmbH is a party.

            2.   Item 20. Miscellaneous transactions consummated on a customer
                 purchase order and Seller Order Acknowledgment Form or supply
                 agreement. ATTACHMENT B shall be in the form attached hereto.

            3.   Item 43. ATTACHMENT E shall be in the form attached hereto.

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       (G)  SECTION 2.03(c): PURCHASE PRICE ALLOCATION. SECTION 2.03(c) of the
            SELLER DISCLOSURE SCHEDULE shall be in the form attached hereto.

       (H)  SECTION 3.16(a): TITLE TO INTELLECTUAL PROPERTY. SECTION 3.16(a) of
            the SELLER DISCLOSURE SCHEDULE shall be in the form attached hereto.

(4)    Other Agreements.

       (A)  OTHER SECURITY INTERESTS. The Purchaser hereby agrees that, in the
            event that it or any of its Subsidiaries sells, transfers or
            otherwise disposes to the Purchaser or any of its Subsidiaries of
            any of the Collateral (as defined in the U.S. Security Agreement),
            the Purchaser shall, or shall cause the applicable Subsidiary of the
            Purchaser to, deliver to the Seller appropriate fully executed
            filings, recordings, registrations and other documents, in each case
            prepared by the Seller, as are reasonably requested by the Seller to
            establish a legal and valid security interest in favor of the
            holders of the Series B Notes or, if such security interest may not
            be established under applicable Law, to execute and deliver to the
            Seller such other documents, in each case prepared by the Seller, as
            are reasonably requested by the Seller to provide similar
            protections through title retention arrangements or otherwise.

       (B)  POUGHKEEPSIE UTILITIES. The Seller and the Purchaser hereby agree
            that, from and after the Closing and until such time as the
            Purchaser or the Purchasing Subsidiaries enter into an agreement
            with CH Energy Group for the provision of utilities (the
            "Utilities") at the premises located at 66 Firemens Way,
            Poughkeepsie, NY, the Seller shall pay for such Utilities on behalf
            of the Purchaser or the Purchasing Subsidiaries, and the Purchaser
            or the Purchasing Subsidiaries shall reimburse the Seller, promptly
            upon written request (which request shall include a copy of the
            Utility invoice) for the amount of such paid Utility invoice.

       (C)  REMOVAL OF IDLE ASSETS. Following the Closing Date, the Purchaser
            shall, upon reasonable advance notice to the Purchaser, grant the
            Seller and its representatives reasonable access to the facilities
            and properties of the Purchaser and its Subsidiaries for the purpose
            of removing or causing to be removed those items of personal
            property of the Seller listed on APPENDIX 4(C) hereto that are
            located in or on any such facility or property (the "IDLE ASSETS").
            The Seller shall be responsible for the costs of removal of the Idle
            Assets and shall reimburse the Purchaser for any costs or
            Liabilities incurred as a result thereof, including any damage or
            destruction of property of the Purchaser or any of its Subsidiaries
            resulting therefrom. Such removal shall take place only upon
            reasonable advance notice to, and with the consent of, the Purchaser
            during normal business hours. Seller shall remove or cause the
            removal of any such property within 90 days following the Closing
            Date.

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       (D)  ZURICH LEASE ASSIGNMENT. The Seller and the Purchaser hereby agree
            that, from and after the Closing and until such time as Binz (as
            such term is defined in the Zurich Lease Assignment) executes the
            Zurich Lease Assignment, the Seller and the Purchaser shall, in
            accordance with Section 5.11 of the Acquisition Agreement, cooperate
            to provide that the Purchaser and the Purchasing Subsidiaries shall
            receive all benefits and be responsible for all Liabilities
            associated with the Zurich Lease Assignment, and the Seller and the
            Purchaser shall treat the Zurich Lease Assignment as though it was
            validly executed by Binz.

       (E)  LICENSE TO OCCUPY THE MONTICELLO PREMISES. The Seller and the
            Purchaser hereby agree that, from and after the Closing and until
            such time the Purchaser or any of its Subsidiaries shall have
            entered into a lease agreement in respect of the premises located in
            Monticello, MN (the "MONTICELLO PREMISES") occupied as of the date
            hereof by the Seller, but in no event after November 22, 2002, in
            accordance with SECTION 5.11 of the Acquisition Agreement, the
            Purchaser and its Subsidiaries shall be granted a license to occupy
            the Monticello Premises on the same terms as those set forth in the
            Canadian License Agreement. If, by November 22, 2002, the Purchaser
            or any of its Subsidiaries shall not have entered into a lease
            agreement in respect of the Monticello Premises, the Purchaser and
            its Subsidiaries shall be obligated to vacate the Monticello
            Premises as of such date.

       (F)  WAIVER OF CONDITION. The Seller hereby waives the condition to its
            obligation to consummate the transactions contemplated by the
            Acquisition Agreement contained in SECTION 8.01(f) of the
            Acquisition Agreement.

       (G)  [**]. The Seller and the Purchaser hereby agree to the following:

            1.   The Seller shall use its commercially reasonable efforts to
                 either (a) negotiate a license agreement [**] on behalf of the
                 Purchaser, or (b) amend the [**] Agreement [**] between the
                 Seller and [**] as part of the [**], in either case to enable
                 the Purchaser to manufacture and sell to the Seller and to [**]
                 as manufactured and sold by the Seller on or prior to the
                 Closing Date (the "APPLICABLE PRODUCTS") to the same extent
                 following the Closing Date as such activities were conducted by
                 the Seller before the Closing Date and [**] the Seller[**]
                 before the Closing Date; provided that, in the event that the
                 Seller [**]in negotiating such a license or obtaining such an
                 amendment [**], the provisions of paragraph 2 below shall
                 apply.

            2.   [**] the Purchaser or the Seller [**] to the Seller [**], the
                 Seller and the Purchaser shall [**] in the manner described:

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                 (i)  [**] (other than pursuant to clause (ii) below) [**] the
                      Purchaser [**] after the Closing Date (excluding, however,
                      [**](as such term is defined [**]; and

                 [**] the Seller or the Purchaser [**] of the Closing Date in
                 connection with [**]The [**] Purchaser, and [**] the Seller and
                 [**] the Purchaser. Notwithstanding the foregoing, the [**]
                 with respect to such [**] the Seller hereunder shall be subject
                 to the limitation set forth in Section 10.03(b)(i)[**] set
                 forth therein) and shall not be subject to the limitations set
                 forth in Section 10.03(b)(ii) [**] in respect of Series B Notes
                 to the extent any Series B Notes are then outstanding or, if no
                 Series B Notes [**] in respect of any Series A Notes then
                 outstanding. Neither the Seller nor the Purchaser shall [**] in
                 connection with any [**], prior to the [**]. In the event of
                 [**] in connection with the [**] will be [**] and the [**]
                 shall be[**] and the [**]. In the event that both the Seller
                 and the Purchaser are [**] in connection with the [**]. The
                 Purchaser and the Seller will [**] from time to time during
                 the[**]. Other than as set forth above, the Seller shall [**]
                 in connection with the [**].

            3.   [**] which is being entered into as of the date of this Letter
                 Agreement, the Seller and the Purchaser further agree that the
                 [**].

       (H)  [**]. For the avoidance of doubt, any [**] in connection with the
            [**] of the applicable portions [**] as it relates to [**].

       (I)  STOCKROOM SERVICES AGREEMENT. The Purchaser and the Seller agree to
            enter into a stockroom services agreement on the terms set forth in
            Appendix 4(J) hereto.

       (J)  ADDITIONAL PAYMENT. The Purchaser represents that it has effected a
            wire transfer of funds in the amount of $[**] as of the Closing
            Date. If the cash payment is not received in the account of the
            Seller on the Closing Date, the Purchaser shall pay the Seller an
            additional $[**] per day, not including the date of receipt, until
            the cash payment is so received and, in all events, shall ensure
            that such funds are delivered.

                  (Remainder of page intentionally left blank)

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       Please evidence your agreement with the foregoing by executing this
Letter Agreement as indicated below. This Letter Agreement may be executed in
one or more counterparts, each of which shall be an original but all of which
shall constitute one and the same agreement.

                                         Very truly yours,

                                         NORTEL NETWORKS CORPORATION

                                         By:
                                            -----------------------------------
                                            Name:
                                            Title:

                                         BOOKHAM TECHNOLOGY PLC

                                         BY: /s/PHILIP S.J. DAVIS
                                            -----------------------------------
                                            NAME: PHILIP S.J. DAVIS
                                            TITLE: COMPANY SECRETARY

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                                                                   EXHIBIT 10.1

                      CONSENT OF INDEPENDENT AUDITORS

     We consent to the incorporation by reference in the Registration
Statements (Form S-8 Nos. 333-13388 and 333-13390) of Bookham Technology plc
of the reference to our firm in Item 3 under the caption "Selected
Consolidated Financial Data" and of our report dated March 18, 2003 with
respect to the consolidated financial statements of Bookham Technology plc,
all included in this Amendment No. 2 to the Annual Report (Form 20-F/A) for
the year ended December 31, 2002.

/s/ Ernst & Young LLP
Ernst & Young LLP
Reading, England
October 21, 2003

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