Exhibit 10.18

 

NON-RECOURSE RECEIVABLES PURCHASE AGREEMENT

 

This NON-RECOURSE RECEIVABLES PURCHASE AGREEMENT (the “Agreement”), dated as of
March 15, 2005, is between SILICON VALLEY BANK (“Buyer”) having a place of
business at 3003 Tasman Drive, Santa Clara, California 95054 and ZTI MERGER
SUBSIDIARY III, INC. (formerly known as Zhone Technologies, Inc.) and ZHONE
TECHNOLOGIES, INC. (formerly known as Tellium, Inc.) (jointly and severally
“Seller”), each a Delaware corporation, with its chief executive office at 7001
Oakport St., Oakland, California 94621.

 

  1 DEFINITIONS.

 

When used herein, the following terms have the following meanings.

 

1.1. “Account Debtor” has the meaning set forth in the California Uniform
Commercial Code and shall include any person liable on any Purchased Receivable,
including without limitation, any guarantor of the Purchased Receivable and any
issuer of a letter of credit or banker’s acceptance.

 

1.2. “Adjustments” means all discounts, allowances, returns, disputes,
counterclaims, offsets, defenses, rights of recoupment, rights of return,
warranty claims, or short payments, asserted by or on behalf of any Account
Debtor with respect to any Purchased Receivable.

 

1.3. “Administrative Fee” means for any Purchase the percentage of the Total
Purchased Receivables Amount set forth in the Schedule for such Purchase.

 

1.4. “Business Day” means any day other than a Saturday, Sunday, or other day on
which banks in California are required or authorized by law to close.

 

1.5. “Discount Rate” means for any Purchase the “Discount Rate” set forth in the
Schedule for such Purchase.

 

1.6. “Due Date” means for any Purchase the “Due Date” set forth in the Schedule
for such Purchase.

 

1.7. “Event of Default” has the meaning set forth in Section 10 hereof.

 

1.8. “Insolvency Event” means, with respect to any Account Debtor, (a) the
commencement of a case, action or proceeding with respect to such Account Debtor
before any court or other governmental authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, (b) such Account Debtor is generally not paying its debts
when due, or (c) the making or commencement of any general assignment for the
benefit of creditors, composition, marshaling of assets for creditors, or other
similar arrangement in respect of the creditors generally or any substantial
portion of the creditors of such Account Debtor.

 

1.9. “Invoice Amount” means for any Purchase, the “Invoice Amount” set forth in
the Schedule for such Purchase.

 

1.10. “Late Payment Settlement Fee” has the meaning set forth in Section 2.2.

 

1.11. “Late Payment Settlement Period” has the meaning set forth in Section 2.2.

 

1.12. “Loan Agreement” means the Amended and Restated Loan and Security
Agreement between them, dated February 24, 2004 between Seller and Buyer (as the
same has previously and may hereafter be amended from time to time).

 

1.13. “Open Amount” means the portion of any Purchased Receivable which has been
pre-paid to the Seller.

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Silicon Valley Bank

   Non-Recourse Receivables Purchase Agreement

 

1.14. “Payment in Full” means for any Purchase that Buyer has received payments
on account of the Purchased Receivables under such Purchase equal to the Total
Purchased Receivables Amount for such Purchase.

 

1.15. “Prime Rate” means per annum rate of interest from time to time announced
and made effective by Buyer as its Prime Rate (which rate may or may not be the
lowest rate available from Buyer at any given time).

 

1.16. “Purchase” means the purchase by Buyer from Seller of one or more
Purchased Receivables on a Purchase Date as listed in the Schedule applicable to
such Purchase.

 

1.17. “Purchase Date” means for any Purchase the date set forth as the “Purchase
Date” in the Schedule for such Purchase.

 

1.18. “Purchase Price” means for any Purchase the “Purchase Price” set forth on
the Schedule for such Purchase.

 

1.19. “Purchased Receivables” means for any Purchase all those Receivables
arising out of the invoices and other agreements identified on the Schedule for
such Purchase.

 

1.20. “Purchased Receivable Amount” means for any Purchased Receivable, the
“Invoice Amount” set forth with respect to such Purchased Receivable on the
applicable Schedule minus the Open Amount.

 

1.21. “Receivables” means accounts, receivables, chattel paper, instruments,
contract rights, documents, general intangibles, letters of credit, drafts,
bankers acceptances, and other rights to payment, and all proceeds thereof.

 

1.22. “Related Property” has the meaning as set forth in Section 9 hereof.

 

1.23. “Repurchase Amount” has the meaning set forth in Section 4.2 hereof.

 

1.24. “Schedule” means for each Purchase a schedule executed by the parties in
the form of Exhibit A hereto identifying the Purchased Receivables subject to
such Purchase and setting forth financial and other details relating to such
Purchase, all as contemplated by Exhibit A.

 

1.25. “Settlement Date” has the meaning set forth in Section 3.2 hereof.

 

1.26. “Total Purchased Receivables Amount” means for any Purchase the total of
the Purchased Receivable Amounts for all Purchased Receivables subject to such
Purchase as set forth on the applicable Schedule.

 

2     PURCHASE AND SALE OF RECEIVABLES.

 

2.1 Sale and Purchase. Subject to the terms and conditions of this Agreement,
with respect to each Purchase, effective on each applicable Purchase Date,
Seller agrees to sell to Buyer and Buyer agrees to buy from Seller all right,
title, and interest (but none of the obligations with respect to) of the Seller
to the payment of all sums owing or to be owing from the Account Debtors under
each Purchased Receivable to the extent of the Purchased Receivable Amount for
such Purchased Receivable.

 

Each purchase and sale hereunder shall be in the sole discretion of Buyer and
Seller. In any event, Buyer will not (i) purchase any Receivables in excess of
an aggregate outstanding amount exceeding the “Receivables Purchase Sublimit”
(as defined in the Loan Agreement), or (ii) purchase any Receivables under this
Agreement after February 22, 2006. The purchase of each Purchased Receivable may
be evidenced by an assignment or bill of sale in a form acceptable to Buyer, but
the purchase shall be fully effective notwithstanding any failure to sign any
such assignment or bill of sale.

 

2.2 Payment of Purchase Price. On the Purchase Date, the Purchase Price, less
the Administrative Fee and legal fees (if any), shall be paid by Buyer to
Seller.

 

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   Non-Recourse Receivables Purchase Agreement

 

  2.3 [intentionally omitted]

 

2.4 Nature of Transaction. It is the intent of the parties hereto that each
purchase and sale of Receivables hereunder is and shall be a true sale of such
Receivables for all purposes and not a loan arrangement. Each such sale shall
be, subject to the terms hereof, absolute and irrevocable, providing Buyer with
the full risks and benefits of ownership of the Purchased Receivables (such that
the Purchased Receivables would not be property of the Seller’s estate in the
event of the Seller’s bankruptcy). The parties agree that appropriate UCC
financing statements have been or shall promptly be filed to reflect that Seller
is the seller and Buyer is the purchaser of Receivables hereunder.

 

3    COLLECTIONS, CHARGES AND REMITTANCES.

 

3.1 Application of Payments. All payments in respect of any Purchased
Receivable, whether received from an Account Debtor or any other source and
whether received by Seller or Buyer, shall be the property of Buyer and Seller
shall have no ownership interest therein.

 

3.2 Collection by Seller. In order to facilitate the collection of the Purchased
Receivables in the ordinary course of business, Seller agrees to act as Buyer’s
agent for collection of the Purchased Receivables. Accordingly, Buyer hereby
appoints the Seller its attorney-in-fact to ask for, demand, take, collect, sue
for and receive all payments made in respect of the Purchased Receivables and to
enforce all rights and remedies thereunder and designates Seller as Buyer’s
assignee for collection; provided that such appointment of Seller as such
attorney-in-fact or assignee for collection may be revoked by Buyer at any time.
Seller, as such attorney-in-fact, shall use due diligence and commercially
reasonable lawful efforts in accordance with its usual policies and practices to
collect all amounts owed by the Account Debtors on each Purchased Receivable
when the same become due. In the enforcement or the collection of Purchased
Receivables, Seller shall commence any legal proceedings only in its own name as
an assignee for collection or on behalf of Buyer or, with Buyer’s prior written
consent, in Buyer’s name. Seller shall have no obligation to commence any such
legal proceedings unless Buyer has agreed to share the legal fees and other
expenses to be incurred in such proceedings on a basis which is acceptable to
Seller. In no event shall Seller take any action which would make Buyer a party
to any litigation or arbitration proceeding without Buyer’s prior written
consent. Until Buyer has received Payment in Full as to any Purchase, Seller
shall (i) hold in trust for Buyer and turn over to Buyer forthwith upon receipt
all payments made to Seller by Account Debtors with respect to the Purchased
Receivables subject to such Purchase and (ii) turn over to Buyer forthwith on
receipt all instruments, chattel paper and other proceeds of the Purchased
Receivables; provided that unless an Event of Default has occurred and is
continuing, Seller shall remit amounts received by Seller and due to Buyer on a
weekly basis on Friday of each week (each a “Settlement Date”), commencing on
the last business day of the second week after the Purchase Date. On each
Settlement Date, Seller shall deliver to Buyer a report, in form and substance
acceptable to Buyer, of the account activity (including dates and amounts of
payments) and changes in account status for each Purchased Receivable.

 

3.3 No Obligation to Take Action. Buyer shall have no obligation to perform any
of Seller’s obligations under any Purchased Receivables or to take any action or
commence any proceedings to realize upon any Purchased Receivables (including
without limitation any defaulted Purchased Receivables), or to enforce any of
its rights or remedies with respect thereto.

 

4    NON-RECOURSE; REPURCHASE OBLIGATIONS.

 

4.1 Non-Recourse. Except as otherwise set forth in this Agreement, Buyer’s
acquisition of Purchased Receivables from Seller hereunder shall be without
recourse against Seller.

 

4.2 Seller’s Agreement to Repurchase. Seller agrees to pay to Buyer on demand,
the full face amount, or any unpaid portion, of any Purchased Receivable: (A)
with respect to such Purchase Receivable there has been any breach of warranty
or representation set forth in Section 6.1 hereof (except for breaches of
warranty or representations which are permitted to be, and have been, cured
pursuant to Section 7 hereof) or any breach of any covenant contained in this
Agreement with respect to such Purchased Receivable; or (B) with respect to such
Purchased Receivable the Account Debtor asserts any discount, allowance, return,
dispute, counterclaim, offset, defense, right of recoupment, right of return,
warranty claim, or short payment (except for such matters as are

 

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   Non-Recourse Receivables Purchase Agreement

 

permitted to be, and have been, cured pursuant to Section 7 hereof); together
with, in the case of (A) or (B), all reasonable attorneys’ and professional fees
and expenses and all court costs incurred by Buyer in collecting such Purchased
Receivable and/or enforcing its rights under, or collecting amounts owed by
Seller in connection with this Agreement (collectively, the “Repurchase
Amount”). Upon such payment, the respective Purchased Receivables shall be
deemed property of and owned solely by the Seller (and shall not be deemed to be
a Purchased Receivable hereunder).

 

4.3 Seller’s Payment of the Amounts Due Buyer. All amounts due from Seller to
Buyer shall be paid by Seller to Buyer in immediately available funds by fedwire
to Buyer’s address for notices.

 

5     POWER OF ATTORNEY.

 

Seller does hereby irrevocably appoint Buyer and its successors and assigns as
Seller’s true and lawful attorney-in-fact, and hereby authorizes Buyer: (a) to
sell, assign, transfer, pledge, compromise, or discharge the whole or any part
of the Purchased Receivables; (b) to demand, collect, receive, sue, and give
releases to any Account Debtor for the monies due or which may become due upon
or with respect to the Purchased Receivables and to compromise, prosecute, or
defend any action, claim, case or proceeding relating to the Purchased
Receivables, including the filing of a claim or the voting of such claims in any
bankruptcy case, all in Buyer’s name or Seller’s name, as Buyer may choose; (c)
to prepare, file and sign Seller’s name on any notice, claim, assignment,
demand, draft, or notice of or satisfaction of lien or mechanics’ lien or
similar document with respect to Purchased Receivables; (d) to notify all
Account Debtors with respect to the Purchased Receivables to pay Buyer directly;
(e) to receive, open, and dispose of all mail addressed to Seller for the
purpose of collecting the Purchased Receivables; (f) to endorse Seller’s name on
any checks or other forms of payment on the Purchased Receivables; (g) to
execute on behalf of Seller any and all instruments, documents, financing
statements and the like to perfect Buyer’s interests in the Purchased
Receivables; and (h) to do all acts and things necessary or expedient, in
furtherance of any such purposes.

 

6     REPRESENTATIONS, WARRANTIES AND COVENANTS.

 

6.1 Receivables’ Warranties, Representations and Covenants. To induce Buyer to
purchase the Purchased Receivables and to render its services to Seller, and
with full knowledge that the truth and accuracy of the following are being
relied upon by the Buyer in determining whether to accept receivables as
Purchased Receivables, Seller represents, warrants, covenants and agrees, with
respect to each Purchased Receivable, that, as of the date of the applicable
Purchase pertaining to such Purchased Receivable:

 

(a) Seller is the absolute owner of each of the Purchased Receivables and has
full legal right to sell, transfer and assign such receivables;

 

(b) The correct amount of each Purchased Receivable is as set forth on the
applicable Schedule and is not in dispute;

 

(c) The payment of each Purchased Receivable is not contingent upon the
fulfillment of any obligation or contract, and any and all obligations required
of the Seller have been fulfilled as of the applicable Purchase Date;

 

(d) Such Purchased Receivable is based on an actual sale and delivery of goods
and/or services actually rendered, is due no later than the applicable Due Date
and is owing to Seller, is not past due or in default, has not been previously
sold, assigned, transferred, or pledged, and is free of any and all liens,
security interests and encumbrances other than liens, security interests or
encumbrances in favor of Buyer or any other division or affiliate of Silicon
Valley Bank;

 

(e) There are no defenses, offsets, or counterclaims against such Purchased
Receivable, and no agreement has been made under which the Account Debtor may
claim any deduction or discount, except as otherwise stated on the applicable
Schedule;

 

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   Non-Recourse Receivables Purchase Agreement

 

(f) Seller and, to Seller’s knowledge, each Account Debtor set forth on the
applicable Schedule with respect to such Purchased Receivable, is not insolvent
as that term is defined in the United States Bankruptcy Code and the California
Uniform Commercial Code, and no such Account Debtor, to the knowledge of Seller,
has filed or had filed against it a voluntary or involuntary petition for relief
under the United States Bankruptcy Code; and

 

(g) No Account Debtor set forth on the applicable Schedule with respect to such
Purchased Receivable has objected to the payment for, or the quality or the
quantity of the subject matter of, the Purchased Receivable, each such Account
Debtor is liable for the amount set forth on such Schedule.

 

6.2 Additional Warranties, Representations and Covenants. In addition to the
foregoing warranties, representations and covenants, to induce Buyer to buy the
Purchased Receivables, Seller hereby represents, warrants, covenants and agrees
that:

 

(a) Seller will not assign, transfer, sell, or grant, or permit any lien or
security interest in any interest the Seller may have in any Purchased
Receivables to or in favor of any other party, without Buyer’s prior written
consent.

 

(b) The place where the records concerning all Purchased Receivables are kept is
set forth at the beginning of this Agreement, and Seller will give Buyer at
least 10 days prior written notice if such place where the records concerning
all Purchased Receivables are kept is changed. Seller shall execute any
documents necessary to perfect Buyer’s interest in the Purchased Receivables.

 

(c) If Payment in Full of any Purchased Receivable has not occurred by the
applicable Due Date, then Seller shall within 10 days of such date provide a
written report to Buyer setting forth the reasons for such delay in payment.

 

7    ADJUSTMENTS.

 

In the event any Adjustment or dispute is asserted by any Account Debtor, Seller
shall promptly advise Buyer and Seller shall, subject to the Buyer’s approval,
resolve such disputes and advise Buyer of any Adjustments and promptly remit to
Buyer the difference between the Invoice Amount on the Purchase Date and the
Invoice Amount after such Adjustment. Unless Buyer has otherwise elected to
exercise its rights under Section 4.2 hereof, Buyer shall remain the absolute
owner of any Purchased Receivable which is subject to Adjustment, and, until the
amount of such adjustment (as set forth above) is paid by Seller to Buyer, any
rejected, returned, or recovered personal property, with the right to take
possession thereof at any time, and if such possession is not taken by Buyer,
Seller agrees to resell it for Buyer’s account at Seller’s expense with the
proceeds made payable to Buyer. While Seller retains possession of said returned
goods and such goods are the property of Buyer, Seller shall segregate said
goods and mark them “property of Silicon Valley Bank.”

 

8    INDEMNIFICATION.

 

(a) Seller hereby agrees that in the event any Account Debtor is released from
all or any part of its payment obligations with respect to any Purchased
Receivable by reason of: (1) any act or omission of Seller not permitted by this
Agreement or consented to in writing by Buyer; or (2) the operation of any of
the provisions of the documentation pertaining to such Purchased Receivables,
which result in the termination of the Account Debtor’s obligation to pay all of
any part of the Purchased Receivables, then, upon the happening of any such
event, Seller shall thereafter pay to Buyer on the date when the Account Debtor
would otherwise have paid the Purchased Receivable to Buyer an amount equal to
the lesser of (a) the amount of the Purchased Receivable not payable by the
Account Debtor as a result of such event and (b) the unpaid portion of the
Purchased Receivable Amount for such Purchased Receivable.

 

(b) Seller hereby agrees to pay, and to indemnify and hold harmless Buyer from
and against, any taxes which may at any time be asserted in respect of this
transaction or the subject matter thereof (including, without limitation, any
sales, occupational, excise, gross receipts, general corporation, personal
property, privilege

 

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   Non-Recourse Receivables Purchase Agreement

 

or license taxes, but not including taxes imposed upon the Buyer with respect to
its income arising out of this transaction) and costs, expenses and reasonable
counsel fees in defending against the same, whether arising by reason of the
acts to be performed by Seller hereunder or imposed against Buyer, Seller, the
property involved or otherwise; provided that with respect to any of the
foregoing for which Seller shall be liable, Seller shall receive reasonably
prompt notice from Buyer of this assertion of any such taxes on Buyer of which
Buyer has notice.

 

9    ADDITIONAL RIGHTS.

 

To secure the prompt payment and performance to Buyer of all of the Purchased
Receivables and the obligations of Seller hereunder, Seller hereby grants to
Buyer a continuing lien upon and security interest in all of Seller’s now
existing or hereafter arising rights and interest in the following, whether now
owned or existing or hereafter created, acquired, or arising, and wherever
located (the “Related Property”): (A) Seller’s rights to any returned or
rejected goods in respect of the Purchased Receivables, with respect to which
Buyer has all the rights of any unpaid seller, including the rights of replevin,
claim and delivery, reclamation, and stoppage in transit; (B) All books and
records pertaining to the Purchased Receivables or the foregoing goods; and (C)
All proceeds of the foregoing, whether due to voluntary or involuntary
disposition, including insurance proceeds. Seller is not authorized to sell,
assign, transfer or otherwise convey any interest in any Related Property
without Buyer’s prior written consent. Seller agrees to sign UCC financing
statements, in a form acceptable to Buyer, and any other instruments and
documents requested by Buyer to evidence, perfect, or protect the interests of
Buyer in the Purchased Receivables and the Related Property. Seller agrees to
deliver to Buyer the originals of all instruments, chattel paper and documents
evidencing or related to Purchased Receivables and Related Property. Nothing in
this Agreement limits the security interest granted in the Loan Agreement and
nothing in this Agreement limits any of the other terms or provisions of the
Loan Agreement, all of which continue in full force and effect.

 

10    DEFAULT.

 

The occurrence of any one or more of the following shall constitute an Event of
Default hereunder:

 

(a) Any involuntary lien, garnishment, attachment or the like is issued against
or attaches to the Purchased Receivables or any Related Property, which is not
cured within 10 days after the Seller has notice of the same or in the exercise
of reasonable diligence should have had notice of the same; or

 

(b) Any “Event of Default” under, or as defined in, the Loan Agreement occurs
and is continuing.

 

11    REMEDIES UPON DEFAULT.

 

Upon the occurrence of an Event of Default, Buyer has and may exercise all the
rights and remedies under this Agreement and under applicable law, including the
rights and remedies of a secured party under the California Uniform Commercial
Code, all the power of attorney rights described in Section 5 with respect to
all Purchased Receivables and Related Property, and the right to collect,
dispose of, sell, lease, use, and realize upon all Purchased Receivables and all
Related Property.

 

12    ACCRUAL OF INTEREST.

 

If any amount owed by Seller to Buyer hereunder is not paid when due, such
amount shall bear interest from such date until paid at a per annum rate equal
to the Prime Rate plus 4.0%.

 

13    FEES, COSTS AND EXPENSES.

 

The Seller will pay to Buyer immediately upon demand all reasonable fees, costs
and expenses (including reasonable fees of attorneys and professionals and their
costs and expenses) that Buyer incurs with any of the following: (a) preparing,
negotiating, administering, and enforcing this Agreement or any other agreement
executed by Buyer and Seller in connection herewith, including any amendments,
waivers or consents in connection with any of the foregoing, (b) enforcing
Buyer’s rights under, or collecting amounts owed by Seller to Buyer in
connection

 

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with this Agreement, including, without limitation, to enforce (i) Seller’s
agreement to repurchase as set forth in Section 4.2, (ii) Seller’s payment of
any amounts owing by Seller pursuant to Section 7 hereof, or (iii) Seller’s
payment of any amounts owing by Seller pursuant to Section 8 hereof, (c)
enforcing any other rights against Seller or any guarantor, (d) protecting or
enforcing its title to the Purchased Receivables or its security interest in the
Related Property, and (e) the representation of Buyer in connection with any
bankruptcy case or insolvency proceeding involving Seller or any guarantor.
Seller shall indemnify and hold Buyer harmless from and against any and all
claims, actions, damages, costs, expenses, and liabilities of any nature
whatsoever arising in connection with any of the foregoing, except to the extent
arising as a result of Buyer’s own gross negligence or willful misconduct.

 

14    SEVERABILITY, WAIVER, AND CHOICE OF LAW.

 

In the event that any provision of this Agreement is deemed invalid by reason of
law, this Agreement will be construed as not containing such provision and the
remainder of the Agreement shall remain in full force and effect. If Buyer
waives a default it may enforce a later default. Any consent or waiver under, or
amendment of, this Agreement must be in writing. Nothing contained herein, or
any action taken or not taken by Buyer at any time, shall be construed at any
time to be indicative of any obligation or willingness on the part of Buyer to
amend this Agreement or to grant to Seller any waivers or consents. This
Agreement has been transmitted by Seller to Buyer at Buyer’s office in the State
of California and has been executed and accepted by Buyer in the State of
California. This Agreement shall be governed by and interpreted in accordance
with the internal laws of the State of California. As a material part of the
consideration to Buyer to enter into this Agreement, Seller (i) agrees that all
actions and proceedings relating directly or indirectly to this Agreement shall,
at Buyer’s option, be litigated in courts located within California, and that
the exclusive venue therefor shall be Santa Clara County; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method permitted
by law; and (iii) waives any and all rights Seller may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any such
action or proceeding

 

15    NOTICES.

 

All notices shall be given to Buyer and Seller at the addresses or faxes set
forth on the first page of this Agreement and shall be deemed to have been
delivered and received: (a) if mailed, three calendar days after deposited in
the United States mail, first class, postage pre-paid, (b) one calendar day
after deposit with an overnight mail or messenger service; or (c) on the same
date of confirmed transmission if sent by hand delivery, telecopy, telefax or
telex.

 

16    JURY TRIAL.

 

SELLER AND BUYER EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT
OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN BUYER AND SELLER,
OR ANY CONDUCT, ACTS OR OMISSIONS OF BUYER OR SELLER OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
BUYER OR SELLER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE.

 

17    TITLES AND SECTION HEADINGS.

 

The titles and section headings used herein are for convenience only and shall
not be used in interpreting this Agreement.

 

[Signatures on Next Page]

 

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   Non-Recourse Receivables Purchase Agreement

 

IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement under seal as
of the date first written above.

 

Seller:

  Buyer:

 

    ZHONE TECHNOLOGIES, INC.

 

SILICON VALLEY BANK

    By

 

/s/ Kirk Misaka

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By

 

/s/ Pete Scott

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President or Vice President

 

Title

 

Senior Vice President

Seller:

       

 

    ZTI MERGER SUBSIDIARY III, INC.

       

    By

 

/s/ Kirk Misaka

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President or Vice President

       

 

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   Non-Recourse Receivables Purchase Agreement

 

EXHIBIT A

SCHEDULE

 

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   Non-Recourse Receivables Purchase Agreement

 

SCHEDULE DATED                     

TO

NON-RECOURSE RECEIVABLES PURCHASE AGREEMENT

DATED AS OF <insert date of agreement>

 

Seller:

  

ZTI MERGER SUBSIDIARY III, INC. and

ZHONE TECHNOLOGIES, INC.

Buyer:

   SILICON VALLEY BANK

Purchase Date:

  

 

--------------------------------------------------------------------------------

Due Date:

                    days from Purchase Date

Total Purchased Receivables:

   $                 (List of Receivables total)

Discount Rate:

   Prime Rate plus 1% per annum computed on the basis of a year of 360 days.

Purchase Price:

   $                     (is                  % of the Total Purchased
Receivables which is the straight discount of the Total Purchased Receivables
discounted from the Due Date to the Purchase Date at the Discount Rate).

Administrative Fee:

   0.58% multiplied by the Total Purchased Receivables.

 

Seller warrants and represents that (a) its warranties and representations in
the Agreement are true and correct as of the date of this Schedule and (b) no
Event of Default has occurred under the Agreement.

 

Seller:

 

Buyer:

    ZHONE TECHNOLOGIES, INC.

 

SILICON VALLEY BANK

    By

 

 

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By

 

 

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President or Vice President

 

Title

 

 

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Seller:

       

    ZTI MERGER SUBSIDIARY III, INC.

       

    By

 

 

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President or Vice President

       

 

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