Form of Second Restated Rights Agreement dated November 13, 2003



 EXHIBIT 4.1 
  

ZHONE TECHNOLOGIES, INC.  
  
 SECOND RESTATED RIGHTS AGREEMENT 
  
 THIS SECOND RESTATED RIGHTS AGREEMENT is entered into as of November 13, 2003, by and among Zhone Technologies, Inc., a Delaware corporation (the
“Company”), the undersigned holders of Series AA Preferred Stock (the “Series AA Preferred Stockholders”) and Series B Preferred Stock (the “Series B Preferred Stockholders”) of the Company (collectively, the
“Preferred Stockholders”), and Mory Ejabat, Jeanette Symons and Robert Dahl (each a “Founder” and collectively, the “Founders”). 
  

RECITALS: 
  
 A. The Company has entered into an Agreement and Plan of Merger, dated as of July 27, 2003 (the “Merger Agreement”), by and among the Company,
Tellium, Inc. (“Tellium”) and Zebra Acquisition Corp. (“Merger Sub”), providing for, among other things, the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving as a wholly owned
subsidiary of Tellium. 
  
 B. Upon the consummation of the Merger,
which is expected to occur on the date of this Agreement (the “Merger Closing Date”), each share of Common Stock and Preferred Stock of the Company will be converted into the right to receive a certain number of shares of Common Stock of
Tellium according to a formula set forth in the Merger Agreement. 
  
 C. Immediately following the Merger, the name of Tellium will be changed to Zhone Technologies, Inc. (hereinafter the “Company” shall refer to Zhone Technologies, Inc. after the Merger (formerly Tellium, Inc.)). 
  
 D. Following the consummation of the Merger and the name change as described
above, Zhone will be a publicly-traded company with shares listed on the Nasdaq National Market and subject to the public reporting obligations set forth in the Securities Exchange Act of 1934. As a result, the parties to this Agreement agree that
the Merger shall be considered to be a “Qualified IPO”, as that term was defined in the Restated Rights Agreement, dated as of February 12, 2003, by and among the Company and the other parties thereto. 
  
 E. The parties desire to amend and restate this Rights Agreement, as provided
herein, to clarify the rights and obligations of the parties with respect to the Company following the Merger. 







 AGREEMENT: 
  

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants contained herein, the parties agree as follows: 

 
 1. Registration Rights. 
  
 1.1 Definitions. As used in this Agreement, the following terms shall
have the following respective meanings: 
  
 (a) The terms
“register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act of 1933, as amended (the “Securities Act”),
and the declaration or ordering of the effectiveness of such registration statement. 
  
 (b) The term “Registrable Securities” means (i) any and all shares of Common Stock of the Company issued or issuable in connection with the Merger to the former holders of Preferred Stock of Zhone, including
warrants and options exercisable therefor or convertible securities convertible thereunto, (ii) except for Sections 1.1(d), 1.2, 1.4, 1.9 and 2.1, the Founder Shares (as defined in subsection (e) below), (iii) stock issued in lieu of the securities
referred to in (i) and (ii) above in any reorganization or (iv) stock issued in respect of the stock referred to in (i), (ii) and (iii) above and this clause (iv) as a result of a stock split, stock dividend, recapitalization or the like
(collectively, a “Recapitalization Event”), but excluding any such Common Stock that has been (i) registered under the Securities Act pursuant to an effective registration statement for resale of securities filed thereunder and disposed of
in accordance with the registration statement covering them, (ii) subject to Section 1.10, disposed of pursuant to an exemption to the registration requirements under the Securities Act or (iii) publicly sold pursuant to Rule 144 or Rule 145 under
the Securities Act. 
  
 (c) The terms “Holder” or
“Holders” mean(s) any person or persons to whom Registrable Securities were originally issued or qualifying transferees under subsection 1.10 hereof who hold Registrable Securities. 
  
 (d) The term “Initiating Holders” means any Holder or Holders of
twenty percent (20%) or greater of the Registrable Securities then held by the Holders. 
  
 (e) The term “Founder Shares” shall mean any and all shares of Common Stock of the Company issued to the Founders in connection with the Merger, but excluding any such Common Stock that has been (i)
registered under the Securities Act pursuant to an effective registration statement for resale of securities filed thereunder and disposed of in accordance with the registration statement covering them, (ii) subject to Section 1.10, disposed of
pursuant to an exemption to the registration requirements under the Securities Act or (iii) publicly sold pursuant to Rule 144 or Rule 145 under the Securities Act. 
  
 (f) The term “SEC” means the Securities and Exchange Commission. 
  
 (g) The term “Registration Expenses” shall mean all expenses
incurred by the Company in complying with any single registration effected pursuant to subsections 1.2, 1.3 and 1.4 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, reasonable fees and expenses of one special counsel for all selling stockholders up to One Hundred Fifty Thousand Dollars ($150,000), blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company). 







 (h) The term “Material Adverse Change” shall mean any change, effect or circumstance that,
individually or when taken together with all other such changes, effects or circumstances, has or is reasonably likely to have, any material adverse effect on the assets, liabilities, operations, business, competitive position, prospects, results of
operations or condition (financial or otherwise) of the Company and its subsidiaries taken as a whole; provided, however that none of the following shall be deemed to constitute a Material Adverse Change: any change, effect or
circumstance that results from conditions affecting the U.S. economy or the world economy. 
  
 (i) The term “Person” means any natural person, partnership (whether limited or general), limited liability company, trust, estate, association, corporation, custodian, nominee or any other individual or
entity in its own or any representative entity. 
  
 1.2 Demand
Registration. 
  
 (a) Request for Registration. In
case the Company shall receive from Initiating Holders a written request that the Company effect any registration, qualification or compliance with respect to Registrable Securities with an anticipated aggregate offering price before deduction of
standard underwriting discounts and commissions, in excess of Five Million Dollars ($5,000,000), the Company will: 
  
 (i) promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and 
  
 (ii) as soon as practicable, use its best efforts to effect all such
registrations, qualifications and compliances (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualifications under the applicable blue sky or other state securities laws and appropriate
compliance with exemptive regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such
Initiating Holder’s or Initiating Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a
written request given within thirty (30) days after receipt of such written notice from the Company; provided, that the Company shall not be obligated to take any action to effect such registration, qualification or compliance pursuant to
this subsection 1.2: 
  
 (A) at any time prior to six (6) months
following the Merger Closing Date; 
  
 (B) in any particular
jurisdiction in which the Company would be required to execute a general qualification or compliance unless the Company is already subject to service in such jurisdiction and except as required by the Securities Act; or 







 (C) after the Company has effected two (2) such registrations pursuant to this subsection 1.2(a) and
such registrations have been declared or ordered effective. 
  
 Subject to the foregoing clauses (A) through (C), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practical, but in any event within ninety (90) days after receipt
of the request or requests of the Initiating Holders; provided, however, that if the Company shall furnish to such Initiating Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of
Directors it would be detrimental to the Company and its stockholders for such registration statement to be filed at the date filing would be required and it is therefore essential to defer the filing of such registration statement, the Company
shall have an additional period of not more than sixty (60) days after the expiration of the initial ninety (90) day period within which to file such registration statement; provided, that the Company may not use this right more than once in
any twelve (12) month period. The Company shall use its best efforts to cause such registration statement to remain effective for at least one hundred twenty (120) days, or until the distribution described in the registration statement has been
completed, whichever occurs first. In the event the Company does not perform its obligations set forth in the preceding sentence, then such registration shall not be deemed effected for the purposes of the limitations set forth in Section
1.2(a)(ii)(C). 
  
 (b) Underwriting. If the Initiating
Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as part of their request made pursuant to subsection 1.2 and the Company shall include such information in
the written notice referred to in subsection 1.2(a)(i). In such event, the underwriter shall be selected by a majority in interest of the Initiating Holders and shall be reasonably acceptable to the Company. The right of any Holder to registration
pursuant to subsection 1.2 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest
of the Initiating Holders and such Holder) to the extent provided herein. The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters. Notwithstanding any other provision of this subsection 1.2, if the underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, the
Initiating Holders shall so advise all Holders participating in the registration, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all such Holders thereof in
proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders. If any Holder disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company,
the underwriter and the Initiating Holders. Any Registrable Securities which are excluded from the underwriting by reason of the underwriter’s marketing limitation or withdrawn from such underwriting shall be withdrawn from such registration.

  
 (c) Company Shares. If the managing underwriter has
not limited the number of Registrable Securities to be underwritten, the Company may include securities for its own account or for the account of others in such registration if the managing underwriter so agrees and if the number of Registrable
Securities which would otherwise have been included in such registration and underwriting will not thereby be limited. 







 1.3 Company Registration. 
  
 (a) Registration. If at any time or from time to time, the Company shall determine to register any of its
securities, for its own account or the account of any of its stockholders (other than a registration (A) on Form S-1 or S-8 or successor forms relating solely to employee stock option or purchase plans, (B) on Form S-4 relating solely to an SEC Rule
145 transaction or (C) a registration on any other form or successor forms the use of which is not appropriate for the sale of Registrable Securities), the Company will: 
  
 (i) promptly give to each Holder written notice thereof; and 
  
 (ii) include in such registration (and compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made within twenty (20) days after receipt of such written notice from the Company by any Holder or Holders, except as set forth in subsection 1.3(b) below. 
  
 (b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to subsection 1.3(a)(i). In such event the right of any Holder to registration pursuant to
subsection 1.3 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and the other stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this subsection 1.3, if the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the
underwriter may limit the number of Registrable Securities to be included in the registration and underwriting; provided, however in no event shall the amount of Registrable Securities of the Holders included in the offering be reduced
below thirty percent (30%) of the total amount of securities included in such offering, unless the Holders holding a majority of the Registrable Securities consent in writing to such a reduction. In the event of a cutback by the managing underwriter
of the number of Registrable Securities to be included in the registration and underwriting, the Company shall advise all Holders of Registrable Securities which would otherwise be registered and underwritten pursuant hereto, and the number of
shares of Registrable Securities that may be included in the registration and underwriting shall be allocated first among all of such Holders, excluding the Holders of Founder Shares, in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders as of the date of the notice pursuant to subsection 1.3(a)(i). If, after such Holders participate to the full extent they desire in such registration and underwriting, the managing underwriter
determines that additional shares of Registrable Securities may be included, the number of such shares shall be allocated among all of the Holders of Founder Shares in proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders of Founder Shares. If any Holder disapproves of the terms of the underwriting, he or she may elect to 







 withdraw therefrom by written notice to the Company and the underwriter. Any Registrable Securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration. 
  
 1.4 Form S-3. In addition to the rights and obligations set forth in subsections 1.2 and 1.3 above, if Initiating Holders request that the Company file a registration statement on Form S-3 (or any successor to Form S-3) for a public
offering of Registrable Securities, and the Company is then a registrant entitled to use Form S-3 to register shares for such an offering, the Company will: (i) promptly give written notice of the proposed registration, qualification or compliance
to all other Holders; and (ii) as soon as practicable, use its best efforts to effect all such registrations, qualifications and compliances (including, without limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualifications under the applicable blue sky or other state securities laws and appropriate compliance with exemptive regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or such portion of such Initiating Holder’s or Initiating Holders’ Registrable Securities as are specified in such request, together with all or such portion of
the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request given within thirty (30) days after receipt of such written notice from the Company. The Company shall use its best efforts to cause
such registration statement to remain effective for at least one hundred twenty (120) days, or until the distribution described in the registration statement has been completed, whichever occurs first; provided, however the Company shall not
be required to effect a registration pursuant to this subsection 1.4: 
  
 (a) at any time prior to six (6) months following the Merger Closing Date; 
  
 (b) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already
subject to service in such jurisdiction and except as may be required by the Securities Act; 
  
 (c) if the Company, within ten (10) days of the receipt of the request of the Initiating Holders, gives notice of its bona fide intention to effect the filing of a registration statement with the SEC within forty-five
(45) days of receipt of such request (other than with respect to a registration statement relating to a Rule 145 transaction, an offering solely to employees or any other registration which is not appropriate for the registration of Registrable
Securities); 
  
 (d) during a period of ninety (90) days
following the effective date of any registration statement filed under the Securities Act (other than with respect to a registration statement relating to a Rule 145 transaction, an offering solely to employees or any other registration which is not
appropriate for the registration of Registrable Securities); 
  
 (e) if the Company has effected two (2) registrations pursuant to this subsection 1.4 within the previous twelve (12) months, provided, however, in the event the Company does not exercise best efforts to cause a registration
statement to remain effective for at least one hundred twenty (120) days, or until the distribution is completed, whichever occurs first, then such registration shall not be deemed effected for the purposes of the limitations of this Section 1.4(d);
or 







 (f) if the Company shall furnish to such Initiating Holders a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of Directors of the Company, it would be detrimental to the Company and its stockholders for such registration statement to be filed on or before the date filing would be required and it
is therefore essential to defer the filing of such registration statement, in which case the Company shall have the right to defer such filing for a period of not more than ninety (90) days after the furnishing of such a certificate of deferral,
provided that the Company may not defer such filing pursuant to this subsection 1.4 more than once in any twelve (12) month period. 
  
 In the event such Initiating Holders propose to offer the shares of Registrable Securities pursuant to this subsection 1.4 by means of an underwriting,
the proposed underwriter(s) shall be selected by a majority in interest of the Initiating Holders and shall be reasonably acceptable to the Company. In such event, the right of any Holder to registration pursuant to subsection 1.4 shall be
conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such
Holder) to the extent provided herein. The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters.
Notwithstanding any other provision of this subsection 1.4, if the underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, the Initiating Holders shall so advise
all Holders participating in the registration, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all such Holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by such Holders. If any Holder disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company, the underwriter and the Initiating
Holders. Any Registrable Securities which are excluded from the underwriting by reason of the underwriter’s marketing limitation or withdrawn from such underwriting shall be withdrawn from such registration. 
  
 1.5 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this Section 1 shall be borne by the Company except as follows: 
  
 (a) The Company shall not be required to pay for Registration Expenses of any registration proceeding begun pursuant to subsection 1.2, the request for
which has been subsequently withdrawn by the Initiating Holders, in which latter such case, such expenses shall be borne pro rata by the Holders requesting such withdrawal. Notwithstanding the foregoing, the Company shall be required to pay for
Registration Expenses of any registration proceeding begun pursuant to subsection 1.2 if the request for such registration proceeding has been withdrawn (i) by the Initiating Holders at the Company’s request, (ii) due to the occurrence of a
Material Adverse Change or (iii) when the Initiating Holders agree to forfeit one (1) other registration for which the Company would be obligated to pay expenses. 







 (b) The Company shall not be required to pay fees or disbursements of legal counsel other than the fees
and disbursements of one special counsel selected by a majority of the participating Holders. 
  
 (c) The Company shall not be required to pay Registration Expenses for more than two (2) registrations pursuant to subsection 1.2. 
  
 (d) The Company shall not be required to pay Registration Expenses for more than six (6) registrations pursuant to
subsection 1.4. 
  
 (e) The Company shall not be required to pay
underwriters’ fees, discounts or commissions relating to Registrable Securities. 
  
 1.6 Registration Procedures. In the case of each registration, qualification or compliance effected by the Company pursuant to this Rights Agreement, the Company will keep each Holder participating therein
advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. Except as otherwise provided in subsection 1.5, at its expense the Company will: 
  
 (a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities (drafts of which shall be provided to the Holders for the sole purpose of confirming the accuracy of the information therein relating to each such Holder) and use its best efforts to cause such registration statement to
become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to one hundred twenty (120) days. 
  
 (b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration
statement (drafts of which shall be provided to the Holders for the sole purpose of confirming the accuracy of the information therein relating to each such Holder). 
  
 (c) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. 
  
 (d) Use its best efforts to register and qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions. 
  
 (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an agreement. 







 (f) Notify each Holder of Registrable Securities covered by such registration statement at any time when
a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. 
  
 1.7 Indemnification. 
  
 (a) The Company will indemnify each Holder of Registrable Securities and each of its officers, directors, members and partners, and each Person
controlling any such Person, with respect to which such registration, qualification or compliance has been effected pursuant to this Rights Agreement, and each underwriter, broker or dealer, if any, and each Person who controls any underwriter,
broker or dealer of the Registrable Securities held by or issuable to such Holder, against all claims, losses, expenses, damages and liabilities (or actions in respect thereto) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, or any violation or alleged violation by the Company of the Securities Act, the Securities
Exchange Act of 1934, as amended (“Exchange Act”), or any state securities law applicable to the Company or any rule or regulation promulgated under the Securities Act, the Exchange Act or any such state law and relating to action or
inaction required of the Company in connection with any such registration, qualification of compliance, and will reimburse each such Holder, each of its officers, directors, members and partners, and each Person controlling any such Person, each
such underwriter, broker or dealer and each Person who controls any such underwriter, broker or dealer, within a reasonable amount of time after incurred for any reasonable legal and any other expenses incurred in connection with investigating,
defending or settling any such claim, loss, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 1.7(a) shall not apply to amounts paid in settlement of any such claim, loss, damage,
liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld); and provided, further that the Company will not be liable in any such case to the extent that any such
claim, loss, damage or liability arises out of or is based solely on any untrue statement or omission based upon written information furnished to the Company by an instrument duly executed by such Holder or underwriter, broker or dealer specifically
for use therein. 
  
 (b) Each Holder will, if Registrable
Securities held by or issuable to such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers, each underwriter, broker or dealer,
if any, of the Company’s securities covered by such a registration statement, each person who controls the Company within the meaning of the Securities Act, and each other such Holder, each of its officers, directors, members and partners and
each Person controlling such Person, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other 







 document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, partners, members, Persons or underwriters, brokers or dealers for any reasonable legal or any other expenses incurred
in connection with investigating, defending or settling any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement, prospectus, offering circular or other document in reliance solely upon and in conformity with written information furnished to the Company by the Holder in an instrument duly executed by such Holder
specifically for use therein; provided, however that the indemnity agreement contained in this subsection 1.7(b) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected
without the consent of the Holder (which consent shall not be unreasonably withheld); and provided, further that the total amount for which any Holder shall be liable under this subsection 1.7(b) shall not in any event exceed the aggregate
net proceeds received by such Holder from the sale of Registrable Securities held by such Holder in such registration. 
  
 (c) Each party entitled to indemnification under this subsection 1.7 (the “Indemnified Party”) shall give notice to the party required to
provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom; provided, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such party’s expense; and provided, further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in prejudice to the Indemnifying Party; and provided, further that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the Indemnifying Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due
to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in
respect to such claim or litigation. 
  
 (d) If the
indemnification provided for in this Section 1.7 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any losses, claims, damages or liabilities referred to herein, the Indemnifying Party, in lieu of
indemnifying such Indemnified Party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the violation(s) that resulted in such loss, claim, damage or liability, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified 







 Party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; provided, that in no event shall any contribution by a Holder hereunder exceed the net proceeds received from the offering by such Holder. 
  
 (e) The obligations of the Company and Holders under this Section 1.7 shall
survive completion of any offering of Registrable Securities in a registration statement and the termination of this Agreement. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim
or litigation. 
  
 1.8 Information by Holder. Any Holder or
Holders of Registrable Securities included in any registration shall promptly furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing and
as shall be required in connection with any registration, qualification or compliance referred to herein. 
  
 1.9 Rule 144 Reporting. With a view to making available to Holders the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the Company agrees at all times to: 
  
 (a) make and keep public information available, as those terms are understood and defined in SEC Rule 144; 
  
 (b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and 
  
 (c) so long as a Holder owns any Registrable Securities, to furnish to such Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144, and
of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as the Holder may reasonably request in complying with any rule or
regulation of the SEC allowing the Holder to sell any such securities without registration. 
  
 1.10 Transfer of Registration Rights. Holders’ rights to cause the Company to register their securities and keep information available, granted to them by the Company under Section 1, may be assigned by
any Holder upon the (i) sale or transfer by such Holder to a transferee of any portion of the Registrable Securities held by such Holder in excess of 100,000 shares of Common Stock (as adjusted for any Recapitalization Event), (ii) transfer of
Registrable Securities to an affiliated partnership or other entity or to an affiliate or an associate of such Holder or (iii) transfer of any portion of the Registrable Securities held by such Holder to any other Holder; provided, that the
Company is given written notice by such Holder at the time of or within a reasonable time after said transfer, stating the name and address of said transferee and 







 identifying the securities with respect to which such registration rights are being assigned, and further provided that
said transferee shall agree to become subject to the obligations of the transferring party hereunder. 
  
 1.11 Limitations on Subsequent Registration Rights. From and after the date hereof, the Company shall not, without the prior written consent of the
Holders of not less than a majority of the Registrable Securities held by all of the Holders then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or
prospective holder to demand any registration or include such securities in any registration filed under subsections 1.2, 1.3 or 1.4 hereof if such inclusion would adversely affect the rights of any Holder under such subsections. 
  
 1.12 Termination of Registration Rights. No Holder shall be entitled
to exercise any right provided for in this Section 1 after seven (7) years following the Merger Closing Date; provided, however, that a Holder’s rights provided for in this Section 1 shall terminate earlier when such Holder may sell all
its shares in a three (3) month period under Rule 144 of the Securities Act (without reference to Rule 144(k)). 
  
 2. General. 
  
 2.1 Waivers and Amendments. With the written consent of the record or beneficial holders of at least sixty six and two-thirds percent (66K%) of the
Registrable Securities, the obligations of the Company and the rights of the parties under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time
or indefinitely), and with the same consent the Company, when authorized by resolution of its Board of Directors, may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of
the provisions of this Agreement; provided, however that no modification, amendment or waiver of this Agreement shall adversely affect any Preferred Stockholder in a way different than any other Preferred Stockholder without the first
Preferred Stockholder’s written consent; provided, further, however that no such modification, amendment or waiver shall reduce the aforesaid percentage of Registrable Securities without the consent of all of the Holders of the
Registrable Securities. Upon the effectuation of each such waiver, consent, agreement of amendment or modification, the Company shall promptly give written notice thereof to the record holders of the Registrable Securities who have not previously
consented thereto in writing. 
  
 2.2 Governing Law. This
Agreement shall be governed in all respects by the laws of the State of Delaware as such laws are applied to agreements between Delaware residents entered into and to be performed entirely within Delaware. 
  
 2.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. Upon the closing of the Merger, all of the rights and obligations of the Company
under this Agreement shall become rights and obligations of Tellium, which shall be renamed “Zhone Technologies, Inc.” immediately following the closing of the Merger. 







 2.4 Entire Agreement. Notwithstanding the provisions of section 4 of that certain Affiliate
Agreement, dated on or about the closing date of the Merger, between Tellium, Inc. and certain of the parties to this Agreement, this Agreement constitutes the full and entire understanding and agreement between the parties with regard to the
subjects hereof, and this Agreement shall supersede and cancel all prior agreements between the parties hereto with regard to the subject matter hereof. 
  
 2.5 Notices, etc. All notices, requests, consents and other communications under this Agreement shall be in writing and shall be delivered by hand
or fax or sent by a nationally recognized overnight courier service with written verification of receipt: 
  
 If to the Company: 
  
 Zhone Technologies, Inc. 
 7001 Oakport Street 
 Oakland, California 94621 
 Attention: President 
 (fax no. 510-777-7001) 
  
 with a copy
to: 
  
 Gray Cary Ware & Freidenrich LLP

 400 Hamilton Avenue 
 Palo Alto, California 94301-1825 
 Attention: Peter M. Astiz, Esq. 
 (fax no. 650-833-2001) 
  
 If to a Preferred Stockholder: 
  
 At such address or addresses as may have been furnished to the Company in writing by such Preferred Stockholder. 
  
 Notices provided in accordance with this Section 2.5 shall be deemed delivered upon actual
receipt. 
  
 2.6 Severability. In case any provision of
this Agreement shall be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby. 
  
 2.7 Titles and Subtitles. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 
  
 2.8 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall
constitute one instrument. 







 2.9 Attorney’s Fees. In the event that any dispute among the Company, any or all Founders and
any or all Preferred Stockholders should result in arbitration, the arbitrator may award to one or more of the Prevailing Persons such reasonable attorney fees, costs and expenses, as determined by the arbitrator. Any judgment or order enforcing
such arbitration may, in the discretion of the court entering such judgment or order, contain a specific provision providing for the recovery of attorney fees and costs incurred in enforcing such judgment or order and an award of prejudgment
interest from the date of the breach at the maximum rate of interest allowed by law. For the purposes of this Section 2.9, “attorney fees” shall include, without limitation, attorney fees incurred in arbitration, post-arbitration order or
judgment motions, contempt proceedings, garnishment, levy, and debtor and third party examinations, discovery and bankruptcy litigation. For purposes of this Section 2.9, “Prevailing Person” shall mean any person who is determined by the
arbitrator in the proceeding to have prevailed or who prevails by dismissal, default or otherwise. 
  
 2.10 Binding Arbitration. The Company, each Founder and each Preferred Stockholder agree that any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by binding arbitration, and judgment upon the final award may be entered in any court having jurisdiction. The arbitration shall be in Palo Alto, California and in accordance with the
Comprehensive Arbitration Rules and Procedures (“Rules”) of the Judicial Arbitration and Mediation Services/Endispute in San Francisco, California. Except as otherwise provided in Section 2.9 (“Attorney’s Fees”) of this
Agreement, all fees and expenses of the arbitration shall be borne by the parties equally. 
  
 A single arbitrator shall be selected according to the Rules within thirty (30) days of submission of the dispute to the arbitrator. The arbitrator shall conduct the arbitration in accordance with the California
Evidence Code. The parties shall allow and participate in discovery in accordance with the California Rules of Civil Procedure for a period of sixty (60) days after the filing of an answer or other responsive pleading. All issues regarding
compliance with discovery requests shall be decided by the arbitrator. Any party may seek the arbitrator’s permission to take any additional deposition which is necessary to preserve the testimony of a witness who either is, or may become,
outside the subpoena power of the arbitrator or otherwise unavailable to testify in the arbitration. 
  
 The arbitrator shall have the power to enter any award that could be entered by a Judge of the Superior Court of the State of California sitting without a jury, and only such power, except that the arbitrator shall
not have the power to award punitive damages, treble damages or any other damages that do not represent actual damages, even if permitted under the laws of the State of California or any other applicable law. 
  
 The parties hereby agree to the Optional Appeal Procedure provided for in the Rules. The
final arbitration award may be enforced in any court having jurisdiction over the parties and the subject matter of the arbitration. Notwithstanding the foregoing, the Company, each Founder and each Preferred Stockholder irrevocably submit to the
non-exclusive jurisdiction of the Superior Court of the State of California, Santa Clara County, and the United States District Court for the Northern District of California, Branch nearest to Palo Alto, California, in any action to enforce an
arbitration award. 







 The Company, each Founder and each Preferred Stockholder further agree that personal jurisdiction over it may be effected
by service of process by registered or certified mail addressed as provided in Section 2.5 of this Agreement, and that when so made shall be as if served upon it personally within the State of California. 
  
 [Signatures to Follow] 







 IN WITNESS WHEREOF, the parties hereby have executed this Agreement on the date first above written.

  

			
	COMPANY:
	
	 Zhone Technologies, Inc.

		
	 By:
	 	 /s/ Mory Ejabat


	 	 	 Mory Ejabat,

	 	 	 Chief Executive Officer

	
	 ACKNOWLEDGED AND AGREED

	
	Tellium, Inc.
		
	 By:
	 	  




  







 COUNTERPART SIGNATURE PAGE 
 ZHONE TECHNOLOGIES, INC. 
 SECOND RESTATED RIGHTS AGREEMENT 
  
 FOUNDERS 
  
 Please print your name and sign to the right. 
  

	
	 Name (Please Print):

	
	

	
	 Signature:




  







 COUNTERPART SIGNATURE PAGE 
 ZHONE TECHNOLOGIES, INC. 
 RESTATED RIGHTS AGREEMENT 
  
 PREFERRED STOCKHOLDER 
  
 If entity: 
  

					
	 Please print the legal name of the
 organization and have an authorized
 person sign to the right.
	 	 Name of Organization:
  
  


			
	 	 	 By:
	 	  


	 	 	 	 	 Name (Please Print)

			
	 	 	 Title:
	 	  


	 If individual:
  
	 	 	 	 
			
	Please print your name and sign to the right.	 	 	 	 
	 	 	 Name (Please Print):

		
	 	 	  


			
	 	 	Signature: