Document:

Non-Recourse Receivables Purchase Agreement

 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. 

			
	 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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	 Silicon Valley Bank
	  	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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	 Silicon Valley Bank
	  	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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	 Silicon Valley Bank
	  	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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	 Silicon Valley Bank
	  	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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	 Silicon Valley Bank
	  	Non-Recourse Receivables Purchase Agreement

  

 
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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	 Silicon Valley Bank
	  	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

	 	 By
	 	 /s/ Pete Scott

	 	 	 President or Vice President
	 	 Title
	 	 Senior Vice President

			
	 Seller:
	 	 	 	 
	  
     ZTI MERGER SUBSIDIARY III,
INC.
	 	 	 	 
				
	     By
	 	 /s/ Kirk Misaka

	 	 	 	 
	 	 	 President or Vice President
	 	 	 	 

  

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	 Silicon Valley Bank
	  	Non-Recourse Receivables Purchase Agreement

  

 EXHIBIT A 
 SCHEDULE 
  

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	 Silicon Valley Bank
	  	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
	 	  

	 	 By
	 	  

	 	 	 President or Vice President
	 	 Title
	 	  

			
	 Seller:
	 	 	 	 
			
	     ZTI MERGER SUBSIDIARY III, INC.
	 	 	 	 
				
	     By
	 	  

	 	 	 	 
	 	 	 President or Vice President
	 	 	 	 

  

 -10-Employment Agreement, effective as of January 29, 2004

 Exhibit 10.14 
  
 EMPLOYMENT AGREEMENT 
  
 EMPLOYMENT AGREEMENT, effective as of January 29, 2004 (the “Commencement Date”) by and between Aphton Corporation, a Delaware corporation and
its successors or assigns (the “Company”), and Patrick T. Mooney, M.D. (“Executive”). 
  
 W I T N E S S E T H: 
  
 WHEREAS, the Board of Directors of the Company (the “Board”) desires to employ Executive and to assure Executive’s continued employment by the Company on the terms and conditions of this Agreement, and
Executive desires to be employed by the Company on the terms and conditions of this Agreement. 
  
 NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the parties agree as follows: 
  
 1. Term of Employment. Except for earlier termination as provided in
Section 7 hereof, Executive’s employment under this Agreement shall be for a three-year term (the “Employment Term”) commencing on the Commencement Date and ending three (3) years thereafter. Subject to Section 7 hereof, the
Employment Term shall be automatically extended for additional terms of successive two (2) year periods (each additional period, a “Renewal Term”) unless the Company or Executive gives written notice to the other at least ninety (90) days
prior to the expiration of the Employment Term, or the respective Renewal Term, as the case may be, of the termination of Executive’s employment hereunder at the end of such current Employment Term or Renewal Term (“Notice of
Nonextension”). 
  
 2. Positions. 
  
 (a) Executive shall serve as the President and Chief Executive Officer of
the Company. Executive shall also serve on the Board without additional compensation and subject to any policy of the Compensation Committee of the Company’s Board (the “Compensation Committee”) with regard to director’s fees.

  
 (b) Executive shall have such duties and authority, consistent
with the position of a president and chief executive officer of a company as shall be assigned to him from time to time by the Board. Executive shall report directly to the Board, or a committee thereof, in performing his duties hereunder.

  
 (c) During the Employment Term or any Renewal Term, Executive
shall devote all of his business time and efforts to the performance of his duties hereunder; provided, however, that Executive shall be allowed, to the extent that such activities do not materially interfere with the performance of his duties and
responsibilities hereunder, to manage his passive personal interests and, subject to the next sentence, to serve on the board of directors, or on committees of such board of directors (or any similar positions), of any for-profit, charitable or

 
civic entity. Executive may serve on such boards of directors or committees only if approved in advance by the Board (which approval may be withdrawn for any
good reason, as determined by the Board in its sole discretion) and Executive shall not serve on any board of directors if such service would be inconsistent with his fiduciary responsibilities to the Company. 
  
 3. Base Salary. During the Employment Term or any Renewal Term, the
Company shall pay Executive a base salary at the annual rate of not less than $400,000. Base salary shall be payable in accordance with the usual payroll practices of the Company, but no less frequently than monthly. Executive’s base salary
shall be reviewed annually in December by the Compensation Committee during the period of the Employment Term and may be increased, but not decreased, from time to time by the Compensation Committee and shall constitute “Base Salary” for
purposes of this Agreement. 
  
 4. Incentive Compensation.

  
 (a) Bonus. For each fiscal year after the
Commencement Date and during the Employment Term or any Renewal Term, the Compensation Committee may award the Executive a bonus (the “Bonus”) in accordance with performance targets, measurements and such other criteria as shall be
established for such year by the Compensation Committee on or before March 31st of such year. The Bonus shall be
earned and deemed accrued on the date the Compensation Committee approves the award of the Bonus. If awarded, the Bonus shall be paid by March 31st of the calendar year immediately following the calendar year for which the bonus was awarded. 
  
 (b) Stock Options. Upon the Commencement Date, Executive was granted options (the “Outstanding Option Grant”) to purchase four
hundred thousand (400,000) shares of the Company’s common stock subject to the terms set forth in the Option Agreement between the Company and Executive dated as of January 29, 2004 (the “Option Agreement”). Executive shall be
entitled to receive additional stock options and such other long term compensation as may be determined by the Compensation Committee from time to time in its discretion. In making any determinations concerning the award of stock options to
Executive, the Compensation Committee will apply the same criteria as it applies in making awards to the other named executive officers (as defined in Regulation S-K, Item 402(a)(3)) of the Company. 
  
 5. Employee Benefits and Vacation. 
  
 (a) Medical Insurance. During the Employment Term or any Renewal
Term, the Company shall provide Executive and his family with comprehensive major medical and hospitalization coverage and to the extent offered to other senior executive officers, dental and optical coverage (the “Medical Coverage”). The
Company shall pay all premiums with respect to such Medical Coverage. Such Medical Coverage may be provided either through the Company’s group medical plans, by an individual policy, or by a combination of both group and individual policies.

  
 (b) Life Insurance. During the Employment Term or any
Renewal Term, the Company shall provide Executive with term life insurance with a death benefit equal to the 

 
greater of (i) three times the then current Base Salary plus any Bonus paid in the prior fiscal year or (ii) $3,000,000. The Company shall pay all premiums
with respect to such life insurance. Such life insurance may be provided either through the Company’s group life insurance programs, by an individual policy, or by a combination of both group and individual policies. Executive shall at all
times designate the beneficiary(ies) of such life insurance. 
  
 (c) Vacation. During the Employment Term or any Renewal Term, Executive shall be entitled to vacation each year in accordance with the Company’s policies in effect from time to time. Executive shall also be entitled to such
periods of sick leave as is customarily provided by the Company to its senior executive officers. In accordance with Company policies, Executive shall have the right to carry forward unused vacation days for a calendar year to any future calendar
year. 
  
 (d) Other Benefits. During the Employment Term or
any Renewal Term, Executive shall be entitled to participate in all pension, long-term incentive compensation, retirement, savings, welfare and other employee benefit plans and arrangements, fringe benefits and perquisites, including a car
allowance, generally provided by the Company from time to time for the benefit of comparable senior executive officers, in each case, in accordance with their respective terms in effect from time to time (collectively with the benefits provided
pursuant to Section 5(b) above, “Additional Benefits”). 
  
 6. Business Expenses. The Company shall reimburse Executive for the travel, entertainment and other business expenses incurred by Executive in the performance of his duties hereunder, including without limitation, the cost of
conferences, seminars and other educational classes or meetings attended by Executive, in accordance with the Company’s policies as in effect from time to time. 
  
 7. Termination. 
  
 (a) Termination due to Death or Disability. (i) Notwithstanding any other provision of this Agreement, prior to the expiration of the Employment
Term or any Renewal Term, the Company may terminate Executive’s employment: (1) immediately upon the death of the Executive; or (2) at any time after providing Executive thirty (30) days written notice due to Executive’s Disability. In
either circumstance, the Employment Term or the Renewal Term under this Agreement shall terminate without further obligations to Executive or Executive’s legal representatives; provided that the Company shall pay to the Executive, or
Executive’s estate in the event of the Executive’s death, in a cash lump sum within thirty (30) days after the Termination Date (as defined below) an amount equal to (i) one year of the then current Base Salary plus (ii) any Base Salary
accrued but unpaid, (iii) any Bonus accrued but unpaid, (iv) any accrued but unused vacation pay payable pursuant to the Company’s policies in effect at such time, and any unreimbursed business expenses payable pursuant to Section 6
(collectively “Accrued Amounts”) and (v) any other amounts or benefits owing to Executive under the then applicable employee benefit plans, long term incentive plans or equity plans and programs of the Company which shall be paid in
accordance with such plans and programs (“Other Accrued Benefits”). For purposes of this Agreement, the “Termination Date” shall mean (A) in the case of the Executive’s termination due to death, the date of his death, (B) in
the case of Executive’s 

 
termination due to Disability, a Termination without Cause or a Termination for Cause, the date specified in the written notice, or if no date is specified
in such notice, the date that is thirty (30) days after the date of the notice or (C) in the case of Termination with Good Reason, the date specified by the Executive in the written notice (which can be no more than forty-five (45) days after the
date of such notice), or if no date is specified in such notice, the date that is thirty (30) days after the date of the notice. 
  
 (ii) For purposes of this Agreement, “Disability” shall mean by reason of the same or related physical or mental illness or incapacity,
Executive is unable to carry out his material duties pursuant to this Agreement for more than six (6) months in any twelve (12) month period; provided, however that a minimum of 90 consecutive days must comprise a portion of the six (6) month
period. At any time after the occurrence of a Disability, the Company may terminate Executive after providing Executive thirty (30) days written notice. Such termination shall not be effective if Executive returns to the full time performance of his
material duties within such thirty (30) day period. 
  
 (b)
Termination Without Cause. (i) Notwithstanding any other provision of this Agreement, prior to the expiration of the Employment Term or any Renewal Term, the Company may terminate Executive’s employment at any time upon written notice to
the Executive, and the Employment Term or the Renewal Term under this Agreement shall terminate without further obligations to Executive; provided that the Company shall pay to the Executive, in a cash lump sum, within forty-five (45) days after the
Termination Date, an amount equal to: (A) (i) if the Employment Term is terminated prior to January 29, 2005, the then current Base Salary through January 29, 2007; or (ii) if the Employment Term or any Renewal Term is terminated after January 29,
2005, an amount equal to two (2) times the sum of the then current Base Salary plus the mean Bonus paid with respect to the prior three fiscal years; (B) the sum of any Accrued Amounts and Other Accrued Benefits; plus (C) premiums for
Executive’s Medical Coverage as specified in Section 5(a) above for the remainder of the three-year Employment Term or the two-year Renewal Term. In addition, the Company will (i) permit Executive to participate in the Additional Benefits, in
accordance with their respective terms and conditions, for a period of twelve (12) months following the Termination Date or (ii) pay the cash equivalent of the Additional Benefits in a cash lump sum within thirty (30) days after the Termination
Date. 
  
 (ii) If Executive’s employment is terminated
pursuant to this subsection (b) and such termination occurs within thirteen (13) months after a Change in Control (as defined below), in lieu of the foregoing, Executive shall receive a cash lump sum within five (5) days of the Termination Date in
an amount equal to: (i) (A) if the Change in Control occurred prior to the accrual of a Bonus to the Executive for fiscal year 2004, three (3) times the then current Base Salary or (B) if the Change in Control occurred after the accrual of a Bonus
to the Executive for fiscal year 2004, two (2) times the sum of the then current Base Salary plus the mean Bonus paid with respect to the prior three fiscal years; (ii) the sum of any Accrued Amounts and Other Accrued Benefits; and (iii) the
aggregate amount of the premiums payable by the Company for Executive’s Medical Coverage as specified in Section 5(a) above for three (3) years. In addition, the Company will (i) permit Executive to participate in the Additional Benefits, in
accordance 

 
with their respective terms and conditions, for a period of twenty-four (24) months following the Termination Date or (ii) pay the cash equivalent of the
Additional Benefits in a cash lump sum within thirty (30) days after the Termination Date. 
  
 (c) Termination For Cause. (i) Notwithstanding any other provision of this Agreement, prior to the expiration of the Employment Term or any Renewal Term, the Company may terminate Executive’s employment
for Cause (as defined below) at any time after providing Executive thirty (30) days written notice by delivery of a Notice of Termination for Cause (as defined below) to the Executive and the Employment Term or the Renewal Term under this Agreement
shall terminate without further obligations to Executive; provided that the Company shall pay to the Executive in a cash lump sum within thirty (30) days after the Termination Date all Accrued Amounts and other Accrued Benefits. 
  
 (ii) For purposes of this Agreement, “A Notice of Termination for
Cause” shall mean a notice that shall indicate the specific termination provision relied upon and shall set forth in reasonable detail the facts and circumstances which provide a basis for Termination for Cause. The Termination Date for a
Termination for Cause shall be the date indicated in the Notice of Termination for Cause or if no date is specified in such notice, the date that is thirty (30) days after the date of the notice. Any purported Termination for Cause which is held by
a court not to have been based on the grounds set forth in this Agreement or not to have followed the procedures set forth in this Agreement shall be deemed a termination by the Company without Cause. A Termination for Cause which is based on
subparagraphs (iii)(A), (B), and/or (C) of this Section shall not be effective unless the Termination for Cause: 1) is based on an act, failure, or event constituting “Cause” under this Section which act, failure, or event occurred within
the ninety (90) day period immediately preceding the date on the Notice of Termination for Cause; or 2) is based on a pattern or series of conduct constituting “Cause” under this Section, of which the most recent act, failure, or event
occurred within the ninety (90) day period immediately preceding the date on the Notice of Termination for Cause. If the purported Termination for Cause is not based on such an act(s), failure(s), or event(s), then the Termination for Cause shall be
deemed a Termination Without Cause. 
  
 (iii) For purposes of
this Agreement, the term “Cause” shall be limited to the following: 
  
 (A) Executive’s willful refusal or willful failure to perform his duties; 
  
 (B) Executive’s willful misconduct or gross negligence
with regard to the Company or its affiliates or their business, assets or employees (including, without limitation, Executive’s fraud, embezzlement or other act of dishonesty with regard to the Company or its affiliates); 
  
 (C) Executive’s willful misconduct or omission which
has a material adverse economic impact on the Company or its affiliates; 

 (D) Executive’s conviction of, or pleading nolo contendere to, any felony or any
crime involving fraud, dishonesty or moral turpitude; 
  
 (E) Executive’s willful refusal or willful failure to follow the lawful written direction of the Board; 
  
 (F) Executive’s breach of a fiduciary duty owed to the Company or its affiliates, including but not limited to Section 8 hereof; or

  
 (G) any other breach by Executive of this
Agreement that remains uncured for ten (10) days after written notice thereof is given to Executive. 
  
 (d) Termination for Good Reason. (i) Notwithstanding any other provision of this Agreement, prior to the expiration of the Employment Term
or any Renewal Term, Executive may terminate his employment for Good Reason (as defined below) at any time after providing Company thirty (30) days written notice and the Employment Term or the Renewal Term under this Agreement shall terminate
without further obligations to Executive; provided that the Company shall pay to the Executive, in a cash lump sum, within forty-five (45) days after the Termination Date, an amount equal to: (A) (i) if the Employment Term is terminated prior to
January 29, 2005, the then current Base Salary through January 29, 2007; or (ii) if the Employment Term or the Renewal Term is terminated after January 29, 2005, an amount equal to two (2) times the sum of the then current Base Salary plus the mean
Bonus paid with respect to the prior three fiscal years; (B) the sum of any Accrued Amounts and Other Accrued Benefits; plus (C) premiums for Executive’s Medical Coverage as specified in Section 5(a) above for the remainder of the three-year
Employment Term or the two-year Renewal Term. In addition, the Company will (i) permit Executive to participate in the Additional Benefits, in accordance with their respective terms and conditions, for a period of twelve (12) months following the
Termination Date or (ii) pay the cash equivalent of the Additional Benefits in a cash lump sum within thirty (30) days after the Termination Date. 
  
 (ii) If Executive’s employment is terminated pursuant to this subsection (d) and such termination occurs within thirteen (13) months after a Change
in Control, in lieu of the foregoing, Executive shall receive a cash lump sum within five (5) days of the Termination Date in an amount equal to: (i) (A) if the Change in Control occurred prior to the accrual of a Bonus to the Executive for fiscal
year 2004, three (3) times the then current Base Salary, or (B) if the Change in Control occurred after the accrual of a Bonus to the Executive for fiscal year 2004, two (2) times the sum of the then current Base Salary plus the mean Bonus paid with
respect to the prior three fiscal years; (ii) the sum of any Accrued Amounts and Other Accrued Benefits; and (iii) the aggregate amount of the premiums payable by the Company for Executive’s Medical Coverage as specified in Section 5(a) above
for three (3) years. In addition, the Company will (i) permit Executive to participate in the Additional Benefits, in accordance with their respective terms and conditions, for a period of twenty-four (24) months following the Termination Date or
(ii) pay the cash equivalent of the Additional Benefits in a cash lump sum within thirty (30) days after the Termination Date. 

 (iii) For purposes of this Agreement, “Good Reason” shall mean the occurrence, without
Executive’s express written consent in the case of (A), (B), (C) or (D), of any of the following circumstances: 
  
 (A) A material reduction in Executive’s title or responsibilities as set forth in Section 2, including, without limitation, the
requirement to report to any person other than the Board or a committee of the Board; 
  
 (B) Any reduction in Executive’s Base Salary; 
  
 (C) A diminution in the Executive’s eligibility to participate in bonus, stock options, incentive
awards and other compensation plans or a diminution in Executive benefits; 
  
 (D) A change in the location of the Executive’s principal place of employment by the Company of more than fifty (50) miles from the location at which he was principally employed immediately prior to such change;
or 
  
 (F) A material breach or violation by the
Company of any provision of this Agreement, including, without limitation, non-payment of any material amounts owed by the Company when due. 
  
 (iv) Change in Control. For purposes of this Agreement, the term “Change in Control” shall mean the occurrence of any of
the following: 
  
 (A) any “person” as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”) (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Stock of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities; 
  
 (B) during any period of two (2) consecutive years, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this paragraph) whose election by the
Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination
for election was previously so approved, cease for any reason to constitute at least a majority of the Board; 

 (C) a merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or 
  
 (D) the stockholders of the Company approve a plan of complete liquidation of the Company or the
consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets other than (x) the sale or disposition of all or substantially all of the assets of the Company to a person or persons who beneficially
own, directly or indirectly, at least fifty percent (50%) or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale or (y) pursuant to a spin-off type transaction, directly or indirectly, of
such assets to the stockholders of the Company. 
  
 (e)
Vesting of Stock Options. Upon termination of Executive’s employment pursuant to Section 7(a), (b) or (d) above, (i) each non-qualified stock option granted the Executive shall be immediately vested and exercisable for a period ending
the earlier of 180 days after the Termination Date or the scheduled expiration date of such option, (ii) each incentive stock option (“ISO”) granted to Executive shall be immediately vested and exercisable in accordance with the terms of
the applicable ISO agreement and (iii) any restricted shares granted to Executive shall become vested and shall be delivered to Executive free and clear of any restrictions, other than pursuant to applicable securities laws. 
  
 (f) Voluntary Resignation without Good Reason, Retirement,
Nonextension. If Executive’s employment and the Employment Term or any Renewal Term are terminated: (i) by Executive without Good Reason, (ii) due to the retirement of Executive or (iii) by either the Company or the Executive as a result of
a Notice of Nonextension, the Employment Term or the Renewal Term shall terminate without further obligations to Executive under this Agreement, provided that the Company shall pay to the Executive, in a cash lump sum, within thirty (30) days after
the Termination Date all Accrued Amounts and Other Accrued Benefits. 
  
 (g) Medical Insurance Payments. Payments with respect to Medical Coverage required to be made pursuant to this Section 7 may, at the discretion of the Company, be made by continuing participation of Executive in the plan as a
terminee, by paying the applicable COBRA premium for Executive and his dependents, or by covering Executive and his dependents under substitute arrangements; provided, however, that any such substitute Medical Coverage shall be materially equal to
those provided to Executive during the Employment Term or any Renewal Term. 
  
 (h) No Mitigation; No Set-Off. In the event of any termination of employment under Section 7, Executive shall be under no obligation to seek other employment and there shall be no offset against any
amounts due Executive under this Agreement on account of any remuneration attributable to any subsequent employment that Executive may obtain. Any 

 
amounts due under Section 7 are in the nature of severance payments and are not in the nature of a penalty. Such amounts are inclusive of, and in lieu of,
any amounts payable under any other salary continuation or cash severance arrangement of the Company and to the extent paid or provided under any other such arrangement shall be offset from the amount due hereunder. 
  
 (i) Release. Executive agrees that, as a condition to receiving the
payments and benefits provided under Section 7 hereunder he will execute, deliver and not revoke (within the time period permitted by applicable law) a release of all claims of any kind whatsoever against the Company, its affiliates, officers,
directors, employees, agents and stockholders in the standard form then being used by the Company for senior executive officers (but without release of the right of indemnification hereunder or under the Company’s By-laws or rights under
benefit or equity plans that by their terms are intended to survive termination of his employment). 
  
 (j) Termination of Other Positions. Upon any termination of employment, Executive hereby resigns as an officer and director of the Company, any
subsidiary and any affiliate and as a fiduciary of any benefit plan of any of the foregoing. Executive shall promptly execute any further documentation thereof as requested by the Company and, if the Executive is to receive any payments from the
Company, execution of such further documentation shall be a condition thereof. 
  
 8. Confidential Information, Non-Competition and Non-Solicitation of the Company. 
  
 (a) Agreement Not to Disclose Confidential Information. (i) Executive acknowledges he has read and understands the Company’s Statement of
Policy Regarding Confidential Information (“Confidentiality Policy”) and that the Confidentiality Policy is incorporated by reference as part of this Agreement. Executive agrees to hold confidential or proprietary information and trade
secrets (“Confidential Information,” as that term is defined by the Confidentiality Policy) in trust and confidence. In this regard, Executive agrees that during and subsequent to Executive’s employment with Company, Executive agrees
that he will abide by the Confidentiality Policy. Executive shall use Confidential Information only for the contemplated purposes for the sole benefit of the Company; shall not use Confidential Information for any other purpose; and shall not
disclose or cause to be disclosed Confidential Information to any Executive, consultant, or third party, except as required in the course and scope of Executive’s employment by the Company and only if the Executive, consultant, or third party
has executed an Agreement Not to Disclose Confidential Information. Executive further acknowledges that the Confidentiality Policy may be amended from time to time, and Executive agrees that this paragraph survives and applies to all such
amendments. The Company agrees that so long as Executive does not breach this Agreement Not to Disclose Confidential Information at any time during or subsequent to his employment with the Company, the Company will not, after the expiration of the
two (2) year term provided in the Agreement Not to Compete, subparagraph (c) of this Section, use the “Inevitable Disclosure” doctrine as a basis to preclude Executive from directly or indirectly (on his own behalf or on behalf of any
other person or entity) engaging in any business that is of the type and character or that is competitive with any business conducted by the Company. 

 (ii) The parties agree that the failure of any Confidential Information to be marked or
otherwise labeled as confidential or proprietary information shall not affect its status as Confidential Information. 
  
 (iii) Executive agrees that all Confidential Information and other materials relating in any way to any Confidential Information shall be
and remain the Company’s sole property during and after Executive’s employment. 
  
 (iv) Executive agrees that he will not duplicate any Confidential Information or other materials relating in any way to any Confidential
Information, other than as necessary to fulfill his obligations as an officer of the Company, without the express written consent of the Company. 
  
 (v) Executive agrees to take all reasonable steps needed or requested by the Company to ensure that all Confidential Information is kept
confidential. 
  
 (vi) Executive agrees that upon
demand by the Company, he will return all Confidential Information, including any notes, to the Company and will represent to the Company in writing at such time that he has complied with the provisions of this subparagraph. 
  
 (b) Agreement to Comply with Company Policy Regarding Inventions and
Ideas. Executive acknowledges he has read and understands the Company’s Policy Regarding Inventions and Ideas (“Inventions Policy”) and that the Inventions Policy is incorporated by reference into this Agreement. Executive agrees
that during and subsequent to Executive’s employment with the Company, he will abide by the Inventions Policy. Executive further acknowledges that the Inventions Policy may be amended from time to time, and Executive agrees that this paragraph
survives and applies to all such amendments. 
  
 (c) Agreement
Not to Compete. Executive agrees that, both during employment and for a period of two (2) years following separation from employment for any reason (the “Non-Compete Period”), Executive will not directly or indirectly (on his own
behalf or on behalf of any other person or entity) engage in any business (or own an interest in an individual proprietorship, partnership, corporation, joint venture, trust or other form of business entity, whether as an individual proprietor,
partner, shareholder, joint venturer, officer, director, consultant, broker, employee, sales person, trustee, independent contractor, or in any manner whatsoever (except for an ownership interest not exceeding five percent (5%) of a publicly traded
entity), that is of the type and character or that is competitive with any business conducted by the Company at any time during the Employee’s employment with the Company. The parties hereby agree that the Company is currently engaged in the
business of developing products using immunotherapy technology for neutralizing hormones that participate in gastrointestinal system and reproductive system cancer and non-cancer diseases and is also engaged in the business of research and
development in the area of biotechnology, including but not limited to, hybridoma, monoclonal antibodies, and recombinant DNA. 

 (d) Agreement Not to Recruit the Company’s Employees. Executive agrees that, both during
employment and for a period of two (2) years following separation from employment for any reason (the “Non-Solicit Period”), Executive will not directly or indirectly (on his own behalf or on behalf of any other person or entity) recruit,
solicit or otherwise induce any Company employee or consultant to enter into an employment or a consulting relationship with any other business entity that competes with the Company. 
  
 (e) Agreement Not to Solicit the Company’s Clients/Customers. Executive agrees that, both during employment and
until the end of the Non-Solicit Period, Executive will not directly or indirectly (on his own behalf or on behalf of any other person or entity), solicit any business involving or similar to any products or services produced or being developed by
the Company from any Clients/Customers of the Company, or divert or attempt to divert from the Company any business relationship which existed between the Company and any Clients/Customers. For purposes of this Agreement, Clients/Customers shall
include any person or entity: 1) that was a client of the Company with which Executive had contact in the course of his business responsibilities during the twelve (12) month period immediately preceding the end of Executive’s employment; and
2) about which Executive gained confidential or proprietary information belonging to the client or Company. Customer shall also mean specifically Aventis Pasteur, GlaxoSmithKline, and Schering Plough. 
  
 (f) Reasonableness of this Section 8. Executive agrees that the
provisions of this Section 8 are reasonable and necessary for protection of the Company’s Confidential Information; its Clients/Customers’ Confidential Information; its business relationships with its Clients/Customers; and its undisrupted
workplace. 
  
 (g) Notice to New Employer. Executive agrees
that, prior to the commencement of any new employment or consultation with a person or entity in any business in which the Company operated during Executive’s employment, he will advise the person or entity of the terms of Section 8 of this
Agreement. The Executive also agrees that the Company may advise any new or prospective employer of the existence and terms of this Agreement and may furnish said employer or consultant with a copy of the relevant provisions of this Agreement.

  
 (h) Absence of Geographic Description; Savings Clause.
Executive acknowledges that there are no geographic restrictions contained in this Section 8 because the Company’s business is international and not limited to any one geographic area. Notwithstanding, if a court of competent
jurisdiction finds any or all of the foregoing paragraphs invalid for lack of a specific geographic restriction, Executive agrees that the applicable geographical restriction is the United States or such lesser or greater geographic area in which
Executive worked or solicited Clients/Customers at any time during his employment. 
  
 (i) No Conflict With Obligations. Executive promises and represents that his employment with the Company is not in conflict with any obligations he owes to any other person or entity. Executive will notify the
Company in writing before performing or causing to be performed any work for or on behalf of the Company which appears to be in conflict with: (a) rights of any nature owned or claimed by Executive in any Invention or Idea or Confidential
Information, as defined in the appropriate Company Policies, conceived by him prior to 

 
beginning work with the Company; (b) rights arising out of obligations incurred by Executive prior to beginning work for the Company; or (c) Executive’s
obligations to the Company under this Agreement. In the event of Executive’s failure to give notice of any such conflict, the Company may conclude that no such conflict exists, and Executive agrees, in such event, to make no claim against the
Company with respect to the use of any such Invention or Idea or Confidential Information by the Company. 
  
 (j) Remedies for Breaches of Section 8. In the event of a breach or potential breach of this Section 8, Executive acknowledges that the Company and
its affiliates will be caused irreparable injury and that money damages may not be an adequate remedy and agree that the Company and its affiliates shall be entitled to injunctive relief (in addition to its other remedies at law) to have the
provisions of this Section 8 enforced. It is hereby acknowledged that the provisions of this Section 8 are for the benefit of the Company and all of the affiliates of the Company and each such entity may enforce the provisions of this Section 8 and
only the applicable entity can waive the rights hereunder with respect to its confidential information and Executives. Furthermore, in the event of a breach of this Section 8 by Executive while amounts under Section 7 hereof are due and owing,
Executive shall not be entitled to receive any future amounts owed under Section 7 hereof, other than payment of Accrued Amounts and Other Accrued Benefits, but the Company shall remain entitled to injunctive relief in addition to any other remedies
at law. In the event that the Company has breached any of its obligations to make payments to Executive under Section 7 hereof, and such breach is not remedied within 30 days of written notice, then Executive shall be relieved of his obligations
under Sections 8(c), (d) and (e) hereof; provided however, that from the date that the Company shall have remedied such breach, and paid all amounts owed under Section 7, the Executive shall not take any future steps that would be in violation of
Section 8(c), (d) or (e) until the end of the Non-Compete Period or the Non-Solicit Period, as the case may be; provided further, however, that in event that prior to the Company’s remedy of the breach, Executive becomes engaged in activities
that would violate Sections 8(c), (d) or (e), except for this Section 8(j), then, upon the Company’s remedy of such breach, Executive shall be permitted to continue to engage in such activities, to the extent of such prior activity, subsequent
to the Company’s remedy. 
  
 9. Indemnification. The
Company shall indemnify and hold harmless Executive to the extent provided in the Certificate of Incorporation and By-Laws of the Company for any action or inaction of Executive while serving as an officer and director of the Company or, at the
Company’s request, as an officer or director of any other subsidiary or affiliate of the Company or as a fiduciary of any benefit plan. The Company shall cover Executive under directors and officers’ liability insurance both during and,
while potential liability exists, after the Employment Term or any Renewal Term in the same amount and to the same extent as the Company covers its other officers and directors. 
  
 10. Gross-Up Payment. 
  
 (a) Amount. If any payment or benefit provided to Executive by the Company (a “Base Payment”) is subject to the tax (the “Excise
Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) (or any other similar tax that may hereafter be imposed), the Company shall pay to Executive the “Gross-Up Payment” determined

 
as follows. The “Gross-Up Payment” shall be equal to the sum of (i) the Excise Tax imposed with respect to the Base Payment, plus (ii) the Excise
Tax imposed with respect to the Gross-Up Payment, plus (iii) all other taxes imposed on Executive with respect to the Gross-Up Payment, including income taxes and Executive’s share of FICA, FUTA and other payroll taxes. The Gross-Up Payment
shall not include the payment of any tax on the Base Payment other than the Excise Tax. The Gross-Up Payment is intended to place Executive in the same economic position Executive would have been in if the Excise Tax did not apply, and shall be
calculated in accordance with such intent. 
  
 (b) Tax Rates
and Assumptions. For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay Federal income taxes at the highest marginal rate of Federal income taxation in the calendar year in which the Gross-Up Payment is
to be made, and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive’s residence on the date of termination, net of the maximum reduction in Federal income taxes which could be obtained
from deduction of such state and local taxes. 
  
 (c) Payment
and Calculation Procedures. The Gross-Up Payment attributable to a Base Payment shall be paid to Executive in cash and at such times as such Base Payment is paid or provided pursuant to this Agreement. Simultaneously with or prior to the
Company’s payment of a Base Payment, the Company shall deliver to Executive a written statement specifying the total amount of the Base Payment and the Excise Tax and Gross-Up Payment relating to the Base Payment, if any, together with all
supporting calculations and conclusions. If Executive disagrees with the Company’s determination of the Excise Tax or Gross-Up Payment, Executive shall submit to the Company, no later than thirty (30) days after receipt of the Company’s
written statement, a written notice advising the Company of the disagreement and setting forth Executive’s calculation of said amounts. Executive’s failure to submit such notice within such period shall be conclusively deemed to be an
agreement by Executive as to the amount of the Excise Tax and Gross-Up Payment, if any. If the Company agrees with Executive’s calculations, it shall pay any shortfall in the Gross-Up Payment to Executive within twenty (20) days after receipt
of such a notice from Executive. If the Company does not agree with Executive’s calculations, it shall provide Executive with a written notice within twenty (20) days after the receipt of Executive’s calculations advising Executive that
the disagreement is to be referred to an independent accounting firm for resolution. Such disagreement shall be referred to an independent accounting firm which is not the regular accounting firm of the Company and which is designated by the
Company. The Company shall be required to designate such accounting firm within ten (10) days after issuance of the Company’s notice of disagreement. The accounting firm shall review all information provided to it by the parties and submit a
written report to the parties setting forth its calculation of the Excise Tax and the Gross-Up Payment within fifteen (15) days after submission of the matter to it, and such decision shall be final and binding on all of the parties. The fees and
expenses charged by said accounting firm shall be paid by the Company. If the amount of the Gross-Up Payment actually paid by the Company was less than the amount calculated by the accounting firm, the Company shall pay the shortfall to Executive
within five (5) days after the accounting firm submits its written report. If the amount of the Gross-Up Payment actually paid by the Company was greater than the amount calculated by the accounting firm, Executive shall pay the excess to the
Company within fifteen (15) days after the accounting firm submits its written report. 

 (d) Subsequent Recalculation. In the event the Internal Revenue Service or other applicable
governmental authority imposes an Excise Tax with respect to a Base Payment that is greater than the amount of the Excise Tax determined pursuant to the immediately preceding paragraph, the Company shall reimburse Executive for the full amount of
such additional Excise Tax plus any interest and penalties which may be imposed in connection therewith, and pay to Executive a Gross-up Payment sufficient to make Executive whole and reimburse Executive for any Excise Tax, income tax and other
taxes imposed on the reimbursement of such additional Excise Tax and interest and penalties, in accordance with the principles set forth above. 
  
 11. Miscellaneous. 
  
 (a) Arbitration. (i) All disputes arising out of or relating to this Agreement, other than those arising out of the Company’s enforcement of Section
8 hereof, that cannot be settled by the parties shall be settled by arbitration in Philadelphia, Pennsylvania, pursuant to the rules and regulations then obtaining of the American Arbitration Association. The decision of the arbitrators shall be
final and binding upon the parties, and judgment upon such decision may be entered in any court of competent jurisdiction. 
  
 (ii) Discovery shall be allowed pursuant to the intendment of the United States Federal Rules of Civil Procedure and as the arbitrators determine
appropriate under the circumstances. 
  
 (iii) The arbitration
tribunal shall be formed of three arbitrators, one to be appointed by each party and the third to be appointed by the first two arbitrators. Such arbitrators shall be required to apply the contractual provisions hereof in deciding any matter
submitted to them. 
  
 (iv) The costs and expenses of such
arbitration shall be borne by the Company. The Company shall pay or reimburse Executive for all reasonable attorneys’ fees and costs incurred by Executive in prosecuting or defending any claim under this Agreement and any such arbitration
proceeding, unless the arbitrator(s) shall determine in their award that Executive has not prevailed with respect to at least one material claim or issue in such dispute in which case Executive shall repay any amounts paid or advanced to Executive
in connection with such dispute. 
  
 (b) Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida without reference to principles of conflict of laws. 
  
 (c) Entire Agreement/Amendments. This Agreement and the instruments contemplated herein, contain the entire
understanding of the parties with respect to the employment of Executive by the Company from and after the Commencement Date and supersedes any prior agreements between the Company and Executive with respect thereto, (but not the terms of, or rights
under any equity or benefit plans or grants existing on the date hereof). 

 
There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other
than those expressly set forth herein and therein. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto. 
  
 (d) No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any
occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any such waiver must be in writing and signed by
Executive or an authorized officer of the Company, as the case may be. 
  
 (e) Legal and Other Fees and Expenses. Any reasonable costs or expenses arising out of the execution, interpretation or application of this Agreement or any term or condition of this Agreement, irrespective of which party incurred
such expense, other than with respect to Section 8 hereof or as covered by Section 11 hereof, shall be the responsibility of the Company; provided, however that Executive shall repay any amounts paid or advanced to Executive in connection with a
dispute or any litigation if Executive is not the prevailing party with respect to at least one material claim or issue in such dispute or litigation. Any reasonable costs or expenses of Executive arising out of a dispute or litigation regarding the
interpretation or application of Section 8 hereof shall be the responsibility of Executive; provided, however that Company shall reimburse Executive any amounts paid by Executive in connection with such dispute or litigation if the Company is not
the prevailing party of such dispute or litigation. The provisions of this subsection shall survive the expiration or termination of the Agreement and Executive’s employment hereunder. 
  
 (f) Assignment. This Agreement shall not be assignable by
Executive. This Agreement shall be assignable by the Company only to an entity which is owned, directly or indirectly, in whole or in part by the Company or by any successor to the Company or an acquirer of all or substantially all of the assets of
the Company or all or substantially all of the assets of a group of subsidiaries and divisions of the Company, provided such entity or acquirer promptly assumes all of the obligations hereunder of the Company in a writing delivered to Executive and
otherwise complies with the provisions hereof with regard to such assumption. Upon such assignment and assumption, all references to the Company herein shall be to the assignee entity or acquirer, as the case may be. 
  
 (g) Successors; Binding Agreement; Third Party Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon the personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees legatees and permitted assignees of the parties hereto. In the event of the
Executive’s death while receiving amounts payable pursuant to Section 7(a) hereof, any remaining amounts shall be paid to Executive’s estate. 
  
 (h) Communications. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly received (i) on the same business day when faxed or delivered, personally or by confirmed facsimile transmission prior to 5:00 p.m. Philadelphia time, (ii) three (3) business days 

 
after being mailed by United States registered or certified mail, return receipt requested, postage prepaid, or (iii) one (1) business day after being sent
by a reputable overnight courier, addressed to the respective addresses set forth below, provided that all notices to the Company shall be directed to the attention of the person below or to such other address as any party may have furnished to the
other in writing in accordance herewith. Notice of change of address shall be effective only upon receipt. Notices and all other communications shall be addressed to each party at its address or facsimile number set forth below: 
  

			
	if to Executive:	  	Patrick T. Mooney, M.D.
	 	  	625 Clinton Avenue
	 	  	Haddonfield, NJ 08033
	 	  	Facsimile:
		
	with a copy to:	  	Eckert Seamans Cherin & Mellott, LLC
	 	  	1515 Market Street, 9th Floor
	 	  	Philadelphia, PA 19102
	 	  	Attention: John M. McCafferty, Esquire
	 	  	Facsimile: (215) 851-8383
		
	if to the Company:	  	Aphton Corporation
	 	  	80 S.W. 8th Street
	 	  	Miami, FL 33130
	 	  	Attention: Chairman of the Board
	 	  	Facsimile:
		
	with a copy to:	  	Akerman Senterfitt
	 	  	One Southeast Third Avenue, 28th Floor
	 	  	Miami, FL 33131
	 	  	Attention: Kara L. MacCullough
	 	  	Facsimile: (305) 374-5095

  
 (h) Withholding
Taxes. The Company may withhold from any and all amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. 
  
 (i) Survivorship. The respective rights and obligations of the
parties hereunder, including without limitation Section 10 hereof, shall survive any termination of Executive’s employment to the extent necessary to the agreed preservation of such rights and obligations. 
  
 (j) Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 
  
 (k) Headings. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement. 

 (l) Executive’s Representation. Executive represents and warrants to the Company that
there is no legal impediment to him entering into, or performing his obligations under this Agreement and neither entering into this Agreement nor performing his contemplated service hereunder will violate any agreement to which he is a party or any
other legal restriction. Executive further represents and warrants that in performing his duties hereunder he will not use or disclose any confidential information of any prior employer or other person or entity. 

 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first
above written. 
  

			
	APHTON CORPORATION
		
	 By:
	 	 /s/ Robert Basso

	 Name:
	 	Robert Basso
	 Title:
	 	Director

  

	
	 EXECUTIVE

	
	 /s/ Patrick T. Mooney

	 Patrick T. Mooney, M.D

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