ZHONE TECHNOLOGIES, INC. INCENTIVE BONUS PLAN

This Incentive Bonus Plan (the “Plan”) is intended to provide an additional incentive for key employees of Zhone Technologies, Inc., a Delaware corporation (the “Company”), to perform to the best of their abilities, to further the growth, development and financial success of the Company, and to enable the Company to attract and retain highly qualified employees.

The Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board”) has adopted the Plan, effective November 8, 2013.

1.Participants. Participation in the Plan shall be limited to such employees of the Company and its subsidiaries and affiliates whom the Committee from time to time determines shall be eligible to receive a bonus hereunder (the “Participants”).

2.Administration. The Plan shall be administered by the Committee. The Committee shall have the discretion and authority to administer and interpret the Plan, including the authority to establish bonus programs or guidelines under the Plan (the “Plan Guidelines”) from time to time containing such terms and conditions as the Committee may determine or deem appropriate in its discretion, including, without limitation, the administration of the Plan and/or the determination and payment of bonuses hereunder. The Committee may modify, suspend, terminate or supersede the Plan Guidelines at any time in its sole discretion. Any and all Plan Guidelines adopted by the Committee shall be subject to the terms and conditions of the Plan.

(a)A Participant may receive a bonus payment under the Plan with respect to any period(s) of employment or performance established by the Committee and based upon such objective and/or subjective performance goals as the Committee may determine in its sole discretion (the “Performance Goals”), which may include, without limitation, performance goals based on one or more of the following corporate criteria and/or individual criteria: (i) net earnings (either before or after one or more of the following: (A) interest, (B) taxes, (C) depreciation and (D) amortization); (ii) gross or net sales or revenue; (iii) net income (either before or after taxes); (iv) adjusted net income; (v) operating income; (vi) cash flow (including, but not limited to, operating cash flow and free cash flow); (vii) return on assets; (viii) return on capital; (ix) stockholders’ equity; (x) total stockholders’ return; (xi) return on sales; (xii) gross or net profit or operating margin; (xiii) expenses; (xiv) working capital; (xv) earnings per share; (xvi) adjusted earnings per share; (xvii) price per share of the Company’s common stock; (xviii) implementation or completion of critical projects; (xix) comparisons with various stock market indices; (xx) debt reduction; (xxi) operating efficiency; (xxii) financial ratios; and (xxiii) financing and other capital raising and strategic transactions.

(b)    A Performance Goal may be a single goal or a range with a minimum goal up to a maximum goal. Unless otherwise determined by the Committee, the amount of each Participant’s bonus shall be based upon a bonus formula determined by the Committee in its sole discretion that ties such bonus to the attainment of the applicable Performance Goals. The Committee may in its sole discretion modify or change the bonus formulas and/or Performance Goals at any time and from time to time during or upon completion of a performance period.

4.    Target and Maximum Bonuses. Each Participant will be assigned a target and/or maximum bonus for each period of employment or performance for which the Participant is eligible to receive a bonus award based on his or her job classification and responsibilities. A Participant’s target and/or maximum bonus may, but need not, be expressed as a percentage of his or her base salary. Unless and until changed by the Committee, in its sole discretion, the maximum bonus for the Chief Executive Officer of the Company under the Plan shall be equal to $206,250 per quarter, for a maximum aggregate bonus under the Plan of $825,000 per year.

6.    Amendment, Suspension and Termination. The Committee may amend, suspend or terminate the Plan at any time in its sole discretion.

7.    Miscellaneous.

(a)    The Company shall deduct all federal, state and local taxes required by law or Company policy from any bonus paid hereunder.

(b)    In no event shall the Company be obligated to pay to any Participant a bonus for any period by reason of the Company’s payment of a bonus to such Participant in any other period, or by reason of the Company’s payment of a bonus to any other Participant or Participants in such period or in any other period. Nothing contained in the Plan shall confer upon any person any claim or right to any payments hereunder. Such payments shall be made at the sole discretion of the Committee.

(c)    Nothing contained in the Plan shall confer upon any Participant any right to continue in the employ of the Company, or shall interfere with or restrict in any way the right of the Company, which is hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, with or without cause.

(d)    The Plan shall be unfunded. Amounts payable under the Plan are not and will not be transferred into a trust or otherwise set aside. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any bonus under the Plan. Any accounts under the Plan are for bookkeeping purposes only and do not represent a claim against the specific assets of the Company.

(e)    No award granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated. All rights with respect to an award granted to a Participant under the Plan shall be available during his or her lifetime only to the Participant.

(f)    The Plan shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of California.

(g)    Bonus payments are not intended to constitute a deferral of compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and are intended to satisfy the “short-term deferral” exemption under Section 409A of the Code and the Treasury Regulations issued thereunder. Accordingly, to the extent necessary to cause bonus payments hereunder to satisfy the “short-term deferral” exemption under Section 409A of the Code and the Treasury Regulations issued thereunder, a bonus payment shall be made not later than the later of (i) the fifteenth day of the third month following the Participant’s first taxable year in which the bonus payment is no longer subject to a substantial risk of forfeiture, or (ii) the fifteenth day of the third month following the Company’s first taxable year in which the bonus payment is no longer subject to a substantial risk of forfeiture; provided, however, that if due to administrative reasons bonuses are not paid within the foregoing time periods, then such bonuses will be paid as soon as administratively feasible but no later than the last day of the calendar year following the end of the calendar year to which such bonuses relate.