Exhibit 10.1

 

Loan No. 950114107

 

SECOND AMENDMENT TO DEED OF TRUST AND OTHER LOAN DOCUMENTS

 

THIS SECOND AMENDMENT TO DEED OF TRUST AND OTHER LOAN DOCUMENTS (this
“Agreement”) is made as of December 27, 2005, by and among ZHONE TECHNOLOGIES
CAMPUS, LLC, a California limited liability company (“Borrower”), ZHONE
TECHNOLOGIES, INC., a Delaware corporation (“Guarantor”), and FREMONT
INVESTMENT & LOAN, a California industrial bank (“Lender”), with respect to the
following Recitals:

 

R E C I T A L S

 

A. Lender previously made a loan to Borrower (the “Loan”) pursuant to that
certain Loan and Security Agreement dated as of March 30, 2001, as amended by
the Amendment Agreement (as hereinafter defined) (as amended, the “Loan
Agreement”). The Loan is evidenced by that certain Secured Promissory Note dated
March 30, 2001, in the original principal amount of the Loan, executed by
Borrower, as maker, in favor of Lender, as holder, as amended by the Amendment
Agreement (as amended, the “Note”). All initially-capitalized terms not
otherwise defined herein shall have the meanings given such terms in the Loan
Agreement.

 

B. The repayment of the Note and Borrower’s performance of its obligations under
the Note are secured, inter alia, by that certain (i) Deed of Trust and Fixture
Filing dated as of March 30, 2001, executed by Borrower, as trustor, to Fremont
General Credit Corporation, a California corporation, as trustee, and naming
Lender, as beneficiary, recorded on April 4, 2001, as Instrument No. 2001113773
in the Official Records of Alameda County, California (the “Recording
Location”), as amended by the Amendment Agreement (as amended, the “Security
Instrument”), and encumbering that certain real property described in Exhibit A
attached hereto and incorporated herein by this reference (the “Property”), and
(ii) Assignment of Rents and Leases dated as of March 30, 2001, executed by
Borrower in favor of Lender, recorded on April 4, 2001, as Instrument
No. 2001113774 in the Recording Location, as amended by the Amendment Agreement
(as amended, the “Assignment of Rents”).

 

C. Guarantor has executed that certain Completion and Performance Guaranty dated
as of March 30, 2001, as amended by the Amendment Agreement (as amended, the
“Guaranty”).

 

D. In connection with the Loan, Borrower, Guarantor and Lender entered into that
certain First Amendment to Loan Documents dated as of August 21, 2003 (the
“Amendment Agreement”).

 

E. Borrower has requested that Lender, among other things, (i) extend the
Maturity Date of the Note, (ii) reduce the Floor Rate (as defined in the Note),
(iii) reduce the Variable Rate Margin (as defined in the Note), (iv) adjust the
Amortization Period (as defined in the Note), (v) adjust the Prepayment Charge
(as defined in the Note), (vi) amend the partial release provision in the Loan
Agreement to allow for the partial release of a larger Release Lot, and
(vii) return the Borrower Letter of Credit for cancellation, and Lender has
agreed to do so on the terms and conditions set forth in this Agreement.

 

F. As used herein, “Loan Documents” shall mean the Note, the Security
Instrument, the Assignment of Rents and all other documents securing, or
executed in connection with, the Loan (as modified by the Modification Documents
(as hereinafter defined)), but shall exclude the Environmental Indemnity.

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

NOW THEREFORE, in consideration of the foregoing Recitals, the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

 

  1. Amendment to Loan Agreement.

 

(a) Article 1 of the Loan Agreement is hereby amended as follows:

 

The definition of “Release Lot” is deleted in its entirety and replaced with the
following:

 

“Release Lot” means one or more parcels made up of (i) the Phase 3 Property
described in Section 7.16 below consisting of approximately 3.625 acres, and/or
(ii) that certain real property depicted on Exhibit D to the Second Amendment
consisting of approximately 0.9 acres, both of which are portions of the
Property, where such real property parcel or parcels constitute one or more
separate lawfully created parcels in accordance with applicable law, which may
be released from the lien of the Deed of Trust in accordance with Section 2.6
below.

 

(b) Article 1 of the Loan Agreement is hereby amended by adding the following
new definitions in alphabetical order:

 

“Current Project Appraisal” means an appraisal of the Project obtained by Lender
within sixty (60) days after the Second Amendment Effective Date from
Metropolitan Appraisal Group (William Buenzli, appraiser), or such other
appraiser reasonably approved by Lender, in form and substance satisfactory to
Lender in its good faith sole discretion.

 

“Prepayment Period” shall mean the six (6) month period commencing on the first
day of the month following the Second Amendment Effective Date and each six
(6) months thereafter.

 

“Second Amendment” means that certain Second Amendment to Deed of Trust and
Other Loan Documents dated as of December 27, 2005, by and among Borrower,
Guarantor and Lender.

 

“Second Amendment Effective Date” means the “Effective Date” s defined in the
Second Amendment.

 

(c) Section 2.6. Section 2.6 of the Loan Agreement is hereby amended to add the
following as Section 2.6(k):

 

  “(k) If the Phase 3 Property is being sold to a purchaser other than the
Oakland CRA pursuant to the CRA Purchase Agreement, Borrower shall deliver to
Lender the written consent of the Oakland CRA to the sale of the Phase 3
Property to such other purchaser, which consent shall provide that such sale is
not in violation of the Oakland CRA’s option to repurchase the Phase 3 Property
set forth in the CRA Purchase Agreement.”

 

(d) Section 7.17. Section 7.17 of the Loan Agreement is hereby deleted in its
entirety.

 

(e) Section 8.1(k) of the Loan Agreement is hereby deleted in its entirety.

 

(f) Section 9.10. Lender’s notice address in Section 9.10 of the Loan Agreement
is hereby deleted in its entirety and replaced with the following:

 

“To Lender:

   Fremont Investment & Loan      2727 E. Imperial Highway      Brea, California
92821-6713      Attention: Commercial Real Estate Asset Management      Loan No.
950114107

 

2

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

With a copy to:

   Fremont Investment & Loan      2425 Olympic Boulevard      Third Floor – East
     Santa Monica, California 90404      Attention: Alec G. Nedelman, Esq.     
Loan No. 950114107”

 

(g) Section 9.25. The following is hereby added as Section 9.25 of the Loan
Agreement.

 

(h) Exhibit D. Exhibit D is attached hereto and made a part hereof for purposes
of the definition of “Release Lot” as defined in Article 1 of the Loan
Agreement.

 

  “18. Consent to Jurisdiction.

 

Borrower and Lender each hereby consent to the jurisdiction of any state or
federal court located within the State of California in any suit, action or
proceeding based hereon or arising out of, under or in connection with this
Agreement or any of the other Loan Documents (and further agree not to assert or
claim that such venue is inconvenient or otherwise inappropriate or unsuitable),
and waive personal service of any and all process upon them and consent that all
service of process be made by certified mail to the applicable address set forth
herein.”

 

  2. Amendment to Note.

 

(a) Definitions. Article 1 of the Note is hereby amended as follows:

 

(i) The definition of “Amortization Period” is deleted in its entirety and
replaced with the following:

 

“Amortization Period” means a period of three hundred (300) months commencing on
January 1, 2006.

 

(ii) The definition of “Floor Rate” is deleted in its entirety and replaced with
the following:

 

“Floor Rate” means a rate of six and one-half percent (6.5%) per annum.

 

(iii) The definition of “Maturity Date” is deleted in its entirety and replaced
with the following:

 

“Maturity Date” means April 1, 2011.

 

(iv) The definition of “Variable Rate Margin” is deleted in its entirety and
replaced with the following:

 

“Variable Rate Margin” means three percent (3.00%) per annum, as the same may be
increased as provided in Section 7.8 of the Loan Agreement.

 

(b) Section 2.3 A. of the Note is hereby deleted as follows and replaced with
the following:

 

“A. Borrower shall make monthly payments (the “Monthly Installments”) of
principal and interest beginning on January 1, 2006 and on the first day of each
month thereafter, in the amount from time to time which fully amortizes the then
unpaid principal balance of the Loan and the interest accruing thereon at the
Interest Rate then in effect under this Note in equal monthly installments over
the then remaining term of the Amortization Period. The Monthly Installments

 

3

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

shall be subject to adjustment to reflect any adjustments in the Variable
Interest Rate of this Note, with each such adjustment effective thirty (30) days
after the applicable Adjustment Date. Monthly Installments shall also be
adjusted as provided in Section 7.8 of the Loan Agreement. Monthly Installments
shall not be adjusted on any Prepayment made while the Variable Interest Rate is
in effect until the next scheduled Adjustment Date.”

 

(c) Section 2.4. of the Note is hereby deleted as follows and replaced with the
following:

 

  “2.4 Prepayment Privilege.

 

Borrower may prepay the outstanding principal balance of this Note in whole or
in part at any time without charge or premium except as provided in this
Section 2.4. Notwithstanding the foregoing, if any principal of the Loan is paid
before the scheduled due date hereunder (a “Prepayment”), Borrower shall in
addition pay to Lender, at the time of such Prepayment, a prepayment charge (as
the same may be increased as provided below, the “Prepayment Charge”) of two
percent (2%) of the amount of the Prepayment for Prepayments made during the
first Prepayment Period; one and one-half percent (1.5%) during the second
Prepayment Period, one percent (1%) during the third Prepayment Period, and
one-half of one percent (0.5%) during the fourth Prepayment Period. No
Prepayment Charge shall be imposed on Prepayments made after the first four
Prepayment Periods. The Prepayment Charge will be due and payable whether the
Prepayment is made voluntarily, involuntarily, or upon the acceleration of the
Maturity Date, provided that no Prepayment Charge will be imposed on the
application of Casualty Proceeds or Condemnation Proceeds (as such terms are
defined in the Deed of Trust) to the amounts owing under this Note. As a
condition precedent to Borrower’s right to make any Prepayment, Borrower shall
provide Lender with not less than thirty (30) days prior written notice of any
Prepayment. The Prepayment Charge shall be in addition to Borrower’s obligation
to pay interest on any Prepayment at the Interest Rate through the date of such
Prepayment on the terms set forth in this Note.

 

BY INITIALING BELOW, BORROWER EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT,
PURSUANT TO THE TERMS OF THIS NOTE, IT HAS AGREED THAT IT HAS NO RIGHT TO PREPAY
THIS NOTE WITHOUT THE PAYMENT OF A PREPAYMENT CHARGE EXCEPT AS OTHERWISE
PROVIDED IN THIS NOTE AND THAT IT SHALL BE LIABLE FOR THE PAYMENT OF A
PREPAYMENT CHARGE FOR PREPAYMENT OF THIS NOTE ON ACCELERATION OF THIS NOTE IN
ACCORDANCE WITH ITS TERMS. FURTHERMORE, BY INITIALING BELOW, BORROWER WAIVES ANY
RIGHTS IT MAY HAVE UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR ANY
SUCCESSOR STATUTE, AND EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT LENDER HAS
MADE THE LOAN IN RELIANCE ON THE AGREEMENTS AND WAIVER OF BORROWER AND THAT
LENDER WOULD NOT HAVE MADE THE LOAN WITHOUT SUCH AGREEMENTS AND WAIVER OF
BORROWER.

 

BORROWER’S INITIALS:  

/s/ KM

 

  3. Amendment to Security Instrument.

 

The introductory paragraph in the Security Instrument is hereby deleted in its
entirety and replaced with the following:

 

“THIS DEED OF TRUST AND FIXTURE FILING (this “Deed of Trust”) is made as of
March 30, 2001, by ZHONE TECHNOLOGIES CAMPUS, LLC, a California limited
liability company (“Trustor”), whose mailing address is 7001 Oakport Street,
Oakland, California 94621, to FREMONT GENERAL CREDIT CORPORATION, a California
corporation (“Trustee”), for the benefit of FREMONT INVESTMENT & LOAN, a
California industrial bank (“Beneficiary”), whose mailing address is 2727 E.
Imperial Highway, Brea, California 92821-6713, Attention: Commercial Real Estate
Asset Management, Loan No. 950114107.”

 

4

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

  4. Amendment to Guaranty.

 

(a) Section 11. Lender’s notice address in Section 11 of the Guaranty is hereby
deleted in its entirety and replaced with the following:

 

“To Lender:

   Fremont Investment & Loan      2727 E. Imperial Highway      Brea, California
92821-6713      Attention: Commercial Real Estate Asset Management      Loan No.
950114594

With a copy to:

   Fremont Investment & Loan      2425 Olympic Boulevard      Third Floor – East
     Santa Monica, California 90404      Attention: Alec G. Nedelman, Esq.     
Loan No. 950114107”

 

  5. Amendment to Environmental Indemnity.

 

(a) The introductory paragraph in the Environmental Indemnity is hereby deleted
in its entirety and replaced with the following:

 

“THIS ENVIRONMENTAL INDEMNITY (this “Indemnity”) is made as of March 30, 2001,
by ZNONE TECHNOLOGIES CAMPUS, LLC, A California limited liability company
(“Borrower”), whose address is c/o Zhone Technologies Campus, LLC, 7001 Oakport
Street, Oakland, California 94621 and ZHONE TECHNOLOGIES, INC., a Delaware
corporation (“Zhone Inc.”), whose address is 7001 Oakport Street, Oakland,
California 94621 (each of which shall be referred to hereinafter individually as
an “Indemnitor” and collectively as the “Indemnitors”), to and for the benefit
of FREMONT INVESTMENT & LOAN, a California industrial bank (“Lender”), whose
address is 2727 E. Imperial Highway, Brea, California 92821-6713, Attention:
Commercial Real Estate Asset Management, Loan No. 950114107, and Lender’s
successors, assigns and participants, and its and their respective Affiliates
(as hereinafter defined), and the respective directors, officers, agents,
attorneys, and employees of each of the foregoing (each of which shall be
referred to hereinafter individually as an “Indemnitee” and collectively as the
“Indemnitees”), with reference to the following Recitals:”

 

(b) Section 12. The following is hereby added as Section 13 of the Environmental
Indemnity.

 

  “12. Consent to Jurisdiction.

 

Indemnitors hereby consent to the jurisdiction of any state or federal court
located within the State of California in any suit, action or proceeding brought
under or arising out of this Indemnity (and further agrees not to assert or
claim that such venue is inconvenient or otherwise inappropriate or unsuitable)
and waive personal service of any and all process upon it and consent that all
service of process be made by certified mail directed to Indemnitors at the
address set forth in this Indemnity. Each Indemnitor who is not a resident of
the State of California, or which is not qualified to do business in the State
of California as a foreign corporation, partnership or other business entity,
hereby irrevocably appoints Borrower (the “Agent”) as its authorized agent in
the State of California to accept on its behalf service of process for purposes
of any such suit, action or proceeding, and Lender may obtain personal
jurisdiction and perfect service of process through the Agent or by any other
means now or hereafter permitted by applicable law. If such Agent shall cease so
to act, each such Indemnitor shall irrevocably designate and appoint without
delay another such agent in the State of California and shall promptly deliver
to Lender written evidence of such agent’s acceptance of such appointment.”

 

5

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

  6. Amendment to Loan Documents and Environmental Indemnity.

 

As of the Effective Date (as hereinafter defined), all of the Loan Documents
(whether or not specifically described herein) and the Environmental Indemnity
are hereby amended to reflect that: (a) the Maturity Date had been extended to
April 1, 2011, (b) the Floor Rate had been reduced to six and one-half percent
(6.5%) per annum, (c) the Variable Rate Margin has been reduced to three percent
(3.00%) per annum, (d) the Amortization Period has been amended to a period of
three hundred (300) months commencing on the Effective Date, (e) the Prepayment
Charge has been increased, (f) each of the Loan Documents and the Environmental
Indemnity have been modified by the applicable Modification Documents, and
(g) the Modification Documents constitute “Loan Documents” (as “Loan Documents”
is used therein).

 

  7. Principal Paydown.

 

On or before the Effective Date (as hereinafter defined), Borrower shall pay to
Lender, in immediately available funds, the amount of Eleven Million Seventy
Thousand Three Hundred Ninety-Nine and 55/100 Dollars ($11,070,399.55) (the
“Principal Paydown”). Borrower hereby irrevocably and unconditionally instructs
and authorizes Lender to apply the Principal Paydown to reduce Borrower’s
obligations under the Loan in such order as Lender shall determine in its sole
discretion. Borrower acknowledges and agrees that the Principal Paydown is made
freely and voluntarily. Borrower further acknowledges and agrees that amounts
repaid under the Loan may not be reborrowed. No Prepayment Charge shall be
payable in connection with such Principal Paydown.

 

  8. Cancellation of Borrower Letter of Credit.

 

Concurrently with the of the closing of the transactions contemplated by this
Agreement, Lender shall return the Borrower Letter of Credit to Borrower, and
Borrower shall return the Borrower Letter of Credit to the issuer thereof for
cancellation. Upon the Effective Date, Sections 7.17 and 8.1(k) of the Loan
Agreement shall be deleted in their entirety and shall be of no further force or
effect.

 

  9. Representations and Warranties.

 

(a) As a material inducement for Lender to enter into this Agreement, Borrower
hereby represents and warrants to Lender that:

 

(i) Borrower has full power and authority to execute, deliver and perform its
obligations under this Agreement and all other documents delivered to Lender in
connection with this Agreement (collectively, the “Modification Documents”).
This Agreement and the other Modification Documents are binding upon and
enforceable against Borrower in accordance with their respective terms.

 

(ii) There is no Potential Default or Event of Default under the Note, any of
the other Loan Documents or the Environmental Indemnity.

 

(iii) The representations and warranties made by Borrower in the Loan Documents
and the Environmental Indemnity are as of the date hereof, and on the Effective
Date will be, true, correct and complete in all material respects.

 

(iv) Borrower does not have any (A) offsets or defenses against the payment of
the Note or any other amounts payable under the Loan Documents or the
Environmental Indemnity, (B) defenses to the payment of the Note, the other Loan
Documents or the Environmental Indemnity, or (C) claims against Lender or any
employee, officer, director, or attorney of Lender in connection with any of the
Note, the other Loan Documents or the Environmental Indemnity.

 

6

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

(b) As a material inducement for Lender to enter into this Agreement, Guarantor
hereby represents and warrants to Lender that:

 

(i) Guarantor has full power and authority to execute, deliver and perform its
obligations under this Agreement and the other Modification Documents. This
Agreement and the other Modification Documents are binding upon and enforceable
against Guarantor in accordance with their respective terms.

 

(ii) There is no Potential Default or Event of Default under the Guaranty, any
of the other Loan Documents or the Environmental Indemnity.

 

(iii) The representations and warranties made by Guarantor in the Guaranty, the
other Loan Documents and the Environmental Indemnity are as of the date hereof,
and on the Effective Date will be, true, correct and complete in all material
respects.

 

(iv) Guarantor has no (A) offsets or defenses against the payment of the
Guaranty or any other amounts payable under the Loan Documents or the
Environmental Indemnity, (B) defenses to the payment of the Guaranty, the other
Loan Documents or the Environmental Indemnity, or (C) claims against Lender or
any employee, officer, director, or attorney of Lender in connection with the
Guaranty, the other Loan Documents or the Environmental Indemnity.

 

The foregoing representations and warranties and the representations of Borrower
and Guarantor set forth in this Agreement, the other Modification Documents, the
other Loan Documents and the Environmental Indemnity constitute material
inducements to Lender and, but for such representations and warranties, Lender
would not have entered into this Agreement.

 

  10. Reaffirmation of Obligations.

 

Borrower and Guarantor each hereby acknowledges and reaffirms its obligations
under the Note, the Guaranties and the other Loan Documents, as such documents
have been amended by this Agreement and the other Modification Documents, and
agrees that any reference made in the Note, the Guaranty or in any of the other
Loan Documents to such documents shall mean such Loan Documents as amended by
this Agreement and the Modification Documents.

 

  11. Modification Fee and Processing Fee.

 

(a) In consideration of Lender’s agreement to make the modifications to the Loan
on the terms and conditions set forth herein, Borrower shall pay to Lender
(i) an extension fee in the amount of One Hundred Thousand Dollars ($100,000)
(the “Modification Fee”), and a processing fee in the amount of Five Thousand
Dollars ($5,000) (the “Processing Fee”); provided, however, Borrower shall
receive a credit to the Processing Fee, in an amount not to exceed $1,000, for
costs incurred and paid by Borrower in connection with it delivery of an opinion
of counsel as required under this Agreement. Borrower acknowledges and agrees
that the Modification Fee and the Processing Fee have both been fully earned by
Lender and are nonrefundable. Neither the Modification Fee nor the Processing
Fee shall be applied to any of Borrower’s obligations under the Note, this
Agreement or the Modification Documents or any of the other Loan Documents and
is in addition to Borrower’s obligation to pay all other amounts under the Loan
Documents.

 

  12. Waiver of Certain Protections.

 

As a material inducement for Lender to enter into this Agreement, Borrower
agrees that, in the event that Borrower (a) files with any bankruptcy court of
competent jurisdiction or is the subject of any petition under Title 11 of the
U.S. Code, as amended, (b) is the subject of any order of relief under such
Title 11 of the U.S. Code, as amended, (c) files or is the subject of any
petition, order, judgment or decree petition seeking, or relating to, any
reorganization, arrangement, composition, readjustment, liquidation,

 

7

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

dissolution or similar relief under any present or future federal or state act
or law relating to bankruptcy, insolvency, or other relief for debtors, or
(d) seeks, consents or agrees to, the appointment of any trustee, receiver,
conservator, or liquidator, then in such event Lender shall be entitled to
relief from any automatic stay imposed by Section 362 of Title 11 of the U.S.
Code, as amended, or otherwise, on or against the exercise of its rights and
remedies under the Loan Documents or as otherwise provided by law or in equity.
Borrower hereby irrevocably waives any benefits or protections that may be
afforded by such automatic stay, and further waives any benefits or protections
that may be afforded by relief similar to such automatic stay under Section 105
of Title 11 of the U.S. Code, as amended, or otherwise.

 

  13. Closing Conditions.

 

Lender shall have no obligation to modify the Loan unless Borrower delivers or
causes to be delivered to Lender the following items on or before December 28,
2005 (the “Termination Date”), all of which shall be satisfactory in form and
content to Lender and, if applicable, duly executed (and acknowledged where
necessary) by the appropriate parties thereto (collectively, the “Closing
Conditions”):

 

(a) This Agreement;

 

(b) A Release in the form attached hereto as Exhibit B;

 

(c) A memorandum of this Agreement, on Lender’s form, and in form sufficient for
recording in the Recording Location (the “Memorandum”);

 

(d) An opinion of counsel to Borrower and Guarantor inform and substance
acceptable to Lender in its sole discretion;

 

(e) Reimbursement to Lender of Lender’s attorneys’ fees and costs incurred in
connection with this Agreement and the other documents required by this Section;

 

(f) The Modification Fee and the Processing Fee, in immediately available funds

 

(g) At Borrower’s expense, a CLTA Endorsement 110.5 to the Title Policy together
with any other endorsements Lender shall require to insure the continued
priority of the lien of the Security Instrument on the Property notwithstanding
the modifications set forth in this Agreement;

 

(h) Lender shall have received the Principal Paydown in immediately available
funds together with all other amounts due and payable under the Loan as of the
Effective Date; and

 

(i) Such other documents, materials or information as Lender may reasonably
require.

 

  14. Events of Default.

 

In addition to all other matters constituting a default or event of default
under the Loan Documents, the breach or default by Borrower or any Guarantor of
any term or covenant contained herein, and the expiration of any applicable cure
period set forth in the Loan Documents, or the inaccuracy of any representation
or warranty contained herein, shall also be deemed a default or event of default
under the Loan Documents.

 

  15. Amendment to Loan Documents.

 

Upon the satisfaction of the Closing Conditions set forth herein and the
recordation of the Memorandum in the Recording Location on or before the
Termination Date (the “Effective Date”), the parties hereto agree that the Note
and other Loan Documents shall be amended as provided herein.

 

8

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

Except as specifically amended pursuant to the terms of this Agreement, the Loan
Documents shall remain unmodified and in full force and effect.

 

  16. Governing Law.

 

This Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of California.

 

  17. Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which when
so executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
Signature and acknowledgement pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document,
which may be recorded.

 

  18. Submission of Agreement.

 

The submission of this Agreement to Borrower, Guarantor or their respective
agents or attorneys for review or signature does not constitute a commitment or
agreement by Lender to modify the Loan, and this Agreement shall have no binding
force or effect unless the Effective Date has occurred on or before the
Termination Date.

 

  19. Time of Essence.

 

Time is of the essence with respect to each provision of this Agreement.

 

  20. WAIVER OF JURY TRIAL.

 

BORROWER, GUARANTOR AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY CONTROVERSY OR CLAIM, WHETHER ARISING IN TORT OR CONTRACT OR BY STATUTE OR
LAW, BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (INCLUDING, WITHOUT LIMITATION, THE
VALIDITY, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF OR THEREOF), OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY IN CONNECTION HEREWITH OR THEREWITH. EACH PARTY
ACKNOWLEDGES AND AGREES THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN
MADE BY ANY PERSON TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY
MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
BORROWER’S, GUARANTOR’S AND LENDER’S ENTERING INTO THIS AGREEMENT AND THE
PARTIES WOULD NOT HAVE ENTERED INTO THIS AGREEMENT WITHOUT THIS WAIVER. LENDER,
GUARANTOR AND BORROWER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS
SECTION 20 IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY
TRIAL.

 

  21. Consent to Jurisdiction.

 

Borrower, Guarantor and Lender each hereby consent to the jurisdiction of any
state or federal court located within the State of California in any suit,
action or proceeding based hereon or arising out of, under or in connection with
this Agreement or any of the other Loan Documents (and further agree not to
assert or claim that such venue is inconvenient or otherwise inappropriate or
unsuitable), and waive personal service of any and all process upon them and
consent that all service of process be made by certified mail to the applicable
address set forth herein.

 

9

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

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date first above written.

 

“Borrower”

ZHONE TECHNOLOGIES CAMPUS, LLC,

a California limited liability company

By:  

Zhone Technologies, Inc.,

a Delaware corporation,

Its Managing Member

    By:  

/s/ Kirk Misaka

   

Name:

 

Kirk Misaka

   

Title:

  Chief Financial Officer

“Guarantor”

ZHONE TECHNOLOGIES, INC.,

a Delaware corporation

By:   /s/ Kirk Misaka

Name:

 

Kirk Misaka

Its:

 

Chief Financial Officer

“Lender”

FREMONT INVESTMENT & LOAN,

a California industrial bank

By:   /s/ Ali Govahi

Name:

 

Ali Govahi

Its:

 

VP National Manager

 

S-1