Zhone Preps Reverse Split

OAKLAND, Calif. -- Zhone Technologies, Inc. (NASDAQ:ZHNE), a global leader in multi-service access solutions, announced today that its Board of Directors has authorized a reverse stock split and repricing of stock options. Zhone has decided to pursue the reverse stock split in order to regain compliance with the minimum bid price requirement of The Nasdaq Stock Market (“Nasdaq”). Zhone plans to select a reverse stock split ratio of between 1-for-5 and 1-for-10, such that between 5 and 10 shares of issued and outstanding common stock will convert into one share of common stock. It also plans to exchange stock options held by current employees, officers and directors for new stock options with an exercise price equal to the last reported sale price of Zhone’s common stock on the date of grant.

The reverse stock split and stock option repricing are subject to the approval of Zhone’s stockholders. Zhone filed a preliminary proxy statement with the SEC today for a special meeting of stockholders at which such approval will be sought. The time, date, location and other details regarding the special meeting will be communicated to stockholders at a later date. Zhone currently expects to complete the transactions in the fourth quarter of 2008.

Zhone Technologies Inc. (Nasdaq: ZHNE)