Zhone Technologies to acquire assets of Gluon Networks

3 February 2004 Oakland, CA Lightwave -- Zhone Technologies, Inc. announced a definitive agreement to acquire the assets of Gluon Networks, Inc. based in Petaluma, CA, for approximately $7.0 million. Gluon had been a developer of next-generation converged switching systems for telecommunications service providers.

3 February 2004 Oakland, CA Lightwave -- Zhone Technologies, Inc. announced a definitive agreement to acquire the assets of Gluon Networks, Inc. based in Petaluma, CA, for approximately $7.0 million. Gluon had been a developer of next-generation converged switching systems for telecommunications service providers.

"The acquisition of Gluon's technology extends Zhone's comprehensive carrier product portfolio to include integrated state-of-the-art switching and access technology," said Jeanette Symons, chief technology officer and vice president of engineering for Zhone. "The combination will enable new multimedia services over a distributed TDM, ATM, or IP infrastructure and will better enable carriers to offer current and next-generation services over a single access line to their subscribers."

Gluon's CLXTM Switching system in a cap and grow, or direct replacement of an existing legacy switch, is designed to provide all the necessary features to immediately begin the move to a next-generation packet-based architecture. The portfolio includes a switching and signaling gateway interface, supporting both North American and international standard variants, which bridges next-generation VoIP networks with legacy circuit switch networks.

The transaction is structured as an asset purchase and is expected to have a minimal dilutive effect on earnings in 2004 and to be accretive in 2005, excluding the impact of any acquisition related charges. The consideration for the transaction consists of approximately 1.0 million newly issued shares of unregistered Zhone common stock and $650,000 in cash. Zhone will be released from all material outstanding claims by Gluon's creditors, employees, and investors.

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