October 29, 2003
Nissho Electronics Corporation Enters into a Distribution Relationship with Xtellus for Dynamic Optical Components

MORRIS PLAINS, N.J.--(BUSINESS WIRE)--Oct. 29, 2003--Xtellus, a maker of dynamic optical modules and components for reconfigurable optical networks, and Nissho Electronics, one of Japan's foremost IT and telecommunications system integrators, today announced an agreement where Nissho will represent and distribute Xtellus' products in Japan. Nissho has already begun sampling Xtellus' Dynamic Blocker Equalizer with leading Japanese telecommunications system suppliers.

The current generation of optical networks deployed in the 1990s provides lots of bandwidth between predetermined points but is totally inflexible. As these networks now need to evolve to satisfy new traffic patterns they are creating a huge operational problem as reconfiguration is either manual or dynamic using very expensive conversion back into the electronic domain. To overcome this problem new dynamic optical technology such as Xtellus' Dynamic Blocker Equalizer is being engineered into optical networking systems currently under development to enable dynamic reconfigurability in the far less expensive optical domain.

"The Market for dynamic and reconfigurable optical networks which address the overwhelming deployment of bandwidth on demand is increasing, and will continue to grow," said Takashi Fukuda, Senior Managing Director of Nissho Electronics Corporation. "Among a number of competitors, Xtellus has unique patented technology on their products and their own LC fabrication facility which is the core of such dynamic optical modules. We recognize that these enhance their products competitiveness against other competitors and we are delighted to add them to our growing portfolio to deliver such leading edge technologies that best meet our customers' current and future needs."

"We are thrilled to be working with Nissho who represents many outstanding US and European telecommunications companies, they have been bringing us opportunities from day one," said Gil Cohen, president and CEO, Xtellus. "We see a demand for our products with telecommunications system suppliers around the world and our relationship with Nissho now enables us to reach directly the suppliers in the highly advanced and competitive Japanese telecommunications market."

Xtellus will be demonstrating its Dynamic Blocker Equalizer at Nissho's booth at the Fiber Optic Expo in Tokyo, Jan. 28-30, 2004.

About Xtellus
Xtellus designs and manufactures liquid crystal-based dynamic optical components and modules for multiwavelength, reconfigurable optical networking systems. Xtellus products provide wavelength management and optical power control functionality that improve the ability of optical networks to handle traffic without expensive electronic conversion. Xtellus products use the world's highest performance liquid crystal optical processors optimized for telecom applications to deliver exceptional performance. For more information visit www.xtellus.com or contact Jonathan Homa, email: jonathan.homa@xtellus.com, tel: 973-326-1100 #113.

About Nissho Electronics Corporation
Since its inception in 1969, Nissho Electronics Corporation has provided best-in-breed technology products and services from around the world to the Japanese market. As one of Japan's leading distributors and system integrators, Nissho Electronics handles various products and services from over a hundred business partners in the fields of information technology, telecommunications, semiconductors and electronics. With nearly 800 staff, 16 offices throughout Japan and 2 offices in the US for efficient international communications, Nissho Electronics can support all our customers on site 24 hours a day, 365 days a year. For more information, please visit our website at: www.nelco.com or call us at 408-969-9700.

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