SALIRA ANNOUNCES CREATION OF WHOLLY-OWNED FOREIGN ENTERPRISE LOCATED IN CHINA

Salira China Founded to Perform Market Development and Product Development Activities.

SANTA CLARA, CA, July 31, 2002
Salira Optical Network Systems, Inc., a leading provider of optical access systems, today announced the creation of Salira China, a wholly-owned foreign enterprise incorporated in the province of Shanghai. Salira created the Salira China enterprise in order to expand its existing sales and marketing presence in China, and to perform specific product development activities including sustaining development, feature enhancements, board design and software coding. Salira will also perform some of its manufacturing in China.

In conjunction with the creation of Salira China, company founder Wei Gao was named Salira China’s president reporting to Herbert J. Martin, Salira’s CEO. In his new position, Gao will be responsible for introducing new products and expanding Salira’s business in the fast-growing China market. Salira China will begin operations immediately in Shanghai and Beijing.

“Salira China was defined in our original business plan as an accelerator to our ability to grow into related access products. We recognized long ago that operating in China represents an outstanding opportunity to simultaneously reduce the cost of developing product extensions, while enhancing our sales and marketing presence in a rapidly growing market,” said Herb Martin, Salira’s CEO. “We have a comprehensive product strategy, and Salira China will be an integral component of that strategy.”

In June 2002, the company announced and exhibited the Salira 2000 Platform, the industry’s first intelligent Ethernet Passive Optical Network (EPON) platform for Fiber-to-the-Business (FTTB). The Salira 2000 Platform is driven by the Access Operating System, a software-rich environment designed to handle the service and operational challenges of access networks today and in the future.

In addition to its product development role, Salira China will also perform key marketing and sales activities in China. Salira has had a market development presence in China since 2000. The expansion of Salira’s presence in China is the next logical step in the company’s growth plans. Salira recognizes China as a significant market for its products due to several factors. China’s entry into the WTO is a catalyst for growth and reduces the complexities and risks of operating in China. The WTO requires China to open its markets to competition, so native service providers will need to build telecom infrastructure in preparation for this competition. The 2008 Olympics in Beijing is acting as a further catalyst for growth in China.

“Salira has had a strong Chinese heritage since its inception, and we have operated in China since 2000,” said Gao. “Salira China is uniquely positioned to provide Salira with invaluable supplemental development resources, and to expand the market opportunity for Salira’s products.”

Salira possesses the in-depth understanding and experience in China that will enable the company to operate there successfully. Gao, Salira China’s president, was born in China and was educated at the prestigious Tsinghua University. Salira’s senior engineering management team is also native to China and was educated at leading Chinese universities. In addition, Salira’s market development team in China has been generating positive customer traction since its establishment in 2000.

About Salira Optical Network Systems, Inc.
Headquartered in Santa Clara, California, Salira builds broadband systems that are used to deliver advanced voice, video and data services to business and residential customers. Salira’s systems give carriers the ability to offer traditional TDM services and advanced IP-based broadband services in one integrated, cost-effective system. Salira Shanghai, Ltd., a subsidiary of Salira, performs manufacturing, R&D and customer support functions, and has responsibility for marketing and sales in the Asia Pacific region.