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Press Release
Network Elements Closes $77 Million in Financing; Funding Will Fuel Expansion of Manufacturing Capacity and Further Optical Module Development

BEAVERTON, Ore. -- (BUSINESS WIRE) -- January 4, 2001 -- Network Elements Inc., the Optical Networking Module (ONM") company, Thursday announced the closing of $77 million in financing.

New strategic investors Intel Communications Fund and Nortel Networks have joined Credit Suisse First Boston Private Equity and Western Technology Investment in this round, bringing the total funding of Network Elements to $100 million. Previous investor New Enterprise Associates led this round and original seed investor, Alloy Ventures, also participated.

"Our Optical Networking Module products are in high demand and we have the right products for this fast-growing market," said Bruce Murdock, president and CEO of Network Elements. "As we continue to attract top tier investors and partners, this round of financing enables us to further build up our manufacturing capacity and introduce several new products that are now in development. Our employees are focused on driving towards high-volume manufacturing, regular product releases and exceeding customer expectations." "Network Elements' Optical Networking Modules complement the Intel" Internet Exchange Architecture (IXA)," said Mike Ricci, general manager of Intel's Telecom Component Division. "Intel and Network Elements will work together on innovative uses for Intel IXA focusing on increased functionality and speed of optical networking modules." "NEA's continued investment in Network Elements is a strong sign of our confidence in this company," said Tom McConnell, general partner at New Enterprise Associates. "We believe the Network Elements' Optical Networking Module products will accelerate the widespread application of 10Gb/s Ethernet and 40Gb/s connectivity." In September of 2000, Network Elements introduced the Optical Networking Module (ONM) product line, the industry's first family of highly integrated 10Gb/s optical networking modules for 10 Gigabit Ethernet equipment, IP switch equipment, SONET/SDH and DWDM termination equipment. These products are designed to be plug-and-play building blocks for the new generation of switches, routers, gateways, servers and network edge devices. Future additions to the ONM family will incorporate long-reach optics, multi-protocol support and increased functionality.

About Network Elements
Founded in late 1998, Network Elements is leading the design and development of 10Gb/s and 40Gb/s Optical Networking Modules with innovations in high-speed optics, electronics and wire-speed, multi-protocol ASICs. These Optical Networking Modules address the core, metropolitan area, edge and server markets, providing the highest levels of performance and integration in a single module. Network Elements' products enable new classes of optical networking equipment based on flexible, scalable and configurable architectures. The company is privately held and has headquarters in Beaverton. For more information, visit

About the Intel Communications Fund
The $500 million Intel Communications Fund invests in companies supporting Intel's key programs and initiatives in voice and data communications, as well as wireless communications and computing efforts. The fund, which makes minority equity investments, is focused on companies developing solutions based on CT Media", Intel(R) Internet Exchange Architecture, Intel(R) XScale" Microarchitecture and Intel(R) Personal Internet Client Architecture. The fund, created in 1999, is managed and controlled by Intel. For more information, visit

About Alloy Ventures
Alloy Ventures is an early-stage venture capital firm, focused on building technology-oriented companies in the information sciences and life sciences. The firm has significant experience investing in data communications, voice communications, wireless, enterprise software, the Internet, network infrastructure, and related areas. Alloy Ventures is based in Palo Alto, and was the original seed investor in Network Elements. Visit Alloy Ventures at

About Credit Suisse-First Boston Private Equity
CSFB Private Equity, the global private equity arm of Credit Suisse Group, is one of the largest managers of alternative assets in the world, with over $25 billion in funds under management. CSFB Private Equity is comprised of investment funds that focus on domestic and international leveraged buyouts and other private equity investments, mezzanine investments, real estate investments, venture capital investments, investments in distressed debt securities and investments in other funds. CSFB Private Equity includes the family of DLJ Merchant Banking funds, DLJ Phoenix funds and the Sprout funds. CSFB Private Equity maintains offices in New York, London, Buenos Aires, Hong Kong, Los Angeles, Moscow and Sao Paulo.

About New Enterprise Associates
New Enterprise Associates (NEA) is the leading start-up venture investor in the country, primarily financing businesses in information technology and medical and life sciences. Since 1978, NEA has practiced classic venture capital by investing in early-stage companies and working with management to nurture and build companies of real and lasting value. NEA has offices in Menlo Park, Calif.; Reston, Va.; and Baltimore. Visit NEA at

About Western Technology Investment
WTI is a specialist in asset-based financial services for start-up and emerging growth companies. WTI is the largest independent asset based financing organization with headquarters in Silicon Valley. Founded in 1980 to assist new and emerging venture capital backed companies, they are long-term players with the experience and resources necessary to support their clients in both good and difficult markets. They have successfully completed 10 private offerings and have originated more than $3/4 billion dollars in asset based financing for venture capital financed companies. Through their venture lending and leasing operations, WTI entities hold warrants in numerous client companies. Visit WTI at

Network Elements Inc. Karen Hall, 503/601-3309 or The Ardell Group Katy Lenmark (editorial), 858/792-2910

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