Tel Aviv, Israel; Morris Plains, NJ; Feb. 4, 2004 - RED-C, a prominent maker of top of the line dynamic fiberoptic amplifiers, and Xtellus, a maker of dynamic optical modules and components for reconfigurable optical networks, announced today that they are cooperating to implement a tunable filter for use in RED-C's self-managed optical amplifier. The joint project was acknowledged and is partially funded by KORIL, the Israeli - Korean bi-national R&D fund.

RED-C's self-managed amplifier uses the tunable filter to screen and analyze the signals' spectral shape thus allowing it to self-set its performance without management system interference. Incorporating various optical modules at its mid-stage access, the amplifier will further improve system OSNR and reliability, will simplify network's design and will materially reduce its cost. Based on RED-C's innovative design for variable-gain EDFA (Erbium Doped Fiber Amplifier), the amplifier is designated to serve as fundamental element in future optical networks.

The tunable filter is based on Xtellus' proprietary liquid crystal optical processors that are fabricated at its facility in South Korea. It features no moving parts for long-term reliability and will be the first tunable optical filter developed specifically for integrated use within an amplifier.

Yossi Boker, CEO & Co-Founder, RED-C, commented. "Being a pioneer in launching the dynamic (variable-gain) amplifier, RED-C is pursuing further its technology edge by launching the self-managed amplifier that constitutes an important step in the evolution of optical amplifiers. Xtellus' tunable filter is designed to meet RED-C's needs, providing it with a highly reliable and cost-effective component for building its self-managed amplifier".

Gil Cohen, president and CEO, Xtellus, commented. "We built our liquid crystal fabrication facility in South Korea to provide Xtellus with the core technology for a family of dynamic optical components. We are currently shipping our lead product, the Dynamic Blocker Equalizer wavelength blocker, and we view tunable filters as a key complementary element for reconfigurable optical networks. We are very pleased to have RED-C as a customer."

About RED-C
RED-C specializes in the design, development and production of a comprehensive line of optical amplifiers, including state-of-the-art Dynamic (Variable-Gain) EDFA's, Raman amplifiers and Fixed Gain Amplifiers. Relying on its multi-disciplinary expertise and its technological edge, RED-C's amplifiers are designed to provide system vendors with enhanced performance and special features. RED-C's products are shipped to leading system- vendors and widely deployed world-wide. The self-managed optical amplifier is an important milestone in RED-C's business record, strengthening its position as a leading and innovative amplifiers' vendor. For more information visit www.red-c.com or contact Arik Hertz, VP of Sales & Marketing, email: hertza@redcinc.com, tel: +(972)-3-647-6789 ext. 253.