Zhone's Arca-DACS and Sechtor 300 Products Acquired by Verilink.

OAKLAND, Calif. & CENTENNIAL, Colo. -- Verilink Corporation (Nasdaq:VRLK), a leading provider of broadband access solutions, and Zhone Technologies, Inc. (Nasdaq:ZHNE), the first company dedicated to building total-delivery solutions for voice, data and video content services worldwide, today announced that Zhone's Arca-DACS and Sechtor 300 products have been acquired by Verilink.

For the past several years, Verilink has been a major OEM of these products with a successful sales and service record of deploying these products at some of the world's largest carriers. As such, Verilink is uniquely qualified to provide continued sales and service of these products to the Arca-DACS and Sechtor 300 customer base.

Mory Ejabat, Chairman and CEO of Zhone, said, "We are pleased that Verilink has chosen to include the Arca-DACS and Sechtor 300 products in its family of telecommunications product portfolio. With this transaction, our customers benefit from continued sales of these products as well as from Verilink's experience in servicing these products at its largest customers."

"In addition to expanding our product portfolio to the network edge, this acquisition is important for Verilink as the Arca-DACS is an integral part of a network solution we supply to our largest customer," said Leigh Belden, President and CEO of Verilink. "We have been supplying this product to our customers under OEM for over three years and have gained a tremendous level of operational and field experience. With this we are well prepared to continue supporting our existing customer as well as those gained through this agreement."

The ARCA-DACS 100 and Sechtor 300 products are ideally suited for grooming fractional T1s at the network access facility, allowing carriers to choose switching granularity from DS3 down to DS0, all in one efficient, effective, and economical platform. The Arca-DACS and Sechtor 300 are OSMINE-certified and Network Equipment Building Standard (NEBS) Level-3 compliant. Both are carrier-class products designed to deliver reliable 99.999% service with no single-point-of-failure. The products also comply with all physical, power, and software requirements needed for installation in a central office, remote node, or customer site.

As an important component of this deployment, both the Arca-DACS and Sechtor 300 have completed the OSMINE Services certification process for Telcordia(TM) Network Configuration Manager (NCON) and Telcordia(TM) Loop Facilities Assignment and Control System (LFACS) support. This certification helps to ensure operations systems automation to deliver services in a timely fashion and on a volume basis. Customers also will benefit from improved billing, ordering, repair and account management services.

The OSMINE services process is an important aspect of a carrier's service offering. The completion of the OSMINE services process allows carriers to pre-qualify the ordering, circuit engineering and provisioning of the service. This flow-through integration reduces provisioning intervals and associated costs. The result for the subscriber is quicker turn-up of service.

Under the terms of this agreement, Zhone will receive 2 million common shares of Verilink in exchange for the inventory, equipment and liabilities associated with the products.

About Verilink Corporation

Verilink Corporation (NASDAQ:VRLK) is a leading provider of next-generation broadband access solutions for today's and tomorrow's networks. The company develops, manufactures and markets a broad suite of products that enable carriers (ILECs, CLECs, IXCs, and IOCs) and enterprises to build converged access networks to cost-effectively deliver next-generation communications services to their end customers. The company's products include a complete line of VoIP, VoATM, VoDSL and TDM-based integrated access devices (IADs), optical access products, wire-speed routers, and bandwidth aggregation solutions including CSU/DSUs, multiplexers and DACS. The company also provides turnkey professional services to help carriers plan, manage and accelerate the deployment of new services. Verilink is headquartered in Centennial, CO (metro Denver area), with operations in Madison, AL, and Newark, CA, and sales offices in the U.S., Europe and Asia. To learn more about Verilink, visit the company's website at http://www.verilink.com.

About Zhone Technologies, Inc.

Zhone designs and manufactures network equipment for network operators worldwide. Zhone's products allow network operators to deliver a rich array of voice, data, video, and entertainment services over their existing networks while simultaneously retooling for converged packet-based voice (VoIP) and video (IPTV) over copper or fiber access lines. Zhone's advanced networking solutions include the Single Line Multi-Service architecture (SLMS(TM)), Multi-Access Line Concentrator (MALC(TM)), Raptor(TM) and GrandSLAM ATM/IP DSLAMs, ReachDSL(TM), Network Extender Ethernet in the First Mile bonded solutions, Zhone Residential Gateways (ZRG(TM)), GigaMux(TM), Optical Transport Systems and Zhone Management System (ZMS(TM)). With deployments at over 400 carriers including among some of the world's largest networks, Zhone has enabled network operators to reinvent their businesses. For more information, please visit www.zhone.com.

Zhone, the Zhone logo, and all Zhone product names are trademarks of Zhone Technologies, Inc. Other brand and product names are trademarks of their respective holders. Specifications, products, and/or product names are all subject to change without notice. Copyright (C)2005 Zhone Technologies, Inc. All rights reserved. Verilink and the Verilink logo are registered trademarks of Verilink Corporation. All other trademarks or registered trademarks are the property of the respective owners.