VIVACE NETWORKS CLOSES THIRD ROUND FUNDING FOR $83M

Investment firms include Meritech Capital, J.P. Morgan Investments, Putnam Investments, Foundation Capital, Sutter Hill Ventures and Redpoint Ventures

San Jose, CA - October 30, 2000 - Vivace Networks, a leading developer of Optical Service Provisioning Platforms, today announced the completion of its third round of venture financing for $83 million. The capital will be used to expand the company's engineering team and to accelerate the delivery of Vivace's family of high-performance multi-protocol label switching (MPLS) networking solutions.

Meritech Capital, known for its investments in proven technology, market-tested business models and seasoned management teams, led the round, accompanied by first-time investors J.P. Morgan Investments and Putnam Investments. "So many organizations have focused on increasing the speed of optical networks, neglecting customers' needs for enhanced services. Vivace is one of the first companies we have seen that addresses the critical service provider need to create new services to run on those networks," said Michael Gordon, Managing Director at Meritech Capital.

Initial investors also participating in this funding round include Foundation Capital, Sutter Hill Ventures, and Redpoint Ventures. This round of capital brings the total investment funding to $118 million.

"Vivace is ideally suited to take advantage of the technological advancements in the optical networking marketplace," said Vivace Co-Founder and Chief Executive Officer, Ken Koenig. "Our engineering organization is one of our greatest assets, consisting of some of the top experts in ASIC design, optical networking and MPLS technology. This new funding will allow us to expand that team and expedite our product development," he continued.

Vivace is developing a family of MPLS-based switches for optical networks that scale from 10 Gig up to 2.5 Terabits, and will help carriers transition from simply building high-speed transport networks to actually putting revenue-generating services on those networks. Vivace's Optical Service Creation Platforms consolidate multiple forms of legacy traffic, eliminating the need for overlay networks.

"Now that optical networks have been optimized for transport, we need to take them to the next level," stated Vivace Marketing Vice President Mike Kazban. "We are committed to enabling service providers to create and deploy services on their networks so they can differentiate themselves in the face of competition," he continued.

About Vivace Networks
Based in San Jose, CA and founded in 1999, Vivace Networks is a leading developer of Optical Service Creation Platforms for Service Providers who are creating the Next Generation Public Data Network. Vivace Networks believes that multi-protocol label switching (MPLS) is the natural migration path for today's IP-based networks and is committed to delivering a broad range of MPLS switches for next-generation Internet, intranet and extranet applications. Based on powerful MPLS traffic engineering and multi-label connection-oriented network characteristics, such as QoS and security, while maintaining the superior scalability and flexibility characteristics of pure IP networks.

Meritech Capital
Meritech Capital is a late-stage venture capital fund that was co-founded and sponsored by five leading venture firms: Accel Partners, Brentwood Venture Capital, Oak Investment Partners, Redpoint Ventures and Worldview Technology Partners. Meritech is capitalized at $1.1 billion.

J.P. Morgan Investments
J.P. Morgan is a global financial firm with a growing technology, media, and telecom investment banking and equities practice. The firm has over 300 professionals worldwide dedicated to this business, and in the United States, has teams in San Francisco, Silicon Valley, New York, and Los Angeles.

Redpoint Ventures
Redpoint Ventures was founded in the fall of 1999 by three partners from Brentwood Venture Capital and Institutional Venture Partners (IVP). Redpoint's strategy focuses on six next generation Internet and broadband categories: enabling infrastructure, service and application providers, business to consumer platforms and services, business to business platforms and services, media and content, and dot com spin-offs.

Foundation Capital
Founded in 1995, Foundation Capital is a premier venture capital firm committed to providing exceptional service to entrepreneurs to help build great new companies. In addition to capital, Foundation invests effort, perspective, experience and enthusiasm in consumer e-commerce, e-business applications, Internet infrastructure and telecommunications and networking startups. The firm takes a hands-on approach, partnering with companies in their formative stages and helping them gain access to industry leaders, potential customers, prospective partners, world-class board members and candidates for key management positions. Current successful portfolio companies include Air Fiber, Atheros, Commerce One, gForce Systems, Interwoven, NetFlix.com, NetZero, Onyx Software, Packet Design, Qstrategies, TeaLeaf and Vivace.

Sutter Hill Ventures
Sutter Hill Ventures is a leader in financing technology-based start-ups and assists entrepreneurs in building world-class, market leading companies. Since 1962, Sutter Hill has invested in over 250 companies that have achieved aggregate market capitalization in excess of $50 billion. At present, Sutter Hill has more than $400 million available for promising companies.

The Vivace team includes seasoned employees from leading technology companies
including Cisco (CSCO), 3Com (COMS), Cascade/Lucent (LU), Nortel (NT), Sun (SUN),
Intel (INTC), Advanced Micro Devices (AMD), Premisys (PRMS) and AT&T (T).
Corporate headquarters are located at 2730 Orchard Parkway, San Jose, CA. 95134.