Finisar has agreed to acquire all of the outstanding equity interests in AZNA, based in Wilmington, Massachusetts, and Kodeos Communications, based in South Plainfield, New Jersey. AZNA develops, manufactures and markets photonic components and subsystems which utilize their Chirp Managed Directly Modulated Lasers. AZNA's technology extends the reach of high power 10Gb/s directly modulated lasers to 200km and beyond and 2.5Gb/s DMLs to beyond 640km. While AZNA's current product offering includes 8 channel tunable transmitters, its core technology is applicable to full C and L band tunable transmitter assemblies.

Finisar will acquire the equity interests in AZNA for $19.7 million in initial consideration comprised of $2.7 million in cash and two convertible promissory notes in the principal amount of $15.6 million and $1.4 million that will be payable, at Finisar's option, in cash or in shares of Finisar common stock. Additional consideration of up to $1.8 million in cash may be paid to certain interest holders subject to meeting certain conditions during the first year after closing. Founded in 2002, AZNA has approximately 58 employees all of whom are located in Wilmington. The Company was profitable on revenues of $6.7 million in calendar 2006.

Finisar will acquire the equity interests in Kodeos for initial consideration of approximately $7.0 million in cash. Finisar may be required to pay additional consideration of up to $2.5 million in cash to certain equity interest holders contingent on the achievement of certain financial and technical milestones. In addition, Finisar may pay up to $1 million to current Kodeos employees for achievement of certain milestones. Founded in 2001, Kodeos acquired Intersymbol Communications, located in Champaign, Illinois in 2006 for its high-speed signal processing capabilities. The Company has approximately 19 employees, most of whom work at its headquarters in South Plainfield, New Jersey.

Kodeos announced last year a line of 10Gb/s tunable transponders incorporating optical duobinary (ODB) technology which enables longer distance transmission and higher dispersion tolerance while still conforming to the standard 300-pin form factor for telecom communications applications. In addition to ODB, Kodeos has developed 10Gb/s signal processing integrated circuits based on the use of Maximum Likelihood Sequence Estimator (MLSE) technology that can electronically compensate for fiber transmission impairments and dramatically increase the transmission distance and performance of a 300-pin transponder.