SUNNYVALE, Calif. -- Finisar Corporation (Nasdaq:FNSR), a technology leader in gigabit fiber optic solutions for high-speed data networks, today reported that it had entered into a definitive agreement to acquire privately held BaySpec, Inc. headquartered in Fremont, CA.

Founded in March 1999, and funded by Broadview, CDIB Ventures, Cisco, H&Q Asia Pacific, Intel and Finisar, BaySpec has developed the world's most cost-effective solution for multiplexing and de-multiplexing multiple DWDM wavelengths for metro and telecom applications. Based on its proprietary Volume Phase Grating (VPGTM) technology, BaySpec has been able to develop a mux/demux which is capable of combining and separating 16 to 80 wavelengths with low losses in an athermal package. Finisar gains access to this important technology as well as a talented engineering and management group.

"BaySpec is a perfect fit for Finisar," said Jerry Rawls, Finisar's President and CEO. "They help complete our vision for enabling the rollout of new wavelength services for metro access. We plan to provide DWDM at a fraction of the cost we are seeing today," added Rawls. "We helped enable an entire SAN industry by demonstrating that you could send gigabit rate signals over inexpensive multimode fibers. We stand on the verge of doing the same for the economics of metro access."

"We are excited by the possibilities that arise from the combination of Finisar and Bayspec technologies," said Dr. William Yang, BaySpec's founder, President and CEO. "The two companies together will be able to offer fiber optic products that have world class performance and disruptive costs. It is with great pleasure and anticipation that we become part of Finisar."

Under the terms of the agreement, BaySpec will merge with a wholly-owned subsidiary of Finisar, and BaySpec stockholders will be entitled to receive approximately 5.5 million shares of Finisar Common Stock including shares issuable upon exercise of options assumed in the merger plus up to an additional 1.5 million shares upon attaining certain revenue and technical milestones. The transaction will be accounted for as a purchase and is intended to qualify as a tax-free reorganization. The closing price of Finisar's Common Stock on March 15, 2002 was $7.51 per share, giving the transaction a potential aggregate value of $53 million.

Following the merger, BaySpec will become an integral part of Finisar's passive optics effort to be headed by Dr. William Yang.

The transaction is expected to be completed during the first quarter of fiscal 2003 ending July 31, 2002, and is subject to approval by BaySpec's stockholders, the notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act, and other customary conditions.

Finisar Corp. BaySpec Inc.