Merger Announcement Details - A Question & Answer Session

Q. What is the new company’s name?

Continuum Photonics Inc and Polatis Ltd have merged to form a new company, named Polatis Inc.

Q. Where will the new company be located?

The combined companies already have customers in North America, Europe, the UK,and in Asia. To support its growing customer base, it intends to maintain the operations in both the UK and United States, and will continue to expand operations and sales offices in other locations as needed. The new company will have both a North American headquarters in Billerica, MA, and a European headquarters in Cambridge, UK. The company will be incorporated in the State of Delaware, in the United States.

Q. Who is Continuum Photonics?

Continuum Photonics was founded in 1998, and is located near Boston, Massachusetts. Continuum currently offers a family of optical switch products based on its patented DirectLight® switching technology. Due to its unique switching architecture, DirectLight is able to provide integrated switching, optical attenuation (gain equalization), and power. Continuum has aimed its existing products at the Optical Automation Systems (OAS) market, with customers in carrier labs, data equipment companies, and telecom equipment manufacturers. Continuum has products in development for telecommunication network and network monitoring applications. Continuum’s investors include Flagship Ventures, Prism Venture Partners, JK&B Capital, Boston Millennia Partners, Harris and Harris Group, GE Capital, MTDC, Arcadian Venture Partners, and Gainesborough Investments.

Q. Who is Polatis Ltd?

Polatis was founded in 2000, and is headquartered in Cambridge, UK. It currently offers products based on its Micro-Actuation and Sensing System (MASS) platform, including a range of optical switch systems,modules, and cards for both single mode and multimode fibre applications The patented MASS technology sets the benchmark for fast and ultra-low loss matrix switching, requiring no light to establish a connection. Polatis has aimed its existing products at communications, aerospace and defense customers. In March 2005, Polatis announced a worldwide sales distribution agreement with JDS Uniphase. Polatis is funded through investments by 3i, Alta Berkeley, Prelude, and EonTech.

Q. Is this an acquisition or a merger?

Continuum and Polatis are announcing a merger of their respective companies to form a new entity. This is a merger of two equally strong, successful companies, resulting in a new company with combined resources, combined technologies & industry-leading products to better serve customers in the telecom, datacom, video, and defense industries. Both companies are contributing intellectual property & technology, products, people, and their existing customer base.

Q. Is there a financing in conjunction with the merger?

Continuum and Polatis are each contributing significant cash toward the new company. In addition, investors from the existing investment team will contribute new capital to the combined entity.

Q. Why did the companies merge?

The companies merged for a number of strategic and financial reasons. Some are:

• Lead the Industry: with the combination of the top two instrument-grade optical switch companies, the new company will be the clear leader in a number of markets where precision optical switches are required. From Day 1, the company will offer an unmatched combination of performance, features, and price in its product line.
• Create a foundation for more rapid growth: with the combination of the respective sales & marketing, operations and development teams, the new company will be strongly positioned to meet the rapidly growing demand for optical switching, and to provide tier I support for high volume and network operations customers.
• Address new markets through combined technologies: both Continuum and Polatis bring unique and powerful technologies, which will be combined to deliver new switching architectures not currently available. The result is a line of new products that will be launched to address exciting new markets.

Q. What markets will the new company pursue?

The companies will continue to build upon their strong presence in the test & measurement, and defense industries, while expanding the product line to provide new solutions in other areas:

• Test & Measurement: automated manufacturing test, product verification, systems verification, network emulation, etc.
• Defense: secured networks, RF signal routing
• Video: secured video links, post-production, fiber facility router
• Network test & monitoring: advanced remote fiber test systems, PON and FTTx test access and real-time monitoring
• Network Transmission: IP over optical, DWDM transport switching
• Others, to be announced

Together, these industries represent a large and growing opportunity for the new company, with market potential of over one billion dollars in 2010.

Q. How will this merger benefit customers?

This merger will benefit our customers in a number of important ways.

• A broader product line, with even more features and configuration options planned
• A larger combined sales & support team, continuing to focus on world-class service
• Consolidated operations, with centers that can more effectively serve North America and European customers

Q. Do the two companies overlap in technology and products?

Both companies offer high performance optical switches utilizing patented, beamsteering technology. Both are capable of sub-1 dB insertion loss switches across a highly transparent switch fabric. However, each of Polatis and Continuum has developed unique and powerful technology resulting in differentiated products serving different classes of customers.

Each brings unique components of technology – from highly integrated optical functionality (including integrated optical attenuation and power meter), to environmentally-hardened packaging, to ultra-stable signal control and latching capabilities.

The combined companies will continue the tradition of high quality switching, while evolving toward a new class of device – a Layer 1 optical device with new levels of functionality integrated directly into the core platform.

Q. What will happen to the existing products? Will the products in the field continue to be supported?

The new company will combine the products and features from both companies, offering the broadest line of optical switches available today. Products in the field will absolutely continue to be supported.

Q. Can you tell us about upcoming products?

In addition to the broad combination of products immediately available, the first new products will take advantage of combining control & sensing technologies of the two companies. The intent is to provide the most versatile and powerful optical switch ever, for its array of defense, test, and carrier customers.

The new company will also leverage the combination of the two technology platforms to deliver a line of products for telecom network deployment. The new company intends to announce numerous new products over the coming year, beginning with product launches at ECOC in Glasgow, Scotland at the end of September 2005.

Q. Will the new company still be a partner with JDSU?

In March of 2005, Polatis Ltd announced a worldwide sales distribution Agreement with JDS Uniphase Corporation. This agreement brings together the Polatis family of high performance Optical Cross-Connect Switches with JDS Uniphase’s network of resellers, direct sales, and distribution channels. Both JDS Uniphase and the new company intend to keep this agreement in force.