Digital cable provider Vecima Networks to acquire software-defined-radio designer Spectrum Signal Processing

VICTORIA, British Columbia, 17 Feb. 2007. Vecima Networks Inc., a manufacturer of digital-over-cable, digital video, and broadband wireless telecommunications products, will acquire Spectrum Signal Processing Inc., a designer of software-defined radio (SDR) technology in Burnaby, British Columbia, according to terms of an agreement announced Friday.

Feb 17th, 2007

VICTORIA, British Columbia, 17 Feb. 2007. Vecima Networks Inc., a manufacturer of digital-over-cable, digital video, and broadband wireless telecommunications products, will acquire Spectrum Signal Processing Inc., a designer of software-defined radio (SDR) technology in Burnaby, British Columbia, according to terms of an agreement announced Friday.

Vecima will acquire all the outstanding common shares of Spectrum in a transaction leveraging synergistic technology, administrative efficiencies, and combined sales channels to strengthen the market position of both companies, officials say.

"Spectrum and its financial advisor, PricewaterhouseCoopers Corporate Finance Inc. (PWC), have been actively pursuing financing alternatives to enable Spectrum to fully execute its strategic plan," says Irving Ebert, chairman of Spectrum's board of directors. "The board concluded that this transaction is the best alternative for Spectrum shareholders, customers and employees and recommends that Spectrum shareholders vote to approve the cash and share offer from Vecima Networks Inc."

Vecima's position as a vendor in the emerging WiMAX market will be further strengthened by the technological resources provided by Spectrum. Both Spectrum's and Vecima's product portfolios are powered at their core by field programmable gate array (FPGA) chips, digital signal processing (DSP) chips, and general-purpose processors running software tailored to broadband wireless communications.

"Balance sheet strength is a requirement to win long-term defense contracts where supply commitments can extend well beyond a decade," says Brent Flichel, Spectrum's President and chief executive officer. "Spectrum is now at the point where such strength is critical in enabling the conversion of its existing design-in portfolio into long-term supply agreements. As a part of Vecima Networks Inc., Spectrum will have the critical mass to realize its full potential."

Vecima also intends to target high-growth commercial markets such as public safety, homeland security, satellite communications, and broadband wireless with Spectrum's software-defined radio solutions, such markets often demanding a software configurable radio solution such that various agencies can communicate in an interoperable manner.

"Vecima and Spectrum combine to offer a compelling product portfolio for the commercial and defense broadband wireless markets," says Dr. Surinder Kumar, president and chief operating officer of Vecima. "Together, we expect to bring the power of software-defined radio technologies to the commercial broadband wireless market and introduce Vecima's portfolio of last-mile wireless solutions to Spectrum's current market."

Vecima will purchase all of the outstanding common shares of Spectrum for the equivalent of $0.8939 per share based on a value per Vecima share of $10.06 which was the 30-day volume weighted average trading price of Vecima shares to January 23, 2007, the date that Spectrum and Vecima executed a non-binding letter of intent. All monetary values are in Canadian dollars.

This represents a 39 percent premium over the 30-day average closing price of Spectrum shares to February 15, 2007. Consideration will be comprised of cash of $0.4915 and 0.04 of one Vecima common share for one common share of Spectrum, subject to maximum aggregate cash consideration of $10,075,000 and a maximum of 820,000 Vecima shares.

Vecima will also acquire all outstanding stock options and warrants to acquire Spectrum shares in exchange for options and warrants of Vecima. The closing prices of Spectrum and Vecima shares on the TSX on 15 Feb. 2007 were $0.56 and $10.39, respectively.

In deciding to recommend the transaction to Spectrum shareholders, Spectrum's board of directors considered a number of factors and received an opinion from CIBC World Markets Inc., and subject to the assumptions and conditions set forth in such opinion, that the consideration to be received for the common shares of Spectrum is fair, from a financial point of view, to Spectrum shareholders.

On 13 Feb. 2007, Vecima reported record sales of $23 million in its second quarter, representing an increase of 22 percent over the same period last fiscal year. Vecima's year-to-date revenues for the six months ended 31 Dec. 2006 increased by $6.6 million or 18 percent to $43.3 million, as compared to $36.7 million for the six months ended December 31, 2005. During the company's second quarter earnings call, management reiterated that 20-30 percent revenue growth is expected in the current fiscal year relative to Vecima's $80 million in sales for fiscal 2006.

The transaction will be carried out by way of a statutory plan of arrangement and must be approved by the Supreme Court of British Columbia and by 75 percent of the votes cast by holders of Spectrum shares. The transaction is also subject to certain closing conditions, including the approval of the United States Department of State and the Committee on Foreign Investments in the United States (CFIUS) as well as the receipt of all other required regulatory approvals and customary closing conditions. The transaction is expected to close in April 2007.

For more information contact Spectrum Signal online at www.spectrumsignal.com, or Vecima Networks at www.vecimanetworks.com.

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