Photon Dynamics to Acquire Image Processing

On September 27, 2000, Photon Dynamics, Inc. (Photon) (Nasdaq: PHTN), a California-based leading worldwide supplier of yield management solutions to the flat panel display industry, entered into an acquisition agreement for plan of arrangement with Image Processing Systems Inc. (IPS) (TSE: IPV) pursuant to which Photon agreed to acquire IPS in exchange for approximately 1.3 million shares of newly issued Photon common stock. The completion of the transaction is subject to court and regulatory approvals as well as the approval of the shareholders of IPS at a special meeting being held on December 18, 2000, and is expected to occur in the quarter ending December 31, 2000.

The acquisition is being structured as an exchangeable share transaction valued at approximately $60 million. In connection with the completion of the transaction, shareholders of IPS will receive shares of IPS exchangeable on a one-for-one basis for publicly-traded Photon shares.

Aird & Berlis is acting for Photon as Canadian counsel, with the A&B team being led by Jay A. Lefton and comprised of Richard M. Kimel and Michael P. McCloskey (corporate finance), and Barbara J. Worndl (tax). U.S. counsel for Photon is Cooley Godward LLP (Palo Alto).

Cassels Brock & Blackwell LLP is acting as Canadian counsel for IPS. Cameron A. Mingay is leading a team comprising Jeffrey P. Roy (corporate), Mark T. Bennett (securities), Lorne H. Saltman (tax) and Andre Boivin (securities). U.S. counsel for IPS is Dorsey & Whitney LLP (New York).


Jay A. Lefton Cameron A. Mingay André Boivin Michael P. McCloskey Mark T. Bennett Barbara J. Worndl Richard M. Kimel Lorne H. Saltman Jeffrey P. Roy


Aird & Berlis LLP Cooley Godward Kronish LLP Cassels Brock & Blackwell LLP Dorsey & Whitney LLP