Optelecom Completes $26 Million Acquisition of NKF

- Stage Set for Expanded Growth -
March 8, Optelecom, Inc. today announced the closing of the acquisition of NKF
Electronics B.V., a wholly owned subsidiary of Draka Holding N.V., pursuant to a
definitive agreement entered into with Draka Holding N.V.
surveillance.jpgThe transaction establishes Optelecom as a leading global independent producer of comprehensive fiber optic-based ommunications solutions for video surveillance, traffic monitoring, and business video systems.

The purchase price for the acquisition is 20 million Euro (approximately $26.4 million),
which consisted of a cash payment of 11 million Euro ($14.5 million) and a 6% subordinated note issued by Optelecom to Draka Holding N.V. in the principal amount of 9 million Euros ($11.9 million), maturing in 2010. The cash portion of the purchase price is being funded by a $14.5 million senior term facility provided by M&T Bank of Baltimore, Maryland, which consists of a Euro-based term loan and a US dollar-based
term loan.
Optelecom currently has a revolving line of credit in place with M&T Bank. That credit line is not expected to be used in conjunction with this transaction. The purchase price is subject to post-closing adjustments for working capital and fixed assets. The acquisition is expected to be accretive to Optelecom’s earnings.

“This acquisition makes great business sense,” said Edmund Ludwig, Optelecom’s President and CEO. “We join two strong product lines and two sales units with little geographic overlap and bring to market industry-leading, advanced communication solutions for mission critical video surveillance, intelligent transportation, and business video systems. By combining R&D, service, and other resources, we believe we can
deliver excellent quality products to our customers at great values.”

The Optelecom-NKF combination creates a company employing more than 150 people
worldwide with increased financial resources to support global government and commercial end-users.

“We believe our customers and the industry will benefit from the combination for several
reasons,” added Tom Overwijn, Managing Director of NKF. “First, we believe it allows
two customer-driven organizations, each with creative, innovative cultures, to be more
responsive on a global basis; second, by leveraging our R&D efforts, we believe we can
provide leading-edge technology where it is needed most. And third, we believe our
enhanced ability to customize solutions will give our customers a more comprehensive way to address their needs.”

M&T Investment Banking Group served as financial advisor to Optelecom on the transaction.

About NKF Electronics B.V.

nkf_electronics.jpgFounded in 1981, NKF Electronics has accumulated extensive expertise in fiber optic and IP/Ethernet network technologies. This expertise has enabled NKF Electronics to build a broad range of communications products, ranging from fiber optic video modems and multiplexers to complete Video-over-IP network solutions. All its products are designed and tested for Local, Metropolitan, and Wide Area Network (LAN, MAN, and WAN) applications, especially those characterized by harsh environmental conditions and by large distances between the individual transmission locations. You can learn more about NKF Electronics at http://www.nkfelectronics.com

About Optelecom, Inc.

optelecom.jpgOptelecom offers integrated multimedia products for communicating video, audio, and other data over both copper wire and optical network systems. Taking a client-centric approach to its business through a proactive, flexible, and value driven philosophy, Optelecom supplies industry and governments worldwide with best-of-class solutions for highway traffic management, air traffic control, parking, border surveillance, facilities security, and business video systems. You can learn more about Optelecom, Inc., at

Forward-Looking Statements

The statements contained in this release, which are not historical facts, are forwardlooking
statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include, among others: the ability of Optelecom to integrate operations with NKF; the ability of the Company to develop and market products and communication solutions for the video surveillance, transportation and business video markets; lack of reliable vendors, service providers and outside products; unforeseen changes in competing technologies and products; worldwide economic variances; poor or delayed research and development
results; and disparities between forecast and realized sales results. Other important factors that could cause actual results to differ materially are included but are not limited
to those listed in Optelecom’s periodic reports and registration statements filed with the Securities and Exchange Commission. Optelecom does not assume any obligation to
update information concerning its expectations.
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