Press Release

KeyEye Raises $15 Million in Series B Financing

Menlo Ventures Leads Investment in Semiconductor Start-up

SACRAMENTO, May 26, 2004 — KeyEye Communications, Inc., a leader in semiconductor transceivers for 10 gigabit per second (Gbps) copper-media communications, announced today the closing of an oversubscribed $15 million Series B financing. The funds will be used to continue the company's aggressive research and development program and to add the engineering, marketing and operations personnel necessary to bring KeyEye's innovative semiconductor products to market.

KeyEye's leadership position in the 10 Gbps copper-media transceiver race attracted Menlo Ventures to lead the investment round. As part of the financing, Hal Calhoun, managing director at Menlo Ventures, will take a seat on the company's board of directors, joining Harvey Scull, president and chief executive officer of KeyEye, Dr. Robert Pepper, the former CEO of Level One Communications and KeyEye chairman, Harry Laswell, founding partner of American River Ventures and Bart Schachter, managing partner at Blueprint Ventures. American River and Blueprint Ventures had led KeyEye's Series A financing in early 2003.

"Significantly reducing the cost per gigabit for 10 Gbps communications is the most difficult challenge faced by OEMs developing next-generation data center equipment," noted Mr. Calhoun. "By powering 10 Gbps communication modules that are less expensive than their optical counterparts, and by permitting standard category 5e/6 cables to be used in place of costly optical fiber, KeyEye's transceiver technology uniquely positions the company to capture a very substantial share of the market."

"This team, which worked together to develop seven generations of transceiver products at Level One Communications, will enable KeyEye to dominate the marketplace for high-performance copper-cable transceivers, including in the forthcoming 10GBASE-T market," said Mr. Laswell. "We're investing in more than 200 aggregate man-years of communications IC design experience and a proven track record of commercial success."

"I am extremely pleased by the enthusiastic response that our team, technology and product strategy received from the venture investment community during our fundraising campaign," said Mr. Scull. "We believe that as the leader in 10Gbps copper communications — proven by our recent technology validation announcement — communications solutions driven by KeyEye transceivers will become the preferred choice for high-bandwidth connectivity in the data center."

KeyEye recently announced that it had validated the successful operation of the first multichannel, multi-level, full-duplex 10 Gbps solution based on the company's patent-pending EchoWave technology. EchoWave enabled the world's first single-chip solution for full-duplex 10 Gbps communications rates over 4-pair category 5e/6 copper cable. The company expects to have samples of its first product available by the end of 2004. The company has raised more than $21 million to date.

About KeyEye

KeyEye Communications is the leader in semiconductor transceivers for 10 Gbps copper-media communications. Products incorporating KeyEye's EchoWave technology provide speed, power, performance, physical space and cost advantages over competing products. KeyEye is using EchoWave technology to address a broad range of applications, including backplanes and highbandwidth bulk interconnects. KeyEye is an active contributor to the IEEE 802.3an task force, which is working to define the 10GBASE-T standard. Founded in 2001 and based in Sacramento, Calif., KeyEye is privately held and venture-funded by American River Ventures, Blueprint Ventures, Menlo Ventures and Technology Funding.

KeyEye and EchoWave are trademarks of KeyEye Communications, Inc. All other trademarks are property of their respective owners.

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