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clause in the 1994 PPA. On December 21, 1994, Ciena sent a
letter to Ventures terminating the 1994 PPA and enclosed a
warrant for 150,000 shares of Ciena series A convertible
preferred stock.
Following Ciena’s termination of the 1994 PPA, a dispute
arose between Ciena and Ventures. Ventures asserted that, as a
result of Ciena’s breach of the 1994 PPA, Ciena was liable for
full compensatory damages, rather than the liquidated damages
delineated in the agreement. On February 10, 1995, Ciena and
Ventures settled their dispute pursuant to a settlement and
release agreement (SRA). The SRA provided: “[Ciena and] each of
* * * [Spencer Trask] and Affiliates agree that, as of the date
of this Agreement, the Placement Agreement as amended to date is
hereby terminated and of no further force and effect”, thus
terminating the 1994 PPA.
The SRA also provided for the issuance of warrants to
Ventures “exercisable for an aggregate of 300,000 shares of
Convertible Preferred Stock, Series B, of Ciena Corporation” at
$2 per share. The exercise period for the SRA warrants was the
earliest to occur of: 4 years from the date of the SRA, the
consummation of any public offering of the company’s stock, or
the sale of all or substantially all of the company’s assets.
The SRA further provided for Ciena to pay $35,000 of legal fees
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