Kevin B. Kimberlin and Joni R. Steele, et al. - Page 6

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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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