Kevin B. Kimberlin and Joni R. Steele, et al. - Page 9

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          Kimberlin’s request, to Kimberlin Partners.  Kimberlin Partners             
          exercised those warrants on February 5, 1997, for 1,250,000 Ciena           
          shares and in 1998 sold the shares.  Kimberlin Partners reported            
          the sale of the Ciena stock on Schedule D of its 1998 Form 1065,            
          U.S. Return of Partnership Income.  On September 24, 2004,                  
          respondent mailed to the tax matters partner of Kimberlin                   
          Partners and to each partner a notice of final partnership                  
          administrative adjustment (FPAA).  The FPAA determined that, in             
          1998, the partnership was entitled to an increased basis for the            
          1,250,000 shares of Ciena stock purchased with the warrants                 
          issued to Kimberlin Partners in 1996.                                       
               On December 27, 2004, Mr. and Mrs. Kimberlin, while residing           
          in Greenwich, Connecticut, filed their petition with the Court              
          seeking review of the 2004 notice of deficiency.  That same day,            
          Kevin Kimberlin, tax matters partner for Kimberlin Partners Ltd.            
          Partnership, filed a petition seeking review of respondent’s                
          FPAA.  At the time of the petition, the partnership maintained              
          its principal place of business in Greenwich, Connecticut.  On              
          May 13, 2005, Spencer Trask, whose principal place of business              
          was New York, New York, filed its petition with the Court seeking           
          review of the 2005 notice of deficiency.  On September 23, 2005,            
          the Court granted the parties’ joint motion to consolidate these            

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