Kevin B. Kimberlin and Joni R. Steele, et al. - Page 12

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               there was an employment contract, the PPA, that                        
               required Ventures to perform underwriting services and                 
               required Ciena to transfer cash and warrants to                        
               Ventures for the performance of such services; (2) the                 
               sole consideration to be furnished by Ventures was                     
               investment banking services; (3) Ciena’s intent was to                 
               secure the services of Ventures; (4) Ventures was                      
               available to perform the services as a placement agent                 
               at the time Ciena opted not to use its services; (5)                   
               Ventures at least engaged in preparatory work and was                  
               reimbursed $35,000 for preparation of documents related                
               to the PPA; and (6) the warrants at issue were granted                 
               to Ventures as a result of the triggering of the                       
               liquidated damages clause contained in the employment                  
               These “essential facts” simply fail to support respondent’s            
          position.  Numbers 1 through 3 merely state that a contract                 
          existed and describe the intent of the parties in performing the            
          contract.  In support of number 4 (i.e., respondent’s recitation            
          of the fact that “Ventures was available to perform the                     
          services”), respondent cites section 1.280G-1, Income Tax Regs.,            
          inapplicable regulations relating to parachute payments.  Number            
          5, emphasizing legal fees Ventures incurred relating to the PPAs,           
          is not a pertinent fact.  Finally, number 6 returns to the                  
          specious contention respondent presented in his opening brief:              
          that the warrants were issued as a result of the liquidated                 
          damages clause.  Even if a connection was established by virtue             
          of the warrants in the liquidated damages clauses of the PPAs,              
          all such connections were severed by the SRA, which superseded              
          the PPAs.                                                                   

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