SEC Info - Ciena Corp - S-4

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective (but no sooner than 20 business days after such effectiveness) and all other conditions to the merger contemplated by the Agreement and Plan of Merger dated as of February 18, 2004, as such agreement may be amended, described in the enclosed Prospectus have been satisfied or waived.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. o


(1)	The Registration Statement covers the maximum number of shares of CIENA common stock that are expected to be issued in connection with the transactions described herein in the proposed merger of Internet Photonics, Inc. with and into CIENA.

(2)	Includes corresponding rights to purchase shares of CIENA Series A Junior Participating Preferred Stock pursuant to a Rights Agreement dated as of December 29, 1997, as amended, between CIENA and Equiserve Trust Company, N.A. (formerly BankBoston, N.A.), as rights agent.

(3)	Pursuant to Rule 457(f)(2), because there is currently no public trading market for Internet Photonics’ common and preferred stock and it has an accumulated capital deficit, the registration fee was computed on the basis of one-third of the par value of the shares of common and preferred stock of Internet Photonics computed as of March 23, 2004. The par value equaled $436,786 in the aggregate.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this information statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This information statement/prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

We are not asking you for a proxy and you are requested not to send us a proxy

I am pleased to inform you that after careful consideration, the boards of directors of Internet Photonics, Inc. and CIENA Corporation have approved the merger of Internet Photonics with CIENA. The merger will be effected pursuant to an agreement and plan of merger, dated as of February 18, 2004, as amended, by and among CIENA, Internet Photonics, Gregory Koss and Steven Waszak, a copy of which is included as Annex A to this information statement/prospectus. The merger agreement has been adopted by the requisite vote of stockholders of Internet Photonics, acting by written consent, as described below. Accordingly, your vote on the merger is not being solicited hereby.

Pursuant to the merger agreement, CIENA will issue approximately 24.1 million shares to Internet Photonics’ stockholders and in connection with CIENA’s assumption of Internet Photonics’ stock options and warrants. At the effective time of the merger, each holder of Internet Photonics preferred stock will be paid, in shares of CIENA common stock, the liquidation preference applicable to such series of preferred stock pursuant to the certificate of incorporation of Internet Photonics. Following payment of the preferred stock liquidation preference, each outstanding share of capital stock of Internet Photonics (other than shares of series A preferred stock) will be converted into the right to receive a fraction of a share of CIENA common stock based on the common stock exchange ratio described in this information statement/prospectus. Ten percent of the total number of shares of CIENA common stock to be issued in the merger to holders of outstanding Internet Photonics capital stock will be held in an escrow fund in order to satisfy any claims for indemnification raised by CIENA within the first year after the closing of the merger. This indemnification arrangement is described further in this information statement/prospectus. A copy of the escrow agreement is included as Annex D to this information statement/prospectus.

CIENA common stock is traded on the Nasdaq National Market under the symbol “CIEN.” The closing price for CIENA common stock reported on the Nasdaq National Market on March 22, 2004, was $4.77 per share. If the merger is completed, Internet Photonics will cease to exist as a separate entity. Following the merger, based on 475,254,814 outstanding shares of CIENA common stock as of March 17, 2004, plus up to an additional 75.9 million shares of CIENA common stock being issued in CIENA’s recently announced acquisition of Catena Networks, Inc., and assuming all Internet Photonics stock options and warrants have been exercised, Internet Photonics stockholders would own approximately 4.2% of the combined company and CIENA stockholders would own approximately 95.8% of the combined company.

This information statement/prospectus contains detailed information about the merger, the merger consideration and related matters. We encourage you to review this document carefully, including the matters referred to under “Risk Factors” starting on page 9, for a description of how the merger will affect you.

Under the terms of the Delaware General Corporation Law and the certificate of incorporation of Internet Photonics, the requisite number of stockholders of Internet Photonics have acted by written consent to approve and adopt the merger and the merger agreement, as amended. Additionally, stockholders of Internet Photonics have acted by written consent to approve and adopt an amendment to our Fifth Amended and Restated Certificate of Incorporation to provide that in the event of a sale of Internet Photonics in which the definitive transaction agreement specifically sets forth the means of valuing any non-cash consideration, the valuation provisions of the definitive transaction agreement shall apply instead of the determination of fair market value by the board of directors. A copy of this amendment as filed with the Secretary of State of the State of Delaware on March 3, 2004, is included as Annex C to this information statement/prospectus. Each of the foregoing written consent actions became effective on February 18, 2004. Accordingly, your approval of the merger and the amendment to our certificate of incorporation is not required and we are not requesting you to vote on these matters. This letter and the remainder of this information statement/prospectus constitutes notice of the actions taken that we are required to provide under Section 228(e) of the Delaware General Corporation Law to the stockholders who did not execute these written consents.

We look forward to closing the merger and appreciate your continued interest in Internet Photonics.


	On Behalf of the Board of Directors,



	Gregory W. Koss
	President and Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities regulator has approved or disapproved of these securities or passed upon the adequacy or accuracy of this information statement/prospectus. Any representation to the contrary is a criminal offense.

This information statement/ prospectus incorporates important business and financial information about CIENA from documents that it has filed with the Securities and Exchange Commission but that have not been included in or delivered with this information statement/ prospectus. For a listing of documents incorporated by reference into this information statement/ prospectus, please see the section entitled “Where You Can Find More Information” beginning on page 60 of this information statement/prospectus.

CIENA will provide you with copies of this information, without charge, upon written or oral request to:

In addition, you may obtain copies of this information by sending an e-mail to ir@ciena.com.

This summary highlights selected information from this information statement/prospectus. It does not contain all of the information that is important to you. You should carefully read this information statement/prospectus and the other documents incorporated by reference into this information statement/prospectus. See “Where You Can Find More Information” on page 60. In this information statement/prospectus, “we,” “us” and “our” may refer to either CIENA or Internet Photonics, depending on the context in which they are used, and “you” and “your” refer to stockholders of Internet Photonics.

CIENA is a leader in innovative networking solutions to service providers and enterprises worldwide. CIENA’s customers include long-distance carriers, local exchange carriers, Internet service providers, wireless and wholesale carriers, systems integrators, large businesses and governmental and non-profit institutions. CIENA offers network solutions that enable service providers to provision, manage and deliver economic, high-bandwidth services to their customers. On February 19, 2004, CIENA announced an agreement to acquire Catena Networks, Inc., a private provider of integrated broadband access solutions. CIENA expects to issue approximately 75.9 million shares of common stock in that acquisition.

Internet Photonics designs, manufactures, and markets equipment and software used to send voice, video, and data traffic across optical networks. This equipment was developed specifically for operators whose existing networks are running out of capacity and who need a non-disruptive and reliable expansion of capacity, as well as the ability to offer new revenue-generating optical services to customers. Internet Photonics believes that its products simplify network deployment and the provisioning of communication services, and offer size, power consumption, cost and capacity advantages over many alternative products. All seven of Internet Photonics’ products currently produce revenue and are in use with telecommunications and cable networks around the world.

The merger agreement provides that Internet Photonics will merge with and into CIENA and CIENA will be the surviving corporation. The merger agreement, and the merger with CIENA contemplated thereby, have been approved by both the board of directors of Internet Photonics and the stockholders of Internet Photonics.

The merger agreement, as amended, is included as Annex A to this information statement/prospectus. It is the legal document that governs the merger.

The Internet Photonics board of directors has unanimously determined that the merger is advisable and in the best interests of Internet Photonics and its stockholders.

See “The Merger — Internet Photonics’ Reasons for the Merger” for the reasons supporting the Internet Photonics board of directors’ approval of the merger.

At the effective time of the merger, each issued and outstanding share of Internet Photonics capital stock will be converted into a fraction of a share of CIENA common stock in accordance with the terms of the merger agreement and the certificate of incorporation of Internet Photonics. Because the consummation of the merger will constitute a sale event under the terms of the certificate of incorporation of Internet Photonics, at the effective time of the merger, holders of each series of Internet Photonics preferred stock will receive payment of their respective liquidation preference in shares of CIENA common stock. Each share of CIENA common stock to be issued in respect of the liquidation preference payable to each series of preferred stock has been designated a fixed value of $6.127 per share pursuant to the terms of the merger agreement. Payment of the liquidation preference shall be made to holders of

Following payment of approximately 14,225,995 shares of CIENA common stock in satisfaction of the aggregate liquidation preference in respect of outstanding shares of Internet Photonics preferred stock, each share of Internet Photonics common stock and preferred stock (other than series A preferred stock), treating each series of Internet Photonics preferred stock on an as-converted into Internet Photonics common stock basis, shall be exchanged for a fraction of a share of CIENA common stock based upon the common stock exchange ratio. The common stock exchange ratio is a fraction, the numerator of which is 24,080,843 shares of CIENA common stock minus the aggregate number of shares of CIENA common stock issued in payment of the foregoing liquidation preferences, and the denominator of which is the number of shares of Internet Photonics common stock outstanding on a modified, fully-diluted basis (modified by excluding certain out-of-the-money and unvested Internet Photonics stock options as described more fully in “Terms of the Merger Agreement and Related Transactions — Treatment of Stock, Options and Warrants”). Consequently, the actual fraction of a share of CIENA common stock to be received for each share of Internet Photonics capital stock (other than the series A preferred stock) is subject to adjustment in the event that Internet Photonics’ modified fully-diluted outstanding capital stock changes due to option issuances, exercise of preferred stock warrants, stock repurchases and similar events or because of the exercise of outstanding options with an exercise price equal to or greater than $1.00 per share. Any issuance of Internet Photonics capital stock due to the exercise of outstanding stock options with exercise prices less than $1.00 per share will not affect the exchange ratios. Any exercise of outstanding preferred stock warrants for 68,721 shares of series C preferred stock, 432,496 shares of series D preferred stock and 20,000 shares of series E preferred stock would increase the number of shares to be issued in satisfaction of the aggregate liquidation preference in respect of outstanding Internet Photonics preferred stock and decrease the applicable common stock exchange ratio.

Internet Photonics stockholders will not know the dollar value of the CIENA common stock they will receive in the merger until the merger is completed. The dollar value of the CIENA common stock will depend upon its market price when the merger is completed.

If the total number of shares of Internet Photonics capital stock outstanding on a modified fully-diluted basis on the day the merger is completed is 60,292,575, which was the number of shares of capital stock outstanding on a fully-diluted basis as of February 18, 2004, the date of execution of the merger agreement, the following exchange ratios, rounded to the nearest ten thousandth, would apply:


*	Exchange ratios above include and reflect payment of the applicable liquidation preference payable to holders of Internet Photonics preferred stock in shares of CIENA common stock at a fixed value of $6.127 per share.

**	The exchange ratio for the series A preferred stock is fixed, and therefore not subject to adjustment based on changes in Internet Photonics’ fully-diluted outstanding capital stock.

Assuming the application of the above common stock exchange ratio, a holder of 100 shares of Internet Photonics common stock would receive 16.35 shares of CIENA common stock in the merger. The following chart sets forth the dollar value of those shares of CIENA common stock at a range of prices of CIENA common stock. The

Subject to the indemnification and escrow arrangements described herein, at the effective time of the merger, CIENA will issue (or reserve for issuance) approximately 24.1 million shares of its common stock in exchange for all outstanding Internet Photonics common and preferred stock and in respect of assumed options and warrants (other than out-of-the-money options and certain unvested options excluded from the definition of “common stock equivalents” in the merger agreement). Based on the closing price per share of CIENA common stock on March 22, 2004, these shares had an aggregate value of approximately $114.9 million.

If you object to the merger, the Delaware General Corporation Law, or DGCL, permits you to seek relief as a dissenting stockholder and have the “fair value” of your shares of Internet Photonics common stock and Internet Photonics preferred stock determined by a court and paid to you in cash.

If you are an Internet Photonics stockholder who did not execute the written consent approving the merger and wish to dissent to the merger, you must deliver to CIENA by , 2004 a written demand for appraisal of your shares.

Beneficial owners of Internet Photonics common stock or Internet Photonics preferred stock whose shares are held of record by another person, such as a bank, broker or nominee, and who wish to seek appraisal, should instruct the record holder to follow the appraisal procedures of the DGCL. The relevant provisions of the DGCL are technical in nature and complex. If you wish to exercise appraisal rights and obtain appraisal of the fair value of your shares, you may wish to consult with legal counsel, because the failure to comply strictly with these provisions may result in waiver or forfeiture of your appraisal rights.

A copy of Section 262 of the DGCL which governs this process is attached as Annex B to this information statement/prospectus.

If the merger occurs, all holders of Internet Photonics capital stock who have not elected the appraisal rights described above will be obligated to indemnify CIENA and its affiliates against losses due to, among other things, the breach or inaccuracy of any of Internet Photonics’ representations and warranties made in the merger agreement. This obligation is limited to escrowed shares equaling 10% of the total number of shares of CIENA common stock issued in the merger to

holders of outstanding Internet Photonics capital stock. An escrow arrangement will be established at closing to hold these shares. Sprout Capital IX, L.P. has been appointed to serve as stockholders’ representative on behalf of all former Internet Photonics stockholders. In general, the escrow and indemnification obligations will end one year after closing. At that time, the escrowed shares will be released to the former Internet Photonics stockholders, reduced by any amounts paid or reserved for claims made by CIENA. Internet Photonics stockholders will also contribute a total of 40,803 shares of CIENA common stock to the escrow fund to pay the expenses of the stockholders’ representative. These shares had a market value of approximately $250,000, based on the average closing price of CIENA’s common stock for the ten trading days ended February 18, 2004. See “Terms of the Merger Agreement and Related Transactions — Indemnification and Escrow Arrangement.”

Consequently, in some circumstances you could be required to forfeit to CIENA some of the CIENA common stock you would otherwise receive in the merger.

CIENA has also agreed to indemnify the former Internet Photonics stockholders against losses due to, among other things, the breach or inaccuracy of CIENA’s representations and warranties contained in the merger agreement. CIENA’s indemnification obligation is limited to $147.5 million.

Several customary contractual conditions set forth in the merger agreement must be satisfied before the merger will be completed. If the law permits, CIENA or Internet Photonics may each waive conditions for their benefit and their stockholders’ benefit and complete the merger even though one or more of these conditions has not been met. Neither CIENA nor Internet Photonics can assure you that the conditions will be satisfied or waived or that the merger will occur.

CIENA and Internet Photonics may mutually agree at any time to terminate the merger agreement without completing the merger, even though the Internet Photonics stockholders have approved it. Either party (so long as it has not materially breached the merger agreement in a manner that caused the merger not to be consummated) may terminate the merger agreement if:


•	the merger has not been completed by July 31, 2004; or

•	a court or other governmental authority of competent jurisdiction forbids the merger to occur.


•	Internet Photonics’ board of directors has withdrawn, modified or amended in any respect adverse to CIENA its recommendation in favor of the merger agreement or merger or failed to reconfirm its recommendation within three business days of a written request of CIENA to do so;

•	Internet Photonics has recommended or entered into an agreement with respect to, or completed, any acquisition proposal from a person other than CIENA or any of its affiliates; or

•	CIENA is not in material breach under the merger agreement and Internet Photonics breaches any material representation, warranty, covenant or agreement in the merger agreement, and fails to cure the breach ten days after receiving notice of it.

If the merger agreement is terminated by CIENA because Internet Photonics’ board of directors withdraws, amends or modifies its recommendation in favor of the merger, or because Internet Photonics has recommended or entered into an agreement with respect to, or consummated, any acquisition proposal from a person other than CIENA or its affiliates, then Internet Photonics must pay CIENA a termination fee of $6 million, as well as reimbursement of up to $500,000 for expenses incurred in the merger negotiation.

In the opinion of Hogan & Hartson L.L.P., counsel to CIENA, and Sonnenschein Nath & Rosenthal LLP, counsel to Internet Photonics, the merger will qualify as a tax-free reorganization. As a general matter, therefore, no gain or loss will be recognized by Internet Photonics stockholders on the exchange of their Internet Photonics capital stock for CIENA common stock pursuant to the

merger, except with respect to cash received in lieu of fractional shares, escrowed CIENA common stock sold to either reimburse the expenses of the stockholders’ representative or to make indemnification payments to CIENA, and cash received for Internet Photonics shares by Internet Photonics stockholders who dissent to the merger and exercise their appraisal rights under the DGCL. For a further discussion of the U.S. federal income tax consequences of these transactions, see “The Merger — U.S. Federal Income Tax Consequences.” Different tax consequences may apply to you because of your individual circumstances or because special tax rules apply to you.

You should consult your tax advisor for a full explanation of the tax consequences of the merger to you.

Internet Photonics Stockholder Approval of Merger by Written Consent (page 13)

Pursuant to Internet Photonics’ certificate of incorporation and applicable law, holders of Internet Photonics common stock are entitled to one vote per share on all matters voted upon by Internet Photonics stockholders and the holders of Internet Photonics preferred stock are entitled to vote along with the common stock on any matter voted upon by common stockholders, on an as-converted to common stock basis. In addition, Internet Photonics’ certificate of incorporation provides that consideration of the merger also requires approval by more than 64% of the outstanding shares of Internet Photonics preferred stock, voting together as a class on an as-converted to common stock basis. On February 18, 2004, certain Internet Photonics stockholders who are directors and officers, and their respective affiliates, representing the requisite number of shares of Internet Photonics capital stock, executed and delivered a written consent approving the merger and adopting the merger agreement. As of that date, Internet Photonics had outstanding 485,141 shares of common stock and 43,628,761 shares of preferred stock convertible into 50,009,956 shares of common stock. As of the date of execution, the holders executing the written consent represented approximately 66% of the common stock outstanding and 87% of the preferred stock voting on an as-converted basis. On March 17, 2004, stockholders representing the requisite number of shares of Internet Photonics capital stock executed and delivered a written consent approving an amendment to the merger agreement. This amendment, among other things, reduced the number of shares of CIENA common stock to be issued in the merger by approximately 400,000 shares and permits Internet Photonics to make an aggregate cash payment of approximately $2.3 million to Internet Photonics employees under the terms of the retention plan adopted by the Internet Photonics board of directors on March 17, 2004. The amendment to the merger agreement is included in Annex A to this information statement/prospectus.

In conjunction with entering into the merger agreement, Internet Photonics entered into a credit and security agreement with CIENA under which CIENA has agreed to provide a bridge loan in the form of a revolving line of credit to Internet Photonics to fund Internet Photonics’ operations through the closing of the merger. On March 17, 2004, the credit and security agreement was amended by the parties to increase Internet Photonics’ borrowing capacity by approximately $2.5 million in order to enable Internet Photonics to make payments pursuant to the terms of its retention plan, including related payroll and employment taxes.

The merger is expected to be accounted for using the purchase method of accounting. CIENA will be deemed the acquirer for financial reporting purposes. Under the purchase method of accounting, the purchase price in the merger is allocated among the Internet Photonics assets acquired and the Internet Photonics liabilities assumed to the extent of their fair market value, with any excess purchase price being allocated to goodwill.

The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and its related rules and regulations prohibit Internet Photonics and CIENA from completing the merger until CIENA and Internet Photonics each file notifications with the Antitrust Division of the Department of Justice and the Federal Trade Commission, and the Hart-Scott-Rodino waiting period requirements have been satisfied. Even after the Hart-Scott-Rodino waiting period expires

or is terminated, and even after the merger is completed, the Antitrust Division or the Federal Trade Commission could challenge the merger on antitrust grounds. In addition, before or after the merger is completed, states and private litigants could also challenge the merger on antitrust grounds. CIENA and Internet Photonics each filed Hart-Scott-Rodino notifications with the Federal Trade Commission and the Antitrust Division on February 26, 2004, and the waiting period was terminated on March 10, 2004.

Approval of Amendment to Certificate of Incorporation of Internet Photonics (page 14)

The Internet Photonics board of directors and the requisite number of Internet Photonics stockholders have approved an amendment to the certificate of incorporation of Internet Photonics. The amendment provides that in the event of a sale of Internet Photonics in which the definitive transaction agreement specifically sets forth the means of valuing any non-cash consideration, the valuation provisions of the definitive transaction agreement shall apply instead of the valuation provisions of Internet Photonics’ certificate of incorporation which enables the board of directors to establish the fair market value. A copy of the amendment to Internet Photonics’ certificate of incorporation, as filed with the Secretary of State of the State of Delaware on March 3, 2004, is included as Annex C to this information statement/ prospectus. Your approval of the amendment to the Internet Photonics certificate of incorporation is not required and Internet Photonics is not requesting you to vote on such matter.

The information in the following summary selected consolidated financial data as of October 31, 1999, 2000, 2001, 2002 and 2003 and for the years ended October 31, 1999, 2000, 2001, 2002 and 2003 is derived from CIENA’s audited consolidated financial statements. You should read this information in conjunction with the financial statements and notes to the consolidated financial statements that are incorporated by reference into this information statement/prospectus. Selected financial information as of January 31, 2004 and for the three months ended January 31, 2004 and January 31, 2003 is derived from CIENA’s unaudited consolidated financial statements, which are incorporated by reference into this information statement/prospectus. See “Where You Can Find More Information” which begins on page 60. CIENA has a 52 or 53 week fiscal year, which ends on the Saturday nearest to the last day of October in each year. For purposes of financial statement presentation, each fiscal year is described as having ended on October 31. Fiscal 1999, 2000, 2002 and 2003 comprised 52 weeks and fiscal 2001 comprised 53 weeks. Historical events are not necessarily indicative of results to be expected in the future and results of interim periods are not necessarily indicative of the results of the entire year.

In addition to the risks described in CIENA’s most recently filed Form 10-K under Item 7 and Form 10-Q under Item 2, you should carefully consider the following risk factors relating to the merger to see how the merger may affect you. You should also consider the other information contained in or incorporated by reference into, this information statement/prospectus. See “Where You Can Find More Information” on page 60.

The value of the CIENA common stock that Internet Photonics stockholders will receive in the merger will depend on its market price at the time of the merger, and no adjustment will be made if that market price declines.

The value of CIENA common stock that Internet Photonics stockholders will receive in the merger depends on the market price of CIENA common stock at the time of the merger. The market price of CIENA common stock may decline, causing the value of the consideration received by Internet Photonics stockholders in the merger to decline. Additionally, pursuant to the terms of the merger agreement and the certificate of incorporation of Internet Photonics, the payment of shares of CIENA common stock in satisfaction of the applicable liquidation preference to holders of Internet Photonics preferred stock is based upon a fixed value of $6.127 per share for CIENA common stock, reflecting the average closing price per share of CIENA common stock for the ten trading days preceding the date of the merger agreement. If the trading price per share of CIENA common stock is below this amount at the time of the merger, holders of Internet Photonics preferred stock will receive less than the full value of their liquidation preference upon the closing of the merger.

The market price of CIENA common stock is extremely volatile and has fluctuated over a wide range. From March 22, 2003 to March 22, 2004, CIENA common stock traded as high as $8.14 per share and as low as $4.19 per share. From February 18, 2004, the last trading day prior to the date on which the merger was announced, through March 22, 2004, the price of CIENA common stock has decreased from $6.28 per share to $4.77 per share, a decline of approximately 24%. The market price of CIENA common stock may continue to fluctuate significantly in response to various factors, including:


	•	quarterly variations in operating results principally due to customer purchasing decisions;

	•	changes in estimates by securities analysts;

	•	continued low levels of capital spending by customers; and

	•	general economic conditions.

Internet Photonics cannot terminate the merger solely due to a decrease in CIENA’s stock price.

If the price of CIENA common stock decreases between the date of the merger agreement and the completion of the merger, Internet Photonics would not be able to terminate the merger agreement, even though its stockholders would receive less value for their shares of Internet Photonics. CIENA has agreed to issue approximately 24.1 million shares of CIENA common stock for all of Internet Photonics’ outstanding capital stock, including the assumption of outstanding stock options and warrants to acquire Internet Photonics capital stock. This represented a value of approximately $147.5 million on February 18, 2004, based on a per share price for CIENA common stock of $6.127, which was the average of the closing price for CIENA’s common stock for the ten trading days prior to the date of the merger agreement. Based on the closing price per share of CIENA common stock on March 22, 2004, these shares had an aggregate value of approximately $114.9 million.

Directors and officers of Internet Photonics may have conflicts of interest that influenced their decisions to approve the merger.

You should be aware of potential conflicts of interest of, and the benefits available to, directors and executive officers of Internet Photonics, and their respective affiliates, upon the completion of the merger.

Some directors and executive officers of Internet Photonics, and their respective affiliates, have interests in the merger that are in addition to, or different from, their interests as Internet Photonics stockholders. Interests of such persons include:


	•	Stock ownership representing approximately 87.2% of the voting power of Internet Photonics on an as converted to common stock basis and execution of the action by written consent of stockholders in favor of the merger, the merger agreement, as amended, and the amendment of the certificate of incorporation of Internet Photonics;

	•	Payment upon completion of the merger of approximately 11,838,302 shares of CIENA common stock in respect of the aggregate liquidation preference payable for shares of Internet Photonics preferred stock held thereby:

	•	Payment of an aggregate of $591,615 to sixteen Internet Photonics officers, at or above the vice president level, immediately prior to the effective time of the merger pursuant to the terms of Internet Photonics’ retention plan;

	•	Acceleration of vesting of 13,333 shares of Internet Photonics restricted stock and stock options exercisable for up to 667,989 shares of Internet Photonics common stock; and

	•	Indemnification of directors and officers for a period of six years to the same extent as such persons were indemnified under Internet Photonics’ certificate of incorporation and bylaws.

These interests are more fully described under “The Merger — Interests of Executive Officers and Directors in the Merger” below.

The structure and implementation of the merger involve a number of risks including risks of integration and unknown liabilities.

The merger involves the combination of CIENA with a private company with limited operating history and is a complex transaction. Among the risks the merger involves are risks of successful integration, potential liabilities that may be incurred as a result of the merger, tax consequences and accounting treatment.


	•	assimilating Internet Photonics’ technology and product offerings, which may be more difficult than anticipated because the technology is very complex;

	•	coordinating research and development efforts, which may involve unexpected problems;

	•	diversion of management attention from business matters to integration issues;

	•	identifying and retaining key personnel which may be difficult in the combined company;

	•	integrating accounting, engineering, information technology and administrative systems which may be unexpectedly difficult or costly;

	•	making significant cash expenditures that may be required to retain personnel, eliminate unnecessary resources and integrate the business;

	•	maintaining uniform standards, controls, procedures and policies which may be harder than CIENA and Internet Photonics anticipate and interfere with efficient administration of the combined company; and

	•	changes in the businesses as a result of the merger that impair relationships with employees, customers or vendors.

In addition, as a result of the merger, CIENA will succeed to any liabilities of Internet Photonics now existing or arising out of Internet Photonics’ businesses prior to closing, including unknown liabilities.

Further, CIENA is proposing to issue approximately 75.9 million shares of common stock to acquire another private company, Catena Networks, Inc., at approximately the same time as the acquisition of Internet Photonics, and all of the risks described above exist with respect to that acquisition as well.

Failure to overcome these risks or any other problems encountered in connection with the merger could have a material adverse effect on CIENA’s business, results of operations and financial condition.

Some of the statements contained, or incorporated by reference, in this information statement/prospectus discuss future expectations, contain projections of results of operations or financial condition or state other “forward-looking” information. Those statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. The “forward-looking” information is based on various factors and was derived using numerous assumptions. In some cases, you can identify these so-called “forward-looking statements” by words like “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of those words and other comparable words. You should be aware that those statements only reflect our predictions. Actual events or results may differ substantially. Important factors that could cause our actual results to be materially different from the forward-looking statements are disclosed under the heading “Risk Factors” beginning on page 9 and throughout or incorporated in this information statement/prospectus.

Internet Photonics has obtained stockholder approval of the merger and adoption of the merger agreement, as amended. Internet Photonics has also obtained stockholder approval of an amendment to its certificate of incorporation. Under applicable Delaware General Corporation Law, or the DGCL, and Internet Photonics’ certificate of incorporation, no further vote or consent of any other stockholder of Internet Photonics is necessary to approve the merger and adopt the merger agreement. Similarly, no further vote or consent of any other stockholder of Internet Photonics is necessary to approve the amendment to the Internet Photonics certificate of incorporation. Accordingly, Internet Photonics is not soliciting any stockholder votes or consents by this information statement/prospectus. INTERNET PHOTONICS IS NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND INTERNET PHOTONICS A PROXY.

Following consideration at a meeting held on February 14, 2004, by unanimous written consent dated February 18, 2004, the Internet Photonics board of directors approved and adopted the merger and the merger agreement and determined that the merger and the merger agreement are in the best interests of Internet Photonics and its stockholders. Internet Photonics’ board of directors also recommended that the stockholders of Internet Photonics authorize, adopt and approve the merger and merger agreement.

Pursuant to Internet Photonics’ certificate of incorporation and applicable law, the holders of Internet Photonics common stock are entitled to one vote per share on all matters voted upon by Internet Photonics stockholders and the holders of Internet Photonics preferred stock are entitled to vote along with the common stock on any matter voted upon by common stockholders, on an as-converted to common stock basis. In addition, Internet Photonics’ certificate of incorporation provides that a merger also requires approval by more than 64% of the outstanding shares of Internet Photonics preferred stock, voting together as a class on an as-converted to common stock basis.

On February 18, 2004, Sprout Plan Investors, L.P., Sprout Capital IX, L.P., Sprout Entrepreneurs’ Fund, L.P., DLJ ESC II, L.P., DLJ Capital Corporation, ComVentures V, L.P., ComVentures V-A CEO Fund, L.P., ComVentures V-B CEO Fund, L.P., ComVentures V Entrepreneurs’ Fund, L.P., Running Bug Investments, L.P., Theodore K. Woodward, Anthony Lentine, Martin Nuss, Surya Panditi and Nicole A. Panditi Trust executed and delivered to Internet Photonics a written consent of stockholders of Internet Photonics approving the merger and adopting the merger agreement. As of that date, Internet Photonics had outstanding 485,141 shares of common stock and 43,628,761 shares of preferred stock convertible into 50,009,956 shares of common stock. The holders executing the written consent represented approximately 66% of the common stock outstanding and 87% of the preferred stock voting on an as-converted basis.

Following consideration at a meeting held on March 11, 2004, by unanimous written consent dated March 17, 2004, the Internet Photonics board of directors approved and adopted an amendment to the merger agreement. This amendment, among other things, reduced the number of shares of CIENA common stock to be issued in the merger by approximately 400,000 shares and permits Internet Photonics to make an aggregate cash payment of approximately $2.3 million to Internet Photonics employees under the terms of the Internet Photonics, Inc. Retention Plan. The retention plan was adopted by written consent of the Internet Photonics board of directors on March 17, 2004 and provides for payment, immediately prior to the effective time of the merger, to certain employees identified in the retention plan. On March 17, 2004, the same stockholders identified above, representing the requisite number of shares of Internet Photonics capital stock, executed and delivered a written consent approving the merger and adopting the amendment to the merger agreement. The amendment to the merger agreement is included in Annex A to this information statement/prospectus.

As a result, in accordance with the DGCL and Internet Photonics’ certificate of incorporation, the merger and the merger agreement, as amended, were approved and adopted by the requisite holders of the outstanding shares of capital stock of Internet Photonics entitled to vote on this matter.

By unanimous written consent dated February 18, 2004, the Internet Photonics board of directors approved an amendment to the certificate of incorporation of Internet Photonics. The amendment provides that in the event of a sale of Internet Photonics in which the definitive transaction agreement specifically sets forth the means of valuing any non-cash consideration, the valuation provisions of the definitive transaction agreement shall apply instead of the valuation provisions of Internet Photonics’ certificate of incorporation, which enables the board of directors to establish the fair market value of such non-cash consideration. The board of directors also recommended that the stockholders of Internet Photonics authorize, adopt and approve the amendment.

In addition to a required vote identical to that necessary for approval of the merger and the merger agreement, pursuant to the DGCL, the holders of Internet Photonics common stock were entitled to vote on the proposed amendment as a separate class.

On February 18, 2004, Sprout Plan Investors, L.P., Sprout Capital IX, L.P., Sprout Entrepreneurs’ Fund, L.P., DLJ ESC II, L.P., DLJ Capital Corporation, ComVentures V, L.P., ComVentures V CEO Fund, L.P., ComVentures V Entrepreneurs’ Fund, L.P, NV Partners II LP, Running Bug Investments, L.P., Theodore K. Woodward, Anthony Lentine and Martin Nuss executed and delivered to Internet Photonics a written consent of stockholders of Internet Photonics approving the amendment. As of that date, Internet Photonics had outstanding 485,141 shares of common stock and 43,628,761 shares of preferred stock convertible into 50,009,956 shares of common stock. The holders executing the written consent represented approximately 66% of the common stock outstanding and 94% of the preferred stock voting on an as-converted basis. A copy of the amendment to Internet Photonics’ certificate of incorporation is attached as Annex C to this information statement/prospectus.

The certificate of amendment relating to the amendment described above was filed with the Secretary of State of the State of Delaware on March 3, 2004 and became effective upon filing. In accordance with the DGCL and Internet Photonics’ certificate of incorporation, the amendment was approved and adopted by the holders of the requisite number of the outstanding shares of capital stock of Internet Photonics entitled to vote on this matter and no further approval is required.

This information statement/prospectus serves as notice to Internet Photonics stockholders pursuant to Section 228 of the DGCL of the approval of the merger and the merger agreement, as amended, and of the amendment of Internet Photonics’ certificate of incorporation by less than unanimous consent of stockholders.

The board of directors of CIENA and the board of directors and stockholders of Internet Photonics have each approved the merger agreement, which provides for the merger of Internet Photonics with and into CIENA, with CIENA being the surviving corporation of the merger. The holders of Internet Photonics stock sufficient to approve the merger and adopt the merger agreement have done so by written consent. Each share of Internet Photonics common stock and Internet Photonics preferred stock outstanding immediately prior to the merger will be converted into the right to receive shares of CIENA common stock. The shares of Internet Photonics common stock and Internet Photonics preferred stock will be converted into a number of shares of CIENA common stock in accordance with the formulas specified in the merger agreement, as described under “Terms of the Merger Agreement and Related Transactions — Treatment of Stock, Options and Warrants.” Fractional shares of CIENA common stock will not be issued in connection with the merger, and Internet Photonics stockholders otherwise entitled to a fractional share will be paid in cash for the fractional share, in the manner described under “Terms of the Merger Agreement and Related Transactions — Exchange of Certificates; Fractional Shares.”

As a regular part of their business, CIENA and Internet Photonics from time to time have each independently considered opportunities to expand and strengthen their own technology, products, research and development capabilities and distribution channels, including distribution agreements, acquisitions, investments, licenses, development agreements and joint ventures. In particular, CIENA’s senior management has been interested in pursuing opportunities to penetrate the multi-system operator (MSO) market, and from time to time CIENA has had contact with various parties to explore on a preliminary basis strategic alternatives in connection with the same. The board of directors of Internet Photonics from time to time has considered both solicited and unsolicited offers from other parties to engage in possible business combinations with such parties. None of such discussions advanced beyond the preliminary stage.

On July 30, 2003, Bob Rodio, CIENA’s Vice President, Consultative Systems Engineering, Mike Frankel, Director, Products & Technology for CIENA, and Jim Brinksma, Senior Systems Engineer for CIENA, met with Greg Koss, President and Chief Executive Officer of Internet Photonics, Steve Waszak, Chief Financial Officer of Internet Photonics, Bill Koss, Vice President of Sales and Business Development of Internet Photonics, and Martin Nuss, Chief Technology Officer of Internet Photonics, at Internet Photonics’ offices in Shrewsbury, New Jersey. Internet Photonics provided an overview of the company, its products, and its addressable markets.

On the same day, CIENA and Internet Photonics entered into a general nondisclosure agreement.

On August 26, 2003, Messrs. Rodio and Brinksma, Tom Mock, CIENA’s Senior Vice President of Strategic Planning, and Jeff Wabik, CIENA’s Vice President of System Architecture, visited Internet Photonics’ offices in New Jersey to gather additional information on its products and technology. Internet Photonics was represented at this meeting by Messrs. Greg Koss, Waszak and Nuss.

On August 27, 2003, Mr. Rodio and Jim Collier, CIENA’s Senior Vice President, Corporate Development, met with Messrs. Greg Koss, Waszak, Nuss, and Bill Koss at Internet Photonics’ offices. Internet Photonics gave a presentation on its products, markets and technology.

Subsequent to that meeting, Mr. Collier spoke with Messrs. Greg Koss and Waszak about the potential for a business combination between the two companies.

On August 28, 2003, Internet Photonics engaged Credit Suisse First Boston (CSFB) to act as its financial advisor in connection with a proposed business combination or strategic investment.

On September 30, 2003, Messrs. Rodio, Collier, Mock and Steve Chaddick, CIENA’s Senior Vice President and Chief Strategy Officer, met with Greg Koss, Bill Koss and Messrs. Waszak and Nuss at

CIENA’s offices in Maryland. Gary B. Smith, CIENA’s President and Chief Executive Officer, participated in a portion of that meeting. The meeting focused on further review of Internet Photonics’ products, markets and technology.

On October 13, 2003, Messrs. Rodio, Mock and Wabik returned to Internet Photonics’ offices in New Jersey and met with the following representatives from Internet Photonics: Greg Koss, Messrs. Waszak and Nuss, Anthony Lentine, Chief Scientist; Gary Southwell, Vice President of Marketing; Dave Payne, Assistant Vice President, Product Marketing and Management; Larry Samberg, General Manager, Packet Solutions; Graham Smith, Vice President, Systems Engineering/ Test; Steven Surek, System Architect; and Theresa Cauble, Director, Product Marketing. The meeting focused on a detailed review of Internet Photonics’ product architecture and future product developments, and was followed by a brief laboratory product demonstration.

On November 18, 2003, Messrs. Collier, Rodio, Mock and Chaddick, Steve Alexander, CIENA’s Senior Vice President and Chief Technology Officer, Joseph Chinnici, CIENA’s Senior Vice President, Finance and Chief Financial Officer, Ed Ogonek, CIENA’s Senior Vice President and General Manager, Metro and Enterprise Solutions Group, and Francois Locoh-Donou, CIENA’s Vice President of Marketing, met with Greg Koss, Bill Koss and Messrs. Waszak, Nuss, Southwell, Payne and Samberg, at Internet Photonics’ offices in New Jersey. During this meeting, the parties discussed Internet Photonics’ business, products, and market opportunities.

On November 26, 2003, at a special meeting of the Internet Photonics board of directors, Internet Photonics’ senior management provided an update on the status of discussions with CIENA and the anticipated timetable for a possible transaction. After discussion, the Internet Photonics board of directors indicated its preliminary interest in continuing negotiations regarding such a transaction.

On or about December 2, 2003, Mr. Chaddick spoke with Cliff Higgerson, a member of the Internet Photonics board of directors, and a former member of the board of directors of CIENA, with respect to Internet Photonics’ upcoming funding needs and CIENA’s interest in further exploring a business combination.

On December 6, 2003, at a special meeting of the Internet Photonics board of directors, CSFB provided an update as to certain key terms of an anticipated offer from CIENA.

On December 10, 2003, CIENA engaged Morgan Stanley to act as its financial advisor in connection with a possible business combination with Internet Photonics.

On December 12, 2003, CIENA sent Internet Photonics a draft of a non-binding letter of intent with respect to a proposed business combination. Over the next several weeks, CIENA and Internet Photonics and their respective financial advisors negotiated the terms of the letter of intent.

On December 13, 2003, at a special meeting of the Internet Photonics board of directors, Internet Photonics’ senior management and CSFB led a brief discussion as to the principal terms of the letter of intent delivered by CIENA. After discussion, the Internet Photonics board of directors requested that management and CSFB request clarification from CIENA regarding certain terms.

On December 19, 2003, at a special meeting of the Internet Photonics board of directors, Internet Photonics’ senior management provided an update as to ongoing negotiations with CIENA. The Internet Photonics board of directors also resolved to create a “Merger and Acquisitions Committee,” consisting of directors Higgerson, Steve Diamond, Wayne Nemeth and Surya Panditi, to continue work with Internet Photonics’ senior management in negotiations with CIENA.

On December 22 and 23, 2003, Gary B. Smith spoke with Mr. Diamond to discuss proposed terms, including a proposed purchase price range.

On December 26, 2003, at a special meeting of the Internet Photonics board of directors, Internet Photonics’ senior management and CSFB updated the board of directors as to the current status of the negotiations with CIENA. After discussion, the Internet Photonics board of directors gave preliminary

On December 31, 2003, at a special meeting of the Internet Photonics board of directors, the board of directors evaluated the final draft of the non-binding letter of intent. After discussion, the Internet Photonics board of directors approved the execution and delivery of this letter of intent.

On December 31, 2003, CIENA and Internet Photonics entered into a non-binding letter of intent, which provided, among other things, for a proposed purchase price of $150 million in CIENA common stock (to be determined at the signing of a definitive merger agreement) for all of the equity of Internet Photonics on a fully-diluted basis.

On January 6, 2004, at a special meeting of the CIENA board of directors, CIENA’s senior management and representatives of Morgan Stanley discussed the status of discussions with Internet Photonics regarding a proposed business combination, including the strategic and financial reasons for such a combination and the key terms from the non-binding letter of intent. After discussion, the CIENA board of directors expressed general support for the strategic value of an acquisition of Internet Photonics, and authorized management to continue discussions with a view toward reaching agreement on terms consistent with the non-binding letter of intent.

On January 6, 2004, CIENA’s legal advisors from Hogan & Hartson commenced a legal due diligence review of Internet Photonics, which continued at Internet Photonics’ New Jersey offices through January 9, 2004. Legal due diligence continued between the parties through mid-February 2004.

On January 8 and 9, 2004, a CIENA due diligence team conducted a series of meetings with Internet Photonics representatives. CIENA representatives at one or more of those meetings included Messrs. Collier, Chinnici, Ogonek and Locoh-Donou; Jesús León, Senior Vice President and Chief Development Officer; Arthur Smith, Senior Vice President Global Operations; Lynn Moore, Vice President Human Resources; Phil Moser, Vice President Sales Operations; Chad Whalen, Vice President Sales; Andrew Petrik, Vice President, Finance and Controller; Greg Sikon, Vice President Tax and Treasury Services; Dawn DiRocco, Assistant Controller; David Rothenstein, Assistant General Counsel; Vijay Sharma, Director Sales; Haji Munshi, Director, Strategic Marketing; Rich Koepper, Senior Director, Products & Technology; David Lynch, Principal Engineer, Products & Technology; and Rebecca Seidman, Human Resources Consultant. CIENA’s financial advisors from Morgan Stanley, CIENA’s legal advisors from Hogan & Hartson, and representatives from PricewaterhouseCoopers, CIENA’s independent accountants, were also present at one or more of those meetings. Internet Photonics representatives at one or more of those meetings included Greg Koss, Bill Koss, Messrs. Waszak, Nuss, Payne, Southwell, Smith and Samberg, Phyllis Lockwood, Vice President, Human Resources, Tom Ertel, Vice President of Engineering, Mark Lampson, Director of Operations, and Tom Conway, Director of Customer Service. Internet Photonics’ financial advisors from CSFB were also present at one or more of those meetings.

On January 14, 2004, Mr. Smith contacted Greg Koss to advise him that CIENA had entered into a non-binding letter of intent with Catena Networks, Inc., and was in the process of negotiating a proposed acquisition of that company.

On January 16, 2004, CIENA directed Hogan & Hartson to send to Internet Photonics and its legal advisors, Sonnenschein Nath & Rosenthal, a first draft of a definitive merger agreement and related agreements.

Also on January 16, 2004, at a special meeting of the Internet Photonics board of directors, the members of the Merger and Acquisitions Committee updated the board of directors as to certain discussions that had taken place following execution of the letter of intent. CSFB also provided an overview as to the likely timetable for an acquisition transaction.

On January 22, 2004, Sonnenschein Nath & Rosenthal sent to CIENA comments on the draft of the merger agreement and related agreements on behalf of Internet Photonics.

During the weeks of January 26-30 and February 2-6, 2004, representatives of CIENA and Internet Photonics and their respective legal advisors continued to negotiate the merger agreement and related agreements.

Late in the evening on February 2, 2004, Mr. Collier contacted Greg Koss and Mr. Diamond separately to inform them that CIENA intended to announce the next day its preliminary results for the first fiscal quarter ended January 31, 2004, which reported revenue in that quarter that was below CIENA’s previously announced guidance range, and to advise them of the reasons for the same.

On February 6, 2004, Mr. Collier and Nick Jeffery, CIENA’s Senior Vice President of Worldwide Sales, met with an international reseller of Internet Photonics’ products to discuss the existing relationship, Internet Photonics’ products and technology, the rollout of such products to the reseller’s sales force, and the impact to the relationship in light of the potential transaction.

On February 12, 2004, an Internet Photonics due diligence team conducted meetings with CIENA representatives in Baltimore, Maryland. Internet Photonics representatives included Greg Koss and Messrs. Waszak and Nemeth. CIENA representatives included Messrs. Smith, Chinnici, Collier and Jeffery. Representatives of Morgan Stanley and CSFB were also present at the meetings.

On February 14, 2004, at a special meeting of the Internet Photonics board of directors, CSFB and Sonnenschein Nath & Rosenthal gave a presentation on the terms of the proposed acquisition as set forth in the definitive transaction agreements. Following a discussion, the Internet Photonics board of directors approved the acquisition of Internet Photonics by CIENA on those terms and directed senior management, in consultation with Internet Photonics’ legal and financial advisors, to finalize, execute and deliver definitive transaction documents.

On February 14, 15 and 16, 2004, CIENA continued to perform due diligence with respect to the reseller relationship, including several conversations between Messrs. Collier and Greg Koss. Based on the additional information gathered in that process, CIENA determined to proceed with final negotiations of the definitive agreements.

On February 17 and 18, 2004, representatives of CIENA and Internet Photonics completed negotiations on the merger agreement and related agreements.

On February 18, 2004, the CIENA board of directors held its regularly scheduled quarterly meeting, at which CIENA’s senior management team presented the proposed terms of the merger. The board received financial advice from Morgan Stanley on the financial terms of the proposed merger to CIENA. At the conclusion of the meeting, the CIENA board approved the terms of the merger and authorized management to complete and execute the merger agreement and related agreements.

Also on February 18, 2004, the Internet Photonics board of directors signed and delivered a unanimous written consent approving the form, terms and provisions of the merger agreement and related agreements, and authorizing management to execute those agreements.

The merger agreement and related documents were executed the evening of February 18, 2004

On February 18, 2004, stockholders holding the requisite number of shares of Internet Photonics capital stock delivered an executed written consent in lieu of a meeting adopting the merger agreement and approving the merger and the related transactions.

On February 19, 2004, CIENA and Internet Photonics issued a joint press release announcing the signing of the merger agreement.

On March 10 and 11, 2004, Messrs. Chinnici and Rothenstein and CIENA’s legal advisors spoke with Messrs. Greg Koss and Waszak and Internet Photonics’ legal advisors about the possibility of amending the merger agreement. The proposed amendment would reduce the number of shares of CIENA common stock to be issued in exchange for all of the equity of Internet Photonics by approximately 400,000 shares and permit Internet Photonics to adopt a retention plan and make cash payments totaling approximately $2.3 million in the aggregate to its employees immediately prior to the closing of the

merger. The parties also discussed amending the terms of the existing bridge loan to increase Internet Photonics’ borrowing limitation by $2.5 million in order to allow an advance under the bridge loan sufficient to pay the aggregate cash retention payments to employees plus related payroll and employment taxes.

Also on March 11, 2004, at a special meeting of the Internet Photonics board of directors, the board of directors discussed the possible merger agreement amendment and the retention plan and gave its preliminary approval for management to proceed with effecting the same.

On March 15 and 16, 2004, the parties and their legal advisors exchanged drafts of and comments on the proposed Internet Photonics Inc. Retention Plan and amendments to the merger agreement and the credit and security agreement reflecting the above terms.

On March 17, 2004, the Internet Photonics board of directors signed and delivered a unanimous consent in lieu of a meeting approving the form, terms and provisions of the amendments to the merger agreement and the credit and security agreement, and authorizing management to execute the amendments. The Internet Photonics board of directors also adopted the Internet Photonics, Inc. Retention Plan, which provides for the payment of approximately $2.3 million to Internet Photonics employees immediately prior to the effective time of the merger.

The amendments to the merger agreement and the credit and security agreement were executed by the parties on March 17, 2004.

On March 17, 2004, stockholders holding the requisite number of shares of Internet Photonics capital stock delivered an executed written consent in lieu of a meeting adopting the amendment to the merger agreement and approving the merger.

Over the past few years, the retrenchment of the telecommunications industry has resulted in dramatically reduced demand for optical networking products that operate in the “core” portion of a network, including products that account for a significant portion of CIENA’s revenues. In response, CIENA has pursued a corporate strategy designed to expand its addressable market and, thus, its opportunities to derive revenue. This strategy incorporates multiple elements, including (i) moving “up” the Open System Interconnection (OSI) Reference Model, the set of standards that allow for networking communications, from Layer 1, the “Physical Layer,” into higher layers, (ii) moving “out” from the core further to the “edge” of a network, where the majority of carrier spending is expected to occur in the near future, and (iii) increasing sales to the most financially stable service providers — the regional Bell operating companies (RBOCs) in the United States and the PTTs and other incumbent operators in Europe and Asia, and multiple-system operators (MSOs), or cable companies.

In connection with this strategy, CIENA has identified equipment used to provide broadband services as an attractive element of this expanded addressable market. CIENA believes that the anticipated growth in demand for broadband voice, video and data services, including high-speed Internet access, video on demand and on-line gaming, is reshaping the telecommunications industry and driving the adoption of a new set of enabling technologies. This growth in demand has led and will lead to new revenue opportunities for service providers and, in turn, an increased demand for products that will allow the service providers to capitalize on those opportunities.

CIENA believes that the proposed acquisition of Internet Photonics fits with CIENA’s strategy of expansion of its addressable market. Internet Photonics’ suite of carrier-grade optical Ethernet transport and switching products will allow CIENA to expand its solution portfolio “up” into Layer 2 of the OSI, the “Data Link Layer,” and “out” to the metropolitan and access portions of the network. The combination with Internet Photonics will also increase CIENA’s addressable market by providing an opportunity to participate in the worldwide Ethernet services market, including the delivery of broadband

services to cable subscribers. Specifically, Internet Photonics’ products will enable CIENA to target additional types of customers, including the MSOs, by providing flexible Gigabit Ethernet solutions that permit the cost-efficient delivery of new, growing broadband services such as Voice Over Internet Protocol (VOIP), high-speed Internet access and video on demand (VoD) (the so-called “triple play” of voice, data and video services), as well as existing services such as cable modem Internet access and broadcast television. The cable companies may also use these products in the future for real-time gaming and other high-bandwidth applications. In addition, the same carrier-grade Ethernet infrastructure will enable the traditional telecom carriers, particularly the international carriers and U.S. CLECs without a broad SONET or SDH installed base, to provide new Ethernet-based enterprise services in their metropolitan and access networks faster and at a lower cost. The potential also exists in the future to apply Internet Photonics’ flexible, low-cost solutions to enhance CIENA’s existing metropolitan and enterprise products.

In particular, CIENA believes that the following strategic benefits will result from the merger:


	•	*Network Convergence.* CIENA believes that the addition of Internet Photonics’ products to the CIENA portfolio is consistent with CIENA’s vision of network convergence. The Internet Photonics platforms allow multiple services to be offered in a single infrastructure in cable networks, allowing traditional cable and new video services such as VoD and HDTV to travel on a common infrastructure, and in traditional telecom networks, allowing SONET/ SDH services and Ethernet services to be combined on a common infrastructure. The Internet Photonics platforms also allow multiple network functions to be converged onto single devices, such as performing both optical transport and Ethernet switching functions in cable networks.

	•	*Cost Efficiency.* CIENA believes that Internet Photonics’ product suite presents a cost-efficient solution to customers to enable rapid deployment of revenue-generating services that combine the simplicity of Ethernet with carrier-grade reliability and availability.

	•	*New Customer Relationships.* CIENA believes that Internet Photonics has developed valuable relationships with the MSOs, an incumbent customer base to which CIENA does not currently offer products. Six of the top ten cable operators in the United States are existing customers of Internet Photonics, including significant deployments by Cablevision and Adelphia. CIENA believes that these relationships will enhance CIENA’s ability to compete for future business from the MSOs and complement CIENA’s existing sales and distribution channels. CIENA also believes it will be able to leverage its existing sales channels and customer relationships to offer the Internet Photonics products to a wider range of customers than Internet Photonics currently reaches.

	•	*New International Sales Channel.* CIENA believes that Internet Photonics has established a valuable international resale relationship, which will provide an important sales channel for Internet Photonics’ products in Europe and Asia. This relationship has already resulted in the sale of Internet Photonics’ products into three PTT accounts, and has the potential to grow into a channel for some of CIENA’s other products.

	•	*Expand Addressable Market.* CIENA believes that the proposed merger will expand its addressable market. CIENA currently does not have a product offering directly targeted at the worldwide Ethernet serviced market. Internet Photonics’ product suite is a leading platform in this space and will give CIENA immediate entry into this fast-growing portion of the market.

	•	*Broader Scope.* CIENA believes that the current telecommunications environment makes vendors with a broad product portfolio more attractive to large incumbent carriers than companies with narrow or single point solutions. In an effort to simplify their networks and reduce operating expenses, large operators are reducing the number of equipment vendors, forming strong relationships with a few large, strategic vendors. CIENA believes that the acquisition of Internet Photonics will strengthen its position with major operators by allowing it to offer a more complete, complementary portfolio of products covering a larger portion of network operators’ equipment needs.

The strategic fit with Internet Photonics represents the principal rationale to CIENA for the merger. CIENA believes that the following factors also support the desirability of the merger to CIENA:


	•	*Operating Expense Savings.* It is expected that the proposed merger will result in certain operating expense cost savings, which will primarily be derived from the lower cost of research and development and the ability to leverage economies of scale. Additional savings may be possible through increased manufacturing efficiencies.

	•	*Cultural Fit.* CIENA and Internet Photonics share a common heritage as entrepreneurial companies. Both companies have established reputations for being flexible, innovative, and customer-focused.

	•	*Strong Engineering Teams.* CIENA believes that Internet Photonics has a strong engineering team that will add significantly to CIENA’s engineering resources and enhance its ability to continue to innovate and rapidly bring new products to market.

In addition, the CIENA board of directors received advice from Morgan Stanley, its financial advisor, in connection with the financial terms of the proposed merger to CIENA.

In view of the variety of factors considered in connection with its evaluation of the merger, the CIENA board of directors did not quantify or otherwise assign relative weights to the factors considered in reaching its conclusions. In addition, individual members of the CIENA board of directors may have given different weights to different factors. However, on an overall basis, the CIENA board of directors concluded that the factors favoring the merger outweigh the countervailing factors.

For the strategic reasons set forth above, after consultation with CIENA’s senior management and its advisors and consideration of the terms and conditions of the merger agreement and the transactions contemplated by the merger agreement, the CIENA board of directors determined that the merger agreement and the merger are in the best interests of CIENA and its stockholders.

At a special meeting held on February 14, 2004, the board of directors of Internet Photonics discussed, and on February 18, 2004, by unanimous written consent, the board of directors of Internet Photonics approved, the terms and conditions of the merger agreement and the transactions contemplated thereby, including the merger. On March 17, 2004, the board of directors of Internet Photonics signed and delivered a unanimous written consent approving an amendment to the merger agreement permitting Internet Photonics to adopt a retention plan and make cash payments totalling approximately $2.3 million to its employees immediately prior to the closing of the merger and reducing the number of shares of CIENA common stock to be issued in the merger in exchange for all of the equity of Internet Photonics by approximately 400,000 shares. In evaluating the merger agreement and the transactions contemplated thereby, and deciding to approve them, the board of directors of Internet Photonics considered a number of factors, including the following:


	•	the consideration being offered by CIENA for shares of Internet Photonics’ capital stock;

	•	Internet Photonics’ prospects if it were to remain independent, including:


	•	the resources necessary to insure Internet Photonics’ future growth;

	•	Internet Photonics’ ability to raise the additional capital necessary for continuing operations and to expand its business, especially in light of the fact that Internet Photonics’ operating plan indicated a need for additional investment capital in the near term and the investment terms for private companies like Internet Photonics have not been favorable;

	•	Internet Photonics’ ability to market efficiently, sell to and support its existing customers while remaining an independent, private company;


	•	Internet Photonics’ ability to independently develop the necessary infrastructure to attract and support larger customers critical to Internet Photonics’ long-term viability;

	•	the challenge faced by Internet Photonics of dedicating significant resources to growth while at the same time focusing on achieving profitability; and

	•	Internet Photonics’ ability to continue to compete in the cable and telecommunications markets;


	•	the possibility of continuing to operate Internet Photonics as an independent entity and the resulting strain on Internet Photonics’ resources such an option would present;

	•	the possibility of continuing to seek another financial or strategic partner;

	•	the range of possible benefits to Internet Photonics stockholders of these alternatives;

	•	the timing and likelihood of accomplishing any of these alternatives; and

	•	the contacts that had been made with potential acquirers and the fact that, although companies with a potential interest in acquiring Internet Photonics had been contacted, only discussions with CIENA had advanced beyond preliminary stages;


	•	the strategic value of Internet Photonics in the hands of a company with significantly greater financial resources and a more diverse product line, such as CIENA;

	•	the ability of the two companies to combine their technological resources to develop new products with increased functionality and bring them to market faster;

	•	the availability to the combined company of greater resources for product marketing and distribution;

	•	the likelihood that CIENA’s offer would be completed, in light of the experience, reputation and financial capabilities of CIENA and the terms of the merger agreement;

	•	the belief of the board of directors of Internet Photonics, based on its assessment of the negotiations, that a more favorable purchase price could not be achieved through continued negotiations with CIENA;

	•	the fact that certain significant stockholders of Internet Photonics were willing to support the transaction, thereby increasing the likelihood that the conditions to CIENA’s offer would be satisfied;

	•	the fact that the other conditions to CIENA’s obligations to consummate the merger were customary and, in the assessment of the board of directors of Internet Photonics, not unduly onerous;

	•	the terms of the merger agreement including the limited conditions to the parties’ respective obligations under the merger agreement; and that the exchange ratios in the merger agreement did not limit the appreciation of the value of CIENA’s common stock;

	•	the expectation that the merger will qualify as a tax-free reorganization under federal tax law;

	•	the opportunity created by the merger for Internet Photonics’ stockholders to share in the combined company’s long term growth;

	•	information concerning Internet Photonics’ and CIENA’s respective businesses, historical financial performance and condition, operations, technology, products, customers, competitive positions, prospects and management; and


	•	due diligence discussions with CIENA by the board of directors of Internet Photonics and reports from management of Internet Photonics as to the results of its due diligence investigation of CIENA.

The board of directors of Internet Photonics also identified and considered a variety of potentially negative factors in its deliberations concerning the merger, including, but not limited to:


	•	the risk that the potential benefits sought in the merger might not be fully realized;

	•	the possibility that the merger might not be completed and the effect such a result would have on Internet Photonics’ operations;

	•	that the exchange ratios in the merger agreement provided no protection against the depreciation of the value of CIENA’s common stock;

	•	the challenges relating to the integration of the two companies;

	•	the possibility of management and employee disruption associated with the proposed merger and integrating the operations of the companies; and

	•	the risks relating to CIENA’s business and how they would affect the operations of the combined company.

The board of directors of Internet Photonics believed that these negative factors were outweighed by the potential benefits of the merger. In view of the wide variety of factors, both positive and negative, considered by the board of directors of Internet Photonics, the board of directors of Internet Photonics did not find it practical to, and did not, quantify or otherwise assign relative weights to the specific factors considered and did not find that any factor was of special importance. Rather, the board of directors of Internet Photonics viewed its position and recommendations as being based on the totality of the information presented to and considered by it. In addition, different members of the board of directors of Internet Photonics may have assigned different weights to the various factors described above.

For the reasons discussed above, the board of directors of Internet Photonics unanimously approved the merger agreement and the merger, unanimously determined that the merger is fair to, and in the best interests of, Internet Photonics and its stockholders and unanimously recommended that the stockholders of Internet Photonics adopt the merger agreement and approve the merger.

In addition, the board of directors of Internet Photonics considered the interests that its officers and directors may have with respect to the merger in addition to their interests as stockholders of Internet Photonics. See “— Interests of Executive Officers and Directors in the Merger” for a more complete discussion of these interests.

Internet Photonics stockholders should be aware that some Internet Photonics directors and executive officers have interests in the merger and related arrangements that are different from, or in addition to, their interests as Internet Photonics stockholders. These interests may create potential conflicts of interest for these directors and officers because they may be more likely to approve the merger than Internet Photonics stockholders generally. The Internet Photonics board of directors was aware of these interests and took these interests into account in its deliberations of the merits of the merger and in approving the merger and the transactions contemplated by the merger agreement.

The executive officers and directors of Internet Photonics, and the stockholders of Internet Photonics affiliated with them, will own a majority of the shares to be issued by CIENA in the merger. As of March 1, 2004, the directors and executive officers of Internet Photonics, and their respective affiliates, beneficially owned 3,074,738 shares of common stock, no shares of series A preferred stock, 1,608,329 shares of series B preferred stock, 7,776,073 shares of series C preferred stock, 26,276,296 shares of

series D preferred stock and 8,245,230 shares of series E preferred stock, all on as-converted to common stock basis, representing approximately 87.2% of the voting power of the fully-diluted outstanding Internet Photonics capital stock. See “Approval of the Merger and the Amended Certificate of Incorporation by Internet Photonics Stockholders” for a discussion of the written consents executed by certain stockholders of Internet Photonics, including certain directors and executive officers, and their respective affiliates.

Because the merger constitutes a sale event under the certificate of incorporation of Internet Photonics, holders of Internet Photonics preferred stock will receive payment of the liquidation preference applicable to the series of Internet Photonics preferred stock they held at the effective time of the merger. Pursuant to the terms of the merger agreement and the certificate of incorporation of Internet Photonics, the liquidation preference applicable to each series of Internet Photonics preferred stock will be payable in shares of CIENA common stock at a fixed value of $6.127 per share. In respect of their aggregate liquidation preference of approximately $72,533,275, directors and executive officers of Internet Photonics, and their respective affiliates, that own shares of Internet Photonics preferred stock, will receive an aggregate of approximately 11,838,302 shares of CIENA common stock upon the closing of the merger. In addition, affiliates of members of the Internet Photonics board of directors hold preferred stock warrants exercisable for 68,721 shares of series C preferred stock and 199,996 shares of series D preferred stock. Exercise of such warrants in full would result in payment of an additional liquidation preference of $887,206 to such persons. For additional information regarding this liquidation preference and the consideration payable to holders of Internet Photonics preferred stock in the merger, see “Terms of the Merger Agreement and Related Transactions — Treatment of Stock, Options and Warrants.”

Pursuant to the terms of the Internet Photonics, Inc. Retention Plan (the “retention plan”), Internet Photonics will make cash payments totaling approximately $2.3 million in the aggregate to certain Internet Photonics employees immediately prior to the closing of the merger, provided they are employees of Internet Photonics at such time. Under the retention plan, sixteen Internet Photonics officers, at or above the vice president level, will collectively receive an aggregate cash payment of $591,615 immediately prior to the effective time of the merger. Payments to such officers range from approximately $5,000 to $67,000 per person.

Acceleration of Vesting of Internet Photonics Restricted Stock and Options.

Upon completion of the merger, Internet Photonics’ right to repurchase an aggregate of 13,333 shares of Internet Photonics restricted common stock held by Martin Nuss at a price of $0.009374 per share will terminate and such shares shall become fully vested. In addition, if the merger is completed, options to acquire an aggregate 667,989 shares of Internet Photonics common stock held by directors and executive officers as of March 1, 2004 will vest and become immediately exercisable. The weighted average exercise price of all such options is $0.62 per share.

The merger agreement provides that, upon the completion of the merger, for a period of six years CIENA will fulfill the obligations of Internet Photonics to indemnify and hold harmless each person who is or was a director or officer of Internet Photonics against any losses incurred based upon matters existing or occurring prior to the completion of the merger to the same extent that these persons were indemnified pursuant to Internet Photonics’ certificate of incorporation, bylaws or any indemnification agreement immediately prior to the merger.

The merger is expected to be accounted for using the purchase method of accounting. CIENA will be deemed the acquiror for financial reporting purposes. Under the purchase method of accounting, the purchase price in the merger is allocated among the Internet Photonics assets acquired and the Internet Photonics liabilities assumed to the extent of their fair market value, with any excess purchase price being allocated to goodwill.

CIENA has agreed to cause the shares of CIENA common stock issued in the merger to be approved for listing on the Nasdaq Stock Market.

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 as amended (the “HSR Act”) and its related rules and regulations prohibit Internet Photonics and CIENA from completing the merger until CIENA and Internet Photonics each file notifications with the Antitrust Division of the Department of Justice and the Federal Trade Commission, and the Hart-Scott-Rodino waiting period requirements have been satisfied. Even after the Hart-Scott-Rodino waiting period expires or is terminated, and even after the merger is completed, the Antitrust Division or the Federal Trade Commission could challenge the merger on antitrust grounds. In addition, before or after the merger is completed, states and private litigants could also challenge the merger on antitrust grounds. CIENA and Internet Photonics each filed Hart-Scott-Rodino notifications with the Federal Trade Commission and the Antitrust Division on February 26, 2004, and the waiting period was terminated on March 10, 2004.

The following discussion describes the material U.S. federal income tax consequences of the exchange of shares of Internet Photonics’ capital stock for CIENA common stock pursuant to the merger that are generally applicable to holders of Internet Photonics capital stock. This discussion is based on currently existing provisions of the Internal Revenue Code of 1986, as amended (the “Tax Code”), existing and proposed Treasury regulations thereunder and current administrative rulings and court decisions, all of which are subject to change. Any such change, which may or may not be retroactive, could alter the tax consequences to Internet Photonics stockholders as described herein. Neither Internet Photonics nor CIENA has requested nor will request a ruling from the Internal Revenue Service with regard to any of the tax consequences of the merger.

Internet Photonics stockholders should be aware that this discussion does not deal with all U.S. federal income tax considerations that may be relevant to particular Internet Photonics stockholders in light of their particular circumstances, such as stockholders who are dealers in securities, stockholders who received their shares in connection with the performance of services where such shares were subject to vesting restrictions, stockholders who are subject to the alternative minimum tax provisions of the Tax Code, stockholders who are foreign persons, insurance companies, tax-exempt organizations, financial institutions, or broker-dealers, stockholders who hold their shares as part of a hedge, straddle, conversion or other risk-reduction transaction, stockholders who do not hold their Internet Photonics stock as capital assets, stockholders who hold their Internet Photonics stock through a partnership or other pass-through entity or stockholders who acquired their shares in connection with stock option or stock purchase plans or in other compensatory transactions. In particular, this discussion does not discuss the tax consequences of payments that may be subject to the “golden parachute” provisions of the Tax Code. In addition, unless specifically addressed below, the following discussion does not address the tax consequences of the merger under foreign, state or local tax laws, the tax consequences of transactions effectuated prior or subsequent to, or concurrently with, the merger (whether or not any such transactions are undertaken in connection with the merger), including without limitation any transaction in which shares of Internet Photonics capital stock are acquired or shares of CIENA common stock are disposed of, or the tax consequences of the assumption by CIENA of the Internet Photonics employee options or the tax consequences of any receipt of rights to acquire CIENA common stock.

Accordingly, Internet Photonics stockholders are urged to consult their own tax advisors as to the specific tax consequences to them of the merger, including the applicable federal, state, local and foreign tax consequences.

In the opinion of Hogan & Hartson L.L.P., counsel to CIENA, and Sonnenschein Nath & Rosenthal LLP, counsel to Internet Photonics, the merger will be treated for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Tax Code. The opinions:


	•	will not be binding on the IRS or the courts nor preclude the IRS from adopting a contrary position;

	•	will be based on the assumption that the merger will be completed in accordance with the terms of the merger agreement; and

	•	will be subject to the limitations discussed below.

Additionally, the opinions will be based on certain assumptions and limitations, as well as factual representations made by, among others, CIENA and Internet Photonics. Such representations, if incorrect, could jeopardize the conclusions reached in the opinions. Neither CIENA nor Internet Photonics is currently aware of any facts or circumstances which would cause any such representations made to counsel to be untrue or incorrect in any material respect. Hogan & Hartson L.L.P. and Sonnenschein Nath & Rosenthal LLP are under no obligation to update the opinions as a result of a change in law or discovery of any inaccuracy in such representations.

U.S. Federal Income Tax Consequences if the Merger Qualifies as a Reorganization

Assuming the merger qualifies as a reorganization within the meaning of Section 368(a) of the Tax Code and the merger is completed under the current terms of the merger agreement, subject to the discussion below under the heading “Taxation of Escrowed Shares,” the following U.S. federal income tax consequences generally will result:


	•	No gain or loss will be recognized by holders of Internet Photonics capital stock solely upon their receipt of CIENA common stock, including CIENA common stock subject to the escrow, in exchange for such Internet Photonics capital stock in the merger (except with respect to cash received in lieu of fractional shares and escrowed CIENA common stock sold to either reimburse expenses of the stockholders’ representative or to make indemnification payments to CIENA as discussed below).

	•	The aggregate tax basis of the CIENA common stock received by each Internet Photonics stockholder in the merger (including any fractional share interest in CIENA common stock and CIENA common stock subject to the escrow) will be the same as the aggregate tax basis of the Internet Photonics capital stock surrendered by such Internet Photonics stockholder in exchange therefor.

	•	The holding period of the CIENA common stock received by each Internet Photonics stockholder in the merger (including the CIENA common stock subject to the escrow) will include the period for which the Internet Photonics capital stock surrendered in exchange therefor was considered to be held, provided that the Internet Photonics capital stock so surrendered is held as a capital asset at the time of the merger.

	•	Any cash payment received by a holder of Internet Photonics capital stock in lieu of a fractional share of CIENA common stock will be treated as if such fractional share had been issued in the merger and then redeemed by CIENA. An Internet Photonics stockholder receiving such cash will recognize gain or loss upon such payment, measured by the difference, if any, between the amount of cash received and the stockholders’ basis in such fractional share. The gain or loss will be capital gain or loss provided that the shares of Internet Photonics capital stock were held as capital assets and will be long-term capital gain or loss if the Internet Photonics capital stock exchanged for that fractional share of CIENA common stock had been held for more than one year at the time of the merger. However, if the receipt of cash instead of fractional shares is essentially equivalent to a dividend (determined by application of Section 302 of the Tax Code on a stockholder by stockholder basis), the cash payment may be treated as dividend income to the stockholder not reduced by the stockholder’s tax basis in the fractional share (and such tax basis would be allocated to the stockholder’s aggregate tax basis in CIENA common stock retained). A dividend realized by


		an individual stockholder should be subject to a maximum tax rate of 15 percent. A dividend realized by a corporate stockholder may be entitled to a dividends received deduction unless the dividend is treated as an extraordinary dividend under Section 1059 of the Code.

	•	If an Internet Photonics stockholder dissents to the merger and receives solely cash in exchange for such stockholder’s Internet Photonics capital stock, although the law is subject to uncertainty, such cash generally should be treated as a distribution in redemption of such stockholder’s Internet Photonics capital stock. The stockholder should recognize gain or loss measured by the difference between the amount of cash received and the adjusted tax basis of the Internet Photonics capital stock surrendered, except in certain situations when the stockholder owns CIENA common stock directly or indirectly by reason of certain attribution rules set forth in that Code, in which case the cash received could be treated as dividend income to the stockholder. Different tax consequences will apply to any interest awarded by a court to a dissenting Internet Photonics stockholder.

Internet Photonics stockholders will be treated as owning an allocable portion of the CIENA common stock issued in the merger and deposited in escrow. An allocable portion of any dividends received on escrowed stock will be taxed to each former Internet Photonics stockholder as ordinary income when such amounts are received by the escrow agent. CIENA does not anticipate declaring dividends. The escrow agreement provides that a portion of the shares of CIENA common stock placed in the escrow may be sold to reimburse the expenses of the stockholders’ representative. In addition, the escrow agreement provides CIENA the option to elect to be indemnified from the escrow fund by either return of escrowed shares of CIENA common stock or by payment of the cash proceeds from the sale of escrowed shares of CIENA common stock, in each case valued at $6.127 per share. In the case of reimbursement of expenses or indemnification in cash through the sale of escrowed shares, the sale of such shares of CIENA common stock will be treated as a taxable sale to the Internet Photonics stockholders. Each Internet Photonics stockholder will recognize capital gain or loss as a result of such sale, measured as the difference between such Internet Photonics stockholder’s basis in such sold shares of CIENA common stock and the fair market value of such shares of CIENA common stock, as of the date of such sale. Likewise, Internet Photonics stockholders will be allocated their portion of any interest or other income earned from the investment of the proceeds of such sale. No gain or loss will be recognized by an Internet Photonics stockholder upon the distribution of escrowed stock to the stockholder upon termination of the escrow arrangement or upon the release of escrowed stock to CIENA pursuant to the terms of the escrow agreement.

Each of CIENA and Internet Photonics has agreed to report the merger as a reorganization within the meaning of Section 368(a) of the Tax Code in all applicable U.S. federal, and to the extent permitted, state tax returns filed by each party. Each Internet Photonics stockholder will be required to file with such stockholder’s U.S. federal income tax return a statement setting forth certain facts relating to the merger.

A holder of Internet Photonics capital stock may be subject, under some circumstances, to backup withholding at a rate of 28% with respect to certain payments made in the merger unless the holder provides proof of an applicable exemption or a correct taxpayer identification number, and otherwise complies with applicable requirements of the backup withholding rules. Any amounts withheld under the backup withholding rules are not an additional tax and may be refunded or credited against the holder’s U.S. federal income tax liability, provided the required information is furnished to the Internal Revenue Service.

If the merger is completed, a holder of record of Internet Photonics stock on the date of making a demand for appraisal, as described below, will be entitled to have those shares appraised by the Delaware

Court of Chancery under Section 262 of the Delaware General Corporation Law or DGCL, and to receive payment for the “fair value” of those shares instead of the consideration provided for in the merger agreement. In order to be eligible to receive this payment, however, an Internet Photonics stockholder must (1) continue to hold his or her shares through the time of the merger; and (2) strictly comply with the procedures discussed under Section 262. This information statement/prospectus is being sent to all holders of record of Internet Photonics stock and constitutes notice of the appraisal rights available to those holders under Section 262.

The following summary is not a complete statement of Section 262 of the DGCL, and is qualified in its entirety by reference to Section 262, which is incorporated herein by reference, together with any amendments to the laws that may be adopted after the date of this information statement/prospectus. A copy of Section 262 is attached as Annex B to this information statement/prospectus. The statutory right of appraisal granted by Section 262 requires strict compliance with the procedures in Section 262. Failure to follow any of these procedures may result in a termination or waiver of dissenters’ rights under Section 262.

A holder of Internet Photonics stock who elects to exercise appraisal rights under Section 262 must deliver a written demand for appraisal of its shares of Internet Photonics by , 2004. The written demand must identify the stockholder of record and state the stockholder’s intention to demand appraisal of his or her shares. All demands should be delivered to CIENA Corporation, 1201 Winterson Road, Linthicum, Maryland 21090, Attention: Corporate Secretary.

Only a holder of shares of Internet Photonics stock on the date of making a written demand for appraisal who did not execute the written consent approving the merger and who continuously holds those shares through the time of the merger is entitled to seek appraisal. Demand for appraisal must be executed by or for the holder of record, fully and correctly, as that holder’s name appears on the holder’s stock certificates representing shares of Internet Photonics stock. If Internet Photonics stock is owned of record in a fiduciary capacity by a trustee, guardian or custodian, the demand should be made in that capacity. If Internet Photonics stock is owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be made by or for all owners of record. An authorized agent, including one or more joint owners, may execute the demand for appraisal for a holder of record; that agent, however, must identify the record owner or owners and expressly disclose in the demand that the agent is acting as agent for the record owner or owners of the shares.

A record holder such as a broker who holds shares of Internet Photonics stock as a nominee for beneficial owners, some of whom desire to demand appraisal, must exercise appraisal rights on behalf of those beneficial owners with respect to the shares of Internet Photonics stock held for those beneficial owners. In that case, the written demand for appraisal should state the number of shares of Internet Photonics stock covered by it. Unless a demand for appraisal specifies a number of shares, the demand will be presumed to cover all shares of Internet Photonics stock held in the name of the record owner.

Beneficial owners who are not record owners and who intend to exercise appraisal rights should instruct the record owner to comply with the statutory requirements with respect to the exercise of appraisal rights before , 2004.

Within 10 days after the merger, the surviving or resulting corporation is required to send a notice of the effectiveness of the merger to each Internet Photonics stockholder, provided, however, that if such notice of the effectiveness of the merger is sent more than 20 days following , 2004, the mailing date of this information statement/prospectus, then such post-effectiveness merger notice will only be sent to each stockholder who, in response to this information statement/prospectus, has timely delivered a notice of intent to demand appraisal as set forth in the third paragraph of this section.

Within 120 days after the merger, the surviving corporation or any stockholder who has complied with the requirement of Section 262 may file a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares of Internet Photonics stock held by all stockholders seeking appraisal. A dissenting stockholder must serve a copy of the petition on the surviving corporation. If no petition is filed by either the surviving corporation or any dissenting stockholder within the 120-day period,

the rights of all dissenting stockholders to appraisal will cease. Stockholders seeking to exercise appraisal rights should not assume that the surviving corporation will file a petition with respect to the appraisal of the fair value of their shares or that the surviving corporation will initiate any negotiations with respect to the fair value of those shares. The surviving corporation shall be under no obligation to and CIENA, as the surviving corporation in the merger, has no present intention to take any action in this regard. Accordingly, stockholders who wish to seek appraisal of their shares should initiate all necessary action with respect to the perfection of their appraisal rights within the time periods and in the manner prescribed in Section 262. Failure to file the petition on a timely basis will cause the stockholder’s right to an appraisal to cease.

Within 120 days after the time of the merger, any stockholder who has complied with subsections (a) and (d) of Section 262 is entitled, upon written request, to receive from the surviving corporation a statement setting forth the total number of shares of Internet Photonics stock not voted in favor of the merger with respect to which demands for appraisal have been received by Internet Photonics and the number of holders of those shares. The statement must be mailed within 10 days after Internet Photonics has received the written request or within 10 days after the time for delivery of demands for appraisal under subsection (d) of Section 262 has expired, whichever is later.

If a petition for an appraisal is filed in a timely manner, at the hearing on the petition, the Delaware Court of Chancery will determine which stockholders are entitled to appraisal rights and will appraise the shares of Internet Photonics stock owned by those stockholders. The court will determine the fair value of those shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with a fair rate of interest, to be paid, if any, upon the fair value.

Stockholders who consider seeking appraisal should consider that the fair value of their shares under Section 262 could be more than, the same as, or less than, the value of the consideration provided for in the merger agreement without the exercise of appraisal rights. The Court of Chancery may determine the cost of the appraisal proceeding and assess it against the parties as the Court deems equitable. Upon application of a dissenting stockholder, the Court may order that all or a portion of the expenses incurred by any dissenting stockholder in connection with the appraisal proceeding (including, without limitation, reasonable attorney’s fees and the fees and expenses of experts) be charged pro rata against the value of all shares of Internet Photonics stock entitled to appraisal. In the absence of a court determination or assessment, each party bears its own expenses.

Any stockholder who has demanded appraisal in compliance with Section 262 will not, after the merger, be entitled to vote such stock for any purpose or receive payment of dividends or other distributions, if any, on the Internet Photonics stock, except for dividends or distributions, if any, payable to stockholders of record at a date prior to the merger.

A stockholder may withdraw a demand for appraisal and accept the CIENA common stock at any time within 60 days after the merger. If an appraisal proceeding is properly instituted, it may not be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, and any such approval may be conditioned on the Court of Chancery’s deeming the terms to be just. If, after the merger, a holder of Internet Photonics stock who had demanded appraisal for his or her shares fails to perfect or loses his or her right to appraisal, those shares will be treated under the merger agreement as if they were converted into CIENA common stock at the time of the merger.

In view of the complexity of these provisions of the Delaware corporate law, any Internet Photonics stockholder who is considering exercising appraisal rights should consult a legal advisor.

The following summary of the material terms and provisions of the merger agreement is qualified in its entirety by reference to the merger agreement. The merger agreement, as amended, is attached as Annex A to this information statement/prospectus and is incorporated herein by reference. All stockholders are urged to read the merger agreement carefully.

The merger agreement provides that Internet Photonics will be merged with and into CIENA, at the effective time of the merger. Pursuant to the merger agreement, Internet Photonics will cease to exist as a separate entity and CIENA will be the surviving corporation. At the effective time of the merger, each outstanding share of Internet Photonics capital stock (other than treasury shares and shares held by dissenting stockholders) will be converted into CIENA common stock, all as more fully described below. The certificate of incorporation of CIENA will be the certificate of incorporation of the surviving corporation. The bylaws of CIENA will be the bylaws of the surviving corporation.

Following the merger, CIENA will integrate all of Internet Photonics’ operations into its Metro and Enterprise Solutions Group. All of the officers and directors of CIENA before the merger will remain officers and directors of the surviving corporation after the merger.

At the effective time of the merger, each issued and outstanding share of Internet Photonics capital stock will be converted into shares of CIENA common stock in accordance with the terms of the merger agreement and the certificate of incorporation of Internet Photonics as described below. Each share of CIENA common stock issued in the merger will include the corresponding fraction of a right to purchase shares of junior preferred stock, par value $0.01 per share, pursuant to the Rights Agreement dated as of December 29, 1997 between CIENA and Equiserve Trust Co., N.A. (formerly BankBoston, N.A.), as rights agent, as amended. Shares of Internet Photonics capital stock held in the treasury of Internet Photonics will be canceled and extinguished at the effective time of the merger without the payment of any consideration.

Subject to the indemnification and escrow arrangements described below, CIENA has agreed to issue an aggregate of 24,080,843 shares of its common stock in exchange for all of Internet Photonics’ outstanding common and preferred stock and for the assumption of certain outstanding options and warrants to purchase Internet Photonics capital stock. You should review “— Indemnification and Escrow Arrangement” for a discussion of the CIENA common stock otherwise distributable at closing, that will not be delivered to the Internet Photonics stockholders but will instead be deposited into an escrow fund to secure certain indemnity claims CIENA may make for up to one year.

Because the consummation of the merger will constitute a sale event under the terms of the certificate of incorporation of Internet Photonics, at the effective time of the merger, holders of each series of Internet Photonics preferred stock will receive payment in shares of CIENA common stock of their respective liquidation preference. Each share of CIENA common stock to be issued in respect of each series of preferred stock’s liquidation preference has a fixed value of $6.127 per share pursuant to the terms of the merger agreement. Payment of the liquidation preference shall be made to holders of Internet Phonics preferred stock prior to any payment or allocation of merger consideration to holders of Internet Photonics common stock. The liquidation preference payable to each series of Internet Photonics preferred stock is set forth in the certificate of incorporation of Internet Photonics and based upon the original purchase price for such series, plus any declared but unpaid dividends in respect of such series. As of March 17, 2004, no dividends had been declared on any series of Internet Photonics preferred stock and

The amounts above represent the liquidation price payable to each series of Internet Photonics preferred stock divided by $6.127, the average closing price per share of CIENA common stock reported on the Nasdaq National Market for the ten trading days prior to the date of the merger agreement. In addition to the amounts above, preferred stock warrants for 68,721 shares of series C preferred stock, 432,496 shares of series D preferred stock and 20,000 shares of series E preferred stock are outstanding and exercisable as of March 1, 2004. Any exercise of these preferred stock warrants would increase the number of shares to be issued in satisfaction of the aggregate liquidation preference in respect of outstanding Internet Photonics preferred stock and decrease the applicable common stock exchange ratio.

Following payment of approximately 14,225,995 shares of CIENA common stock in satisfaction of the aggregate liquidation preferences in respect of outstanding shares of Internet Photonics preferred stock, each share of Internet Photonics common stock and preferred stock (other than series A preferred stock), treating each series of Internet Photonics preferred stock on an as-converted into Internet Photonics common stock basis, shall be exchanged for a fraction of a share of CIENA common stock equal to the common stock exchange ratio. The common stock exchange ratio shall equal a fraction, the numerator of which is 24,080,843 shares minus the aggregate number of shares issued in payment of the foregoing liquidation preferences, and the denominator of which is the sum of the number of shares of Internet Photonics common stock outstanding plus the number of shares of Internet Photonics common stock issuable upon the exercise of all “Internet Photonics common stock equivalents” immediately prior to the effective time of the merger.

Under the terms of the merger agreement, “Internet Photonics common stock equivalents” means:


	•	the number of shares of Internet Photonics common stock issuable upon exercise of all Internet Photonics stock options outstanding at the effective time, excluding (i) those options which by their terms will expire on or prior to the effective time of the merger without becoming exercisable due to vesting provisions, (ii) options with an exercise price per share equal to or greater than $1.00, (iii) unvested options held by Internet Photonics employees terminated at the closing of the merger, and (iv) unvested options, held by Internet Photonics employees identified by CIENA for termination during the six month period following the merger, that are projected to be unvested at the end of the transitional period during which CIENA expects to continue to employ such person, plus,

	•	the number of shares of Internet Photonics common stock that would be issuable upon conversion of all Internet Photonics preferred stock outstanding at the effective time of the merger (other than series A preferred stock), plus


	•	the number of shares of Internet Photonics common stock issuable upon the exercise of warrants to purchase Internet Photonics preferred stock outstanding at the effective time of the merger, and assuming the conversion of such shares into Internet Photonics common stock.

As of March 1, 2004, 485,141 shares of Internet Photonics common stock were issued and outstanding. In addition, as of such date, each series of Internet Photonics preferred stock was convertible into such number of shares of Internet Photonics common stock as set forth below:

As of March 1, 2004, warrants exercisable for Internet Photonics preferred stock, representing 680,412 shares of Internet Photonics common stock on an as-converted basis, and stock options (excluding the options described in (i) through (iv) of the first bullet point above) exercisable for 9,117,066 shares of Internet Photonics common stock were issued and outstanding. As of March 1, 2004, therefore, there were a total of 60,292,575 shares of Internet Photonics common stock and “Internet Photonics common stock equivalents” outstanding.

Based on the aggregate liquidation preference payable on Internet Photonics preferred stock described above, the common stock exchange ratio, as of that date, would be ..1635 shares of CIENA common stock and a holder of 100 shares of Internet Photonics common stock would receive 16.35 shares of CIENA common stock in the merger. The following chart sets forth the dollar value of those 100 shares of CIENA common stock at a range of prices of CIENA common stock. The chart does not include cash received for fractional shares or cash paid in respect of dissenting shares.


*	The closing price of CIENA common stock on February 18, 2004, the last trading day prior to the announcement of the merger.

Accordingly, after taking into account payment, in shares of CIENA common stock, in respect the liquidation preference applicable to each series of Internet Photonics preferred stock, the applicable exchange ratio per share of Internet Photonics capital stock as of such date is as set forth below:


*	The exchange ratio for the series A preferred stock is fixed, and therefore not subject to adjustment based on changes in Internet Photonics’ fully-diluted outstanding capital stock.

The actual common stock exchange ratio will be calculated at the effective time of the merger and is subject to change as a result of changes in the number of shares of Internet Photonics common stock, preferred stock or Internet Photonics common stock equivalents outstanding and other adjustments. The actual common stock exchange ratio is subject to adjustment due to option issuances, exercise of preferred stock warrants, stock repurchases and similar events or because of the exercise of outstanding Internet Photonics stock options with an exercise price equal to or greater than $1.00 per share. Any issuance of Internet Photonics capital stock due to the exercise of outstanding options with exercise prices less than $1.00 per share will not affect the exchange ratios. Moreover, the value you will receive in exchange for your Internet Photonics capital stock is subject to the trading price per share of CIENA common stock at the effective time.

If, prior to the effective time of the merger, the outstanding shares of CIENA common stock are changed into or exchanged for a different number of shares or a different class as a result of any stock split, combination, reclassification or dividend, the nature of the consideration to be received by the holders of Internet Photonics capital stock and the exchange ratios will be appropriately and proportionately adjusted.

CIENA will assume each option or warrant to acquire Internet Photonics common stock and preferred stock granted under Internet Photonics’ stock plans or otherwise issued by Internet Photonics that is outstanding and unexercised immediately prior to the effective time of the merger. At the effective time of the merger, CIENA will replace each Internet Photonics option or warrant with an option or warrant, as the case may be, to purchase CIENA common stock. In each case, the number of shares of CIENA common stock subject to the new CIENA option or warrant will be equal to the number of shares of Internet Photonics common stock or preferred stock subject to the Internet Photonics stock option or warrant, multiplied by the common stock exchange ratio (and rounding any fractional share down to the nearest whole share) and the exercise price per share of CIENA common stock will be equal to the exercise price per share of Internet Photonics common stock subject to the Internet Photonics stock option or warrant divided by the exchange ratio. The duration and other terms of each such CIENA option or warrant, including the vesting schedule, will be the same as the prior Internet Photonics stock option or warrant, unless the vesting is accelerated by the terms of the instrument as a result of the merger. See “The Merger — Interests of Executive Officers and Directors in the Merger” for a discussion of the treatment of the acceleration of vesting schedules of certain executive officers pursuant to the merger.

CIENA has agreed to deposit with a bank or trust company designated as exchange agent by CIENA for the benefit of the holders of issued and outstanding shares of Internet Photonics common stock,

At the earliest practicable date after the effective time of the merger, the exchange agent will mail a letter of transmittal to each holder of record of Internet Photonics common stock. The letter of transmittal will contain instructions with respect to the surrender of stock certificates to the exchange agent.

You should not forward your stock certificates to the exchange agent unless and until you receive the letter of transmittal, at which time you should forward them only in accordance with the instructions specified in the letter of transmittal.

Until the holders of certificates representing Internet Photonics capital stock to be converted into CIENA common stock in the merger surrender them for exchange at or after the effective time of the merger, they will accrue but will not receive dividends or other distributions declared after the effective time of the merger with respect to CIENA common stock into which their Internet Photonics stock has been converted. When they surrender such certificates, any unpaid dividends or other distributions will be paid, without interest. All stock certificates presented after the effective time of the merger will be canceled and exchanged for a certificate representing the applicable number of shares of CIENA common stock.

Any shares of CIENA common stock and cash that the exchange agent has not distributed six months after the effective time of the merger will be delivered to CIENA upon demand. Certificates representing Internet Photonics capital stock must thereafter be surrendered for exchange to CIENA. Neither CIENA, Internet Photonics, nor the exchange agent will be liable for any shares of CIENA common stock, dividends or distributions with respect thereto, or cash delivered to a public official pursuant to any abandoned property, escheat or similar laws.

If a certificate representing Internet Photonics capital stock is lost, stolen or destroyed, the exchange agent will issue the CIENA common stock in exchange for the certificate only upon the making of an affidavit of such loss, theft or destruction by the claimant and payment of any surety premium as required by the exchange agent with respect to such certificate.

CIENA will not issue any fractional shares of its common stock in the merger. Instead, each Internet Photonics stockholder who would otherwise have been entitled to receive a fractional share of CIENA common stock will receive cash, without interest, in an amount rounded to the nearest whole cent, determined by multiplying (1) the per share closing price of CIENA’s common stock on the Nasdaq National Market on the date of the merger by (2) the fraction of a share of CIENA common stock to which the holder would otherwise be entitled.

For a description of the differences between the rights of the holders of CIENA common stock and holders of Internet Photonics capital stock, see “Comparison of Stockholder Rights.”

The merger will occur after specified conditions set forth in Article V of the merger agreement have been satisfied or waived. No later than the second business day after the satisfaction or waiver of these conditions, the parties will hold a scheduled closing. On the day the merger occurs, CIENA will file a certificate of merger with the Secretary of State of the State of Delaware. The effective time of the merger will be the date and time of such filing. CIENA and Internet Photonics each anticipate that the merger will be completed during CIENA’s third fiscal quarter of 2004. However, a delay in obtaining governmental consents required prior to consummation of the transactions contemplated in the merger agreement could delay the merger. There can be no assurances as to if or when such governmental consents will be obtained or that the merger will be completed.

The merger agreement contains various representations of CIENA and Internet Photonics. Internet Photonics has made customary representations and warranties relating to, among other things:


	•	the corporate organization and existence of Internet Photonics, including that it is duly organized, validly existing and in good standing with the corporate power and authority to own, operate and lease its properties and to carry on its business as currently conducted;

	•	the certificate of incorporation and bylaws or other organizational documents of Internet Photonics;

	•	the capitalization of Internet Photonics, including the number of shares of capital stock authorized, the number of shares and rights to acquire shares outstanding and the number of shares reserved for issuance;

	•	the corporate power and authority of Internet Photonics to execute and deliver the merger agreement and related documents and to consummate the transactions contemplated by these documents;

	•	the compliance of the merger agreement and related documents with (1) Internet Photonics’ certificate of incorporation and bylaws, (2) applicable laws, and (3) material agreements of Internet Photonics, including the absence of events of default thereunder;

	•	the required governmental and third-party consents;

	•	Internet Photonics’ financial statements through December 31, 2003, including that the information in the financial statements, are a fair presentation of the financial condition and results of operations of Internet Photonics and is in compliance with GAAP;

	•	the absence of certain changes in Internet Photonics’ business since December 31, 2003;

	•	the ownership and condition of the assets owned by Internet Photonics;

	•	material leases, contracts and agreements;

	•	interests in real property;

	•	compliance with environmental laws and the absence of environmental liabilities;

	•	the absence of material legal proceedings, injunctions and disputes;

	•	compliance with applicable laws, including relating to employees or the workplace;

	•	the absence of intellectual property infringement or contests;

	•	the filing and accuracy of Internet Photonics’ tax returns;

	•	employee benefit plans and related matters, including that the plans have been operated and administered in accordance with applicable laws;

	•	related party transactions;

	•	insurance;

	•	the absence of undisclosed fees being paid to brokers;

	•	complete and correct books and records;

	•	the absence of certain business practices of Internet Photonics;

	•	knowledge regarding customer and supplier relationships; and

	•	the truthfulness of information provided by Internet Photonics and its principal officers for inclusion in the information statement/prospectus.

Messrs. Greg Koss and Waszak have also made the representations and warranties made by Internet Photonics above, but are making these representations and warranties on the basis only of their actual knowledge as to the matters stated therein.

Internet Photonics’ representations and warranties generally survive until the end of the first year after the effective time of the merger. After the effective time of the merger, the maximum liability of Internet Photonics stockholders for any breach of the representations, covenants or agreements generally will be limited to 10% of the shares issued in the merger transaction, except for liability for fraud. CIENA and certain other indemnified persons may make a claim for indemnification for any breach of any of the foregoing representations and warranties until the end of the first year after the effective time of the merger. For a description of indemnification obligations of Internet Photonics stockholders see “— Indemnification and Escrow Arrangement.”

The merger agreement also contains customary representations and warranties of CIENA as to, among other things:


	•	the corporate organization and existence of CIENA;

	•	the certificate of incorporation and bylaws or other organizational documents of CIENA;

	•	the corporate power and authority of CIENA;

	•	the compliance of the merger agreement and related documents with CIENA’s certificate of incorporation and bylaws, applicable laws, and certain material agreements of CIENA;

	•	the required governmental and third-party consents;

	•	absence of undisclosed fees being paid to brokers;

	•	the valid issuance of the shares of CIENA common stock to be issued in the merger;

	•	CIENA’s filings with the SEC;

	•	the absence of material legal proceedings, injunctions and disputes;

	•	the capitalization of CIENA; and

	•	the absence of undisclosed material adverse change or other specified changes in CIENA’s business since October 31, 2003.

CIENA’s representations and warranties will survive until the end of the first year after the effective date of the merger. CIENA has agreed to indemnify the former Internet Photonics stockholders for up to $147.5 million against losses due to the breach or inaccuracy of CIENA’s representations and warranties contained in the merger agreement.


	•	maintain its existence in good standing;

	•	conduct its business in the ordinary and usual manner consistent with past practices;

	•	maintain business and accounting records consistent with past practices; and

	•	use commercially reasonable efforts (1) to preserve its business intact, (2) to keep available to it the services of its present officers and employees, and (3) to preserve for it the goodwill of its suppliers, customers and others having business relations with it.

Unless CIENA otherwise approves (unless such approval would violate legal requirements) or if necessary in order to comply with law, Internet Photonics may not:


	•	amend or otherwise change its certificate of incorporation or its bylaws (other than the amendment described in this information statement/prospectus);

	•	issue any stock or grant any options, with certain exceptions, in the ordinary course, consistent with past practice, including under its existing equity compensation programs;

	•	declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise with respect to any of its capital stock;

	•	reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock, except for repurchases of shares in connection with the termination of any employee or consultant pursuant to stock option, restricted stock purchase agreements or stock award agreements;

	•	incur any indebtedness for borrowed money or issue any debt securities (except in connection with the bridge loan described in this information statement/prospectus) or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any person, or make any loans or advances, except in the ordinary course of business, consistent with past practice;

	•	acquire, including, without limitation, by merger, consolidation, or acquisition of stock or assets, any corporation, partnership, other business organization or any division thereof or any material amount of assets;

	•	enter into any contract or agreement other than in the ordinary course of business, consistent with past practice, or pursuant to the retention plan;

	•	authorize any capital commitment or capital lease that is in excess of $100,000 or capital expenditures that are, in the aggregate, in excess of $500,000, other than pursuant to the retention plan;

	•	mortgage, pledge or subject to encumbrance, except certain permitted encumbrances, any of its material assets or properties, or agree to do so, other than in the ordinary course of business, consistent with past practice;

	•	assume, guarantee or otherwise become responsible for the obligations of any other person or agree to so do;

	•	enter into or agree to enter into any employment agreement, other than pursuant to the retention plan, or offer letters for non-executive new hires entered into in the ordinary course of business, consistent with past practice;

	•	except as set forth in agreements disclosed to CIENA, increase the compensation of its officers or employees, other than pursuant to the retention plan, or grant any severance or termination pay to, or enter into any severance agreement with any director, officer or other employee of Internet Photonics, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any such director, officer or employee, other than pursuant to the retention plan, except for amendments to existing employee benefit plans as necessary to maintain compliance with applicable laws and in certain other limited circumstances;

	•	take any action to change in any respect its accounting policies or procedures, including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivables, except as required by concurrent changes in GAAP and the application of SEC rules and regulations and related interpretations;


	•	make any tax election or settle or compromise any federal, state, local or foreign material income tax liability in excess of $50,000;

	•	settle or compromise any pending or threatened suit, action or claim or initiate any litigation against a third party;

	•	pay, discharge or satisfy any claim, liability or obligation, other than the payment, discharge or satisfaction, (a) in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in Internet Photonics’ balance sheet dated December 31, 2003, or subsequently incurred in the ordinary course of business and consistent with past practice in amounts not in excess of $100,000, (b) of a secured loan between Internet Photonics and Comerica Bank, or (c) of a $1.5 million promissory note payable by Internet Photonics to AT&T Corp;

	•	sell, assign, transfer, license or sublicense, pledge or otherwise encumber any of its intellectual property rights, other than in the ordinary course of business and consistent with past practice; or

	•	announce an intention, commit or agree to do any of the foregoing.

Unless Internet Photonics otherwise approves (unless such approval would violate legal requirements) or if necessary in order to comply with law, CIENA may not declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise with respect to any of its capital stock, or agree to do so, except where (1) an adjustment is made to the exchange ratios for Internet Photonics capital stock, or (2) the holders of Internet Photonics capital stock will otherwise receive an equivalent, proportional dividend or distribution in connection with the merger as if they had been holders of CIENA common stock on the record date for such dividend or distribution.

Pursuant to the merger agreement, Internet Photonics may not, nor may it authorize or permit any of its affiliates or any officer, director, employee, investment banker, attorney or other adviser or representative of Internet Photonics or any of its affiliates to:


	•	solicit, initiate, or encourage any acquisition proposal (as defined to mean any proposal for a merger or other business combination involving Internet Photonics or any proposal or offer to acquire in any manner, directly or indirectly, 20% or more of the equity securities, voting securities, or assets of Internet Photonics);

	•	enter into any agreement with respect to any acquisition proposal; or

	•	participate in any discussions or negotiations regarding, or furnish to any person any information for the purpose of facilitating the making of, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any acquisition proposal.

Internet Photonics must promptly advise CIENA of any acquisition proposal and inquiries with respect to any acquisition proposal. Any action by a person purporting to act on behalf of Internet Photonics without actual authority in violation of the foregoing restrictions shall not be deemed a breach of those restrictions b y Internet Photonics if Internet Photonics provides written notice to CIENA of such breach within one business day of the discovery of such action, disavows the action taken in writing to CIENA and to any third-party involved and promptly uses commercially reasonable available means to cause such person to refrain from taking any further action in violation of the foregoing restrictions.

Under the merger agreement, for a period of one year following the merger, CIENA and its officers, directors and affiliates are indemnified by the Internet Photonics stockholders, other than those dissenting


	•	any inaccuracy or breach of a representation or warranty of Internet Photonics or its chief executive officer or chief financial officer contained in the merger agreement or a certificate of any officer of Internet Photonics delivered pursuant to the merger agreement;

	•	any failure by Internet Photonics to perform or comply with any covenant or agreement contained in the merger agreement;

	•	certain incremental costs incurred in responding to any exercise of dissenters’ rights by any holder of Internet Photonics’ capital stock; and

	•	fees and expenses incurred by or on behalf of Internet Photonics in connection with the merger in excess of $3 million.

With the exception of claims, losses and liabilities incurred by CIENA as a result of fraud, or inaccuracies or breaches of Internet Photonics’ representation and warranty regarding its record holders of capital stock, or Internet Photonics’ representations and warranties regarding certain tax matters, CIENA is only entitled to indemnification for claims made within the one-year period following the closing of the merger. In the case of indemnification claims made after the one-year period relating to the limited representations and warranties described in this paragraph, each Internet Photonics stockholder’s liability (including through claims against the escrow fund) is limited to the product of the number of shares such stockholder was entitled to receive in the merger and $6.127.

Except as described in the previous paragraph, the aggregate amount available to indemnify the indemnified parties may not exceed the amount deposited in the escrow fund, referred to below, and no stockholder is required to indemnify the indemnified parties for an amount that would exceed such stockholder’s pro rata share of the CIENA stock deposited in the escrow fund. In addition, there will be no indemnification liability, except for the indemnification for fees and expenses that exceed $3 million, unless the aggregate amount of losses incurred exceeds $500,000, in which event the entire amount of losses will be indemnifiable. The stockholders will have no right of contribution from Internet Photonics with respect to any loss claimed by CIENA after the closing date. Nothing in the merger agreement limits the liability of Internet Photonics for any breach of any representation, warranty or covenant if the merger is not completed.

The merger agreement provides that 10% of the shares of CIENA common stock to be issued to the Internet Photonics stockholders in the merger will be placed in escrow with an escrow agent as soon as practicable after the merger is completed. Additionally, 40,803 shares of CIENA common stock that are allocable to Internet Photonics stockholders in the merger will be deposited with the escrow agent to pay any expenses of Sprout Capital IX, L.P. , appointed as the stockholders’ representative under the terms of the merger agreement. The escrow fund will be the sole and exclusive source available to compensate CIENA for the indemnification obligations of each Internet Photonics stockholder under the merger agreement, except as described above. The deposit with the escrow agent constitutes an escrow fund to be governed by the terms set forth in the escrow agreement. The portion of the escrow amount contributed on behalf of each stockholder must be proportional to the aggregate CIENA common stock to which such holder would otherwise be entitled. The form of escrow agreement to be executed at closing is attached to this information statement/prospectus as Annex D.

Under the terms of the merger agreement, Sprout Capital IX, L.P. has been appointed as agent and attorney-in-fact to act on behalf of Internet Photonics stockholders and to take all such actions as may be necessary or appropriate to carry out the merger agreement and the escrow agreement. Any actions taken by the stockholders’ representative shall be binding upon all stockholders, except in cases of bad faith, and

no stockholder shall have the right to object, dissent, protest or otherwise contest such determinations or actions. The stockholders’ representative shall have no liability to any stockholder or any other person, for any actions taken, decisions made or instructions given in the performance of its duties, except in the case of its own gross negligence or willful misconduct.

Internet Photonics stockholders will, on a pro rata basis, contribute 40,803 shares of CIENA common stock to the escrow fund for purposes of reimbursing the out-of-pocket fees and expenses incurred by the stockholders’ representative in the performance of its duties. To the extent such costs exceed the reimbursement fund, and any amounts remaining in the escrow fund, Internet Photonics stockholders shall pay their respective pro rata share of such amounts incurred by the stockholders’ representative in the performance of its duties.

Internet Photonics stockholders who in the aggregate hold not less than a 61% interest in the escrow fund will have the right at any time during the term of the escrow agreement to remove the then-acting stockholders’ representative and appoint a successor.

CIENA has agreed to fulfill and honor in all respects any indemnification agreements Internet Photonics has previously entered into with its officers and directors and to fulfill and honor any indemnification provisions of Internet Photonics’ certificate of incorporation and bylaws. The merger agreement provides that all rights to indemnification for present and former officers and directors of Internet Photonics will survive the merger and continue in full force and effect for a period of not less than six years from the date of the completion of the merger in the case of certain omissions.

The following conditions must be satisfied before the merger can become effective:


	•	CIENA and Internet Photonics have obtained all authorizations, consents, orders, declarations or approvals of, or filings with, any governmental authority required in connection with the merger, which the failure to obtain, make or occur would have the effect of making the merger or any of the transactions contemplated by it illegal or would have a material adverse effect on CIENA or a material adverse effect on Internet Photonics;

	•	no court or governmental entity enacts, issues, promulgates, enforces or enters (or institutes a proceeding to do so) any law, statute, ordinance, rule, regulation, judgment, decree, injunction or other order which is in effect and which restrains, enjoins or otherwise prohibits consummation of the merger; and

	•	the registration statement on Form S-4 of which this information statement/prospectus forms a part must have become effective under the Securities Act, and there must be no stop order or threat of proceedings by the SEC to suspend the effectiveness of the registration statement.

CIENA’s obligations to effect the merger are subject to the fulfillment or satisfaction, prior to or on the closing date, of each of the following conditions:


	•	Internet Photonics must have performed and complied in all material respects with all agreements and covenants to be performed prior to or on the closing date;

	•	each of Internet Photonics’ representations and warranties contained in the merger agreement must be true and correct as of the closing, except to the extent (i) that such representations and warranties expressly relate to an earlier date (in which case such representations and warranties must be true as of such earlier date); and (ii) such failure to be true and correct would not have a material adverse effect on Internet Photonics;


	•	Internet Photonics must have received certain specified consents or waivers, in form and substance satisfactory to CIENA, from the other parties to certain contracts, leases or agreements to which Internet Photonics is a party;

	•	the escrow agreement must have been executed and delivered by the stockholders’ representative;

	•	CIENA must have received favorable written legal opinions dated as of the closing date from its counsel as to federal income tax matters and from Internet Photonics’ counsel as to certain customary matters;

	•	CIENA must have received executed letter agreements from each director and executive officer of Internet Photonics relating to certain restrictions on the transfer of the shares of CIENA common stock received by such persons in the merger; and

	•	the secured loan between Internet Photonics and Comerica Bank shall have been repaid in full by Internet Photonics.

Conditions Precedent to Internet Photonics’ Obligations to Effect the Merger

Internet Photonics’ obligations to effect the merger are subject to the satisfaction of the following conditions prior to the closing date:


	•	CIENA must have performed and complied in all material respects with all agreements and conditions to be performed prior to or on the closing date;

	•	each of CIENA’s representations and warranties contained in the merger agreement must be true and correct, except to the extent (i) that such representations and warranties expressly relate to an earlier date (in which case such representations and warranties must be true as of such earlier date); and (ii) such failure to be true and correct would not have a material adverse effect on CIENA;

	•	Internet Photonics must have received favorable written legal opinions dated as of the closing date from its counsel as to federal income tax matters and from CIENA’s counsel as to certain customary matters;

	•	if required, CIENA shall have filed a timely notification of listing of additional shares with the Nasdaq National Market; and

	•	the escrow agreement must have been executed and delivered by CIENA.

The merger agreement may be terminated, and the merger may be abandoned at any time prior to the closing date:


	•	by the mutual written agreement of CIENA and Internet Photonics;

	•	by CIENA or Internet Photonics if:


	•	the closing has not occurred by July 31, 2004, except that the right to terminate the merger agreement is not available to any party who has caused the delay in the closing date by failing to fulfill its obligations under the merger agreement; or

	•	any court or other governmental authority of competent jurisdiction issues an order or takes any other final and non-appealable action restraining, enjoining or otherwise prohibiting the merger; or


	•	Internet Photonics’ board of directors has withdrawn, modified or amended in any respect adverse to CIENA its recommendation in favor of the merger agreement or merger or failed to


		reconfirm its recommendation within three business days of a written request of CIENA to do so;

	•	Internet Photonics has recommended or entered into an agreement with respect to, or consummated, any acquisition proposal from a person other than CIENA or any of its affiliates; or

	•	CIENA is not in material breach of its obligations under the merger agreement and Internet Photonics breaches any material representation, warranty, covenant or agreement in the merger agreement, and fails to cure the breach ten days after receiving notice of it or such breach cannot be cured and would cause a condition to CIENA’s obligation to complete the merger to be incapable of being satisfied.

If the merger agreement is terminated by CIENA because Internet Photonics’ board of directors withdraws, amends or modifies its recommendation in favor of the merger, of because Internet Photonics has recommended or entered into an agreement with respect to, or consummated, any acquisition proposal from a person other than CIENA or its affiliates, then Internet Photonics must pay CIENA a termination fee of $6 million, as well as reimbursement of up to $500,000 for expenses incurred in the merger negotiation.

At any time prior to the effective time of the merger, CIENA and Internet Photonics may agree in writing to:


	•	extend the time for the performance of any obligation or other act required to be performed under the merger agreement;

	•	waive any inaccuracies in the representations and warranties contained in the merger agreement or in any document delivered pursuant to the merger agreement;

	•	waive compliance with any of the agreements or conditions contained in the merger agreement; or

	•	amend the merger agreement.

After the closing, the merger agreement may be amended or modified by CIENA and the stockholders’ representative.

CIENA and Internet Photonics will pay their own expenses incidental to the preparation of the merger agreement, the carrying out of the provisions of the merger agreement and the consummation of the transactions contemplated by the merger agreement.

Following the merger, CIENA will not be liable for Internet Photonics’ out-of-pocket expenses paid or payable in connection with the merger (including fees and costs payable to bankers, accountants and lawyers, as well as payments required in connection with obtaining consents, and the cost of employee entitlements as a result of a change in control or non-standard severance provisions (with certain exclusions), tax gross-ups or otherwise) in excess of $3 million. Any expenses in excess thereof are recoverable by CIENA from the escrow fund without reference to the $500,000 minimum aggregate amount of losses that CIENA must otherwise incur prior to recovery. For additional information on CIENA’s rights to indemnification, see “—Indemnification and Escrow Arrangement” above.

In conjunction with entering into the merger agreement, CIENA has agreed to provide Internet Photonics with a bridge loan pursuant to a credit and security agreement under which CIENA has agreed to provide a revolving line of credit to Internet Photonics to fund Internet Photonics’ operations through the closing of the merger. A copy of the credit and security agreement is included as an exhibit to the registration statement of which this information statement/prospectus forms a part.

Under the line of credit, CIENA agrees to advance cash to Internet Photonics from time to time in minimum draw amounts of not less than $1 million to finance its operations until the earlier of (i) the termination of the merger agreement, or (ii) the closing of the merger. The total principal amount of advances outstanding under the line of credit at any one time may not exceed $15,057,000 and borrowing under the line of credit is further limited by certain monthly ceilings. Notwithstanding the application of any monthly ceiling, but subject to the aggregate limit on borrowing, Internet Photonics may borrow up to $1.5 million to repay its outstanding promissory note with AT&T Corp. when it becomes due and payable and may borrow up to $2.5 million to make payments pursuant to the terms of Internet Photonics’ retention plan, including related payroll and unemployment taxes. Internet Photonics may borrow, repay and re-borrow under the line of credit at any time during the borrowing term. All principal, accrued and unpaid interest and all other sums owing to CIENA under the line of credit are due and payable upon the earlier of:


	•	90 days following the termination of the merger agreement by any party thereto for any reason;

	•	the date on which Internet Photonics consummates any financing with net proceeds to it equal to or greater than $5 million; and

	•	October 29, 2004.

Interest on the principal amount outstanding under the line of credit is payable at a rate equal to 12% per annum. Internet Photonics may prepay any or all amounts outstanding under the line of credit at any time without penalty or premium. Upon the occurrence of any one or more of the following, each an “event of default”, interest is payable at a rate equal to 14% per annum:


	•	any representation or information provided to CIENA by or on behalf of Internet Photonics in connection with the line of credit should prove to have been false or misleading when made or supplied in any respect deemed material to CIENA in good faith;

	•	the failure of Internet Photonics to pay any obligation under the line of credit when due and such failure to pay remains uncured for a period of three business days after notice from CIENA to Internet Photonics;

	•	the occurrence of a default or event of default by Internet Photonics with respect to, or acceleration or demand for payment prior to maturity of, any indebtedness of Internet Photonics to any person in excess of $250,000, or with respect to any lien securing indebtedness of Internet Photonics which could reasonably have a material adverse effect on Internet Photonics or any rights of CIENA with respect to its collateral or any of Internet Photonics’ obligations under the line of credit or on the prospect for full and punctual payment and performance of Internet Photonics’ obligations under the line of credit;

	•	Internet Photonics’ failure to observe or perform certain affirmative and negative covenants under the credit and security agreement that shall remain uncured for a period of 20 days after notice from CIENA to Internet Photonics;

	•	Internet Photonics admits in writing to insolvency or inability to pay its debts as they mature, makes a general assignment for the benefit of creditors, commences a case under or otherwise seeks to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law, statute or proceeding, or by any act indicates its consent to, approval of or acquiescence in any such proceeding or the appointment of any receiver of or trustee for itself, or a substantial part of its property, or suffers any such receivership, trusteeship or proceeding to continue undismissed for 30 days;

	•	Internet Photonics becomes a debtor in a federal bankruptcy case;

	•	Internet Photonics dissolves or there is an entry of any order, judgment, award or decree for the dissolution of Internet Photonics;


	•	a judgment, order, award or decree is entered against Internet Photonics which is uninsured and not stayed or satisfied within 30 days thereafter and which CIENA deems in good faith to be material or when aggregated with similar judgments, orders, awards or decrees could reasonably have a material adverse effect on Internet Photonics or any rights of CIENA with respect to its collateral or Internet Photonics’ performance of its obligations under the line of credit;

	•	an injunction or restraint on Internet Photonics from conducting its business in whole or in part deemed material by CIENA in good faith;

	•	any collateral of Internet Photonics is attached, levied upon, seized or repossessed, or comes into the possession of a trustee, receiver or other custodian and such is not dismissed or resolved without loss of any collateral within 20 days;

	•	any adverse change with respect to the business, assets, operations, business prospects or financial condition of Internet Photonics that is deemed by CIENA in good faith to be reasonably likely to have a material adverse effect on Internet Photonics;

	•	Internet Photonics becomes insolvent or unable to pay its debts as they mature;

	•	Internet Photonics terminates or cancels, without CIENA’s prior consent, any material lease or sublease, contract franchise, license, permit, authorization, certificate or right;

	•	Internet Photonics terminates any contract that CIENA in good faith deems material to Internet Photonics’ business, assets, operations, business prospects, or financial condition; or

	•	any suspension or revocation of any material license, permit, certification, approval or the like required to be held by Internet Photonics by applicable law.

Upon the occurrence of an event of default, all obligations under the line of credit are automatically and immediately due and payable and CIENA may, without notice or demand, exercise in any jurisdiction, its rights and remedies under the credit and security agreement, the uniform commercial code and applicable law. As security for the payment and performance of Internet Photonics’ obligations under the line of credit, Internet Photonics has granted CIENA a security interest in substantially all of Internet Photonics’ property, other than real property. For so long as any amounts are owed by Internet Photonics to Comerica Bank or Comerica Bank has an obligation to make credit extensions to Internet Photonics, CIENA’s security interest shall be subordinate to the security interest of Comerica Bank. Internet Photonics’ repayment of all amounts outstanding under its loan and security agreement with Comerica Bank is a condition to CIENA’s obligations to consummate the merger.

The shares of CIENA stock to be issued to Internet Photonics stockholders in the merger have been registered under the Securities Act by the registration statement on Form S-4 of which this prospectus forms a part. These shares may be traded freely and without restriction by those stockholders not deemed to be “affiliates” of Internet Photonics as that term is defined under the Securities Act. An affiliate of a corporation, as defined by the rules promulgated under the Securities Act, is a person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, that corporation. Under the merger agreement, Internet Photonics has agreed to obtain affiliate agreements from each affiliate of Internet Photonics before completion of the merger. Under these agreements, each affiliate will agree not to sell, transfer, pledge or otherwise dispose of any of the CIENA common stock received by them in the merger in violation of the Securities Act. Generally, this will require that all sales be made as provided by the resale provisions of Rule 145 promulgated under the Securities Act, which, in turn, requires that for a specified period, sales be made in compliance with the volume limitations, manner of sale provisions and current information requirements of Rule 144 under the Securities Act. CIENA has the right to place legends on the certificates evidencing CIENA common stock issued to affiliates of Internet Photonics summarizing the foregoing restrictions. If an Internet Photonics affiliate becomes an affiliate of CIENA, any transfer must be permitted by the resale provisions of Rule 144 promulgated under the Securities Act or otherwise permitted under the Securities Act.

On February 19, 2004, CIENA announced the execution of a definitive agreement to acquire Catena Networks, Inc., a leader in the broadband access market with offices in Ottawa, Canada and Research Triangle Park, NC. Under the terms of the acquisition agreement, Catena will merge into CIENA, and all the outstanding shares of Catena common and preferred stock will be exchanged for shares of CIENA common stock. CIENA also will assume Catena’s employee stock options and warrants which will be converted into options and warrants to purchase CIENA shares. The total number of shares issuable in respect of Catena outstanding stock, options and warrants is approximately 75.9 million shares of CIENA common stock which, based on the closing price of CIENA’s common stock on March 22, 2004, had an aggregate value of approximately $362 million. CIENA expects the transaction to qualify as a tax-free reorganization. The Catena transaction is subject to various conditions and approval by appropriate government agencies and the stockholders of Catena. The boards of directors of both CIENA and Catena each have approved the transaction. It is expected that this transaction will close by the end of CIENA’s third fiscal quarter 2004.

A detailed description of CIENA’s business and various benefit plans, including stock option plans, financial statements and other matters related to CIENA is incorporated by reference in this information statement/prospectus or set forth in CIENA’s Annual Report on Form 10-K for the year ended October 31, 2003 and Quarterly Report on Form 10-Q for the quarter ended January 31, 2004. Stockholders desiring copies of such documents may contact CIENA at its address or telephone number indicated under the caption “Where You Can Find More Information.”

Internet Photonics was incorporated in August 2000 in the state of Delaware and was a development stage company through 2002. Internet Photonics achieved its first revenues with multiple customers in 2002. Currently, Internet Photonics’ operating activities consist primarily of research and development, sales and marketing, product design and manufacturing.

The following table sets forth certain information regarding the beneficial ownership of Internet Photonics capital stock as of March 1, 2004: (i) by each person who is known by Internet Photonics to own beneficially more than 5% of each of the classes of Internet Photonics capital stock, on an as-converted basis; (ii) by each director of Internet Photonics; (iii) by the chief executive officer and the four most highly compensated executive officers, other than the chief executive officer, of Internet Photonics; and (iv) by all of the directors and all of the executive officers of Internet Photonics as a group. Except as noted below, the address of each person listed on the table is c/o Internet Photonics, Inc., 1030 Broad Street, Suite 200, Shrewsbury, New Jersey 07702.

As of March 1, 2004, 485,141 shares of Internet Photonics common stock were issued and outstanding. As of the same date, 783,333 shares of series A preferred stock, 1,199,999 shares of series B preferred stock, 2,395,435 shares of series C preferred stock, 30,999,994 shares of series D preferred stock and 8,250,000 shares of series E preferred stock of Internet Photonics were issued and outstanding.

Each share of Internet Photonics common stock is entitled to one vote. Each share of Internet Photonics preferred stock is entitled to a number of votes equal to the number of shares of Internet Photonics common stock into which such share may be converted into pursuant to Internet Photonics’ certificate of incorporation. Each share of series A preferred stock and series B preferred stock converts into 1.419533 shares of common stock. Each share of series C preferred stock converts into 3.316541 shares of common stock. Each share of series D preferred stock and series E preferred stock converts into one share of common stock. No other classes of capital stock are authorized under the Internet Photonics certificate of incorporation.

The following table is based on 1,111,967 shares of series A preferred stock, 1,703,438 shares of series B preferred stock, 7,944,557 shares of series C preferred stock, 30,999,994 shares of series D preferred stock and 8,250,000 shares of series E preferred stock outstanding, calculated on an as-converted to common stock basis as of March 1, 2004. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to the shares of Internet Photonics capital stock and capital stock issuable upon conversion or exercise of other currently convertible or exercisable Internet Photonics securities or that will be so convertible or exercisable within 60 days of March 1, 2004.



							Series A					Series B					Series C
		Common and Preferred					Preferred Stock					Preferred Stock					Preferred Stock
		Stock Outstanding on					Outstanding on an					Outstanding on an					Outstanding on an
		an As-Converted Basis					As-Converted Basis					As-Converted Basis					As-Converted Basis

		Amount and					Amount and					Amount and					Amount and
Name of		Nature of					Nature of					Nature of					Nature of
Beneficial		Beneficial		Percent			Beneficial		Percent			Beneficial		Percent			Beneficial		Percent
Owner(1)(2)(3)		Ownership		of Class			Ownership		of Class			Ownership		of Class			Ownership		of Class

DLJ Capital Corp.(4)			31,215,785		61.3	%							1,608,329		94.4	%		7,759,498		94.9	%
DLJ ESC II, L.P.(5)			31,215,785		61.3	%							1,608,329		94.4	%		7,759,498		94.9	%
Sprout Entrepreneurs’ Fund, L.P.(6)			31,215,785		61.3	%							1,608,329		94.4	%		7,759,498		94.9	%
Sprout Capital IX, L.P.(7)			31,215,785		61.3	%							1,608,329		94.4	%		7,759,498		94.9	%
Sprout Plan Investors, L.P.(8)			31,215,785		61.3	%							1,608,329		94.4	%		7,759,498		94.9	%
Nemeth, Wayne(9)			31,215,785		61.3	%							1,608,329		94.4	%		7,759,498		94.9	%
Diamond, Stephen			0		0	%
	Eleven Madison Avenue
	New York, NY 10010
ComVentures V, L.P.(10)			12,673,568		25.1	%
ComVentures V-A CEO Fund, L.P.(11)			12,673,568		25.1	%
ComVentures V-B CEO Fund, L.P.(12)			12,673,568		25.1	%
ComVentures V Entrepreneurs’ Fund, L.P.(13)			12,673,568		25.1	%
Higgerson, Clifford(14)			12,673,568		25.1	%
	305 Lytton Avenue
	Palo Alto, CA 94301
NV Partners II LP			3,751,238		7.4	%		757,084		68.1	%							396,396		5.0	%
	98 Floral Avenue
	Murray Hill, NJ 07974
Koss, Gregory(15)			1,694,296		3.1	%
Liebhaber, Richard(16)			142,500		0.3	%
Nuss, Martin(17)			433,386		0.8	%
Panditi, Surya(18)			154,079		0.3	%												16,579		0.2	%
Corkum, Todd(19)			25,164		0.0	%
Dale, Peter(20)			42,500		0.1	%
Aucoin, Todd(21)			15,183		0.0	%
Waszak, Steven(22)			584,209		1.1	%
Directors and executive officers as a group (11 persons)			46,980,670		87.2	%		0		0	%		1,608,329		94.4	%		7,776,073		95.1	%

[Continued from above table, first column(s) repeated]



		Series D					Series E
		Preferred Stock					Preferred Stock
		Outstanding on an					Outstanding on an
		As-Converted Basis					As-Converted Basis

		Amount and					Amount and
Name of		Nature of					Nature of
Beneficial		Beneficial		Percent			Beneficial		Percent
Owner(1)(2)(3)		Ownership		of Class			Ownership		of Class

DLJ Capital Corp.(4)			16,076,297		51.5	%		5,771,661		70.0	%
DLJ ESC II, L.P.(5)			16,076,297		51.5	%		5,771,661		70.0	%
Sprout Entrepreneurs’ Fund, L.P.(6)			16,076,297		51.5	%		5,771,661		70.0	%
Sprout Capital IX, L.P.(7)			16,076,297		51.5	%		5,771,661		70.0	%
Sprout Plan Investors, L.P.(8)			16,076,297		51.5	%		5,771,661		70.0	%
Nemeth, Wayne(9)			16,076,297		51.5	%		5,771,661		70.0	%
Diamond, Stephen
	Eleven Madison Avenue
	New York, NY 10010
ComVentures V, L.P.(10)			10,199,999		32.9	%		2,473,569		30.0	%
ComVentures V-A CEO Fund, L.P.(11)			10,199,999		32.9	%		2,473,569		30.0	%
ComVentures V-B CEO Fund, L.P.(12)			10,199,999		32.9	%		2,473,569		30.0	%
ComVentures V Entrepreneurs’ Fund, L.P.(13)			10,199,999		32.9	%		2,473,569		30.0	%
Higgerson, Clifford(14)			10,199,999		32.9	%		2,473,569		30.0	%
	305 Lytton Avenue
	Palo Alto, CA 94301
NV Partners II LP			2,597,758		8.3	%
	98 Floral Avenue
	Murray Hill, NJ 07974
Koss, Gregory(15)
Liebhaber, Richard(16)
Nuss, Martin(17)
Panditi, Surya(18)
Corkum, Todd(19)
Dale, Peter(20)
Aucoin, Todd(21)
Waszak, Steven(22)
Directors and executive officers as a group (11 persons)			26,276,296		84.2	%		8,245,230		99.9	%


(1)	The persons identified in the table above possess sole voting and investment power with respect to all shares shown as beneficially owned by them, except as noted in the footnotes below and subject to applicable community property laws.

(2)	The inclusion herein of any shares of Internet Photonics capital stock deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

(3)	All Internet Photonics stockholders are party to either a stockholders agreement or a stock restriction agreement since the time of their acquisition of Internet Photonics capital stock that requires that they vote all of the voting securities of Internet Photonics capital stock that they own or control to cause and maintain the election of the persons specified in the stockholders agreement to the Internet Photonics board of directors. All of the current members of the Internet Photonics board of directors have been elected pursuant to this voting arrangement. Under applicable federal securities laws, this voting arrangement may mean that all Internet Photonics stockholders are deemed to be the beneficial owner of all of the shares of Internet Photonics capital stock now outstanding.

(4)	Includes 1,587,645 shares of series B preferred stock, 7,671,898 shares of series C preferred stock, 15,894,809 shares of series D preferred stock and 5,706,504 shares of series E preferred stock, on an as-converted basis, held by its affiliates Sprout Capital IX, L.P., Sprout Entrepreneurs’ Fund, L.P., Sprout Plan Investors, L.P., and DLJ ESC II, L.P. Includes 2,570 shares of series C preferred stock and 2,256 shares of series D preferred stock, on an as-converted basis, issuable upon the exercise of certain warrants held by DLJ Capital Corporation.

(5)	Includes 1,509,837 shares of series B preferred stock, 7,342,354 shares of series C preferred stock, 15,212,053 shares of series D preferred stock and 5,771,661 shares of series E preferred stock, on an as-converted basis, held by its affiliates Sprout Capital IX, L.P., Sprout Entrepreneurs’ Fund, L.P., Sprout Plan Investors, L.P., and DLJ Capital Corporation. Includes 12,251 shares of series C preferred stock and 10,750 shares of series D preferred stock, on an as-converted basis, issuable upon the exercise of certain warrants held by DLJ ESC II, L.P.

(6)	Includes 1,596,510 shares of series B preferred stock, 7,731,022 shares of series C preferred stock, 16,017,295 shares of series D preferred stock and 5,750,479 shares of series E preferred stock, on an as-converted basis, held by its affiliates Sprout Capital IX, L.P., Sprout Plan Investors, L.P., DLJ Capital Corporation and DLJ ESC II, L.P. Includes 832 shares of series C preferred stock and 734 shares of series D preferred stock, on an as-converted basis, issuable upon the exercise of certain warrants held by Sprout Entrepreneurs’ Fund, L.P.

(7)	Includes 130,989 shares of series B preferred stock, 533,208 shares of series C preferred stock, 1,104,734 shares of series D preferred stock and 396,619 shares of series E preferred stock, on an as-converted basis, held by its affiliates DLJ Capital Corporation, Sprout Entrepreneurs’ Fund, L.P., Sprout Plan Investors, L.P., and DLJ ESC II, L.P. Includes 212,262 shares of series C preferred stock and 186,256 shares of series D preferred stock, on an as-converted basis, issuable upon the exercise of certain warrants held by Sprout Capital IX, L.P.

(8)	Includes 1,608,329 shares of series B preferred stock, 7,759,498 shares of series C preferred stock, 16,076,297 shares of series D preferred stock and 5,461,381 shares of series E preferred stock, on an as-converted basis, held by its affiliates Sprout Capital IX, L.P., Sprout Entrepreneurs’ Fund, L.P., DLJ Capital Corporation, and DLJ ESC II, L.P.

(9)	Includes 1,608,329 shares of series B preferred stock, 7,759,498 shares of series C preferred stock, 16,076,297 shares of series D preferred stock and 5,771,661 shares of series E preferred stock, on an as-converted basis, held by affiliates Sprout Capital IX, L.P., Sprout Entrepreneurs’ Fund, L.P., Sprout Plan Investors, L.P., DLJ Capital Corporation, and DLJ ESC II, L.P. Mr. Nemeth is a Director of DLJ Capital Corporation, which in turn is the General Partner and Managing General Partner, respectively, of Sprout Entrepreneurs’ Fund, L.P. and Sprout Capital IX, L.P.; Mr. Nemeth is also attorney in fact of the entities that control Sprout Plan Investors, L.P. and DLJ ESC II, L.P.


(10)	Includes 1,171,561 shares of series D preferred stock and 284,112 shares of series E preferred stock, on an as-converted basis, held by affiliates ComVentures V-A CEO Fund, L.P., ComVentures V-B CEO Fund, L.P., and ComVentures V Entrepreneurs’ Fund, L.P.

(11)	Includes 9,625,129 shares of series D preferred stock and 2,334,160 shares of series E preferred stock, on an as-converted basis, held by affiliates ComVentures V, L.P., ComVentures V-B CEO Fund, L.P., and ComVentures V Entrepreneurs’ Fund, L.P.

(12)	Includes 9,640,242 shares of series D preferred stock and 2,337,822 shares of series E preferred stock, on an as-converted basis, held by affiliates ComVentures V, L.P., ComVentures V-A CEO Fund, L.P., and ComVentures V Entrepreneurs’ Fund, L.P.

(13)	Includes 10,163,065 shares of series D preferred stock and 2,464,613 shares of series E preferred stock, on an as-converted basis, held by affiliates ComVentures V, L.P., ComVentures V-A CEO Fund, L.P., and ComVentures V-B CEO Fund, L.P.

(14)	Includes 10,199,999 shares of series D preferred stock and 2,473,569 shares of series E preferred stock, on an as-converted basis, held by affiliates ComVentures V, L.P., ComVentures V-A CEO Fund, L.P., ComVentures V-B CEO Fund, L.P., and ComVentures V Entrepreneurs’ Fund, L.P. Mr. Higgerson is a Member of the entity that is the General Partner of each of ComVentures V, L.P., ComVentures V-A CEO Fund, L.P., ComVentures V-B CEO Fund, L.P., and ComVentures V Entrepreneurs’ Fund, L.P.

(15)	Includes 1,694,296 shares of common stock issuable upon the exercise of certain options held by Mr. Koss.

(16)	Includes 142,500 shares of common stock issuable upon the exercise of certain options held by Mr. Liebhaber.

(17)	Includes 326,720 shares of common stock issuable upon the exercise of certain options held by Mr. Nuss.

(18)	Includes 137,500 shares of common stock issuable upon the exercise of certain options held by Mr. Panditi and 3,963 shares of series C preferred stock, on an as-converted basis, held by a trust of which Mr. Panditi is trustee.

(19)	Includes 25,164 shares of common stock issuable upon the exercise of certain options held by Mr. Corkum.

(20)	Includes 42,500 shares of common stock issuable upon the exercise of certain options held by Mr. Dale.

(21)	Includes 15,183 shares of common stock issuable upon the exercise of certain options held by Mr. Aucoin.

(22)	Includes 584,209 shares of common stock issuable upon the exercise of certain options held by Mr. Waszak.

Both Internet Photonics and CIENA are corporations organized under the laws of the State of Delaware and are therefore subject to the Delaware general corporation law. However, there are some differences in the certificate of incorporations and bylaws of Internet Photonics and CIENA and in certain agreements among Internet Photonics’ stockholders that affect their rights.

CIENA. CIENA is authorized to issue 980,000,000 shares of common stock and 20,000,000 shares of preferred stock. On March 17, 2004, 475,254,814 shares of CIENA common stock were outstanding and no shares of CIENA preferred stock were outstanding. CIENA’s board has the authority, without stockholder approval, to issue shares of preferred stock from time to time in one or more series and to fix the rights and preferences, including voting rights, of each such series of preferred stock, which rights and preferences may be superior to that of CIENA’s common stock.

Internet Photonics. Internet Photonics is authorized to issue 90,000,000 shares of common stock. In addition, Internet Photonics is authorized to issue 61,142,495 shares of preferred stock, of which 783,333 shares have been designated series A preferred stock, 1,200,000 shares have been designated series B preferred stock, 2,464,162 shares have been designated series C preferred stock, 31,495,000 shares have been designated series D preferred stock, and 25,200,000 have been designated series E preferred stock. On March 1, 2004, there were (i) 485,141 shares of common stock outstanding, (ii) 783,333 shares of series A preferred stock outstanding, (iii) 1,199,999 shares of series B preferred stock outstanding, (iv) 2,395,435 shares of series C preferred stock outstanding, (v) 30,999,994 shares of series D preferred stock outstanding and (vi) 8,250,000 shares of series E preferred stock outstanding.

On March 1, there were outstanding warrants to purchase (i) 68,721 shares of series C preferred stock, (ii) 432,496 shares of series D preferred stock and (iii) 20,000 shares of series E preferred stock. In addition, options to purchase 9,959,953 shares of common stock were outstanding under the Internet Photonics’ 2000 Corporate Stock Option Plan.

CIENA. Each holder of CIENA common stock is entitled to one vote for each share and may not cumulate votes for the election of directors.

Internet Photonics. Subject to the voting rights of the holders of the preferred stock, the holders of common stock are entitled to one vote for each share held of record upon such matters and in such manner as may be provided by law.

Each share of series A, series B, series C, series D and series E preferred stock votes together with the common stock and not as a separate class, except as specifically required by law or by the certificate of incorporation, with those exceptions set forth below. Each share of preferred stock has the number of votes equal to the number of shares of common stock then issuable upon conversion of such share of preferred stock.

Board of Directors. Pursuant to a Second Amended and Restated Stockholders Agreement, as amended (the “Internet Photonics Stockholders Agreement”) among Internet Photonics and the holders of common stock and/or preferred stock named therein, each stockholder a party to the Internet Photonics Stockholders Agreement has agreed to vote their respective shares to ensure the following:


	•	no more than 7 directors are to serve on the board of directors;

	•	the election of Internet Photonics’ chief executive officer to the board of directors;


	•	the election of 2 directors nominated by holders of the series A, series B and series C preferred stock, voting together as a class (with such directors nominated by Sprout Capital IX, L.P. for so long as such stockholder and its affiliates hold at least 15% of the aggregate outstanding number of shares of series A, series B and series C preferred stock);

	•	the election of 1 director nominated by holders of the series D preferred stock (with such director nominated by ComVentures V, L.P. for so long as such stockholder holds at least 15% of the number of outstanding shares of series D preferred stock); and

	•	the election of up to 3 directors by all of the holders of Internet Photonics’ outstanding common and preferred stock, voting together on an as-converted basis.

Protective Provisions. For so long as at least 3,750,000 shares of preferred stock remain outstanding, the consent of the holders of more than 64% of the preferred stock, voting together as a single class on an as-converted basis, is necessary to take any of the following actions:


	•	amend Internet Photonics’ certificate of incorporation or bylaws so as to increase or decrease the number of directors constituting the board of directors;

	•	purchase, redeem or otherwise acquire for value any capital stock (or any warrant, option or right to purchase capital stock) of Internet Photonics other than redemption, on or after October 1, 2008, of the currently designated series of preferred stock or upon any liquidation, dissolution, indefinite cessation of business or winding up of Internet Photonics, and except for acquisitions of common stock by Internet Photonics from officers, directors, consultants and employees pursuant to agreements that permit Internet Photonics to repurchase such shares upon certain events, provided that repurchases from officers, directors, consultants and employees do not exceed $300,000 in total during any 12-month period;

	•	approve or effect any sale or other disposition of all or substantially all of the assets of Internet Photonics, or any consolidation, merger, combination, reorganization or similar transaction in which Internet Photonics is not the surviving entity or the stockholders of Internet Photonics immediately prior to such transaction own less than 50% of Internet Photonics’ voting power immediately after such transaction, or in which AT&T Corp. or its affiliates own in excess of 50% of the voting power of Internet Photonics;

	•	declare or pay any dividend, or make any distribution of any sort in respect of any class of equity security of Internet Photonics; or

	•	approve or effect any dissolution or liquidation of Internet Photonics.

In addition to the foregoing consent requirements, the following consents of each separate series of preferred stock is required:


	•	the separate consent of the holders of more than 75% of the outstanding shares of series E preferred stock is required to amend Internet Photonics’ certificate of incorporation in any way that (i) creates a class of capital stock that has rights senior to or on a parity with the series E preferred stock with respect to dividends, distributions, rights upon liquidation or sale of the company, redemption rights, anti-dilution rights, conversion rights or voting power or (ii) adversely affects any of the rights, privileges or preferences of the series E preferred stock, provided that any amendment that similarly adversely affects the other series of preferred stock does not require a separate class vote of the series E preferred stock and instead requires the vote or written consent of the holders of more than 64% of the preferred stock, voting together on an as-converted basis;

	•	the separate consent of the holders of more than 75% of the outstanding shares of series D preferred stock is required to amend Internet Photonics’ certificate of incorporation in any way that (i) creates a class of capital stock that has rights senior to or on a parity with the series D preferred stock, but junior to the series E preferred stock, with respect to dividends, distributions, rights upon liquidation or sale of the company, redemption rights, anti-dilution rights, conversion


		rights or voting power or (ii) adversely affects any of the rights, privileges or preferences of the series D preferred stock, provided that any amendment that similarly adversely affects the other series of preferred stock does not require a separate class vote of the series D preferred stock and instead requires the vote or written consent of the holders of more than 64% of the preferred stock, voting together on an as-converted basis;

	•	the separate consent of the holders of more than 50% of the outstanding shares of series A preferred stock is required to amend Internet Photonics’ certificate of incorporation in any way that adversely affects any of the rights, privileges or preferences of the series A preferred stock, provided that any amendment that similarly adversely affects the other series of preferred stock does not require a separate class vote of the series A preferred stock and instead requires the vote or written consent of the holders of more than 64% of the preferred stock, voting together on an as-converted basis, and provided further that any such amendment that similarly adversely affects the series B and series C preferred stock (but not the series D or series E preferred stock) instead requires the separate vote or written consent of a majority of the outstanding shares of series A, series B and series C preferred stock, voting together on an as-converted basis;

	•	the separate consent of the holders of more than 50% of the outstanding shares of series B preferred stock is required to amend Internet Photonics’ certificate of incorporation in any way that adversely affects any of the rights, privileges or preferences of the series B preferred stock, provided that any amendment that similarly adversely affects the other series of preferred stock does not require a separate class vote of the series B preferred stock and instead requires the vote or written consent of the holders of more than 64% of the preferred stock, voting together on an as-converted basis, and provided further that any such amendment that similarly adversely affects the series A and series C preferred stock (but not the series D or series E preferred stock) instead requires the separate vote or written consent of a majority of the outstanding shares of series A, series B and series C preferred stock, voting together on an as-converted basis;

	•	the separate consent of the holders of more than 50% of the outstanding shares of series C preferred stock is required to amend Internet Photonics’ certificate of incorporation in any way that adversely affects any of the rights, privileges or preferences of the series C preferred stock, provided that any amendment that similarly adversely affects the other series of preferred stock does not require a separate class vote of the series C preferred stock and instead requires the vote or written consent of the holders of more than 64% of the preferred stock, voting together on an as-converted basis, and provided further that any such amendment that similarly adversely affects the series A and series B preferred stock (but not the series D or series E preferred stock) instead requires the separate vote or written consent of a majority of the outstanding shares of series A, series B and series C preferred stock, voting together on an as-converted basis; and

	•	the separate consent of the holders of a majority of the series A, series B and series C preferred stock voting together on an as-converted basis, is required to amend Internet Photonics’ certificate of incorporation in any way that creates a class of capital stock that has rights senior to or on parity with such series of preferred stock but junior to the series D preferred stock with respect to dividends, distributions, rights upon liquidation or sale of the company, redemption rights or voting power.

CIENA. CIENA’s certificate of incorporation provides that its board of directors will be comprised of three classes of two or more directors each, with each class elected for a term of three years, so that a different class of directors stands for election each year. CIENA currently has nine directors and the board of directors may increase or decrease the size of the board of directors by resolution.

Internet Photonics. Internet Photonics’ bylaws provide that its board of directors shall consist of not less than one nor more than seven directors, as fixed by resolution of the board of directors, with each

CIENA. CIENA’s certificate of incorporation provides that, subject to the rights of the then outstanding series of preferred stock, any director or the entire board of directors may be removed from office at any time, with or without cause, by the affirmative vote of a majority of the shares of capital stock of CIENA outstanding and entitled to vote on the election of directors, voting together as a separate class. CIENA’s bylaws provide that a director may only be removed from office by the stockholders at a special meeting called for that purpose.

Internet Photonics. The Internet Photonics Stockholders Agreement provides that a director designated by a class or series or classes or series of stockholders may be removed upon the written request of the stockholder or majority in interest of the stockholders then entitled to nominate such director.

CIENA. CIENA’s certificate of incorporation provides that, subject to the rights of any then-existing series of preferred stock, if a vacancy occurs on the CIENA board of directors, (other than a vacancy resulting from the removal of a director by the stockholders but including a vacancy resulting from an increase in the size of the board of directors), the vacancy may be filled only by a majority vote of the directors then in office, even if they constitute less than a quorum. However, if a vacancy results from the removal of a director by the stockholders at a meeting called for that purpose, then the stockholders may fill the vacancy at that meeting.

Internet Photonics. The Internet Photonics Stockholders Agreement provides that any vacancy resulting from the resignation, death or removal of a director designated by a class or series or classes or series of stockholders may be filled in the same manner as such director was elected by such class or series or classes or series of stockholders. Internet Photonics’ bylaws provide that vacancies may be filled by a majority of the directors then in office, though less than a quorum, or by the sole remaining director, and that whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by provisions of Internet Photonics’ certificate of incorporation, vacancies in such directorships may be filled by a majority of the directors elected by such class or classes or series or by a sole remaining director so elected.

CIENA. CIENA’s certificate of incorporation provides that the affirmative vote of the holders of at least 66 2/3% of the voting power of all then outstanding shares of the capital stock of CIENA entitled to vote on the election of directors, voting together as a separate class, is required to amend certain provisions of CIENA’s certificate of incorporation relating to the board of directors, stockholder action, amendment of the certificate of incorporation and indemnification of officers and directors of CIENA. Otherwise, the certificate of incorporation may be amended by the holders of a majority of the voting power of all outstanding shares of CIENA stock.

Internet Photonics. Subject to the foregoing exceptions set forth under the section entitled “—Voting Rights—Internet Photonics—Protective Provisions,” Internet Photonics’ certificate of incorporation may be amended in accordance with the DGCL, which provides that the certificate of incorporation may be amended with the affirmative vote of at least a majority of the voting power of all outstanding shares of the capital stock of Internet Photonics (assuming conversion of all outstanding preferred stock) entitled to vote on the election of directors.

CIENA. CIENA’s certificate of incorporation provides that the bylaws may be amended by a majority vote of the total number of authorized directors (whether or not there exist any vacancies in the previously authorized directorships at the time any resolution providing for amendment is presented to the board of directors) or in addition to any vote of any holders of any class or series of CIENA stock required by law or by CIENA’s certificate of incorporation by an affirmative vote of the holders of at least 66 2/3% of the voting power of all then outstanding shares of the capital stock of CIENA entitled to vote on the election of directors voting together as a single class.

Internet Photonics. Internet Photonics’ bylaws provide that they may be amended by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation. With respect to amendment by the stockholders, the DGCL provides that a majority vote of the holders of the outstanding voting shares at any regular meeting of the stockholders is required to amend the bylaws. Internet Photonics’ certificate of incorporation provides that, in furtherance and not in limitation of any powers conferred on the board of directors by the DGCL, the board of directors may amend the bylaws, subject to the protective provisions in favor of holders of Internet Photonics’ preferred stock.

CIENA. CIENA’s certificate of incorporation provides that any action by the stockholders may only be taken at an annual or special meeting and may not be taken by written consent.

Internet Photonics. Internet Photonics’ bylaws provide that any action that must or may be required to be taken by stockholders may be taken by written consent.

CIENA. Neither CIENA’s certificate of incorporation nor its bylaws require advance notice of stockholder nominations of directors or any other business to be brought by stockholders before any meeting of stockholders, except in the case of a special meeting of the stockholders, which requires notice of the purposes for which a meeting is called.

Internet Photonics. Neither Internet Photonics’ certificate of incorporation nor its bylaws requires advance notice of stockholder nominations of directors or any other business brought by stockholders before any meeting of stockholders.

CIENA. CIENA’s bylaws provide that a special meeting of stockholders may only be called by the board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in the previously authorized directorships at the time any such resolution is presented to the board of directors for adoption) or by the holders of not less than ten percent (10%) of all of the shares entitled to cast votes at the meeting.

Internet Photonics. Internet Photonics’ bylaws provide that a special meeting of stockholders may be called at any time by the chairman of the board of directors, by the chief executive officer or by a majority of the board of directors or at the written request of stockholders owning a majority of the entire capital stock of the company issued and outstanding and entitled to vote.

CIENA. CIENA’s bylaws provide that, from time to time, CIENA’s board may declare and pay dividends upon shares of CIENA stock, but only out of funds available for the payment of dividends as provided by law.

Internet Photonics. Internet Photonics’ certificate of incorporation provides that holders of preferred stock are entitled to receive non-cumulative dividends at the rate of 8% per annum on the “original issue price” of such series of preferred stock, with the amounts to be adjusted upon a stock split, reverse split or similar event, when and if declared by the board of directors out of funds legally available therefor. The original issue price of the series A, series B and series C preferred stock is $10.00. The original issue price of the series D and series E preferred stock is $1.00. Any dividends on the preferred stock are to be paid first to the holders of series E preferred stock, second to the holders of series D preferred stock, and lastly, to the holders of the series A, series B and series C preferred stock.

CIENA. CIENA’s certificate of incorporation provides that, in the event of a liquidation of CIENA, the holders of CIENA common stock shall receive all remaining assets of CIENA ratably in proportion to the number of shares of common stock held by them.

Internet Photonics. Internet Photonics’ certificate of incorporation provides that in the event Internet Photonics liquidates, dissolves, ceases or winds up its business or is sold, distributions shall be made to holders of Internet Photonics’s common stock and preferred stock as follows:


	•	first, the holders of the series E preferred stock are entitled to receive, out of the assets of Internet Photonics available for distribution to stockholders, prior to any payment to the holders of any other series of preferred stock or common stock an amount per share equal to $1.00 plus any declared but unpaid dividends in respect of such share;

	•	second, the holders of the series D and series E preferred stock are entitled to receive, out of the assets of Internet Photonics available for distribution to stockholders an amount per share equal to:


	•	in the case of the series D preferred stock, $1.00 plus any declared but unpaid dividends in respect of such share; or

	•	in the case of the series E preferred stock, $0.50; and

	•	such amounts are to be paid prior to any payment to the holders of any series A, series B or series C preferred stock or any common stock until such time as the series D preferred stock has been paid in full the foregoing liquidation preferential amount;


	•	third, the holders of series A, series B, series C and series E preferred stock are entitled to receive, out of the assets of Internet Photonics available for distribution to stockholders, prior to any payment to the holders of common stock or any series of preferred stock designated after the initial issuance of the series E preferred stock an amount per share equal to:


	•	in the case of any shares of series A, series B or series C preferred stock, $10.00 plus any declared but unpaid dividends in respect of such share; or

	•	in the case of the series E preferred stock, any remaining portion of the $0.50 per share amount described above not previously paid to holders of series E preferred stock; and


	•	lastly, any remaining assets of Internet Photonics are to be distributed pro rata to the holders of common stock, series B, series C, series D and series E preferred stock on an as-converted basis, provided that holders of series B preferred stock cease to participate in any distributions pursuant to this paragraph once they have received a total of $50 per share under this paragraph and the foregoing paragraphs relating to distributions upon the liquidation, dissolution, winding up or sale of Internet Photonics.

Each of the following events is deemed a liquidation, dissolution, winding up or sale of the company:


	•	any liquidation, dissolution, indefinite cessation of business or winding up of the company, whether voluntary or involuntary;


	•	any consolidation, merger, combination, reorganization or other similar transaction, or a series of related transactions, in which Internet Photonics is not the surviving entity or as a result of which shares of capital stock of Internet Photonics constituting in excess of 50% of its voting power are owned beneficially by (i) AT&T Corp. or its affiliates or (ii) person or entities that were not stockholders of Internet Photonics immediately prior to such transaction; or

	•	a sale or other disposition of all or substantially all of the assets of Internet Photonics, in one transaction or a series of related transactions.

CIENA. Holders of CIENA common stock have no right to convert their shares into any other shares of the capital stock of CIENA or any other securities or to cause CIENA to redeem their shares.

Conversion Rights. Holders of preferred stock have the right at any time to convert their shares of preferred stock into shares of common stock based on the conversion rate applicable to such series of preferred stock. The following table sets forth the number of shares of common stock issuable upon conversion of one share of the applicable series of preferred stock:

The Internet Photonics preferred stock will automatically convert into common stock, at the then effective applicable conversion ratio, upon the closing of an underwritten public offering of Internet Photonics common stock in which the net cash proceeds to Internet Photonics exceeds $25 million and in which the offering price per share is at least $5.00. Each series of preferred stock also is subject to automatic conversion into common stock, at the then effective applicable conversion ratio, at any time upon the affirmative election of the holders of at least 64% of the outstanding shares of preferred stock (voting together on an as-converted basis).

The number of shares of common stock into which preferred stock is convertible is subject to adjustment in the following circumstances, subject to certain exceptions:


	•	if Internet Photonics issues or sells shares of its capital stock, or warrants, options or purchase rights without consideration or at a price less than the “original issue price” of a series of preferred stock;

	•	any issuance of common stock for securities convertible into or exchangeable for common stock as a dividend or other distribution; or

	•	any subdivision or combination of outstanding shares of common stock.

Redemption Rights. If at any time after October 1, 2008 the holders of more than 64% of Internet Photonics’ preferred stock, voting together on an as-converted basis, elect to redeem the preferred stock, Internet Photonics is required to redeem all of the outstanding shares of preferred stock, to the extent legally permissible, by paying in exchange for such shares of preferred stock an amount in cash equal to the applicable original issue price for such shares of preferred stock plus any declared but unpaid dividends on such shares.

CIENA. The common stock to be issued in the merger will be registered under the Securities Act of 1933.

Internet Photonics. Set forth below is a summary of the registration rights of certain holders of common stock and the holders of preferred stock pursuant to Internet Photonics’ Second Amended and Restated Registration Rights Agreement, as amended, (the “Registration Rights Agreement”) entered into among Internet Photonics and the holders of common stock and/or preferred stock named therein. The term “registrable securities,” as used below, means Internet Photonics common stock issued or issuable upon conversion of the preferred stock. Registrable securities does not include any such common stock which have previously been registered, sold to the public or which have been sold in a private transaction to a permitted transferee that, together with its affiliates, does not hold at least 1 million shares of preferred stock (or shares of common stock issued upon conversion of preferred stock).

Demand Registration Rights. If holders of at least 20% of the registrable securities then outstanding and entitled to registration request in writing that Internet Photonics file a registration statement under the Securities Act covering the registration of at least 20% of the registrable securities then outstanding, then Internet Photonics is obligated to use commercially reasonable efforts to cause the requested shares to be registered. However, Internet Photonics is not obligated to effect any registration:


	•	prior to the earlier of six months after the effective date of its initial public offering and December 1, 2004;

	•	after it has initiated three such registrations which have either become effective and under which registrable securities have been sold or for which it has borne the expense of registration but has been withdrawn;

	•	during the period starting 60 days prior to Internet Photonics’ good faith estimate of the date of filing of, and ending on the earlier of (i) the completion of the sale of stock covered by or (ii) the date 90 days after the effective date of, a company-initiated registration.

Incidental Registration Rights. The holders of registrable securities are also entitled to registration rights on all Internet Photonics registrations, excluding registrations on Form S-4 or S-8 or another form not available for registering registrable securities for sale to the public. If the registration is an underwritten offering, then the holder’s participation in such underwritten offering shall be conditioned upon the party agreeing to participate in the underwriting on the same terms and conditions as the shares of common stock otherwise being sold pursuant to such registration. If the underwriter of the registration determines that marketing factors require a limitation on the aggregate amount of securities sold on the market, Internet Photonics is required to include in the offering only the number of securities which the managing underwriter believes marketing factors allow.

Form S-3 Registration Rights. Any holder of registrable securities may also demand registrations on Form S-3 provided Form S-3 is available for such offering and the aggregate proceeds are not less than $1 million. Internet Photonics may refuse to effect a “Form S-3” registration if it has already effected one such registration in the preceding 12 months.

Indemnification. To the extent permitted by law, Internet Photonics will indemnify the other parties to the agreement and certain related parties against any losses, claims, damages or liabilities, joint or several, to which they may become subject based on any untrue statement or alleged untrue statement of material fact contained in, or material fact omitted from, a registration statement covering registrable securities, or any other violation or alleged violation of any state or federal securities laws by Internet Photonics.

To the extent permitted by law, each investor holding registrable securities included in a registration that Internet Photonics effected must indemnify Internet Photonics, its officers, directors, employees, agents, control persons and underwriters and any other parties and certain related parties selling securities in such registration against any losses, claims, damages or liabilities, joint or several, to which they may

Transferability. The aforementioned registration rights may be transferred by a holder of registrable securities to a transferee or assignee of such holder’s registrable securities that holds together with its affiliates at least 1,000,000 shares of registrable securities.

Expenses. Internet Photonics is obligated to bear registration expenses, exclusive of underwriting discounts and commissions, for each of the above-described demand registrations, incidental registrations and S-3 registrations. Registration expenses not covered by Internet Photonics are to be borne pro rata by the holders of the securities so registered, based on the number of shares so registered.

Market Standoff. Each holder of registrable securities has agreed that it will not, upon the request of Internet Photonics or its underwriter, sell, transfer or otherwise dispose of any common stock or other securities of Internet Photonics, held by the holder, other than those included in the registration, for up to 180 days following the effective date of a registration statement filed under the Securities Act relating to Internet Photonics’ initial public offering, provided each of Internet Photonics’ officers and directors and each holder of at least 1% of Internet Photonics’ voting securities is similarly bound.

Termination. The above registration rights with respect to any holder of registrable securities terminate upon the earlier of (i) such, time as such holder is able to sell all of their shares pursuant to Rule 144(k) of the Securities Act or (ii) the closing of an acquisition or other transaction in which such holder’s registrable securities are exchanged for publicly traded stock of another entity.

Amendment. Registration rights may be amended or waived upon Internet Photonics’ consent and the consent of holders holding at least a majority in interest of the preferred stock registrable under the Registration Rights Agreement.

Internet Photonics has entered into management rights agreements with certain securityholders who are “venture capital operating companies.” Pursuant to such agreements, the parties thereto have the right to:


	•	consult with and advise management of Internet Photonics on significant business issues, including operating plans;

	•	examine and inspect Internet Photonics’ books, records and facilities; and

	•	if such party is not represented on the board of directors of Internet Photonics, a representative of such party may attend all board of directors meetings as a nonvoting observer.

CIENA. All stockholder proposals intended to be presented at CIENA’s 2005 Annual Meeting must be received by CIENA not later than September 29, 2004 and must otherwise comply with the rules of the SEC for inclusion in CIENA’s information statement and form of proxy relating to that meeting. Proposals should be delivered to CIENA Corporation, 1201 Winterson Road, Linthicum, Maryland 21090, Attention: Corporate Secretary.

Except in the case of proposals made in accordance with Rule 14a-8, stockholders intending to bring any business before an annual meeting of stockholders must deliver written notice thereof to CIENA’s Secretary not less than 45 days prior to the anniversary of the date on which CIENA first mailed its proxy materials for its immediately preceding annual meeting of stockholders. The deadline for matters sought to be presented at the 2005 Annual Meeting is December 13, 2004. If a stockholder gives notice of such a proposal after the December 13, 2004 deadline, CIENA’s proxy holders will be allowed to use their discretionary voting authority to vote against the stockholder proposal when and if the proposal is raised at the Corporation’s 2005 Annual Meeting.

The legal validity of the CIENA common stock offered hereby will be passed upon by Hogan & Hartson L.L.P., counsel to CIENA.

The U.S. federal income tax consequences described in this information statement/prospectus are the subject of opinions issued by Hogan & Hartson L.L.P., counsel to CIENA, and Sonnenschein Nath & Rosenthal LLP, New York, New York, counsel to Internet Photonics.

The consolidated financial statements of CIENA Corporation as of October 31, 2003 and 2002 and for each of the years in the three-year period ended October 31, 2003 incorporated in this information statement/prospectus by reference to CIENA’s Annual Report on Form 10-K for the year ended October 31, 2003 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

CIENA has filed the registration statement of which this information statement/prospectus is a part. The registration statement registers the distribution to Internet Photonics stockholders of the shares of CIENA common stock to be issued in connection with the merger.

CIENA files annual, quarterly and current reports, information statements and other information with the SEC. You may read and copy any of this information at the SEC’s public reference room at 450 Fifth Street N.W., Room 1024, Washington, D.C. 20549. You may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330.

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Delaware	3661	23-2725311
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)






		Proposed maximum	Proposed maximum
Title of each class of	Amount to	offering price	aggregate offering	Amount of
securities to be registered	be registered	per share	price	registration fee


Common Stock, $.01 par value(1)(2)	24,080,843	Not applicable	$436,786(3)	$55.34


		Page

	Amendments to Bylaws		55
	Action by Written Consent		55
	Notice of Stockholder Actions		55
	Right to Call Special Meeting of Stockholders		55
	Dividends		55
	Liquidation Rights		56
	Conversion and Redemption		57
	Registration Rights		58
	Additional Rights of Certain Internet Photonics Stockholders		59
	Stockholder Proposals		59
OTHER MATTERS			60
	Legal Matters		60
	Experts		60
WHERE YOU CAN FIND MORE INFORMATION			60
ANNEX A: AGREEMENT AND PLAN OF MERGER, AS AMENDED			A-1
ANNEX B: DELAWARE GENERAL CORPORATION LAW SECTION 262			B-1
ANNEX C: CERTIFICATE OF AMENDMENT TO FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AS FILED WITH THE STATE OF DELAWARE ON MARCH 3, 2004			C-1
ANNEX D: FORM OF ESCROW AGREEMENT			D-1


Class of Internet Photonics Stock	Exchange Ratio*

Common Stock		.1635
Series A preferred stock**		1.6321
Series B preferred stock		1.8641
Series C preferred stock		2.1742
Series D preferred stock		0.3267
Series E preferred stock		0.4083

Ciena Corp · S-4 · On 3/23/04

Filed On 3/23/04 8:29pm ET · SEC File 333-113874 · Accession Number 950133-4-1075

Registration of Securities Issued in a Business-Combination Transaction · Form S-4
Filing Table of Contents

S-4 · Form S-4 Ciena Corporation

This is an EDGAR HTML document rendered as filed. [ Alternative Formats ]


Michael J. Silver Amy Bowerman Freed Thene M. Martin Hogan & Hartson L.L.P. 111 South Calvert Street Baltimore, MD 21202 (410) 659-2700		Michael R. Flynn Stephen E. Fox Sonnenschein Nath & Rosenthal LLP 1221 Avenue of the Americas New York, NY 10020 Tel: (212) 768-6700


		Page

SUMMARY			1
SUMMARY SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF CIENA			7
RISK FACTORS			9
FORWARD-LOOKING STATEMENTS			12
APPROVAL OF THE MERGER AND THE AMENDED CERTIFICATE OF INCORPORATION BY INTERNET PHOTONICS STOCKHOLDERS			13
Approval of Merger and Merger Agreement			13
Approval of Amendment to Internet Photonics’ Certificate of Incorporation			14
Notice under Section 228 of the DGCL			14
THE MERGER			15
	General		15
	Background of the Merger		15
	CIENA’s Reasons for the Merger		19
	Internet Photonics’ Reasons for the Merger		21
	Interests of Executive Officers and Directors in the Merger		23
	Accounting Treatment		24
	Listing on The Nasdaq Stock Market		25
	Governmental and Regulatory Approvals		25
	U.S. Federal Income Tax Consequences		25
	Appraisal Rights of Dissenting Stockholders of Internet Photonics		27
TERMS OF THE MERGER AGREEMENT AND RELATED TRANSACTIONS			30
	General		30
	Management and Operations After the Merger		30
	Treatment of Stock, Options and Warrants		30
	Exchange of Certificates; Fractional Shares		33
	Effective Time		34
	Representations and Warranties		35
	Business of Internet Photonics Pending the Merger; Other Agreements		36
	No Solicitation by Internet Photonics		38
	Indemnification and Escrow Arrangement		38
	Directors’ and Officers’ Indemnification		40
	Conditions Precedent to Each Party’s Obligation to Effect the Merger		40
	Conditions Precedent to CIENA’s Obligations to Effect the Merger		40
	Conditions Precedent to Internet Photonics’ Obligations to Effect the Merger		41
	Termination of the Merger Agreement; Termination Fee		41
	Waiver and Amendment of the Merger Agreement		42
	Expenses		42
	Bridge Loan		42
	Restrictions on Resales by Affiliates		44
INFORMATION ABOUT CIENA			45
	General		45
	Proposed Acquisition of Catena Networks, Inc.		45
	Additional Information		45
INFORMATION ABOUT INTERNET PHOTONICS			46
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND MORE THAN FIVE PERCENT STOCKHOLDERS OF INTERNET PHOTONICS			47
COMPARISON OF STOCKHOLDER RIGHTS			51
	General		51
	Capitalization		51
	Voting Rights		51
	Number and Classification of Directors		53
	Removal of Directors		54
	Filling Vacancies on the Board of Directors		54
	Amendments to Certificate of Incorporation		54


	Value of Shares
	of CIENA Common
Illustrative	Stock Issued at
Market Price	Closing to the
of CIENA	Holder of 100
Common	Shares of
Stock at	Internet Photonics
Closing	Common Stock

$4.50	$	73.58
$5.00	$	81.75
$5.50	$	89.93
$6.00	$	98.10
$6.28*	$	102.68
$6.50	$	106.28
$7.00	$	114.45
$7.50	$	122.63



	As of October 31,
											As of January 31,
	1999		2000		2001		2002		2003		2004


	(in thousands)
Balance Sheet Data:
Cash, cash equivalents, short term and long-term investments	$	262,396	$	238,318	$	1,795,141	$	2,078,464	$	1,626,218	$	1,519,271
Total assets		677,835		1,027,201		3,317,301		2,751,022		2,378,165		2,264,323
Long-term obligations, excluding current portion		4,881		4,882		869,865		999,935		861,149		818,056
Stockholders’ equity	$	530,473	$	809,835	$	2,128,982	$	1,527,269	$	1,330,817	$	1,263,611



																			Three Months Ended
				Year Ended October 31,															January 31,

				1999			2000			2001			2002			2003			2003			2004


				(in thousands, except per share data)
Statement of Operations Data:
Revenue				$	482,085		$	858,750		$	1,603,229		$	361,155		$	283,136		$	70,474		$	66,414
Excess and obsolete inventory costs (benefit)					6,534			15,022			68,411			286,475			(5,296	)		(2,657	)		1,043
Cost of goods sold					293,235			462,371			836,138			309,559			215,387			56,866			44,818

	Gross profit (loss)				182,316			381,357			698,680			(234,879	)		73,045			16,265			20,553

Operating expenses:
	Research and development				101,006			125,434			235,831			239,619			199,699			53,734			47,177
	Selling and marketing				61,603			90,922			146,949			130,276			103,193			26,605			25,468
	General and administrative				22,696			33,960			57,865			52,612			38,478			14,706			7,091
	Settlement of accrued contract obligation				—			(8,538	)		—			—			—			—			—
	Deferred stock compensation costs:
		Research and development			—			—			17,783			15,672			12,824			3,798			2,205
		Selling and marketing			—			—			8,378			3,560			2,728			759			518
		General and administrative			40			40			15,206			1,092			1,225			374			121
	Amortization of goodwill				3,197			3,197			177,786			—			—			—			—
	Amortization of intangible assets				438			438			4,413			8,972			17,870			3,554			3,396
	In-process research and development				—			—			45,900			—			2,800			—			—
	Restructuring costs				—			—			15,439			225,429			31,155			—			3,393
	Goodwill and intangible impairment				—			—			1,719,426			557,286			29,596			—			—
	Merger related costs				13,021			—			—			—			—			—			—
	Provision (benefit) for doubtful accounts				250			28,010			(6,579	)		14,813			—			—			—

			Total operating expenses		202,251			273,463			2,438,397			1,249,331			439,568			103,530			89,369

Income (loss) from operations					(19,935	)		107,894			(1,739,717	)		(1,484,210	)		(366,523	)		(87,265	)		(68,816	)
Interest and other income, net					14,448			13,020			63,579			61,145			42,959			13,301			7,678
Interest expense					(504	)		(340	)		(30,591	)		(45,339	)		(36,331	)		(12,203	)		(7,384	)
Gain (loss) on equity investments, net					—			—			—			(15,677	)		(4,760	)		(10	)		454
Loss on extinguishment of debt					—			—			—			(2,683	)		(20,606	)		(20,606	)		(8,216	)

Income (loss) before income taxes					(5,991	)		120,574			(1,706,729	)		(1,486,764	)		(385,261	)		(106,783	)		(76,284	)
Provision (benefit) for income taxes					(2,067	)		39,187			87,333			110,735			1,256			359			424

Net income (loss)				$	(3,924	)	$	81,387		$	(1,794,062	)	$	(1,597,499	)	$	(386,517	)	$	(107,142	)	$	(76,708	)

Basic net income (loss) per common share				$	(0.01	)	$	0.29		$	(5.75	)	$	(4.37	)	$	(0.87	)	$	(0.25	)	$	(0.16	)

Diluted net income (loss) per common and dilutive potential common share				$	(0.01	)	$	0.27		$	(5.75	)	$	(4.37	)	$	(0.87	)	$	(0.25	)	$	(0.16	)

Weighted average basic common shares outstanding					267,042			281,621			311,815			365,202			446,696			432,572			472,935

Weighted average basic common and dilutive potential common shares outstanding					267,042			299,662			311,815			365,202			446,696			432,572			472,935


	•	the possible alternatives to the CIENA transaction, including:


					Approximate
			Shares of CIENA		aggregate shares of
			common stock		CIENA common
			per share of		stock in payment
	Liquidation		Internet Photonics		of liquidation
Series of Internet Photonics Preferred Stock	Preference($)		preferred stock		preference

Series A preferred stock	$	10.00		1.632		1,278,494
Series B preferred stock	$	10.00		1.632		1,958,543
Series C preferred stock	$	10.00		1.632		3,909,638
Series D preferred stock	$	1.00		0.163		5,059,571
Series E preferred stock	$	1.50		0.245		2,019,749
Total number of shares of CIENA common stock in payment of the liquidation preference of all series of Internet Photonics preferred stock						14,225,995


	Number of shares of		Aggregate number of
	Internet Photonics		shares of Internet
	common stock		Photonics common
	underlying each		stock underlying
	share of		such series of
Series of Internet Photonics preferred stock	preferred stock		preferred stock

Series A preferred stock		1.419533		1,111,967
Series B preferred stock		1.419533		1,703,438
Series C preferred stock		3.316541		7,944,557
Series D preferred stock		1.0		30,999,994
Series E preferred stock		1.0		8,250,000


	Value of Shares of
	CIENA Common
	Stock Issued at
	Closing to the
	Holder of 100
	Shares of Internet
	Photonics
Illustrative Market Price of CIENA Common Stock at Closing	Common Stock

$4.50	$	73.58
$5.00	$	81.75
$5.50	$	89.93
$6.00	$	98.10
$6.28*	$	102.68
$6.50	$	106.28
$7.00	$	114.45
$7.50	$	122.63


Class of Internet Photonics Stock	Exchange Ratio

Common Stock		.1635
Series A preferred stock*		1.6321
Series B preferred stock		1.8641
Series C preferred stock		2.1742
Series D preferred stock		0.3267
Series E preferred stock		0.4083


Series of Preferred Stock	Conversion Rate

Series A preferred stock		1.419533
Series B preferred stock		1.419533
Series C preferred stock		3.316541
Series D preferred stock		1.0
Series E preferred stock		1.0

Ciena Corp · S-4 · On 3/23/04

Filed On 3/23/04 8:29pm ET · SEC File 333-113874 · Accession Number 950133-4-1075

Registration of Securities Issued in a Business-Combination Transaction · Form S-4Filing Table of Contents

S-4 · Form S-4 Ciena Corporation

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Registration of Securities Issued in a Business-Combination Transaction · Form S-4
Filing Table of Contents