Kimberlin v. Ciena Corp.
United States District Court for the Southern District of New York
1998 WL 603234 (1998)
In 1993, Kevin Kimberlin (plaintiff) provided $190,000 in seed capital to Ciena Corporation (Ciena) (defendant) pursuant to a stock-purchase agreement. Ciena manufactured fiber-optic technology. Kimberlin then purchased Series A preferred stock during a capital funding campaign in 1994. In 1995, Kimberlin obtained Series B preferred stock during Ciena’s second round of private financing. Kimberlin distributed some of this stock to companies he owned. The Series B stock-purchase agreement included a provision that granted the Series B holders a right of first refusal to purchase additional stock offered by Ciena proportional to each holder’s overall ownership. The purchase agreement also provided that the right of first refusal could be waived by the holders of 67 percent of existing shares. By this time, Ciena was growing and was pursuing a significant contract with Sprint. This resulted in Ciena needing additional capital funding. During the third round of private funding, Ciena anticipating selling $10-25 million of Series C stock. Kimberlin attempted to assert his right to purchase a pro rata amount of Series C stock. However, Kimberlin had not been included on some of the communications, and Ciena had made commitments to other investors. Ciena asserted that fully honoring Kimberlin’s request would cause the entire third round to fail. The existing investors executed a stock-purchase agreement for the Series C stock. The agreement included a provision that waived the right of first refusal for additional stock. Seventy-five percent of these votes came from minority shareholders. Kimberlin then purchased fewer shares of Series C stock than he was entitled to under the pro rata formula. Kimberlin sued Ciena, asserting that he was entitled to purchase additional shares of Series C stock.
Rule of Law
Holding and Reasoning (Sotomayor, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 711,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 711,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,600 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.