<PAGE>

                                                                    EXHIBIT 4.06

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.

                            WARRANT AGREEMENT NO. 1

             To Purchase Shares of the Series B Preferred Stock of

                         OPTICAL NETWORKS, INCORPORATED

              Dated as of February 10, 1999 (the "Effective Date")

          WHEREAS, Optical Networks, Incorporated, a California corporation (the
"Company") has entered into a Master Lease Agreement dated as of February 10,
1998, Equipment Schedule No. VL-1 and VL-2 dated as of February 10, 1998, and
related Summary Equipment Schedules (collectively, the "Leases") with Comdisco,
Inc., a Delaware corporation (the "Warrantholder"); and

          WHEREAS, the Company desires to grant to Warrantholder, in
consideration for such Leases, the right to purchase shares of its Series B
Preferred Stock;

          NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:

1.   GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK
     ----------------------------------------------

     The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and purchase, from the Company, 51,046 fully paid and non-
assessable shares of the Company's Series B Preferred Stock ("Preferred Stock")
at a purchase price of $1.1754 per share (the "Exercise Price").  The number and
purchase price of such shares are subject to adjustment as provided in Section 8
hereof.

     If all of the Company's outstanding Preferred Stock is converted into
shares of Common Stock in connection with the registration of the Company's
Common Stock under the Securities Act of 1933, as amended, or otherwise in
accordance with the terms of the Company's Amended and Restated Articles of
Incorporation, then this Warrant shall automatically become exercisable for that
number of shares of Common Stock equal to the number of shares of Common Stock
that would have been received if this Warrant had been exercised in full and the
shares of Preferred Stock received thereupon had been simultaneously converted
into Common Stock immediately prior to such event, and the Exercise Price shall
be automatically adjusted to equal the amount obtained by dividing (1) the
aggregate Exercise Price of the shares of Preferred Stock for which this Warrant
was exercisable immediately prior to such conversion, by (ii) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such conversion. The shares of Preferred Stock or Common Stock subject to this
Warrant, as the case may be, are sometimes referred to herein as "Warrant
Stock."

2.   TERM OF THE WARRANT AGREEMENT.
     -----------------------------

     Except as otherwise provided for herein, the term of this Warrant Agreement
and the right to purchase Preferred Stock as granted herein shall commence on
the Effective Date and shall be exercisable for a period of (i) ten (10) years
or (ii) five (5) years from the effective date of the Company's initial public
offering, whichever is shorter.

     Notwithstanding the term of this Warrant Agreement as set forth above, the
right to purchase Preferred Stock as granted shall expire, if not previously
exercised, immediately upon the closing of (i) the issuance and sale of shares
of Common Stock of the Company in the Company's first public offering of
securities for its own account pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "Initial Public Offering"),
provided that the net proceeds to the Company exceed $10,000,000, and provided
further that the Warrantholder is afforded an opportunity to include Registrable
Securities issuable upon exercise hereof in such Initial Public Offering in
accordance with the terms of the Company's Investors' Rights Agreement or (ii) a
merger of consolidation of the Company with or into another corporation when the
Company is not the surviving corporation, or

                                       1
<PAGE>

the sale of all or substantially all of the Company's properties and assets to
any other person (the "Merger"), provided that the holders of Warrantholder
realizes a value for its shares of Preferred Stock issuable hereunder receive
consideration with a value equal to or greater than $2.35 per share in such
Merger. The Company shall notify the Warrantholder if the Initial Public
Offering is proposed within a reasonable period of time prior to the filing of a
registration statement and if the Company fails to deliver such written notice
within a reasonable period of time, anything to the contrary in this Warrant
Agreement notwithstanding, the rights to purchase will not expire until ten (10)
business days after the Company delivers such notice to the Warrantholder. Such
notice shall also contain such details of the proposed Initial Public Offering
or Merger as are reasonable in the circumstances and notice that this Warrant
Agreement is expected to expire upon closing thereof.

3.   EXERCISE OF THE PURCHASE RIGHTS.
     -------------------------------

     The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time, prior
to the expiration of the term set forth in Section 2 above, by tendering to the
Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the "Notice of Exercise"), duly completed and executed.  Promptly
upon receipt of the Notice of Exercise and the payment of the purchase price in
accordance with the terms set forth below, and in no event later than twenty-one
(21) days thereafter, the Company shall issue to the Warrantholder a certificate
for the number of shares of Preferred Stock purchased and shall execute the
acknowledgment of exercise in the form attached hereto as Exhibit II (the
"Acknowledgment of Exercise") indicating the number of shares which remain
subject to future purchases, if any.

     The Exercise Price may be paid at the Warrantholder's election either (i)
by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below.  If the Warrantholder elects the Net Issuance method, the
Company will issue Warrant Stock in accordance with the following formula:

                                   X = Y(A-B)
                                       ------
                                          A

     Where:         X =  the number of shares of Warrant Stock to be issued to
                         the Warrantholder.

                    Y =  the number of shares of Warrant Stock requested to be
                         exercised under this Warrant Agreement.

                    A =  the fair market value of one (1) share of Warrant
                         Stock.

                    B =  the Exercise Price.

     For purposes of the above calculation, current fair market value of Warrant
Stock shall mean with respect to each share of Warrant Stock:

               (i)    if the exercise is in connection with an initial public
     offering of the Company's Common Stock, and if the Company's Registration
     Statement relating to such public offering has been declared effective by
     the SEC, then the fair market value per share shall be the product of (x)
     the initial "Price to Public" specified in the final prospectus with
     respect to the offering and (y) the number of shares of Common Stack into
     which each share of Preferred Stock is convertible at the time of such
     exercise;

               (ii)   if this Warrant is exercised after, and not in connection
     with the Company's initial public offering, and:

                      (a) if traded on a securities exchange, the fair market
          value shall be deemed to be the average of the closing prices over a
          twenty-one (21) day period ending three days before the day the
          current fair market value of the securities is being determined; or

                      (b) if actively traded over-the-counter, the fair market
          value shall be deemed to be the average of the closing bid and asked
          prices quoted on the NASDAQ system (or similar system) over the
          twenty-one (21) day period ending three days before the day the
          current fair market value of the securities is being determined;

               (iii)  if at any time the Common Stock is not listed on any
     securities exchange or quoted in the NASDAQ System or the over-the-counter
     market, the current fair market value of Warrant Stock shall be the highest
     price per share which the Company could obtain from a willing buyer (not a
     current employee or director) for shares of Warrant Stock sold by the
     Company, from authorized but unissued shares, as determined in good faith
     by its Board of Directors , unless the Company shall become subject to a
     merger, acquisition or other consolidation pursuant to which the Company is
     not the surviving party, in which case

                                       2
<PAGE>

     the fair market value of Warrant Stock shall be deemed to be the value
     received by the holders of such Warrant Stock on a common equivalent basis
     pursuant to such merger or acquisition.

     Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder.  All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.

4.   RESERVATION OF SHARES.
     ---------------------

     Authorization and Reservation of Shares.  During the term of this Warrant
     ---------------------------------------
Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of Warrant Stock to provide for the exercise of the
rights to purchase Warrant Stock as provided for herein.

5.   NO FRACTIONAL SHARES OR SCRIP.
     -----------------------------

     No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.

6.   NO RIGHTS AS SHAREHOLDER.
     ------------------------

     This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.

7.   WARRANTHOLDER REGISTRY.
     ----------------------

     The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.

8.   ADJUSTMENT RIGHTS.
     -----------------

     The purchase price per share and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment, as follows:

     (a) Mercer and Sale of Assets.  If at any time there shall be a capital
         -------------------------
reorganization of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation whether or not the Company is the surviving corporation, or the sale
of all or substantially all of the Company's properties and assets to any other
person, other than as defined in Section 2 hereof (hereinafter referred to as a
"Merger Event"), then as a part of such Merger Event, lawful provision shall be
made so that the Warrantholder shall thereafter be entitled to receive, upon
exercise of the Warrant, the number of shares of preferred stock or other
securities of the successor corporation resulting from such Merger Event,
equivalent in value to that which would have been issuable if Warrantholder had
exercised this Warrant immediately prior to the Merger Event. In any such case,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
Agreement with respect to the rights and interest of the Warrantholder after the
Merger Event to the end that the provisions of this Warrant Agreement (including
adjustments of the Exercise Price and number of shares of Preferred Stock
purchasable) shall be applicable to the greatest extent possible.

     (b) Reclassification of Shares.  If the Company at any time shall, by
         --------------------------
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.

     (c) Subdivision or Combination of Shares.  If the Company at any time shall
         ------------------------------------
combine or subdivide its Warrant Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.

     (d) Stock Dividends.  If the Company at any time shall pay a dividend
         ---------------
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of the Company's capital
stock to the holders of outstanding shares of the Company's Warrant Stock, then
the Warrantholder shall,

                                       3
<PAGE>

upon exercise of this Warrant, be entitled to receive, in addition to the number
of shares of Warrant Stock receivable thereupon, and without payment of any
additional consideration therefore, the amount of the Company's capital stock
which would have been issuable to such Warrantholder if Warrantholder had
exercised this Warrant immediately prior to the date on which holders of Warrant
Stock received such dividend or distribution of the Company's capital stock.

     (e) Right to Purchase Additional Stock.  If, the Warrantholder's total cost
         ----------------------------------
of equipment leased pursuant to the Leases exceeds $1,500,000.00, Warrantholder
shall have the right to purchase from the Company, at the Exercise Price
(adjusted as set forth herein), an additional number of shares, which number
shall be determined by (i) multiplying the amount by which the Warrantholder's
total equipment cost exceeds $1,500,000.00 by 4%, and (ii) dividing the product
thereof by the Exercise Price per share referenced above.

     (f) Antidilution Rights.  Shares of Preferred Stock issuable upon exercise
         -------------------
of this Warrant shall be entitled, with respect to such issuance or sale, to the
same antidilution benefits then applicable to other shares of the Preferred
Stock as set forth in its Company's Amended and Restated Articles of
Incorporation (the "Charter") as amended through the time of such issue or sale.
A copy of the Charter as currently in effect has been delivered to the
Warrantholder. The Company shall promptly provide the Warrantholder with any
restatement, amendment, modification or waiver of the Charter. Notwithstanding
anything herein to the contrary, no adjustment to the Exercise Price or the
number and character of securities issuable upon exercise of this Warrant shall
be made by virtue of this Section 8 to the extent that such adjustment is
effected (by adjusting the conversion price of the Preferred Stock or otherwise)
in accordance with the terms of the Charter. The Company will provide notice to
Warrantholder of any such adjustments in accordance with the terms of the
Charter (assuming, solely for purposes of such notice, that Warrantholder was
currently a holder of the shares of Warrant Stock then issuable upon an exercise
of this Warrant).

     (g) Notice of Adjustments.  If: (i) the Company shall declare any dividend
         ---------------------
or distribution upon its stock, whether in cash, property, stock or other
securities (excluding any dividend or distribution for which an adjustment will
be made pursuant to Section 8(d)); (ii) the Company shall offer for subscription
prorata to the holders of any class of its Preferred or other convertible stock
any additional shares of stock of any class or other rights; (iii) there shall
be any Merger Event; or (iv) there shall be any voluntary dissolution,
liquidation or winding up of the Company; then, in connection with each such
event, the Company shall send to the Warrantholder (A) at least twenty (20)
days' prior written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend, distribution, subscription
rights (specifying the date on which the holders of Preferred Stock shall be
entitled thereto) or for determining rights to vote in respect of such Merger
Event, dissolution, liquidation or winding up; (B) in the case of any such
Merger Event, dissolution, liquidation or winding up, at least twenty (20) days'
prior written notice of the date when the same shall take place (and specifying
the date on which the holders of Preferred Stock shall be entitled to exchange
their Preferred Stock for securities or other property deliverable upon such
Merger Event, dissolution, liquidation or winding up).

     Promptly following any adjustment to the Exercise Price or the number and
character of securities issuable upon exercise of this Warrant effected pursuant
to this Section 8, the Company shall provide written notice of such adjustment
to the Warrantholder.  Each such written notice shall set forth, in reasonable
detail, (i) the event requiring the adjustment, (ii) the amount of the
adjustment, (iii) the method by which such adjustment was calculated, (iv) the
Exercise Price, and (v) the number of shares subject to purchase hereunder after
giving effect to such adjustment, and shall be given by first class mail,
postage prepaid, addressed to the Warrantholder, at the address as shown on the
books of the Company.

     (h) Timely Notice.  Failure to timely provide such notice required by
         -------------
subsection (g) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder.  The notice period shall
begin on the date Warrantholder actually receives a written notice containing
all the information specified above.

9.   REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
     --------------------------------------------------------

     (a) Reservation of Preferred Stock.  The Preferred Stock issuable upon
         ------------------------------
exercise of the Warrantholder's rights has been duly and validly reserved and,
when issued in accordance with the provisions of this Warrant Agreement, will be
validly issued, fully paid and non-assessable, and will be free of any taxes,
liens, charges or encumbrances of any nature whatsoever (other than any created
by Warrantholder); provided, however, that the Warrant Stock issuable pursuant
to this Warrant Agreement may be subject to restrictions on transfer under state
and/or Federal securities laws. The Company has made available to the
Warrantholder true, correct and complete copies of its Charter and Bylaws, as
amended. The issuance of certificates for shares of Warrant Stock upon exercise
of the Warrant Agreement shall be made without charge to the Warrantholder for
any issuance tax in respect thereof, or other cost incurred by the Company in
connection with such exercise and the related issuance of

                                       4
<PAGE>

shares of Warrant Stock. The Company shall not be required to pay any tax which
may be payable in respect of any transfer involved and the issuance and delivery
of any certificate in a name other than that of the Warrantholder.

     (b) Due Authority.  The execution and delivery by the Company of this
         -------------
Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Warrant Stock, have been duly authorized by all necessary corporate
action on the part of the Company, and the Leases and this Warrant Agreement are
not inconsistent with the Company's Charter or Bylaws, do not contravene any law
or governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a material default under, any
material indenture, mortgage, contract or other instrument to which it is a
party or by which it is bound, and the Leases and this Warrant Agreement
constitute legal, valid and binding agreements of the Company, enforceable in
accordance with their respective terms.

     (c) Consents and Approvals.  No consent or approval of, giving of notice
         ----------------------
to, registration with, or taking of any other action in respect of any state,
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant Agreement, except for the filing of notices pursuant to Regulation
D under the 1933 Act and any filing required by applicable state securities law,
which filings will be effective by the time required thereby.

     (d) Issued Securities.  All issued and outstanding shares of Common Stock,
         -----------------
Preferred Stock or any other securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable.  All outstanding shares
of Common Stock, Preferred Stock and any other securities were issued in full
compliance with all Federal and state securities laws.  In addition:

          (i) The authorized capital stock of the Company consists of (A)
     20,000,000 shares of Common Stock, of which 4,330,812 shares are issued and
     outstanding, and (B) 23,190,000 shares of Preferred Stock consisting of
     19,840,000 shares designated as Series B Preferred Stock, of which
     18,596,631 shares are issued and outstanding and are currently convertible
     into an aggregate of 6,198,876 shares of Common Stock, 2,050,000 shares
     designated as Series C Preferred Stock, all of which are issued and
     outstanding and are currently convertible into an aggregate of 683,334
     shares of Common Stock, 1,300,000 shares designated Series D Preferred
     Stock, of which 1,242,287 shares are issued and outstanding and are
     currently convertible into an aggregate of 1,242,287 shares of Common Stock
     and 6,850,000 shares designated Series E Preferred Stock, of which
     5,562,100 are issued and outstanding.

          (ii) The Company has reserved (A) 783,560 shares of Common Stock under
     its 1997 Stock Option Plan and (B) 2,601,901 shares of Common Stock under
     its 1998 Equity Incentive Plan.  Except for (i) 22,222 shares of Common
     Stock issuable to Venture Lending & Leasing, Inc. ("VLLI"), in respect of
     Section 4.2(c) of that certain warrant issued to VLLI on January 30, 1997
     and 36,144 shares of Common Stock issuable to VLLI in respect of Section
     4.2(c) of that certain warrant also issued to VLLI on January 30, 1997,
     (ii) the conversion privileges of the Series B Preferred, the Series C
     Preferred and the Series D Preferred, (iii) the shares of Common Stock
     reserved for issuance under the Company's 1997 Stock Option Plan and 1998
     Equity Incentive Plan, (iv) the right of first offer provided in Section 3
     of that certain Investors' Rights Agreement dated April 1, 1998 by and
     among the Company and the persons and entities listed on Exhibit A thereto,
     and (v) the right of first refusal in Section 8.7 of the Bylaws of the
     Company with respect to transfers of shares of the company's capital stock,
     there are no other options, warrants, conversion privileges, or preemptive
     or other rights or agreements presently outstanding to purchase or
     otherwise acquire any authorized but unissued shares of the capital stock
     or other securities of the Company.

     (e) Insurance.  The Company has in full force and effect insurance
         ---------
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.

     (f) Other Commitments to Register Securities.  Except as set forth in the
         ----------------------------------------
Company's Investors' Rights Agreement as amended, a copy of which has been
provided to Warrantholder , the Company is not, pursuant to the terms of any
other agreement currently in existence, under any obligation to register under
the 1933 Act any of its presently outstanding securities or any of its
securities which may hereafter be issued.

     (g) Exempt Transaction.  Subject to the accuracy of the Warrantholder's
         ------------------
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the 1933 Act, in reliance upon Section
4(2) thereof, and (ii) the qualification requirements of the applicable state
securities laws.

                                       5
<PAGE>

     (h) Compliance with Rule 144.  At the written request of the Warrantholder,
         ------------------------
who proposes to sell Preferred Stock issuable upon the exercise of the Warrant
in compliance with Rule 144 promulgated by the Securities and Exchange
Commission, the Company shall furnish to the Warrantholder, within ten days
after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.

10.  REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
     --------------------------------------------------

     This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:

     (a) Investment Purpose.  Each of the right to acquire the Warrant Stock
         ------------------
issuable upon exercise of the Warrantholder's rights contained herein, the
Warrant Stock and any securities issuable upon any conversion of the Warrant
Stock (collectively, the "Warrant Securities"), is and will be acquired for
investment for Warrantholder's own account and not with a view to the sale or
distribution of any part thereof.  The Warrantholder has no present intention of
selling or engaging in any public distribution of the same except pursuant to a
registration or exemption.

     (b) Private Issue.  The Warrantholder understands (i) that the Warrant
         -------------
Securities are not registered under the 1933 Act or qualified under applicable
state securities laws on the ground that the issuance contemplated by this
Warrant Agreement will be exempt from the registration and qualifications
requirements thereof, and (ii) that the Company's reliance on such exemption is
predicated on the representations set forth in this Section 10.  At no time was
Warrantholder presented with or solicited by any publicly issued or circulated
newspaper, mail, radio, television or other form of general advertising or
solicitation in connection with the offer, sale and purchase of the Warrant
Securities.

     (c) Disposition of Warrantholder's Rights.  In no event will the
         -------------------------------------
Warrantholder make a disposition of any of the Warrant Securities unless and
until (i) it shall have notified the Company of the proposed disposition, and
(ii) if requested by the Company, it shall have furnished the Company with an
opinion of counsel (which counsel may either be inside or outside counsel to the
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the 1933 Act is
available.  Notwithstanding the foregoing, the restrictions imposed upon the
Warrant Securities do not apply to transfers from the beneficial owner of any of
the aforementioned securities to its nominee or from such nominee to its
beneficial owner, and shall terminate as to any particular Warrant Security when
(1) such security shall have been effectively registered under the 1933 Act and
sold by the holder thereof in accordance with such registration or (2) such
security shall have been sold without registration in compliance with Rule 144
under the 1933 Act, or (3) a letter shall have been issued to the Warrantholder
at its request by the staff of the Securities and Exchange Commission or a
ruling shall have been issued to the Warrantholder at its request by such
Commission stating that no action shall be recommended by such staff or taken by
such Commission, as the case may be, if such security is transferred without
registration under the 1933 Act in accordance with the conditions set forth in
such letter or ruling and such letter or ruling specifies that no subsequent
restrictions on transfer are required.  Whenever the restrictions imposed
hereunder shall terminate, as hereinabove provided, the Warrantholder or holder
of Warrant Securities then outstanding as to which such restrictions have
terminated shall be entitled to receive from the Company, without expense to
such holder, one or more new certificates for the Warrant or Warrant Securities
not bearing any restrictive legend.

     (d) Financial Risk.  The Warrantholder has such knowledge and experience in
         --------------
financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment, and has the capacity to protect its own interests in connection with
the purchase of the Warrant Securities.

     (e) Risk of No Registration.  The Warrantholder understands that if the
         -----------------------
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the

                                       6
<PAGE>

1934 Act (the "1934 Act"), or file reports pursuant to Section 15(d), of the
1934 Act, or if a registration statement covering the securities under the 1933
Act is not in effect when it desires to sell Warrant Securities, it may be
required to hold such securities for an indefinite period. The Warrantholder
also understands that any sale of Warrant Securities which might be made by it
in reliance upon Rule 144 under the 1933 Act may be made only in accordance with
the terms and conditions of that Rule.

     (f) Accredited Investor.  Warrantholder is an "accredited investor" within
         -------------------
the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.

11.  REQUESTS FOR REGISTRATION.
     -------------------------

     The Company and the initial Warrantholder will enter into an Amendment to
Investors' Rights Agreement in the form attached hereto as Exhibit IV to provide
the initial Warrantholder with certain registration rights in accordance with
the terms of the Company's existing Investors' Rights Agreement.

12.  TRANSFERS.
     ---------

     Subject to the terms and conditions contained in Section 10 hereof, this
Warrant Agreement and all rights hereunder are transferable in whole or in part
by the Warrantholder and any successor transferee, provided, however, in no
event shall the number of transfers of the rights and interests in all of the
Warrants exceed three (3) transfers.  The transfer shall be recorded on the
books of the Company upon receipt by the Company of a notice of transfer in the
form attached hereto as Exhibit III (the "Transfer Notice") together with
representations to the Company from the transferee in form reasonably acceptable
to the Company and in substance similar to the representations made by
Warrantholder in Section 10, at its principal offices and the payment to the
Company of all transfer taxes and other governmental charges imposed on such
transfer.

13.  MISCELLANEOUS.
     -------------

     (a) Effective Date.  The provisions of this Warrant Agreement shall be
         --------------
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof.  This Warrant Agreement shall
be binding upon any successors or assigns of the Company.

     (b) Attorney's Fees.  In any litigation, arbitration or court proceeding
         ---------------
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant Agreement.

     (c) Governing Law.  This Warrant Agreement shall be governed by and
         -------------
construed for all purposes under and in accordance with the laws of the State of
California.

     (d) Counterparts.  This Warrant Agreement may be executed in two or more
         ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     (e) Notices.  Any notice required or permitted hereunder shall be given in
         -------
writing and shall be deemed effectively given upon personal delivery, facsimile
transmission (provided that the original is sent by personal delivery or mail as
hereinafter set forth) or seven (7) days after deposit in the United States
mail, by registered or certified mail, addressed (i) to the Warrantholder at
6111 North River Road, Rosemont, Illinois 60018, Attention: Venture Lease
Administration, cc: Legal Department, Attention: General Counsel, (and/or, if by
facsimile, (847) 518 5465 and (847) 518-5088) and (ii) to the Company at 166-B
Baypointe Parkway, San Jose, California 95134, Attention: Chief Financial
Officer, cc: Mark C. Stevens, Esq., Fenwick & West LLP, Two Palo Alto Square,
Palo Alto, California 94306 (and/or if by facsimile, (408) 965-2665 and (650)
494-1417 or at such other address as any such party may subsequently designate
by written notice to the other party.

     (f) Remedies.  In the event of any default hereunder, the non-defaulting
         --------
party may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default, and/or an action for specific performance for any
default where Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable.

     (g) No Impairment of Rights.  The Company will not avoid or seek to avoid
         -----------------------
the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate in order to
protect the rights of the Warrantholder against impairment.

     (h) Survival.  The representations, warranties, covenants and conditions of
         --------
the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement

     (i) Severability.  In the event any one or more of the provisions of this
         ------------
Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.

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<PAGE>

     (j) Amendments.  Any provision of this Warrant Agreement may be amended by
         ----------
a written instrument signed by the Company and by the Warrantholder.


   IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to
be executed by its officers thereunto duly authorized as of the Effective Date.

      Company:                     OPTICAL NETWORKS, INCORPORATED


                                   By:   /s/ Terrence J. Schmid
                                       ----------------------------
                                   Title:       CFO
                                          -------------------------

      Warrantholder:               COMDISCO, INC.

                                   By:  /s/ James P. Labe
                                       ----------------------------
                                   Title: President, Comdisco Ventures Division

                                       8