8-K 1 g74490e8-k.txt ELASTIC NETWORKS, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------- Date of report (Date of earliest event reported): February 28, 2002 ELASTIC NETWORKS INC. -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) DELAWARE 001-16147 58-2418576 ---------------------------- ----------------------- ----------------- (State or Other Jurisdiction (Commission File Number) (I.R.S. Employer of Incorporation) Identification No.) 6120 WINDWARD PARKWAY, SUITE 100 ALPHARETTA, GEORGIA 30005 ---------------------- (Address of Principal Executive Offices, including Zip Code) Registrant's telephone number, including area code: (618) 297-3100 N/A -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 5. OTHER EVENTS. Elastic Networks Inc. ("Elastic") has previously entered into that certain Agreement and Plan of Merger, dated December 27, 2001, as amended on January 4, 2002 (the "Merger Agreement"), by and among Paradyne Networks, Inc. ("Paradyne"), Phoenix Merger Sub, Inc., a wholly owned subsidiary of Paradyne ("Merger Sub"), and Elastic, pursuant to which, and subject to the terms and conditions contained therein, Paradyne will acquire Elastic by means of the merger of Sub with and into Elastic (the "Merger"). Pursuant to the Merger Agreement, Elastic stockholders will receive a fraction of a share of Paradyne common stock (the "Exchange Ratio") in exchange for each share of Elastic common stock they own that is outstanding at the effective time of the Merger. Copies of the Merger Agreement and certain related documents are attached as exhibits to a Current Report on Form 8-K and a Current Report on Form 8-K/A filed by Elastic with the Securities and Exchange Commission on December 31, 2001 and January 8, 2002, respectively. The Exchange Ratio is to be determined based in part on the average closing price (the "Average Closing Price") of Paradyne common stock on the Nasdaq National Market for the ten trading days ending the two trading days prior to closing of the Merger, which is currently expected to be completed on March 5, 2002 after the Elastic and Paradyne stockholder meetings or as soon thereafter as possible, and based in part on the amount of Elastic's net adjusted working capital as of February 15, 2002 (the "Closing Net Adjusted Working Capital Amount"). On February 28, 2002, Paradyne and Elastic issued a joint press release announcing that the Closing Net Adjusted Working Capital Amount was within $100,000 of the Targeted Net Adjusted Working Capital Amount (as defined in the Merger Agreement) of $16,820,000. As a result, the Adjustment Factor (as defined in the Merger Agreement) to be used for purposes of determining the Exchange Ratio will be 1.0. The Adjustment Factor will be multiplied by a fraction determined based on the Average Closing Price, all as set forth in more detail in the Merger Agreement. The text of the joint press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference. The material contained in this Current Report on Form 8-K contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, as applicable, particularly those statements regarding the effects of the acquisition of Elastic by Paradyne, and those preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "estimates," or similar expressions. For those statements, Elastic claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements relating to expectations about future results or events are based upon information available to Elastic as of today's date, and Elastic does not assume any obligation to update any of these statements. The forward-looking statements are not guarantees of the future performance of Elastic or the combined company and actual results may vary materially from the results and expectations discussed. For instance, while Paradyne and Elastic have entered into a definitive agreement, there is no assurance that the parties will complete the transaction. In the event the companies do not receive necessary stockholder or other approvals or fail to satisfy conditions to closing, the 2 transaction will terminate. Additional risks and uncertainties related to the acquisition include, but are not limited to, conditions in the financial markets relevant to the proposed acquisition, the successful integration of Elastic into Paradyne's business, and each company's ability to compete in the highly competitive data communications equipment industry. The revenues and earnings of Paradyne, Elastic and the combined company and their ability to achieve their planned business objectives will be subject to a number of factors that make estimates of future operating results uncertain. These factors include: the timing and amount of expense reduction; the uncertainty of litigation, including putative stockholder class actions; a reliance on international sales; rapid technological change that could render Paradyne's, Elastic's or the combined company's products obsolete; the uncertain acceptance of new telecommunications services based on DSL; substantial dependence on network service providers who may reduce or discontinue their purchase of products or services at any time; the timing and amount of, or cancellation or rescheduling of, orders of Paradyne's, Elastic's or the combined company's products to existing and new customers; possible inability to sustain revenue growth or profitability; dependence on only a few customers for a substantial portion of Paradyne's, Elastic's or the combined company's revenue; highly competitive markets; reliance on sales of access products to BB Technologies Corporation (a newly formed subsidiary of Softbank Corp.), Lucent Technologies and Avaya Inc.; dependence on sole and single-source suppliers and the reliability of the raw materials supplied by them to manufacture products under customer contracts; a long and unpredictable sales cycle; the number of DSL lines actually deployed by BB Technologies Corporation and other DSL customers as compared to forecasts; Paradyne's, Elastic's or the combined company's ability to manufacture adequate quantities of products at forecasted costs under customer contracts; Paradyne's, Elastic's or the combined company's ability to manufacture products in accordance with its published specifications; and other risks identified from time to time in Paradyne's and Elastic's SEC reports and public announcements. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits The following exhibit is filed herewith:

Exhibit No. Description ----------- ----------- 299.1 ~~Agreement~~Joint ~~and~~press ~~Plan~~release of ~~Merger, dated as of December 27, 2001, among~~ Paradyne Networks, Inc., ~~Phoenix Merger Sub, Inc.,~~ and Elastic Networks Inc., ~~99.1~~dated ~~Form~~February of28, ~~Elastic Voting Agreement~~2002, ~~dated~~announcing asthe ofAdjustment ~~December~~Factor ~~27,~~to ~~2001,~~be ~~among~~used ~~Paradyne~~in ~~Networks,~~determining ~~Inc.,~~the ~~each~~Exchange ~~of the~~Ratio.

3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: February 28, 2002 ELASTIC NETWORKS INC. /S/ DARRELL E. BORNE ------------------------------ Darrell E. Borne Chief Financial Officer 4 EXHIBIT INDEX

Exhibit No. Description ----------- ----------- ~~2 Agreement and Plan of Merger, dated as of December 27, 2001, among Paradyne Networks, Inc., Phoenix Merger Sub, Inc., and Elastic Networks Inc.~~ 99.1 ~~Form~~Joint ofpress ~~Elastic~~release ~~Voting Agreement, dated as~~ of ~~December 27, 2001, among~~ Paradyne Networks, Inc., ~~each of the Elastic Networks Inc. stockholders identified on Annex A,~~ and ~~(with respect to Section 5 only)~~ Elastic Networks Inc. ~~99.2 Elastic Voting Agreement~~, dated asFebruary ~~of December 27~~28, ~~2001~~2002, ~~among~~announcing Paradyne Networks, Inc., Nortel Networks Inc., and (with respect to Section 5 only) Elastic Networks Inc. 99.3 Warrant Termination Agreement, dated as of December 27, 2001, among Paradyne Networks, Inc., Elastic Networks Inc., and Pequot Private Equity Fund II, L.P. 99.4 Form of Paradyne Voting Agreement, dated as of December 27, 2001, between Elastic Networks Inc. and each of Sean E. Belanger, Patrick M. Murphy and the ~~Thomas~~Adjustment E.Factor Epley Trust 99.5 Paradyne Voting Agreement, dated as of December 27, 2001, between Elastic Networks Inc. and Thomas E. Epley 99.6 Form of Paradyne Voting Agreement, dated as of December 27, 2001, between Elastic Networks Inc. and each of the Paradyne Networks, Inc. stockholders identified on the signature pages thereto 99.7 Amendment No. 1 to ~~the~~be ~~Contribution~~used ~~Agreement,~~in ~~dated~~determining ~~as of December 27, 2001, between Nortel Networks, Inc. and Elastic Networks Inc. 99.8 Amendment No. 1 to~~ the ~~Intellectual~~Exchange ~~Property Transfer and License Agreement, dated as of December 27, 2001, between Nortel Networks Corporation and Elastic Networks Inc~~Ratio.

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