EXHIBIT 99.3
WARRANT TERMINATION AGREEMENT
THIS WARRANT TERMINATION AGREEMENT (this "Agreement") is made and
entered into as of December 27, 2001 by and among Paradyne Networks, Inc., a
Delaware corporation ("Paradyne"), Elastic Networks Inc., a Delaware corporation
("Elastic"), and Pequot Private Equity Fund II, L.P. ("Pequot").
RECITALS
A. Concurrently with the execution and delivery hereof, Paradyne,
Phoenix Merger Sub, Inc., a Delaware corporation and a direct wholly owned
subsidiary of Paradyne ("Sub"), and Elastic are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), which provides
for the merger (the "Merger") of Sub with and into Elastic in accordance with
its terms.
B. In consideration of the execution and delivery of the Merger
Agreement by Paradyne and Sub, Pequot (in his or her capacity as such) desires
to terminate that certain warrant to purchase of capital stock of Elastic so as
to facilitate the consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties hereto
hereby agree as follows:
1. Certain Definitions. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed thereto in the Merger Agreement.
2. Termination of Warrant. Pequot agrees that, effective as of
the Effective Time (i) all of Pequot's rights pursuant to that certain Warrant
to Purchase 51,230 Shares of Preferred Stock or Common Stock, As Applicable, of
Elastic, dated August 4, 2000 (the "Warrant"), shall be cancelled and
terminated, without any consideration therefor, and (ii) the Warrant shall be of
no further force or effect.
3. Appraisal Rights. Pequot hereby waives and agrees not to
exercise any rights of appraisal or rights to dissent from the Merger that
Pequot may have.
4. Additional Documents. Pequot hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Paradyne, to carry out the intent of this Agreement.
5. Termination. If the Merger Agreement is validly terminated
pursuant to the terms of Article 10 thereof, this Agreement shall be terminated
and be of no further force or effect whatsoever as of the date of such valid
termination of the Merger Agreement.
6. Severability. If any term or other provision of this Agreement
is held invalid, illegal or incapable of being enforced by any court of
competent jurisdiction, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect
FINAL VERSION
so long as the legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party hereto. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the fullest extent possible.
7. Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns; provided, however,
that except as otherwise specifically provided herein, neither this Agreement
nor any of the rights, interests or obligations of the parties hereto may be
assigned by either of the parties hereto without prior written consent of the
other party hereto.
8. Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by each of the parties hereto; provided
that any provision of this Agreement may be waived, or the time for its
performance may be extended, by the party or parties entitled to the benefit
thereof by a writing signed by such party or an authorized representative
thereof.
9. Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Paradyne shall be irreparably harmed and that there shall be no
adequate remedy at law for a violation of any of the covenants or agreements of
Pequot set forth in this Agreement. Therefore, Pequot hereby agrees that, in
addition to any other remedies that may be available to Paradyne upon any such
violation, Paradyne shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means
available to Paradyne at law or in equity.
10. Notices. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
If to Paradyne: Paradyne Networks, Inc.
0000 000xx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile (000) 000-0000
and to: Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
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FINAL VERSION
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Elastic: Elastic Networks Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and to: Xxxxxx & Xxxxxxxx
Xxxx xx Xxxxxxx Xxxxx, Xxxxx 0000
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: W. Tinley Xxxxxxxx, III
Xxxxxxx X. Xxxxxx, III
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Pequot: To the address for notice set forth on the
signature page hereof.
(a) Governing Law. This Agreement shall be governed by
the laws of the State of Delaware, without reference to principles of conflicts
of law.
(b) Entire Agreement. This Agreement, together with the
documents expressly referred to herein, contain the entire understanding of the
parties in respect of the subject matter hereof, and supersede all prior
negotiations and understandings between the parties with respect to such subject
matter.
(c) Effect of Headings. The section headings are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
(d) Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
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FINAL VERSION
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date first above written.
PARADYNE NETWORKS, INC. PEQUOT PRIVATE EQUITY FUND II, L.P.
By: /s/ Xxxxxxx X. Xxxxxx By: Pequot Capital Management, Inc.
-------------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxx Its: Investment Manager
------------------------------ -------------------------------
Title:
-----------------------------
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Xxxxxxx Xxxxxx
Its: Vice President
-------------------------------
ELASTIC NETWORKS INC. Address:
By: /s/ Xxx Xxxx 000 Xxxxx Xxxx Xxxx
-------------------------------- Xxxxxxxx, Xxxxxxxxxxx 00000
Name: Xxx Xxxx
------------------------------
Title: President & CEO
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