================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
AXENT TECHNOLOGIES, INC.
AXQUISITION TWO, INC.
AND
RAPTOR SYSTEMS, INC.
DECEMBER 1, 1997
================================================================================
TABLE OF CONTENTS
ARTICLE I: THE MERGER ......................................................... 1
1.1 The Merger .............................................................. 1
1.2 The Closing ............................................................. 1
1.3 Actions at or Concurrently with the Closing ............................. 2
1.4 Additional Action ....................................................... 2
1.5 Conversion of Shares .................................................... 2
1.6 Exchange of Shares ...................................................... 3
1.7 Dividends ............................................................... 4
1.8 Fractional Shares ....................................................... 4
1.9 Options ................................................................. 5
1.10 Certificate of Incorporation ............................................ 6
1.11 By-laws ................................................................. 6
1.12 Directors and Officers .................................................. 6
1.13 No Further Rights ....................................................... 6
1.14 Closing of Transfer Books ............................................... 6
ARTICLE II: REPRESENTATIONS AND WARRANTIES OF RAPTOR ........................... 7
2.1 Organization, Qualification and Corporate Power ......................... 7
2.2 Capitalization .......................................................... 7
2.3 Authorization of Transaction ............................................ 8
2.4 Noncontravention ........................................................ 8
2.5 Subsidiaries ............................................................ 9
2.6 Financial Statements .................................................... 10
2.7 Absence of Certain Material Adverse Changes ............................. 10
2.8 Undisclosed Liabilities ................................................. 10
2.9 Tax Matters ............................................................. 11
2.10 Assets .................................................................. 12
2.11 Owned Real Property ..................................................... 12
2.12 Intellectual Property ................................................... 13
2.13 Real Property Leases .................................................... 15
2.14 Contracts ............................................................... 15
2.15 Insurance ............................................................... 15
2.16 Litigation .............................................................. 16
2.17 Employees ............................................................... 16
2.18 Employee Benefits ....................................................... 17
-i-
2.19 Environmental Matters ................................................... 19
2.20 Legal Compliance ........................................................ 20
2.21 Permits ................................................................. 20
2.22 Certain Business Relationships With Affiliates .......................... 20
2.23 Fees .................................................................... 20
2.24 Books and Records ....................................................... 20
2.25 Pooling ................................................................. 21
2.26 Company Action .......................................................... 21
2.27 Disclosure .............................................................. 21
2.28 Fairness Opinion ........................................................ 21
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF AXENT
AND THE TRANSITORY SUBSIDIARY ................................................ 21
3.1 Organization ............................................................ 22
3.2 Capitalization .......................................................... 22
3.3 Authorization of Transaction ............................................ 23
3.4 Noncontravention ........................................................ 23
3.5 Subsidiaries ............................................................ 24
3.6 Reports and Financial Statements ........................................ 24
3.7 Absence of Material Adverse Changes ..................................... 25
3.8 Undisclosed Liabilities ................................................. 25
3.9 Tax Matters ............................................................. 25
3.10 Assets .................................................................. 26
3.11 Owned Real Property ..................................................... 27
3.12 Intellectual Property ................................................... 27
3.13 Real Property Leases .................................................... 29
3.14 Contracts ............................................................... 29
3.15 Insurance ............................................................... 30
3.16 Litigation .............................................................. 30
3.17 Employees ............................................................... 30
3.18 Employee Benefits ....................................................... 31
3.19 Environmental Matters ................................................... 33
3.20 Legal Compliance ........................................................ 33
3.21 Permits ................................................................. 33
3.22 Certain Business Relationships With Affiliates .......................... 33
3.23 Fees .................................................................... 33
-ii-
3.24 Books and Records ....................................................... 34
3.25 Pooling ................................................................. 34
3.26 Company Action .......................................................... 34
3.27 Disclosure .............................................................. 34
3.28 Interim Operations of the Transitory Subsidiary ......................... 34
3.29 Fairness Opinion ........................................................ 35
3.30 Registration Rights ..................................................... 35
ARTICLE IV: COVENANTS ......................................................... 35
4.1 Best Efforts ............................................................ 35
4.2 Notices and Consents .................................................... 35
4.3 Special Meeting, Prospectus/Proxy Statement and Registration Statement .. 35
4.4 Conduct of Businesses ................................................... 37
4.5 Operation of Business of Raptor ......................................... 38
4.6 Operation of Business of Axent .......................................... 40
4.7 Full Access ............................................................. 40
4.8 Notice of Breaches ...................................................... 40
4.9 Exclusivity ............................................................. 41
4.10 Pooling Accounting; Agreements From Affiliates .......................... 42
4.11 Voting Agreements ....................................................... 43
4.12 Merger Shares; Stock Options ............................................ 43
4.13 Public Disclosure ....................................................... 43
4.14 Tax-Free Reorganization ................................................. 43
4.15 Confidentiality ......................................................... 43
4.16 Axent's Board of Directors .............................................. 44
4.17 Registration Rights to Certain Raptor Affiliates ........................ 44
4.18 Qualification of Subsidiaries ........................................... 44
4.19 Indemnification ......................................................... 44
ARTICLE V: CONDITIONS TO CONSUMMATION OF MERGER ............................... 46
5.1 Conditions to Each Party's Obligations .................................. 46
5.2 Conditions to Obligations of Axent and the Transitory Subsidiary ........ 47
5.3 Conditions to Obligations of Raptor ..................................... 48
ARTICLE VI: TERMINATION ....................................................... 49
6.1 Termination of Agreement ................................................ 49
6.2 Effect of Termination ................................................... 51
-iii-
ARTICLE VII: MISCELLANEOUS .................................................... 52
7.1 No Third Party Beneficiaries ............................................ 52
7.2 Entire Agreement ........................................................ 52
7.3 Succession and Assignment ............................................... 52
7.4 Counterparts ............................................................ 52
7.5 Headings ................................................................ 52
7.6 Notices ................................................................. 52
7.7 Governing Law ........................................................... 54
7.8 Amendments and Waivers .................................................. 54
7.9 Severability ............................................................ 54
7.10 Expenses ................................................................ 55
7.11 Specific Performance .................................................... 55
7.12 Construction ............................................................ 55
7.13 Incorporation of Exhibits and Schedules ................................. 55
7.14 Non-Survivability of Provisions ......................................... 55
- iv-
EXHIBITS
EXHIBIT A Certificate of Incorporation of Surviving Corporation
EXHIBIT B By-laws of Surviving Corporation
EXHIBIT C Raptor Affiliate's Agreement
EXHIBIT D Axent Affiliate's Agreement
EXHIBIT E Raptor Voting Agreement
EXHIBIT F Axent Voting Agreement
EXHIBIT G Stock Option Exchange Agreement
EXHIBIT H Opinion of Counsel to Axent
EXHIBIT I Opinion of Counsel to Raptor
- v-
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") entered into as of
December 1, 1997 by and among AXENT TECHNOLOGIES, INC., a Delaware corporation
("Axent"), AXQUISITION TWO, INC., a Delaware corporation and a wholly-owned
subsidiary of Axent (the "Transitory Subsidiary"), and RAPTOR SYSTEMS, INC., a
Delaware corporation ("Raptor"). Axent, the Transitory Subsidiary and Raptor are
referred to collectively herein as the "Parties."
This Agreement contemplates a merger of the Transitory Subsidiary with
and into Raptor in a transaction that will qualify under Section 368(a) of the
Code (as defined below). In such merger, the shareholders of Raptor will receive
capital stock of Axent in exchange for their capital stock of Raptor.
NOW, THEREFORE, in consideration of the representations, warranties,
agreements and covenants herein contained, the Parties agree as follows.
ARTICLE I
THE MERGER
1.1 THE MERGER.
Upon and subject to the terms and conditions of this Agreement, the
Transitory Subsidiary shall merge with and into Raptor (with such merger
referred to herein as the "Merger") at the Effective Time (as defined below).
From and after the Effective Time, the separate corporate existence of the
Transitory Subsidiary shall cease and Raptor shall continue as the surviving
corporation in the Merger (the "Surviving Corporation"). The "Effective Time"
shall be the time at which Raptor and the Transitory Subsidiary file the
certificate of merger prepared and executed in accordance with the relevant
provisions of the Delaware General Corporation Law (the "Certificate of Merger")
with the Secretary of State of the State of Delaware. The Merger shall have the
effects specified in this Agreement and in Section 259 of the Delaware General
Corporation Law.
1.2 THE CLOSING.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Piper & Marbury, L.L.P., 0000
Xxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X., commencing at 10:00 a.m. local time
on January 31, 1998, or, if all of the conditions to the obligations of the
Parties to consummate the transactions contemplated hereby have not been
satisfied or waived by such date, on such mutually agreeable later date as soon
as practicable after the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate
- 1 -
the transactions contemplated hereby, but in no event later than ten days
following such satisfaction or waiver of such conditions (the "Closing Date").
1.3 ACTIONS AT OR CONCURRENTLY WITH THE CLOSING.
At the Closing, (a) Raptor shall deliver to Axent and the Transitory
Subsidiary the various certificates, instruments and documents referred to in
Section 5.2, (b) Axent and the Transitory Subsidiary shall deliver to Raptor the
various certificates, instruments and documents referred to in Section 5.3, and
(c) Axent shall deliver certificates for the Merger Shares (as defined below) to
Boston EquiServ LP as exchange agent (the "Exchange Agent") in accordance with
Section 1.6. At or concurrently with the Closing, the parties hereto shall cause
the Merger to be consummated by filing a Certificate of Merger with the
Secretary of State of the State of Delaware, in accordance with the relevant
provisions of the Delaware General Corporation Law.
1.4 ADDITIONAL ACTION.
The Surviving Corporation may, at any time after the Effective Time,
take any action, including executing and delivering any document, in the name
and on behalf of either Raptor or the Transitory Subsidiary, in order to
consummate the transactions contemplated by this Agreement.
1.5 CONVERSION OF SHARES.
As of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of common stock, $.01 par value,
of Raptor ("Raptor Common Stock") or capital stock of the Transitory Subsidiary:
(a) Each issued and outstanding share of the capital stock of
the Transitory Subsidiary shall be converted into and become one fully
paid and nonassessable share of common stock, $.01 par value, of the
Surviving Corporation.
(b) Any shares of Raptor Common Stock owned by Axent or the
Transitory Subsidiary shall be canceled and retired and shall cease to
exist, and no stock of Axent or other consideration shall be delivered
in exchange therefor. All shares of common stock, $.02 par value, of
Axent ("Axent Common Stock") owned by Raptor shall remain unaffected by
the Merger.
(c) Subject to Section 1.6, each issued and outstanding share
of Raptor Common Stock (other than shares to be canceled in accordance
with Section 1.5(b)) shall be converted into the right to receive
eight-tenths (.80) (the "Exchange Ratio") of a fully paid and
nonassessable share of Axent Common Stock (all such stock received in
such conversion, the "Merger Shares") (which amount will be adjusted
for any stock split or stock dividend with respect to the Axent Common
Stock or Raptor Common Stock effected between the date of this
Agreement and the Effective Time). All such shares of
- 2-
Raptor Common Stock, when so converted, shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares
shall cease to have any rights with respect thereto, except the right
to receive Axent Common Stock and any cash in lieu of fractional shares
of Axent Common Stock to be issued or paid in consideration therefor
upon the surrender of such certificate in accordance with Section 1.6,
without interest.
1.6 EXCHANGE OF SHARES.
(a) "Raptor Shareholders" means the holders of the Raptor
Common Stock.
"Raptor Shares" means shares of Raptor's equity securities
actually held by each Raptor Shareholder.
(b) Prior to the Effective Time, Axent shall appoint the
Exchange Agent to effect the exchange for the Merger Shares of
certificates that, immediately prior to the Effective Time, represented
Raptor Shares converted into Merger Shares pursuant to Section 1.5
("Certificates"). On the Closing Date, Axent shall deliver to the
Exchange Agent, in trust for the benefit of holders of Certificates, a
stock certificate (issued in the name of the Exchange Agent or its
nominee) representing the Merger Shares, as described in Section
1.5(c). Within thirty (30) days after the Effective Time, Axent shall
cause the Exchange Agent to send a notice and a transmittal form to
each holder of a Certificate advising such holder of the effectiveness
of the Merger and the procedure for surrendering to the Exchange Agent
such Certificate in exchange for the Merger Shares issuable pursuant to
Section 1.5(c). Each holder of a Certificate, upon proper surrender
thereof to the Exchange Agent in accordance with the instructions in
such notice, shall be entitled to receive in exchange therefor (subject
to any taxes required to be withheld) the Merger Shares issuable
pursuant to Section 1.5(c). Until properly surrendered, each such
Certificate shall be deemed for all purposes to evidence only the right
to receive the Merger Shares issuable pursuant to Section 1.5(c).
Holders of Certificates shall not be entitled to receive certificates
for the Merger Shares to which they would otherwise be entitled until
such Certificates are properly surrendered.
(c) If any Merger Shares are to be issued in the name of a
person other than the person in whose name the Certificate surrendered
in exchange therefor is registered, it shall be a condition to the
issuance of such Merger Shares that (i) the Certificate so surrendered
shall be transferable, and shall be properly assigned, endorsed or
accompanied by appropriate stock powers, (ii) such transfer shall
otherwise be proper and (iii) the person requesting such transfer shall
pay to the Exchange Agent any transfer or other taxes payable by reason
of the foregoing or establish to the satisfaction of the Exchange Agent
that such taxes have been paid or are not required to be paid.
Notwithstanding the foregoing, neither the Exchange Agent nor any Party
shall be liable to a holder of Raptor Shares for any Merger Shares
issuable to such holder pursuant to
- 3 -
Section 1.5(c) that are delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(d) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed, Axent
shall issue in exchange for such lost, stolen or destroyed Certificate
the Merger Shares issuable in exchange therefor pursuant to Section
1.5(c). The Board of Directors of Axent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Certificate to submit to Axent an affidavit,
to give to Axent an indemnity against any claim that may be made
against Axent with respect to the Certificate alleged to have been
lost, stolen or destroyed, and to provide such other assurances and
execute such other instruments as the Exchange Agent may require.
(e) Promptly following the date which is twelve months after
the Closing Date, the Exchange Agent shall return to Axent all Merger
Shares in its possession, and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a Certificate may surrender such
Certificate to Axent and, subject to applicable abandoned property,
escheat and similar laws, receive in exchange therefor the Merger
Shares issuable with respect thereto pursuant to Section 1.5(c).
1.7 DIVIDENDS.
No dividends or other distributions that are payable to the holders of
record of Axent Common Stock as of a date on or after the Closing Date shall be
paid to former Raptor Shareholders entitled by reason of the Merger to receive
Merger Shares until such holders surrender their Certificates in accordance with
Section 1.6. Upon such surrender, Axent shall pay or deliver to the persons in
whose name the certificates representing such Merger Shares are issued any
dividends or other distributions that are payable to the holders of record of
Axent Common Stock as of a date on or after the Closing Date and which were paid
or delivered between the Effective Time and the time of such surrender; provided
that no such person shall be entitled to receive any interest on such dividends
or other distributions.
1.8 FRACTIONAL SHARES.
No certificates or scrip representing fractional Merger Shares shall be
issued to former Raptor Shareholders upon the surrender for exchange of
Certificates, and such former Raptor Shareholders shall not be entitled to any
voting rights, rights to receive any dividends or distributions or other rights
as a stockholder of Axent with respect to any fractional Merger Shares that
would otherwise be issued to such former Raptor Shareholders. In lieu of any
fractional Merger Shares that would otherwise be issued, each former Raptor
Shareholder that would have been entitled to receive a fractional Merger Share
shall, upon proper surrender of such person's Certificates, receive a cash
payment equal to the average of the last reported sale prices of Axent Common
Stock on The NASDAQ National Market for the ten (10) trading days
- 4-
immediately preceding the Effective Time multiplied by the fraction of a share
that such Raptor Shareholder would otherwise be entitled to receive. The
fractional share interests of each former holder of Raptor Common Stock will be
aggregated, and no former holder of Raptor Common Stock will receive cash in an
amount greater than or equal to the value of one full share of Axent Common
Stock.
1.9 OPTIONS.
(a) As of the Effective Time, all options to purchase Raptor
Shares issued by Raptor pursuant to its 1995 Stock Option and Grant
Plan, as amended and restated (the "Raptor Stock Option Plan"), or
pursuant to the resolution of Raptor's Board of Directors or the
Compensation Committee thereof ("Options"), whether vested, unvested or
subject to repurchase by Raptor following such exercise, which are
outstanding and not exercised immediately prior to the Effective Time,
shall be exchanged for options for Axent Common Stock to be issued by
Axent. Axent and Raptor shall enter into the Stock Option Exchange
Agreement in the form attached hereto as EXHIBIT G. Immediately after
the Effective Time, each Option outstanding immediately prior to the
Effective Time shall be deemed to constitute an option to acquire, on
the same terms and conditions as were applicable under such Option
immediately prior to the Effective Time, such number of shares of Axent
Common Stock as is equal to the number of Raptor Shares subject to the
unexercised portion of such Option multiplied by the Exchange Ratio
(with any fraction resulting from such multiplication to be rounded
down to the next lower whole number). The exercise price per share of
each such exchanged Option shall be equal to the exercise price of such
Option immediately prior to the Effective Time, divided by the Exchange
Ratio (with any fraction of a cent resulting from such division to be
rounded up to the next higher whole cent). Except for any acceleration
and termination, the term, exercisability (including any acceleration
of exercisability as a result of this transaction), vesting schedule,
repurchase provisions, status as an "incentive stock option" under
Section 422 of the Internal Revenue Code of 1986 (as amended, the
"Code"), if applicable, and all of the other terms of the Options in
effect immediately prior to the Effective Time and after giving effect
to any acceleration of vesting for such Options as a result of this
transaction shall otherwise remain unchanged. Axent acknowledges that
the unvested Options are subject to automatic acceleration of vesting
pursuant to the terms of the Raptor Stock Option Plan and related
agreements as a result of the consummation of this transaction.
(b) As soon as practicable after the Effective Time, Axent or
the Surviving Corporation shall deliver to the holders of Options
appropriate notices setting forth such holders' rights pursuant to such
Options, as amended by this Section 1.9, and the agreements evidencing
such Options shall continue in effect on the same terms and conditions
(subject to the amendments provided for in this Section 1.9 and such
notice).
- 5 -
(c) Axent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Axent Common Stock for
delivery upon exercise of the Options exchanged in accordance with this
Section 1.9. As soon as practicable after the Effective Time, and in
any event no later than 30 days after the Closing, Axent shall file a
Registration Statement on Form S-8 (or any successor form) under the
Securities Act of 1933 (as amended, the "Securities Act") with respect
to all shares of Axent Common Stock subject to such Options, and shall
use its best efforts to maintain the effectiveness of such Registration
Statement for so long as such Options remain outstanding.
(d) Axent's obligations for each Option pursuant to this
Section 1.9 shall be subject to the execution and delivery, to the
extent required, by the holder of such Option, a consent, in the form
of the Stock Option Exchange Agreements, to the terms hereof. Raptor
shall use its best efforts to obtain, prior to the Closing, the consent
from each holder of an Option to the amendment of such Option pursuant
to this Section 1.9.
1.10 CERTIFICATE OF INCORPORATION.
The Certificate of Incorporation of Raptor shall be amended and
restated substantially in the form set forth in EXHIBIT A hereto and, as so
amended and restated, shall be the Certificate of Incorporation of the Surviving
Corporation.
1.11 BY-LAWS.
The By-laws of the Surviving Corporation shall be amended and restated
substantially in the form set forth in EXHIBIT B hereto and, as so amended and
restated, shall be the By-laws of the Surviving Corporation.
1.12 DIRECTORS AND OFFICERS.
The directors of the Transitory Subsidiary shall become the directors
of the Surviving Corporation after the Effective Time. The officers of the
Transitory Subsidiary immediately prior to the Effective Time shall become the
initial officers of the Surviving Corporation after the Effective Time, in each
case until their respective successors are duly elected or appointed.
1.13 NO FURTHER RIGHTS.
From and after the Effective Time, no Raptor Shares shall be deemed to
be outstanding, and holders of Certificates shall cease to have any rights with
respect thereto, except as provided herein or by law.
1.14 CLOSING OF TRANSFER BOOKS.
At the Effective Time, the stock transfer books of Raptor shall be
closed and no transfer of Raptor Shares shall thereafter be made. If, after the
Effective Time, Certificates are presented
- 6 -
to the Surviving Corporation or the Exchange Agent, they shall be canceled and
exchanged for Merger Shares in accordance with Section 1.5(c).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF RAPTOR
Raptor represents and warrants to Axent and the Transitory Subsidiary
that the statements contained in this Article II are true and correct, except as
set forth in the disclosure schedule attached hereto (the "Disclosure Schedule")
or except where the failure to comply or fulfill, accurately state, accurately
represent or accurately warrant would not have a material adverse effect on the
business of Raptor.
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER.
Raptor is a corporation duly organized, validly existing and in
corporate good standing under the laws of the State of Delaware. Raptor is duly
qualified to conduct business and is in corporate good standing under the laws
of each jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification, except as disclosed in
Section 2.1 of the Disclosure Schedule. Raptor has the corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. Raptor has furnished or made available to
Axent true and complete copies of its Certificate of Incorporation and By-laws,
each as amended and as in effect on the date hereof (hereinafter "Certificate of
Incorporation" and "By-laws," respectively). Raptor is not in default under or
in violation of any provision of its Certificate of Incorporation or By-laws,
each as amended to date.
2.2 CAPITALIZATION.
(a) The authorized capital stock of Raptor consists of
35,000,000 shares of Raptor Common Stock and 5,000,000 shares of
Preferred Stock, $.01 par value per share ("Raptor Preferred Stock").
As of the date hereof: (i) 13,568,695 shares of Raptor Common Stock
were issued and outstanding, all of which are validly issued, fully
paid and nonassessable; (ii) no shares of Raptor Preferred Stock are
issued or outstanding; (iii) no shares of Raptor Common Stock or Raptor
Preferred Stock were held in the treasury of Raptor; and (iv) 3,678,852
shares of Raptor Common Stock were reserved for issuance under 1995
Raptor Stock Option Plan. All shares of Raptor Common Stock subject to
issuance as specified above, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, shall
be duly authorized, validly issued, fully paid and nonassessable.
Except as provided in Section 2.2 of the Disclosure Schedule, there are
no obligations, contingent or otherwise, of Raptor to repurchase,
redeem or otherwise acquire any shares of Raptor Common Stock.
(b) Except as set forth in this Section 2.2 and except under
the 1995 Raptor Stock Option Plan or any related agreement in effect as
of the date of this Agreement,
- 7-
there are no equity securities of any class of Raptor, or any security
exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding. Except pursuant to the Raptor
Stock Option Plan or any related agreement in effect as of the date of
this Agreement or as set forth in this Section 2.2 or in Section 2.2 of
the Disclosure Schedule, there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any character
to which Raptor is a party or by which it is bound obligating Raptor to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of Raptor or obligating Raptor to
grant, extend, accelerate the vesting of or enter into any such option,
warrant, equity security, call, right, commitment or agreement, and, to
the best knowledge of Raptor, as of the date of the Agreement and
except such ancillary agreements as are required by this Agreement,
there are no voting trusts, proxies or other agreements or
understandings with respect to the shares of capital stock of Raptor.
2.3 AUTHORIZATION OF TRANSACTION.
Raptor has the corporate power and authority to execute and deliver
this Agreement and the Stock Option Exchange Agreements and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Stock Option Exchange Agreements and, subject to the adoption
of this Agreement and the approval of the Merger by a majority of the votes
represented by the outstanding Raptor Shares entitled to vote on this Agreement
and the Merger voting in accordance with the Delaware General Corporation Law
and the Certificate of Incorporation and By-laws of Raptor (the "Requisite
Raptor Shareholder Approval"), the performance by Raptor of this Agreement and
the Stock Option Exchange Agreements and the consummation by Raptor of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the necessary corporate action on the part of Raptor. This
Agreement and the Stock Option Exchange Agreements have been duly and validly
executed and delivered by Raptor and, assuming the due authorization, execution
and delivery by Axent and the Transitory Subsidiary, constitute a valid and
binding obligation of Raptor, enforceable against Raptor in accordance with
their terms, except as enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights and remedies
generally, and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
2.4 NONCONTRAVENTION.
Except as disclosed in Section 2.4 of the Disclosure Schedule and
subject to compliance by Raptor with any obligations it may have relating to (i)
the applicable requirements of the Securities Act, (ii) any applicable state or
foreign securities laws, (iii) the filing of the Certificate of Merger as
required by the Delaware General Corporation Law, and (iv) the filing with the
Securities and Exchange Commission (the "SEC"), the National Market System (the
"NMS") and the National Association of Securities Dealers (the "NASD") of any
registration statement and the declaration by the SEC of the effectiveness of
such registration statement, neither the execution and delivery of this
Agreement and the Stock Option Exchange Agreements by Raptor,
- 8 -
nor the consummation by Raptor of the transactions contemplated hereby and
thereby, will (a) conflict with or violate any provision of the Certificate of
Incorporation or By-laws of Raptor, (b) require on the part of Raptor or any of
its Subsidiaries (as defined in Section 2.5) any filing with, or any permit,
authorization, consent or approval of, any United States federal or state court,
arbitrational tribunal, administrative agency or commission or other United
States federal or state governmental or regulatory authority or agency (a
"Governmental Entity"), (c) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel, or require notice, consent or waiver under, any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest (as
defined below) or other arrangement to which Raptor or any of its Subsidiaries
is a party or by which Raptor or any of its Subsidiaries is bound or to which
any of their assets are subject, (d) result in the imposition of a Security
Interest upon any assets of Raptor or any of its Subsidiaries or (e) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Raptor, any of its Subsidiaries or any of their properties or assets. For
purposes of this Agreement, "Security Interest" means any mortgage, pledge,
security interest, encumbrance, charge, or other lien (whether arising by
contract or by operation of law), other than (i) mechanic's, materialmen's, and
similar liens, (ii) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation, and (iii) liens
on goods in transit incurred pursuant to documentary letters of credit, in each
case arising in the ordinary course of business consistent with past custom and
practice (including with respect to frequency and amount) ("Ordinary Course of
Business") of Raptor and not material to Raptor.
2.5 SUBSIDIARIES.
Except as disclosed by Raptor in its most recent Raptor Report (as
defined in Section 2.6 below) as required by Item 601 of Regulation S-K under
the Securities Act, and except as set forth in Section 2.5 of the Disclosure
Schedule, Raptor does not have the power, directly or indirectly, to vote or
direct the voting of, securities sufficient to elect the majority of the
directors of any corporation (a "Subsidiary") and does not control, directly or
indirectly, or have any direct or indirect controlling equity interest, or any
commitment to acquire any such direct or indirect controlling equity interest,
in any corporation, partnership, joint venture, association, trust, or other
business organization. Each Subsidiary is a corporation duly organized, validly
existing and in corporate good standing (to the extent such good standing is
recognized in the jurisdiction of incorporation) under the laws of the
jurisdiction of its incorporation. Each Subsidiary has the requisite corporate
power and authority to carry on the businesses in which it is engaged and to own
and use the properties owned and used by it. Raptor has delivered or made
available to Axent correct and complete copies of the charter of each
Subsidiary, as amended to date, and prior to Closing will deliver or make
available to Axent correct and complete copies of the By-laws of each
Subsidiary, as amended to date. No Subsidiary is in default under or in
violation of any provision of its charter or Bylaws. All of the issued and
outstanding shares of capital stock of each Subsidiary are duly authorized,
validly issued, fully paid, nonassessable and free of
- 9 -
preemptive rights. All shares of each Subsidiary that are held of record or
owned beneficially by either Raptor or any Subsidiary or any nominee are held or
owned free and clear of any restrictions on transfer (other than restrictions
under the Securities Act, state securities laws or foreign securities laws),
written claims, Security Interests, options, warrants, rights, contracts and
calls. There are no outstanding or authorized options, warrants, rights,
agreements or commitments to which Raptor or any Subsidiary is a party or which
are binding on any of them providing for the issuance, disposition or
acquisition of any capital stock of any Subsidiary. There are no outstanding
stock appreciation, phantom stock or similar rights with respect to any
Subsidiary.
2.6 FINANCIAL STATEMENTS.
Raptor has previously furnished or made available to Axent complete and
accurate copies, as amended or supplemented, of its (a) Registration Statement
on Form S-1 which was declared effective by the SEC on February 6, 1996, and (b)
all other reports filed by Raptor under Sections 13, 14 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") with the SEC since February
6, 1996 (such reports are collectively referred to herein as the "Raptor
Reports"). The Raptor Reports constitute all of the documents required to be
filed by Raptor under Sections 13, 14 or 15(d) of the Exchange Act with the SEC.
As of their respective dates, the Raptor Reports complied in all material
respects with applicable SEC and NASDAQ requirements and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial
statements and unaudited interim financial statements of Raptor included in the
Raptor Reports (i) complied as to form in all material respects with then
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, (ii) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act), (iii)
fairly present the consolidated financial condition, results of operations and
cash flows of Raptor as of the respective dates thereof and for the periods
referred to therein, and (iv) are consistent with the books and records of
Raptor.
2.7 ABSENCE OF CERTAIN MATERIAL ADVERSE CHANGES.
Since September 30, 1997, there has not been any material adverse
change in the assets, business, financial condition or results of operations of
Raptor and its Subsidiaries (taken as a whole), nor has there occurred any event
which should reasonably be foreseen to result in such a material adverse change
in the future.
2.8 UNDISCLOSED LIABILITIES.
Neither Raptor nor its Subsidiaries has any liability (whether known or
unknown, whether absolute or contingent, whether liquidated or unliquidated and
whether due or to become
- 10 -
due), except for (a) liabilities accrued or reserved against the September 30,
1997 unaudited consolidated balance sheet of Raptor and its Subsidiaries
("Raptor Most Recent Balance Sheet"), (b) liabilities which have arisen since
September 30, 1997 in the Ordinary Course of Business, (c) contractual or
statutory liabilities incurred in the Ordinary Course of Business which are not
required by GAAP to be reflected on a balance sheet, (d) liabilities disclosed
in Section 2.8 of the Disclosure Schedule, and (e) liabilities adequately
reserved against or disclosed in writing.
2.9 TAX MATTERS.
(a) Except as set forth in Section 2.9 of the Disclosure
Schedule, Raptor and its Subsidiaries has filed all Tax Returns (as
defined below) that it was required to file and all such Tax Returns
were correct and complete in all material respects. Each of Raptor and
its Subsidiaries has paid or will pay all Taxes (as defined below) that
are due on or before the Closing Date, whether or not shown on any such
Tax Returns, except such as are being contested in good faith by
appropriate proceedings (to the extent any such proceedings are
required) and with respect to which Raptor is maintaining reserves
adequate for their payment. The accrued but unpaid Taxes of Raptor and
its Subsidiaries for Tax Periods through the date of the Raptor Most
Recent Balance Sheet do not exceed the accruals and reserves for Taxes
(other than deferred Taxes) set forth on the Raptor Most Recent Balance
Sheet. Neither Raptor nor any of its Subsidiaries has any actual or, to
their knowledge, potential liability for any Tax obligation of any
taxpayer (including without limitation any affiliated group of
corporations or other entities that included Raptor during a prior
period) other than Raptor. All Taxes that Raptor or any of its
Subsidiaries is or was required by law to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid
to the proper Governmental Entity.
(i) For purposes of this Agreement, "Taxes" means all
taxes, charges, fees, levies or other similar assessments or
liabilities, including without limitation income, gross receipts,
ad valorem, premium, value-added, excise, real property, personal
property, sales, use, transfer, withholding, employment, payroll
and franchise taxes imposed by the United States of America or
any state, local or foreign government, or any agency thereof, or
other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or
additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute thereof and any
amounts of Taxes of another person that Raptor or any of its
Subsidiaries, or Axent or any of its Subsidiaries, as applicable,
is liable to pay by law.
(ii) For purposes of this Agreement, "Tax Returns" means
all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in
connection with Taxes.
- 11 -
(iii) For purposes of determining the amount of Taxes
attributable to a specified period (e.g., the period from the
date of the Raptor Most Recent Balance Sheet through the Closing
Date) other than a Tax Period, each Tax shall be computed as if
the specified period were a Tax Period. For purposes of this
paragraph (iii), a Tax Period means a period for which a Tax is
required to be computed under applicable statues and regulations.
(b) No examination or audit or any Tax Returns of Raptor or any
of its Subsidiaries by any Governmental Entity is currently in progress
or, to the actual knowledge of Raptor, threatened or contemplated.
Raptor has not waived any statute of limitations with respect to taxes
or agreed to an extension of time with respect to a tax assessment or
deficiency.
(c) Raptor is not a "consenting corporation" within the meaning
of Section 341(f) of the Code and none of the assets of Raptor are
subject to an election under Section 341(f) of the Code. Raptor is not
a party to any Tax allocation or sharing agreement, other than an
agreement to which only Raptor and its Subsidiaries are parties.
(d) Raptor is not and has never been a member of an "affiliated
group" of corporations (within the meaning of Section 1504 of the
Code), other than a group of which only Raptor and its Subsidiaries are
members.
(e) Raptor has not taken or agreed to take any action that
would prevent the Merger from constituting a tax-free reorganization
under the provisions of Section 368(a) of the Code.
2.10 ASSETS.
Each of Raptor and its Subsidiaries has good and marketable title to
all tangible assets necessary for the conduct of its businesses as presently
conducted. Each such tangible asset is free from material defects, has been
maintained in accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear) and is suitable for the
purposes for which it presently is used. No asset of Raptor (tangible or
intangible) is subject to any Security Interest, except the following: (a) liens
shown on the Raptor Most Recent Balance Sheet securing specified liabilities or
obligations with respect to which no material default exists (or event that,
whether with or without notice, lapse of time, or the happening or occurrence of
any other event would constitute a default); (b) exceptions disclosed in Section
2.10 of the Disclosure Schedule; and (c) liens for current taxes not yet due and
payable for which adequate reserves have been provided.
2.11 OWNED REAL PROPERTY.
Neither Raptor nor any of its Subsidiaries owns any real property.
- 12 -
2.12 INTELLECTUAL PROPERTY.
(a) Each of Raptor and its Subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights, and any
applications for such patents, trademarks, trade names, service marks
and copyrights, and all patent rights, trade secrets, schematics,
technology, know-how, computer software programs or applications and
tangible or intangible proprietary information or material
(collectively, "Intellectual Property") that are used to conduct its
business as currently conducted. Raptor has taken reasonable measures
to protect the proprietary nature of each item of Intellectual Property
that it considers confidential, and to maintain in confidence all trade
secrets and confidential information that it presently owns or uses.
(i) Section 2.12(a)(i) of the Disclosure Schedule lists
all patents and patent applications and all trademarks, registered
copyrights, trade names and service marks owned by Raptor and which are
currently used in connection with the business of Raptor, including the
jurisdictions in which each such Intellectual Property right has been
issued or registered or in which any such application for such issuance
or registration has been filed.
(ii) Section 2.12(a)(ii) of the Disclosure Schedule lists
all written licenses, sublicenses and other agreements to which Raptor
or any of its Subsidiaries is a party and pursuant to which any person
is authorized to use any Intellectual Property rights, except such
licenses, sublicenses or other agreements with end-users, resellers and
distributors that grant non-exclusive rights to use, resell or
sublicense a Raptor product in accordance with customary industry
practices on customary terms.
(iii) Section 2.12(a)(iii) of the Disclosure Schedule
lists all written licenses, sublicenses and other agreements as to
which Raptor or any of its Subsidiaries is a party and pursuant to
which Raptor is authorized to use any third party patents, patent
rights, trademarks, service marks, trade secrets or copyrights,
including software ("Third Party Intellectual Property Rights") which
are incorporated in any existing product or service of Raptor, other
than shrink-wrap licenses.
(iv) Section 2.12(a)(iv) of the Disclosure Schedule lists
all written agreements or other arrangements under which Raptor or any
of its Subsidiaries has provided or agreed to provide source code of
any Raptor product to any third party, except for software development
kits provided to agent integration providers.
Raptor has made available to Axent correct and complete copies of
all such patents, registrations, applications (owned by Raptor), and
all licenses, sublicenses and agreements referred to above and as
amended to date. Except for retail purchases of software, neither
Raptor nor any of its Subsidiaries is a party to any oral license,
- 13 -
sublicense or agreement which, if reduced to written form, would be
required to be listed in Section 2.12 of the Disclosure Schedule under
the terms of this Section 2.12(a).
(b) With respect to each item of Intellectual Property that
Raptor or any of its Subsidiaries owns: (i) other than common law
trademarks, Intellectual Property subject to joint development rights
or other rights that will not materially interfere with the conduct of
the business of Raptor, and subject to such rights as have been granted
by Raptor or any of its Subsidiaries under license agreements entered
into by Raptor (copies of which have previously been made available or
disclosed in writing to Axent), Raptor or its Subsidiaries possesses
all right, title and interest in and to such item; and (ii) such item
is not subject to any outstanding judgment, order, decree, stipulation
or injunction that materially interferes with the conduct of Raptor's
business as currently conducted. With respect to each item of Third
Party Intellectual Property Rights: (i) the license, sublicense or
other agreement covering such item is legal, valid, binding,
enforceable and in full force and effect with respect to Raptor or its
Subsidiaries, and to Raptor's knowledge is legal, valid, binding,
enforceable and in full force and effect with respect to each other
party thereto; (ii) Neither Raptor nor any of its Subsidiaries is in
breach or default thereunder, and to Raptor's knowledge no other party
to such license, sublicense or other agreement is in breach or default
thereunder, and no event has occurred which with notice or lapse of
time would constitute a breach or default by Raptor or any of its
Subsidiaries or permit termination, modification or acceleration
thereunder by the other party thereto; (iii) the underlying item of
Third Party Intellectual Property is not subject to any outstanding
judgment, order, decree, stipulation or injunction to which Raptor or
any of its Subsidiaries is a party or has been specifically named that
materially interferes with the conduct of Raptor's business as
currently conducted, nor to Raptor's knowledge subject to any other
outstanding judgment, order, decree, stipulation, or injunction that
materially interferes with the conduct of Raptor's business as
currently conducted.
(c) Except as set forth in Section 2.12 of the Disclosure
Schedule and to Raptor's knowledge with respect to patent rights,
neither Raptor nor any of its Subsidiaries (i) has been named in any
suit, action or proceeding which involves a claim of infringement or
misappropriation of any Intellectual Property right of any third party
or (ii) has received any written notice alleging any such claim of
infringement or misappropriation. Raptor has made available to Axent
correct and complete copies of all such suits, actions or proceedings
or written notices to the extent Raptor is not prohibited from
disclosing the same under applicable court orders. The manufacturing,
marketing, licensing or sale of the products or performance of the
service offerings of Raptor and its Subsidiaries do not currently
infringe, and have not within the six years prior to the date of this
Agreement infringed, any Intellectual Property right of any third party
(other than patent rights) or to Raptor's knowledge any patent rights
of third parties; and to the knowledge of Raptor, the Intellectual
Property rights of Raptor and its Subsidiaries are not being infringed
by activities, products or services of any third party.
- 14 -
2.13 REAL PROPERTY LEASES.
Except as disclosed in Section 2.13 of the Disclosure Schedule, with
respect to each lease and sublease to which Raptor or any of its Subsidiaries is
a party:
(a) the lease or sublease is legal, valid, binding, enforceable
and in full force and effect with respect to Raptor or any Subsidiary
party thereto, to Raptor's best knowledge is legal, valid, binding,
enforceable and in full force and effect with respect to each other
party thereto, and will not require consent from the other party
thereto as a result of the consummation of the transactions
contemplated by this Agreement;
(b) Raptor is not in breach or default thereunder, to Raptor's
knowledge no other party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of time,
would constitute a breach or default by Raptor or any Subsidiary party
thereto or permit termination, modification, or acceleration thereunder
by the other party thereto;
(c) there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease; and
(d) Neither Raptor nor any of its Subsidiaries has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in the leasehold or subleasehold.
2.14 CONTRACTS.
Since September 30, 1997, and to the knowledge of Raptor (which for the
purposes of this representation shall be limited to the actual knowledge of
Xxxxxx X. Xxxxxxxxxxx, Xxxxx XxXxxxxx and Xxxx X. Xxxxxxx) during the period
from January 1, 1997 through August 31, 1997, neither Raptor nor any of its
Subsidiaries has breached, or received in writing any claim or threat that it
has breached, any of the terms or conditions of any material agreement, contract
or commitment to which it is a party or by which any of its assets are bound
("Raptor Material Contracts") in such a manner as would permit any other party
to cancel or terminate the same prior to its stated term or would permit any
other party to collect material damages from Raptor under any Raptor Material
Contract. Each Raptor Material Contract that has not expired or been terminated
is in full force and effect and to Raptor's knowledge is not subject to any
material default thereunder by any party obligated to Raptor pursuant to such
Raptor Material Contract. There are no outstanding powers of attorney executed
on behalf of Raptor or any of its Subsidiaries.
2.15 INSURANCE.
Raptor and its Subsidiaries are covered by insurance in scope and
amount customary and reasonable for the businesses in which they is engaged.
Except as disclosed on Section 2.15 of
- 15 -
the Disclosure Schedule, each insurance policy to which Raptor or any of its
Subsidiaries is a party is in full force and effect and will not require any
consent as a result of the consummation of the transactions contemplated by this
Agreement. Neither Raptor nor any of its Subsidiaries is in breach or default
(including with respect to the payment of premiums or the giving of notices)
under any insurance policy to which it is a party, and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default by Raptor or any of its Subsidiaries or would permit termination,
modification or acceleration, under such policies; and Raptor has not received
any notice from the insurer disclaiming coverage or reserving rights with
respect to a particular claim or any such policy in general.
2.16 LITIGATION.
(a) Except as disclosed in Section 2.16 of the Disclosure
Schedule, there is no (i) unsatisfied judgment, order, decree,
stipulation or injunction or (ii) private or governmental claim,
complaint, action, suit, arbitration, proceeding, hearing or
investigation affecting Raptor to which Raptor, any of its
Subsidiaries, or to Raptor's knowledge, any officer, director, employee
or agent of Raptor is or was (for the period from September 30, 1996 up
to and including the date hereof) a party or, to the knowledge of
Raptor, is threatened to be made a party. Other than as set forth in
Section 2.16 of the Disclosure Schedule, none of the complaints,
actions, suits, proceedings, hearings, and investigations set forth in
Section 2.16 of the Disclosure Schedule, if determined adversely to
Raptor or any of its Subsidiaries, could have a material adverse effect
on the assets, business, financial condition or results of the
operations of Raptor and its Subsidiaries taken as a whole.
(b) Raptor has provided or has made available to Axent any
agreement or other document or instrument settling any claim,
complaint, action, suit or other proceeding, or a threat of any such
claim, complaint, action, suit or other proceedings, against Raptor,
which was entered into within the past two years.
2.17 EMPLOYEES.
Raptor has provided Axent with a written list of the annual rate of
compensation for all employees of Raptor and each of its Subsidiaries. Except as
disclosed in Section 2.17 of the Disclosure Schedule, each employee who performs
work on the development of Raptor Intellectual Property or has access to
material confidential information of Raptor or any of its Subsidiaries has
entered into a confidentiality/assignment of inventions agreement with Raptor or
such Subsidiary, a copy of which has previously been delivered or made available
to Axent. To the knowledge of Raptor, no key employee or group of employees has
any current plans to terminate employment with Raptor or any of its
Subsidiaries. Neither Raptor nor any of its Subsidiaries is a party to or bound
by any collective bargaining agreement, nor has any of them experienced any
strikes, formal grievances, claims of unfair labor practices or other collective
bargaining disputes. Raptor has no knowledge of any organizational effort made
or threatened,
- 16 -
either currently or within the past two years, by or on behalf of any labor
union with respect to employees of Raptor or its Subsidiaries.
2.18 EMPLOYEE BENEFITS.
(a) Section 2.18 of the Disclosure Schedule contains a
complete and accurate list of all Employee Benefit Plans (as defined
below) maintained, or contributed to, by Raptor or any ERISA Affiliate
(as defined below). For purposes of this Agreement, "Employee Benefit
Plan" means any "employee pension benefit plan" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), any "employee welfare benefit plan" (as defined in Section
3(1) of ERISA), and any other written or oral plan, agreement or
arrangement involving direct or indirect compensation, including
without limitation insurance coverage, severance benefits, disability
benefits, deferred compensation, bonuses, stock options, stock
purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation. For purposes of this
Agreement, "ERISA Affiliate" means any entity which is a member of (i)
a controlled group of corporations (as defined in Section 414(b) of the
Code), (ii) a group of trades or businesses under common control (as
defined in Section 414(c) of the Code), or (iii) an affiliated service
group (as defined under Section 414(m) of the Code or the regulations
under Section 414(o) of the Code), any of which includes Raptor.
Complete and accurate copies of (i) all Employee Benefit Plans which
have been reduced to writing, (ii) written summaries of all unwritten
Employee Benefit Plans, if any, (iii) all related trust agreements,
insurance contracts and summary plan descriptions, and (iv) all annual
reports filed on IRS Form 5500, 5500C or 5500R for the last two plan
years for each Employee Benefit Plan, have been delivered or made
available to Axent or will prior to Closing be delivered or made
available to Axent. Each Employee Benefit Plan has been administered in
accordance with its terms and each of Raptor and the ERISA Affiliates
has met its obligations with respect to such Employee Benefit Plan and
has made all required contributions thereto. Raptor and all Employee
Benefit Plans are in compliance with the currently applicable
provisions of ERISA and the Code and the regulations thereunder.
(b) There are no investigations by any Governmental Entity,
termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Employee Benefit Plans and
proceedings with respect to qualified domestic relations orders), suits
or proceedings against or involving any Employee Benefit Plan or
asserting any rights or claims to benefits under any Employee Benefit
Plan that could give rise to any liability.
(c) All the Employee Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination,
opinion or notification letters from the Internal Revenue Service to
the effect that such Employee Benefit Plans are qualified and the plans
and the trusts related thereto are exempt from federal income taxes
- 17 -
under Sections 401(a) and 501(a), respectively, of the Code, no such
determination, opinion or notification letter has been revoked and
revocation has not been threatened, and no such Employee Benefit Plan
has been amended since the date of its most recent determination,
opinion or notification letter or application therefor in any respect,
and no act or omission has occurred, that would adversely affect its
qualification or increase its cost.
(d) Neither Raptor nor any ERISA Affiliate has ever maintained
an Employee Benefit Plan subject to Section 412 of the Code or Title IV
of ERISA.
(e) At no time has Raptor or any ERISA Affiliate been obligated
to contribute to any "multi-employer plan" (as defined in Section
4001(a)(3) of ERISA).
(f) There are no unfunded obligations under any Employee
Benefit Plan providing benefits after termination of employment to any
employee of Raptor (or to any beneficiary of any such employee),
including but not limited to retiree health coverage and deferred
compensation, but excluding continuation of health coverage required to
be continued under Section 4980B of the Code, any applicable state
health insurance continuation law and any state insurance conversion
privileges law.
(g) No act or omission has occurred and no condition exists
with respect to any Employee Benefit Plan maintained by Raptor or any
ERISA Affiliate that would subject Raptor or any ERISA Affiliate to any
fine, penalty, tax or liability of any kind imposed under ERISA or the
Code.
(h) No Employee Benefit Plan is funded by, associated with, or
related to a "voluntary employee's beneficiary association" within the
meaning of Section 501(c)(9) of the Code.
(i) No Employee Benefit Plan, plan documentation or agreement,
summary plan description or other written communication distributed
generally to employees by its terms prohibits Raptor from amending or
terminating any such Employee Benefit Plan.
(j) Except as set forth in Section 2.18 of the Disclosure
Schedule, there is no: (i) written agreement with any director,
executive officer or other key employee of Raptor or any of its
Subsidiaries which has not been terminated in accordance with its terms
(A) the benefits of which are contingent, or the terms of which are
altered, upon the occurrence of a transaction involving Raptor or any
of its Subsidiaries of the nature of any of the transactions
contemplated by this Agreement, (B) providing any term of employment or
compensation guarantee or (C) providing severance benefits or other
benefits after the termination of employment of such director,
executive officer or key employee; (ii) agreement, plan or arrangement
under which any person may receive payments from Raptor or any of its
Subsidiaries that may be subject to the tax imposed
- 18 -
by Section 4999 of the Code or included in the determination of such
person's "excess parachute payment" under Section 280G of the Code; and
(iii) agreement or plan binding Raptor or any of its Subsidiaries,
including without limitation any stock option plan, stock appreciation
right plan, restricted stock plan, stock purchase plan, severance
benefit plan, or any Employee Benefit Plan, any of the benefits of
which will be increased, or the vesting of the benefits of which will
be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
2.19 ENVIRONMENTAL MATTERS.
(a) Each of Raptor and its Subsidiaries has complied with all
applicable Environmental Laws (as defined below). Except as disclosed
in the Raptor Reports and since September 30, 1997, there is no pending
or, to the knowledge of Raptor, threatened civil or criminal
litigation, written notice of violation, formal administrative
proceeding, or investigation, inquiry or information request by any
Governmental Entity, relating to any Environmental Law involving Raptor
or any of its Subsidiaries. For purposes of this Agreement,
"Environmental Law" means any federal, state or local law, statute,
rule or regulation or the common law relating to the environment or
occupational health and safety, including without limitation any
statute, regulation or order pertaining to (i) treatment, storage,
disposal, generation and transportation of toxic or hazardous
substances or solid or hazardous waste; (ii) air, water and noise
pollution; (iii) groundwater and soil contamination; (iv) the release
or threatened release into the environment of toxic or hazardous
substances, or solid or hazardous waste, including without limitation
emissions, discharges, injections, spills, escapes or dumping of
pollutants, contaminants or chemicals; (v) the protection of wild life,
marine sanctuaries and wetlands, including without limitation all
endangered and threatened species; (vi) storage tanks, vessels and
containers; (vii) underground and other storage tanks or vessels,
abandoned, disposed or discarded barrels, containers and other closed
receptacles; (viii) health and safety of employees and other persons;
and (ix) manufacture, processing, use, distribution, treatment,
storage, disposal, transportation or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
oil or petroleum products or solid or hazardous waste. As used above,
the terms "release" and "environment" shall have the meaning set forth
in the federal Comprehensive Environmental Compensation, Liability and
Response Act of 1980 ("CERCLA").
(b) There have been no releases of any Materials of
Environmental Concern (as defined below) into the environment at any
parcel of real property or any facility when owned, operated or
controlled by Raptor or any of its Subsidiaries for which Raptor or any
of its Subsidiaries should have liability under the Environmental Laws.
Raptor is not aware of any other releases of Materials of Environmental
Concern that could reasonably be expected to have an impact on the real
property or facilities owned, operated or controlled by Raptor or a
Subsidiary. For purposes of this Agreement,
- 19 -
"Materials of Environmental Concern" means any chemicals, pollutants or
contaminants, hazardous substances (as such term is defined under
CERCLA), solid wastes and hazardous wastes (as such terms are defined
under the federal Resources Conservation and Recovery Act), toxic
materials, oil or petroleum and petroleum products, or any other
material subject to regulation under any Environmental Law.
2.20 LEGAL COMPLIANCE.
Each of Raptor and its Subsidiaries, and the conduct and operations of
their respective businesses, is in compliance with each law (including rules and
regulations thereunder) of any federal, state, local or foreign government, or
any Governmental Entity, which (a) affects or relates to this Agreement or the
transactions contemplated hereby or (b) is applicable to Raptor or such
Subsidiary or such business.
2.21 PERMITS.
Raptor has all of the permits, licenses, registrations, certificates,
orders or approvals from any Governmental Entity required for Raptor or any of
its Subsidiaries to conduct its business as currently conducted (including
without limitation those issued or required under applicable export laws or
regulations) ("Permits"). Each such Permit is in full force and effect and, to
the knowledge of Raptor, no suspension or cancellation of such Permit is
threatened and to Raptor's knowledge there is no basis for believing that such
Permit will not be renewable upon expiration.
2.22 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES.
Except as set forth in the Raptor Reports, as disclosed in Section 2.22
of the Disclosure Schedule or by virtue of the Merger, since the date of
Raptor's last proxy statement to its shareholders, no event has occurred that
would be required to be reported by Raptor as a Certain Relationship or Related
Transaction pursuant to Item 404 of Regulation S-K promulgated by the SEC.
2.23 FEES.
Except as disclosed in Section 2.23 of the Disclosure Schedule or
otherwise in this Agreement, neither Raptor nor any of its Subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, investment
banking firm, finder or agent with respect to the transactions contemplated by
this Agreement.
2.24 BOOKS AND RECORDS.
The minute books of Raptor and each of its Subsidiaries contain true
and complete records of all actions taken at any meetings of Raptor's or such
Subsidiary's shareholders, Board of Directors or any committee thereof and of
all written consents executed in lieu of the holding of any such meeting. The
financial books and records of Raptor and each of its Subsidiaries accurately
reflect in all material respects the assets, liabilities, business, financial
condition and
- 20 -
results of operations of Raptor or such Subsidiary and have been maintained in
accordance with good business and bookkeeping practices.
2.25 POOLING.
Neither Raptor nor any of its Affiliates (as defined below) has through
the date of this Agreement taken or agreed to take any action that could impair
the ability of Axent to account for the business combination to be effected by
the Merger as a "pooling of interests" in accordance with GAAP. "Affiliate"
shall have the meaning set forth in Rule 12b-2 under the Exchange Act, as
amended.
2.26 COMPANY ACTION.
The Board of Directors of Raptor, at a meeting duly called and held,
has by the unanimous vote of all directors (i) determined that the Merger is
fair and in the best interests of Raptor and its shareholders, (ii) adopted this
Agreement in accordance with the provisions of the Delaware General Corporation
Law, and (iii) directed that this Agreement and the Merger be submitted to
Raptor Shareholders for their adoption and approval and resolved to recommend
that Raptor Shareholders vote in favor of the adoption of this Agreement and the
approval of the Merger.
2.27 DISCLOSURE.
No representation or warranty by Raptor contained in this Agreement,
and no statement contained in any document, certificate or other instrument
delivered to or to be delivered by or on behalf of Raptor pursuant to this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
2.28 FAIRNESS OPINION.
Raptor has received a written fairness opinion from NationsBanc
Xxxxxxxxxx Securities, Inc., its financial advisor, to the effect that the
Merger is fair to the holders of the Raptor Common Stock from a financial point
of view, and that Raptor has delivered a true and complete copy of such opinion
to Axent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AXENT
AND THE TRANSITORY SUBSIDIARY
Each of Axent and the Transitory Subsidiary represents and warrants to
Raptor that the statements contained in this Article III are true and correct
except as set forth in the Disclosure
- 21 -
Schedule or except where the failure to comply or fulfill, accurately state,
accurately represent or accurately warrant would not have a material adverse
effect on the business of Axent.
3.1 ORGANIZATION.
Each of Axent and the Transitory Subsidiary is a corporation duly
organized, validly existing and in corporate good standing under the laws of the
State of Delaware. Each of Axent and the Transitory Subsidiary is duly qualified
to conduct business and is in corporate good standing under the laws of each
jurisdiction in which the nature of its businesses or the ownership or leasing
of its properties requires such qualification. Axent and the Transitory
Subsidiary have the corporate power and authority to carry on the businesses in
which each is engaged and to own and use the properties owned and used by it.
Axent has furnished or made available to Raptor true and complete copies of its
Certificate of Incorporation and By-laws, each as amended and in effect as of
the date hereof. Neither Axent nor the Transitory Subsidiary is in material
default under or in violation of any material provision of its Certificate of
Incorporation or By-laws.
3.2 CAPITALIZATION.
(a) The authorized capital stock of Axent consists of
50,000,000 shares of Axent Common Stock and 5,000,000 shares of
Preferred Stock, $.02 par value per share ("Axent Preferred Stock"). As
of the date hereof: (i) 12,306,864 shares of Axent Common Stock were
issued and outstanding, all of which are validly issued, fully paid and
nonassessable; (ii) no shares of Axent Preferred Stock are issued or
outstanding; (iii) no shares of Axent Common Stock or Axent Preferred
Stock were held in the treasury of Axent; (iv) 1,501,714 shares of
Axent Common Stock were reserved for issuance under Axent's Amended and
Restated 1991 Stock Option Plan, and (v) 200,000 shares of Axent Common
Stock were reserved for issuance under Axent's Amended and Restated
1996 Directors Stock Option Plan, and (vi) 1,975,000 shares of Axent
Common Stock were reserved for issuance under Axent's Amended and
Restated 1996 Stock Option Plan (all such plans collectively, the
"Axent Stock Option Plans"). All shares of Axent Common Stock subject
to issuance as specified above, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. All of the Merger Shares will be, when issued in
accordance with this Agreement, duly authorized, validly issued, fully
paid, nonassessable and free of all liens and encumbrances and subject
to no preemptive rights. Except as provided in Section 3.2 of the
Disclosure Schedule, there are no obligations, contingent or otherwise,
of Axent to repurchase, redeem or otherwise acquire any shares of Axent
Common Stock.
(b) Except as set forth in this Section 3.2 and except as under
the Axent Stock Option Plans or any related agreement in effect as of
the date of this Agreement, there are no equity securities of any class
of Axent, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding.
- 22 -
Except pursuant to the Axent Stock Option Plans or any related
agreement in effect as of the date of this Agreement as set forth in
this Section 3.2 or in Section 3.2 of the Disclosure Schedule, there
are no options, warrants, equity securities, calls, rights, commitments
or agreements of any character to which Axent or any of its
Subsidiaries is a party or by which it is bound obligating Axent to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of Axent or obligating Axent to
grant, extend, accelerate the vesting of or enter into any such option,
warrant, equity security, call, right, commitment or agreement, and, to
the best knowledge of Axent, as of the date of the Agreement and except
such ancillary agreements as are required by this Agreement, there are
no voting trusts, proxies or other agreements or understandings with
respect to the shares of capital stock of Axent.
3.3 AUTHORIZATION OF TRANSACTION.
Each of Axent and the Transitory Subsidiary has the corporate power and
authority to execute and deliver this Agreement and the Stock Option Exchange
Agreements, as applicable, and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Stock Option
Exchange Agreements, as applicable, and, subject to approval by the stockholders
of Axent (the "Requisite Axent Shareholder Approval"), the performance of this
Agreement and the Stock Option Exchange Agreements and the consummation of the
transactions contemplated hereby and thereby by Axent and the Transitory
Subsidiary have been duly and validly authorized by the necessary corporate
action on the part of Axent and Transitory Subsidiary. This Agreement and the
Stock Option Exchange Agreements, as applicable, have been duly and validly
executed and delivered by Axent and the Transitory Subsidiary and, assuming the
due authorization, execution and delivery by Raptor, constitute a valid and
binding obligation of Axent and the Transitory Subsidiary, enforceable against
them in accordance with their terms, except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights and remedies generally, and except that the availability of
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceeding therefor may be brought.
3.4 NONCONTRAVENTION.
Subject to compliance by Axent and/or the Transitory Subsidiary with
any obligations they may have relating to (i) the applicable requirements of the
Securities Act, (ii) any applicable state or foreign securities laws, (iii) the
Exchange Act, (iv) the filing of the Certificate of Merger as required by the
Delaware General Corporation Law, and (v) the filing with the SEC, the NMS and
the NASD of any registration statement and the declaration by the SEC of the
effectiveness of such registration statement, neither the execution and delivery
of this Agreement and the Stock Option Exchange Agreements by Axent or the
Transitory Subsidiary nor the consummation by Axent or the Transitory Subsidiary
of the transactions contemplated hereby and thereby will (a) conflict or violate
any provision of the charter or By-laws of Axent or the Transitory Subsidiary,
(b) require on the part of Axent or any of its Subsidiaries any filing with, or
permit, authorization, consent or approval of, any Governmental Entity, (c)
conflict with,
- 23 -
result in breach of, constitute (with or without due notice or lapse of time or
both) a default under, result in the acceleration of, create in any party any
right to accelerate, terminate, modify or cancel, or require notice, consent or
waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which Axent or any of
its Subsidiaries is a party or by which either is bound or to which any of their
assets are subject, (d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Axent or any of its Subsidiaries or any of
their properties or assets, or (e) result in the imposition of a Security
Interest upon any of the property or assets of Axent or any of its Subsidiaries.
3.5 SUBSIDIARIES.
Except as disclosed by Axent in its most recent Axent Report (as
defined in Section 3.6 below) as required by Item 601 of Regulation S-K under
the Securities Act, except as set forth in Section 3.5 of the Disclosure
Schedule and other than the Transitory Subsidiary, Axent has no Subsidiaries and
does not control directly or indirectly or have any direct or indirect equity
controlling interest, or any commitment to acquire any such direct or indirect
controlling equity interest, in any corporation, partnership, joint venture,
association, trust, or other business organization. Each Subsidiary is a
corporation duly organized, validly existing and in corporate good standing (to
the extent such good standing is recognized in the jurisdiction of
incorporation) under the laws of the jurisdiction of its incorporation. Each
Subsidiary has the requisite corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. Prior to the Closing, Axent will deliver or make available to Raptor
correct and complete copies of the charter and By-laws of each Subsidiary, as
amended to date. No Subsidiary is in default under or in violation of any
provision of its charter or By-laws. All of the issued and outstanding shares of
capital stock of each Subsidiary are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights. All shares of each Subsidiary
that are held of record or owned beneficially by either Axent or any of its
Subsidiaries or any nominee are held or owned free and clear of any restrictions
on transfer (other than restrictions under the Securities Act, state securities
laws or foreign securities laws), written claims, Security Interests, options,
warrants, rights, contracts and calls. There are no outstanding or authorized
options, warrants, rights, agreements or commitments to which Axent or any of
its Subsidiaries is a party or which are binding on any of them providing for
the issuance, disposition or acquisition of any capital stock of any Subsidiary.
There are no outstanding stock appreciation, phantom stock or similar rights
with respect to any Subsidiary.
3.6 REPORTS AND FINANCIAL STATEMENTS.
Axent has previously furnished or made available to Raptor complete and
accurate copies, as amended or supplemented, of its (a) Registration Statement
on Form S-1 which was declared effective by the SEC on April 23, 1996, and (b)
all other reports filed by Axent under Sections 13, 14 or 15(d) of the Exchange
Act with the SEC since April 23, 1996 (such reports are collectively referred to
herein as the "Axent Reports"). The Axent Reports constitute all of the
- 23 -
documents required to be filed by Axent under Sections 13, 14 or 15(d) of the
Exchange Act with the SEC. As of their respective dates, the Axent Reports
complied in all material respects with applicable SEC and NASDAQ requirements
and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited financial statements and unaudited interim financial
statements of Axent included in the Axent Reports (i) complied as to form in all
material respects with then applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto, and
in the case of quarterly financial statements, as permitted by Form 10-Q under
the Exchange Act), (iii) fairly present the consolidated financial condition,
results of operations and cash flows of Axent as of the respective dates thereof
and for the periods referred to therein, and (iv) are consistent with the books
and records of Axent.
3.7 ABSENCE OF MATERIAL ADVERSE CHANGES.
Since September 30, 1997, there has not been any material adverse
change in the assets, business, financial condition or results of operations of
Axent and its Subsidiaries (taken as a whole), nor has there occurred any event
which should reasonably be foreseen to result in such a material adverse change
in the future.
3.8 UNDISCLOSED LIABILITIES.
Neither Axent nor any of its Subsidiaries has any liability (whether
known or unknown, whether absolute or contingent, whether liquidated or
unliquidated and whether due or to become due), except for (a) liabilities
accrued or reserved against the September 30, 1997 unaudited consolidated
balance sheet of Axent and its Subsidiaries ("Axent Most Recent Balance Sheet"),
(b) liabilities which have arisen since September 30, 1997 in the Ordinary
Course of Business, (c) contractual or statutory liabilities incurred in the
Ordinary Course of Business which are not required by GAAP to be reflected on a
balance sheet, and (d) liabilities disclosed in Section 3.8 of the Disclosure
Schedule.
3.9 TAX MATTERS.
(a) Except as set forth in Section 3.9 if the Disclosure
Schedule, Axent and its Subsidiaries have filed all Tax Returns that it
was required to file and all such Tax Returns were correct and complete
in all material respects. Each of Axent and its Subsidiaries has paid
or will pay all Taxes that are due on or before the Closing Date,
whether or not shown on any such Tax Returns, except such as are being
contested in good faith by appropriate proceedings (to the extent any
such proceedings are required) and with respect to which Axent is
maintaining reserves adequate for their payment. The accrued but unpaid
Taxes of Axent and its Subsidiaries for Tax Periods through the date of
the Axent Most Recent Balance Sheet do not exceed the accruals and
reserves for
- 25 -
Taxes (other than deferred Taxes) set forth on the Axent Most Recent
Balance Sheet. Neither Axent nor any of its Subsidiaries has any actual
or, to their knowledge, potential liability for any Tax obligation of
any taxpayer (including without limitation any affiliated group of
corporations or other entities that included Axent during a prior
period) other than Axent. All Taxes that Axent or any Subsidiary is or
was required by law to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper
Governmental Entity.
(b) For purposes of determining the amount of Taxes
attributable to a specified period (e.g., the period from the date of
the Axent Most Recent Balance Sheet through the Closing Date) other
than a Tax Period, each Tax shall be computed as if the specified
period were a Tax Period. For purposes of this paragraph (b), a Tax
Period means a period for which a Tax is required to be computed under
applicable statutes and regulations.
(c) No examination or audit of any Tax Returns of Axent or any
of its Subsidiaries by any Governmental Entity is currently in progress
or, to the actual knowledge of Axent threatened or contemplated. Axent
has not waived any statute of limitations with respect to taxes or
agreed to an extension of time with respect to a tax assessment or
deficiency.
(d) Axent is not a "consenting corporation" within the meaning
of Section 341(f) of the Code and none of the assets of Axent is
subject to an election under Section 341(f) of the Code. Axent is not a
party to any Tax allocation or sharing agreement other than an
agreement to which only Axent and its Subsidiaries are parties.
(e) Axent has never been a member of an "affiliated group" of
corporations (within the meaning of Section 1504 of the Code) other
than (i) a group of which only Axent and its Subsidiaries are members
or (ii) a group including Raxco Software, Inc. and its Subsidiaries.
(f) Axent has not taken or agreed to take any action that would
prevent the Merger from constituting a tax-free reorganization under
the provisions of Section 368(a) of the Code.
3.10 ASSETS.
Each of Axent and its Subsidiaries has good and marketable title to all
tangible assets necessary for the conduct of its businesses as presently
conducted. Each such tangible asset is free from material defects, has been
maintained in accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear) and is suitable for the
purposes for which it presently is used. No asset of Axent (tangible or
intangible) is subject to any Security Interest, except the following: (a) liens
shown on the Axent Most Recent Balance
- 26 -
Sheet securing specified liabilities or obligations with respect to which no
material default exists (or event that, whether with or without notice, lapse of
time, or the happening or occurrence of any other event would constitute a
default); (b) exceptions disclosed in Section 3.10 of the Disclosure Schedule;
and (c) liens for current taxes not yet due and payable for which adequate
reserves have been provided.
3.11 OWNED REAL PROPERTY.
Neither Axent nor any of its Subsidiaries owns any real property.
3.12 INTELLECTUAL PROPERTY.
Other than as expressly set forth in this Section 3.12, only with
respect to Axent's Omniguard product line:
(a) Each of Axent and its Subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use, all items of
Intellectual Property that are used to conduct its business as
currently conducted or planned by Axent to be conducted. Axent has
taken reasonable measures to protect the proprietary nature of each
item of Intellectual Property that it considers confidential, and to
maintain in confidence all trade secrets and confidential information
that it presently owns or uses.
(i) Section 3.12(a)(i) of the Disclosure Schedule lists
all patents and patent applications and all trademarks, registered
copyrights, trade names and service marks owned by Axent and which are
currently used in connection with the business of Axent with regard to
Axent's Omniguard product line, including the jurisdictions in which
each such Intellectual Property right has been issued or registered or
in which any such application for such issuance or registration has
been filed.
(ii) Section 3.12(a)(ii) of the Disclosure Schedule lists
all written licenses, sublicenses and other agreements to which Axent
or any of its Subsidiaries is a party and pursuant to which any person
is authorized to use any Intellectual Property rights, except such
licenses, sublicenses or other agreements with end-users, resellers and
distributors that grant non-exclusive rights to use, resell or
sublicense an Axent product in accordance with customary industry
practices on customary terms.
(iii) Section 3.12(a)(iii) of the Disclosure Schedule
lists all Third Party Intellectual Property Rights which are
incorporated in any existing product or service of Axent, other than
shrink-wrap licenses.
(iv) Section 3.12(a)(iv) of the Disclosure Schedule lists
all written agreements or other arrangements under which Axent or any
of its Subsidiaries has provided or agreed to provide source code of
any Axent product to any third party, except for software development
kits provided to agent integration providers.
- 27 -
Axent has made available to Raptor correct and complete copies of
all such patents, registrations, applications (owned by Axent), and all
licenses, sublicenses and agreements referred to above and as amended
to date. Except for retail purchases of software, neither Axent nor any
of its Subsidiaries is a party to any oral license, sublicense or
agreement which, if reduced to written form, would be required to be
listed in Section 3.12 of the Disclosure Schedule under the terms of
this Section 3.12(a).
(b) With respect to each item of Intellectual Property that
Axent or any of its Subsidiaries owns: (i) other than common law
trademarks, Intellectual Property subject to joint development rights
or other rights that will not materially interfere with the conduct of
the business of Axent, and subject to such rights as have been granted
by Axent or any of its Subsidiaries under license agreements entered
into by Axent (copies of which have previously been made available or
disclosed in writing to Raptor), Axent or its Subsidiaries possess all
right, title and interest in and to such item; and (ii) such item is
not subject to any outstanding judgment, order, decree, stipulation or
injunction that materially interferes with the conduct of Axent's
business as currently conducted. With respect to each item of Third
Party Intellectual Property Rights: (i) the license, sublicense or
other agreement covering such item is legal, valid, binding,
enforceable and in full force and effect with respect to Axent or any
of its Subsidiaries, and to Axent's knowledge is legal, valid, binding,
enforceable and in full force and effect with respect to each other
party thereto; (ii) neither Axent nor any of its Subsidiary is in
breach or default thereunder, and to Axent's knowledge no other party
to such license, sublicense or other agreement is in breach or default
thereunder, and no event has occurred which with notice or lapse of
time would constitute a breach or default by Axent or any of its
Subsidiaries or permit termination, modification or acceleration
thereunder by the other party thereto; (iii) the underlying item of
Third Party Intellectual Property is not subject to any outstanding
judgment, order, decree, stipulation or injunction to which Axent or
any of its Subsidiaries is a party or has been specifically named that
materially interferes with the conduct of Axent's business as currently
conducted, nor to Axent's knowledge subject to any other outstanding
judgment, order, decree, stipulation, or injunction that materially
interferes with the conduct of Axent's business as currently conducted.
(c) Notwithstanding anything contained herein to the contrary,
the provisions of this Section 3.12(c) shall apply to all Intellectual
Property of Axent. Except as set forth in Section 3.12 of the
Disclosure Schedule and to Axent's knowledge with respect to patent
rights, neither Axent nor any of its Subsidiaries (i) has been named in
any suit, action or proceeding which involves a claim of infringement
or misappropriation of any Intellectual Property right of any third
party or (ii) has received any written notice alleging any such claim
of infringement or misappropriation. Axent has made available to Raptor
correct and complete copies of all such suits, actions or proceedings
or written notices to the extent Axent is not prohibited from
disclosing the same under applicable court orders. The manufacturing,
marketing, licensing or sale of the products or
- 28 -
performance of the service offerings of Axent and its Subsidiaries do
not currently infringe, and have not within the six years prior to the
date of this Agreement infringed, any Intellectual Property right of
any third party (other than patent rights) or to Axent's knowledge any
patent rights of third parties; and to the knowledge of Axent, the
Intellectual Property rights of Axent and its Subsidiaries are not
being infringed by activities, products or services of any third party.
3.13 REAL PROPERTY LEASES.
With respect to each lease and sublease to which Axent or any of its
Subsidiaries is a party:
(a) the lease or sublease is legal, valid, binding, enforceable
and in full force and effect with respect to Axent or any Subsidiary
party thereto, to Axent's best knowledge is legal, valid, binding,
enforceable and in full force and effect with respect to each other
party thereto, and will not require consent from the other party
thereto as a result of the consummation of the transactions
contemplated by this Agreement;
(b) Axent is not in breach or default thereunder, to Axent's
knowledge no other party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of time,
would constitute a breach or default by Axent or any Subsidiary party
thereto or permit termination, modification, or acceleration thereunder
by the other party thereto;
(c) there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease; and
(d) Neither Axent nor any of its Subsidiaries has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in the leasehold or subleasehold.
3.14 CONTRACTS.
Since September 30, 1997, and to the knowledge of Axent (which for the
purposes of this representation shall be limited to the actual knowledge of Xxxx
X. Xxxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxx) during the period from January 1, 1997
through August 31, 1997, neither Axent nor any of its Subsidiaries has breached,
or received in writing any claim or threat that it has breached, any of the
terms or conditions of any material agreement, contract or commitment to which
it is a party or by which any of its assets and properties are bound ("Axent
Material Contracts") in such a manner as would permit any other party to cancel
or terminate the same prior to its stated term or would permit any other party
to collect material damages from Axent under any Axent Material Contract. Each
Axent Material Contract that has not expired or been terminated is in full force
and effect and to Axent's knowledge is not subject to any material default
thereunder by any party obligated to Axent pursuant to such Axent Material
Contract.
- 29 -
There are no outstanding powers of attorney executed on behalf of Axent or any
of its Subsidiaries.
3.15 INSURANCE.
Axent and its Subsidiaries is covered by insurance in scope and amount
customary and reasonable for the businesses in which they are engaged. Except as
disclosed on Section 3.15 of the Disclosure Schedule, each insurance policy to
which Axent or any of its Subsidiaries is a party is in full force and effect
and will continue to be in full force and effect following the Closing. Neither
Axent nor any of its Subsidiaries is in breach or default (including with
respect to the payment of premiums or the giving of notices) under any insurance
policy to which it is a party, and no event has occurred which, with notice or
the lapse of time, would constitute such a breach or default by Axent or any of
its Subsidiaries or permit termination, modification or acceleration, under such
policies; and Axent has not received any notice from the insurer disclaiming
coverage or reserving rights with respect to a particular claim or any such
policy in general.
3.16 LITIGATION.
(a) Except as disclosed on Section 3.16 of the Disclosure
Schedule, there is no (i) unsatisfied judgment, order, decree,
stipulation or injunction or (ii) private or governmental claim,
complaint, action, suit, arbitration, proceeding, hearing or
investigation affecting Axent to which Axent, any of its Subsidiaries,
or to Axent's knowledge, any officer, director, employee or agent of
Axent is or was (for the period from September 30, 1996 up to and
including the date hereof) a party or, to the knowledge of Axent is
threatened to be made a party. Other than as set forth in Section 3.16
of the Disclosure Schedule, none of the complaints, actions, suits,
proceedings, hearings, and investigations set forth in Section 3.16 of
the Disclosure Schedule, if determined adversely to Axent or any of its
Subsidiaries, could have a material adverse effect on the assets,
business, financial condition, results of operations or future
prospects of Axent and its Subsidiaries taken as a whole.
(b) Axent has provided or has made available to Raptor any
agreement or other document or instrument settling any claim,
complaint, action, suit or other proceeding, or a threat of any such
claim, complaint, action, suit or other proceedings, against Axent,
which was entered into within the past two years.
3.17 EMPLOYEES.
Axent has provided Raptor with a written list of the annual rate of
compensation for all employees of Axent and each Subsidiary. Each employee who
performs work on the development of Axent Intellectual Property or has access to
material confidential information of Axent or any of its Subsidiaries has
entered into a confidentiality/assignment of inventions agreement with Axent or
such Subsidiary, a copy of which has previously been delivered or
- 30 -
made available to Raptor. To the knowledge of Axent, no key employee or group of
employees has any current plans to terminate employment with Axent or any of its
Subsidiaries. Neither Axent nor any of its Subsidiaries is a party to or bound
by any collective bargaining agreement, nor has any of them experienced any
strikes, formal grievances, claims of unfair labor practices or other collective
bargaining disputes. Axent has no knowledge of any organizational effort made or
threatened, either currently or within the past two years, by or on behalf of
any labor union with respect to employees of Axent or its Subsidiaries.
3.18 EMPLOYEE BENEFITS.
(a) Section 3.18 of the Disclosure Schedule contains a complete
and accurate list of all Employee Benefit Plans maintained, or
contributed to, by Axent or any ERISA Affiliate. Complete and accurate
copies of (i) all Employee Benefit Plans which have been reduced to
writing, (ii) written summaries of all unwritten Employee Benefit
Plans, if any, (iii) all related trust agreements, insurance contracts
and summary plan descriptions, and (iv) all annual reports filed on IRS
Form 5500, 5500C or 5500R for the last two plan years for each Employee
Benefit Plan, have been delivered or made available to Raptor. Each
Employee Benefit Plan has been administered in accordance with its
terms and each of Axent and the ERISA Affiliates has met its
obligations with respect to such Employee Benefit Plan and has made all
required contributions thereto. Axent and all Employee Benefit Plans
are in compliance with the currently applicable provisions of ERISA and
the Code and the regulations thereunder.
(b) There are no investigations by any Governmental Entity,
termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Employee Benefit Plans and
proceedings with respect to qualified domestic relations orders), suits
or proceedings against or involving any Employee Benefit Plan or
asserting any rights or claims to benefits under any Employee Benefit
Plan that could give rise to any liability.
(c) All the Employee Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination,
opinion or notification letters from the Internal Revenue Service to
the effect that such Employee Benefit Plans are qualified and the plans
and the trusts related thereto are exempt from federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code, no such
determination, opinion or notification letter has been revoked and
revocation has not been threatened, and no such Employee Benefit Plan
has been amended since the date of its most recent determination,
opinion or notification letter or application therefor in any respect,
and no act or omission has occurred, that would adversely affect its
qualification or increase its cost.
(d) Neither Axent nor any ERISA Affiliate has ever maintained
an Employee Benefit Plan subject to Section 412 of the Code or Title IV
of ERISA.
- 31 -
(e) At no time has Axent or any ERISA Affiliate been obligated
to contribute to any "multi-employer plan" (as defined in Section
4001(a)(3) of ERISA).
(f) There are no unfunded obligations under any Employee
Benefit Plan providing benefits after termination of employment to any
employee of Axent (or to any beneficiary of any such employee),
including but not limited to retiree health coverage and deferred
compensation, but excluding continuation of health coverage required to
be continued under Section 4980B of the Code, any applicable state
health insurance continuation law and any state insurance conversion
privileges law.
(g) No act or omission has occurred and no condition exists
with respect to any Employee Benefit Plan maintained by Axent or any
ERISA Affiliate that would subject Axent or any ERISA Affiliate to any
fine, penalty, tax or liability of any kind imposed under ERISA or the
Code.
(h) No Employee Benefit Plan is funded by, associated with, or
related to a "voluntary employee's beneficiary association" within the
meaning of Section 501(c)(9) of the Code.
(i) No Employee Benefit Plan, plan documentation or agreement,
summary plan description or other written communication distributed
generally to employees by its terms prohibits Axent from amending or
terminating any such Employee Benefit Plan.
(j) Except as set forth in Section 3.18 of the Disclosure
Schedule, there is no: (i) written agreement with any director,
executive officer or other key employee of Axent or any of its
Subsidiaries which has not been terminated in accordance with its terms
(A) the benefits of which are contingent, or the terms of which are
altered, upon the occurrence of a transaction involving Axent or any of
its Subsidiaries of the nature of any of the transactions contemplated
by this Agreement, (B) providing any term of employment or compensation
guarantee or (C) providing severance benefits or other benefits after
the termination of employment of such director, executive officer or
key employee; (ii) agreement, plan or arrangement under which any
person may receive payments from Axent or any of its Subsidiaries that
may be subject to the tax imposed by Section 4999 of the Code or
included in the determination of such person's "excess parachute
payment" under Section 280G of the Code; and (iii) agreement or plan
binding Axent or any of its Subsidiaries, including without limitation
any stock option plan, stock appreciation right plan, restricted stock
plan, stock purchase plan, severance benefit plan, or any Employee
Benefit Plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence
of any of the transactions contemplated by this Agreement or the value
of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement.
- 32 -
3.19 ENVIRONMENTAL MATTERS.
(a) Each of Axent and its Subsidiaries has complied with all
applicable Environmental Laws. Except as disclosed in the Axent Reports
and since September 30, 1997, there is no pending or, to the knowledge
of Axent, threatened civil or criminal litigation, written notice of
violation, formal administrative proceeding, or investigation, inquiry
or information request by any Governmental Entity, relating to any
Environmental Law involving Axent or any of its Subsidiaries.
(b) There have been no releases of any Materials of
Environmental Concern into the environment at any parcel of real
property or any facility when owned, operated or controlled by Axent or
any of its Subsidiaries for which Axent or any of its Subsidiaries
should have liability under the Environmental Laws. Axent is not aware
of any other releases of Materials of Environmental Concern that could
reasonably be expected to have an impact on the real property or
facilities owned, operated or controlled by Axent or any of its
Subsidiaries.
3.20 LEGAL COMPLIANCE.
Each of Axent and its Subsidiaries, and the conduct and operations of
their respective businesses, are in compliance with each law (including rules
and regulations thereunder) of any federal, state, local or foreign government,
or any Governmental Entity, which (a) affects or relates to this Agreement or
the transactions contemplated hereby or (b) is applicable to Axent or such
Subsidiary or business.
3.21 PERMITS.
Axent has all of the Permits required for Axent or any of its
Subsidiaries to conduct its business as currently conducted (including without
limitation those issued or required under applicable export laws or
regulations). Each such Permit is in full force and effect and, to the knowledge
of Axent, no suspension or cancellation of such Permit is threatened and to
Axent's knowledge there is no basis for believing that such Permit will not be
renewable upon expiration.
3.22 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES.
Except as set forth in the Axent Reports, as disclosed in Section 3.22
of the Disclosure Schedule or by virtue of the Merger, since the date of Axent's
last proxy statement to its shareholders, no event has occurred that would be
required to be reported by Axent as a Certain Relationship or Related
Transaction pursuant to Item 404 of Regulation S-K promulgated by the SEC.
3.23 FEES.
Except as disclosed on Section 3.23 of the Disclosure Schedule or
otherwise in this Agreement, neither Axent nor any of its Subsidiaries has any
liability or obligation to pay any
- 33 -
fees or commissions to any broker, investment banking firm, finder or agent with
respect to the transactions contemplated by this Agreement.
3.24 BOOKS AND RECORDS.
The minute books of Axent and each of its Subsidiaries contain true and
complete records of all actions taken at any meetings of Axent's or such
Subsidiaries shareholders, Board of Directors or any committee thereof and of
all written consents executed in lieu of the holding of any such meeting. The
financial books and records of Axent and each of its Subsidiaries accurately
reflect in all material respects the assets, liabilities, business, financial
condition and results of operations of Axent or such Subsidiary and have been
maintained in accordance with good business and bookkeeping practices.
3.25 POOLING.
Neither Axent nor any of its Affiliates has through the date of this
Agreement taken or agreed to take any action that could impair the ability of
Axent to account for the business combination to be effected by the Merger as a
"pooling of interests" in accordance with GAAP.
3.26 COMPANY ACTION.
The Board of Directors of Axent, at a meeting duly called and held, has
by the unanimous vote of all directors (i) determined that the Merger is fair
and in the best interests of Axent and its shareholders, (ii) adopted this
Agreement in accordance with the provisions of the Delaware General Corporation
Law, and (iii) directed that this Agreement and the Merger be submitted to Axent
Shareholders for their adoption and approval and resolved to recommend that
Axent Shareholders vote in favor of the adoption of this Agreement and the
approval of the Merger.
3.27 DISCLOSURE.
No representation or warranty by Axent contained in this Agreement, and
no statement contained in any document, certificate or other instrument
delivered to or to be delivered by or on behalf of Axent pursuant to this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
3.28 INTERIM OPERATIONS OF THE TRANSITORY SUBSIDIARY.
The Transitory Subsidiary was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement, has engaged in no other
business activities, and has conducted operations only as contemplated by this
Agreement.
- 34 -
3.29 FAIRNESS OPINION.
Axent has received a written fairness opinion from Broadview Associates
LLC, its financial advisor, to the effect that the Merger is fair to the holders
of Axent Common Stock from a financial point of view, and that Axent has
delivered a true and correct copy of such opinion to Raptor.
3.30 REGISTRATION RIGHTS
The filing by Axent of a registration statement on Form S-3 covering
all of the shares of the Axent Common Stock to be held by Affiliates of Raptor
immediately following the Effective Time does not contravene any existing
registration rights agreements or other agreements to which Axent is a party.
ARTICLE IV
COVENANTS
4.1 BEST EFFORTS.
Each of the Parties shall use its best efforts, to the extent
commercially reasonable, to take all actions and to do all things necessary,
proper or advisable to consummate the transactions contemplated by this
Agreement.
4.2 NOTICES AND CONSENTS.
Each of Axent, the Transitory Subsidiary and Raptor shall use its
respective best efforts to obtain, at its expense, all such waivers, permits,
consents, approvals or other authorizations from third parties and Governmental
Entities and to effect all such registrations, filings and notices with or to
third parties and Governmental Entities including, without limitation pursuant
to applicable state securities laws, as may be required by or with respect to
Axent, the Transitory Subsidiary or Raptor, respectively, in connection with the
transactions contemplated by this Agreement.
4.3 SPECIAL MEETING, PROSPECTUS/PROXY STATEMENT AND REGISTRATION
STATEMENT.
(a) As promptly as practicable after execution of this
Agreement, (i) each of Raptor and Axent shall prepare and file with the
SEC under the Exchange Act, a joint proxy statement/prospectus and
forms of proxies (such joint proxy statement/prospectus together with
any amendments or supplements thereto, the "Prospectus/Proxy
Statement") for the purpose of soliciting proxies from shareholders to
vote in favor of the adoption of this Agreement and the approval of the
Merger at a special meeting of Raptor Shareholders to be called and
held for such purpose (the "Raptor Special Meeting") and of Axent
Shareholders to be called and held for such purpose (the "Axent Special
Meeting") and (ii) following clearance by the SEC of the Proxy
Statement, Axent shall
- 35 -
within five business days prepare and file with the SEC under the
Securities Act a registration statement on Form S-4 (such registration
statement, together with any amendments or supplements thereto, the
"Registration Statement"), in which the Proxy Statement will be
included as a prospectus in connection with the registration under the
Securities Act of the Axent Common Stock. Raptor and Axent will cause
the Proxy Statement and the Registration Statement to comply as to form
in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the rules and regulations
thereunder. Each of Raptor and Axent shall furnish all information
about itself and its business and operations and all necessary
financial information to the other as the other may reasonably request
in connection with the preparation of the Proxy Statement and the
Registration Statement. Axent will use its reasonable best efforts, and
Raptor will cooperate with it, to have the Registration Statement
declared effective by the SEC as promptly as practicable (including
clearing the Proxy Statement with the SEC). Each of Raptor and Axent
agrees promptly to correct any information provided by it for use in
the Proxy Statement and the Registration Statement if and to the extent
that such information shall have become false or misleading in any
material respect, and each of the parties hereto further agrees to take
all steps necessary to amend or supplement the Proxy Statement and the
Registration Statement, and to cause the Proxy Statement and the
Registration Statement as so amended or supplemented to be filed with
the SEC and to be disseminated to their respective stockholders, in
each case as to the extent required by applicable federal and state
securities laws. Each of Raptor and Axent agrees that the information
provided by it for inclusion in the Proxy Statement or the Registration
Statement and each amendment or supplement thereto, at the time of
mailing thereof and, at-the time of respective meetings of stockholders
of Raptor and Axent, will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances
under which they were made, not misleading. Axent will advise Raptor
and deliver copies (if any) to Raptor, promptly after it receives
notice thereof, of any request by the SEC for amendment of the Proxy
Statement or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information
(regardless of whether such requests relate to Raptor or Axent), and
Axent shall promptly notify Raptor of (i) the time when the
Registration Statement has become effective, (ii) or any supplement or
amendment has been filed, (iii) the issuance of any stop order and (iv)
the suspension of the qualification and registration of the Axent
Common Stock issuable in connection with the Merger. Axent and Raptor
shall also take any and all such actions as may be necessary or as it
may deem advisable for the purpose of complying with all applicable
state securities laws in connection with the offering and issuance of
the Merger Shares.
(b) Promptly following the resolution to the satisfaction of
the SEC of all SEC comments on the Prospectus/Proxy Statement (or the
expiration of applicable waiting period if no SEC comments are received
by such date), each of Raptor and Axent shall distribute the
Prospectus/Proxy Statement to their shareholders and, pursuant thereto,
- 36 -
shall respectively call the Raptor Special Meeting and the Axent
Special Meeting in accordance with the Delaware General Corporation Law
and shall use their respective best efforts to solicit proxies from
their shareholders to vote in favor of the adoption of this Agreement
and the approval of the Merger at the Raptor Special Meeting and the
Axent Special Meeting.
(c) Raptor shall comply with all applicable provisions of the
Delaware General Corporation Law in the preparation, filing and
distribution of the Prospectus/Proxy Statement, the solicitation of
proxies thereunder, and the calling and holding of Raptor Special
Meeting. Subject to Sections 6.1(f) and 6.1(g), Raptor, acting through
its Board of Directors, shall include in the Prospectus/Proxy Statement
the unanimous recommendation of its Board of Directors that Raptor
Shareholders vote in favor of the adoption of this Agreement and the
approval of the Merger, and shall otherwise use its best efforts to
obtain the Requisite Raptor Shareholder Approval.
(d) Axent shall comply with all applicable provisions of the
Delaware General Corporation Law in the preparation, filing and
distribution of the Prospectus/Proxy Statement, the solicitation of
proxies thereunder, and the calling and holding of Axent Special
Meeting. Subject to Raptor's right to withdraw or modify its
recommendation as set forth in Section 6.1(g), Axent, acting through
its Board of Directors, shall include in the Prospectus/Proxy Statement
the unanimous recommendation of its Board of Directors that Axent
Shareholders vote in favor of the adoption of this Agreement and the
approval of the Merger, and shall otherwise use its best efforts to
obtain the Requisite Axent Shareholder Approval. Axent shall comply
with all applicable provisions of and rules under the Securities Act
and the Exchange Act and state securities laws in the preparation and
filing of the Registration Statement and the offering and issuance of
the Merger Shares.
4.4 CONDUCT OF BUSINESSES.
Prior to the Effective Time, except as specifically permitted by this
Agreement, unless the other party has consented in writing thereto, Raptor and
Axent:
(a) Shall use their reasonable best efforts to preserve intact
their business organizations and goodwill and keep available the
services of their respective officers and material employees;
(b) Shall confer on a regular basis with one or more
representatives of the other to report on material operational matters
and any proposals to engage in material transactions;
(c) Shall promptly notify the other of any material emergency
or other material change in the condition (financial or otherwise),
business, properties, assets,
- 37 -
liabilities. prospects or in the operation of their properties, any
material governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated); and
(d) Shall promptly deliver to the other true and correct copies
of any report, statement or schedule filed by or with respect to it
with the SEC subsequent to the date of this Agreement.
4.5 OPERATION OF BUSINESS OF RAPTOR.
Unless Axent has consented in writing thereto, prior to the Effective
Time Raptor shall not:
(a) issue, sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) or
authorize the issuance, sale or delivery of, or redeem or repurchase,
any stock of any class or any other securities or any rights, warrants
or options to acquire any such stock or other securities (except
pursuant to the conversion or exercise of convertible securities or
Options outstanding on the date hereof), or amend any of the terms of
any such convertible securities or Options;
(b) split, combine or reclassify any shares of its capital
stock; declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock;
(c) create, incur or assume any debt not currently outstanding
(including obligations in respect of capital leases); assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person or entity; or make any loans, advances or capital contributions
to, or investments in, any other person or entity, except, in each
case, in the Ordinary Course of Business;
(d) enter into, adopt or amend any Employee Benefit Plan or any
employment or severance agreement or arrangement of the type described
in Section 2.18(j) or increase in any manner the compensation or fringe
benefits of, or modify the employment terms of, its directors, officers
or employees, generally or individually, or pay any benefit not
required by the terms in effect on the date hereof of any existing
Employee Benefit Plan;
(e) acquire, sell, lease, encumber or dispose of any assets or
property (including without limitation any shares or other equity
interests in or securities of any Subsidiary or any corporation,
partnership, association or other business organization or
- 38 -
division thereof), other than purchases and sales of assets in the
Ordinary Course of Business;
(f) amend its Certificate of Incorporation or By-laws, except
as required by this Agreement;
(g) change in any material respect its accounting methods,
principles or practices, except insofar as may be required by a
generally applicable change in GAAP;
(h) discharge or satisfy any Security Interest or pay any
obligation or liability other than in the Ordinary Course of Business;
(i) mortgage or pledge any of its property or assets or subject
any such assets to any Security Interest other than in the Ordinary
Course of Business;
(j) sell, assign, transfer or license any Intellectual
Property, other than in the Ordinary Course of Business;
(k) enter into, amend, terminate, take or omit to take any
action that would constitute a violation of or default under, or waive,
release or assign any rights under, any material contract or agreement
provided that Raptor can continue to enter into OEM, VAR and
distribution agreements in the Ordinary Course of Business;
(l) make or commit to make any capital expenditure in excess of
$100,000 per item;
(m) willfully take any action or willfully fail to take any
action permitted by this Agreement with the intent that such action or
failure to take action would result in (i) any of the representations
and warranties of Raptor set forth in this Agreement becoming untrue or
(ii) any of the conditions to the Merger set forth in Article V not
being satisfied;
(n) hire, terminate or discharge any key employee or engage or
terminate any key consultant, provided however that any such employee
or consultant may himself or herself terminate his or her relationship
with Raptor in accordance with the terms of any applicable employment,
consulting or similar agreement;
(o) commence after the date hereof any offerings of securities
to employees pursuant to any employee stock purchase plans; or
(p) agree in writing or otherwise to take any of the foregoing
actions.
- 39 -
4.6 OPERATION OF BUSINESS OF AXENT
Prior to the Effective Time, without the prior written consent of
Raptor, Axent shall not: (x) engage in any transaction (other than transactions
contemplated by this Agreement) that would (i) require the approval of the
stockholders of Axent, (ii) require Axent to include the information relating to
such transaction in the pro forma financial statements that are required to be
contained in the Registration Statement (the "Pro Formas"), or (iii) require
Axent to amend or restate the Pro Formas in any material manner; (y) engage in
any material securities offering, or acquisition of the business, assets or
capital stock of any other entity by Axent that would reasonably be anticipated
to cause a material delay in the consummation of the transactions contemplated
by this Agreement; or (z) enter into any contract or make any agreement to enter
into or do any of the foregoing.
4.7 FULL ACCESS.
(a) Raptor shall permit representatives of Axent to have full
access (at all reasonable times, and in a manner so as not to interfere
with the normal business operations of Raptor) to all premises,
properties, financial and accounting records, contracts, other records
and documents, and personnel, of or pertaining to Raptor, subject to
compliance with applicable confidentiality obligations of Axent as set
forth in Section 4.15 of this Agreement.
(b) Axent shall permit representatives of Raptor to have full
access (at all reasonable times, and in a manner so as not to interfere
with the normal business operations of Axent) to all premises,
properties, financial and accounting records, contracts, other records
and documents, and personnel, of or pertaining to Axent, subject to
compliance with applicable confidentiality obligations of Raptor as set
forth in Section 4.15 of this Agreement.
4.8 NOTICE OF BREACHES.
Raptor shall promptly deliver to Axent written notice of any event or
development of which Raptor is aware that would (a) render any representation or
warranty of Raptor in this Agreement (including the Disclosure Schedule)
inaccurate or incomplete in any material respect, or (b) constitute or result in
a breach by Raptor or any of its Affiliates of, or a failure by Raptor or any of
its Affiliates to comply with, any agreement or covenant in this Agreement
applicable to such party. Axent or the Transitory Subsidiary shall promptly
deliver to Raptor written notice of any event or development that would (i)
render any statement, representation or warranty of Axent or the Transitory
Subsidiary in this Agreement inaccurate or incomplete in any material respect,
or (ii) constitute or result in a breach by Axent or the Transitory Subsidiary
of, or a failure by Axent or the Transitory Subsidiary to comply with, any
agreement or covenant in this Agreement applicable to such party. No such
disclosure by Raptor, Axent or the Transitory Subsidiary shall be deemed to
avoid or cure any such misrepresentation or breach.
- 40 -
4.9 EXCLUSIVITY.
(a) Raptor agrees that, from and after the date of this
Agreement until the earlier of the Effective Time or the termination of
this Agreement in accordance with Section 6.1, it shall not, directly
or indirectly, through any (A) officer, (B) director, (C) employee, (D)
affiliate that has signed an Affiliate's Agreement (as defined in
Section 4.10) (a "Specified Affiliate"), (E) any agent or
representative of a Specified Affiliate, (F) any agent or
representative of Raptor that Raptor controls, and it shall direct any
other agent or representative not to, (i) solicit, initiate, or
encourage any inquiries or proposals that constitute, or could
reasonably be expected to lead to, any Acquisition Proposal (as defined
below), (ii) engage in negotiations or discussions concerning, or
provide any non-public information to any person or entity relating to,
any Acquisition Proposal, or (iii) agree to, approve or recommend any
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent Raptor or its Board of Directors, directly or
through representatives or agents on behalf of the Board, from (A)
furnishing non-public information to, or entering into discussion or
negotiations with, any person or entity in connection with an
unsolicited bona fide written Acquisition Proposal by such person or
entity or recommending such an unsolicited bona fide written
Acquisition Proposal to the stockholders of Raptor, if and only to the
extent that (1) such Acquisition Proposal would, if consummated, result
in a transaction that would, in the reasonable good faith judgment of
the Board of Directors of Raptor, after consultation with its financial
advisors, result in a transaction more favorable to Raptor's
stockholders from a financial point of view (including consideration
of, among other matters, the ability of the person or entity making
such proposal to obtain any financing necessary for the Acquisition
Proposal) than the Merger (any such more favorable Acquisition Proposal
being referred to in this Agreement as a "Superior Proposal"), (2) such
action is necessary, in the reasonable good faith judgment of the Board
of Directors of Raptor after consultation with outside corporate
counsel to Raptor, in order to comply with the fiduciary duties of
Raptor's Directors to Raptor's stockholders under Delaware law, and (3)
prior to furnishing such non-public information to, or entering into
discussions or negotiations with, such person or entity, Raptor's Board
of Directors receives from such person or entity an executed
confidentiality agreement with confidentiality provisions not
materially less favorable to such party than those contained in Section
4.15 of this Agreement; or (B) complying with Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act or other applicable law with regard
to an Acquisition Proposal.
(b) As used herein, the term "Acquisition Proposal" shall mean
any proposed or actual (i) merger consolidation or similar transaction
involving Raptor, (ii) sale, lease or other disposition, directly or
indirectly, by merger, consolidation, share exchange or otherwise, of
any assets of Raptor representing 20% or more of the assets of Raptor,
(iii) issue, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
(or options, rights or warrants to purchase or securities convertible
into, such securities) representing 20% or more of the votes
- 41 -
attached to the outstanding securities of Raptor, (iv) transaction in
which any person shall acquire beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act), or the right to acquire
beneficial ownership, or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 20% or more of the
outstanding shares of Raptor Common Stock, (v) liquidation,
dissolution, or other similar type of transaction with respect to
Raptor, or (vi) transaction which is similar in form, substance or
purpose to any of the foregoing transactions, provided, however, that
the term "Acquisition Proposal" shall not include the Merger and the
transactions contemplated thereby.
(c) Raptor shall notify Axent no later than 24 hours after
receipt by Raptor (or its advisors), of any Acquisition Proposal or any
request for nonpublic information in connection with an Acquisition
Proposal or for access to the properties, books or records of Raptor by
any person or entity that informs Raptor that it is considering making,
or has made, an Acquisition Proposal (the "Acquisition Proposal"). Such
notice to the Axent shall be made orally and in writing and shall
indicate reasonable detail the identity of the Acquisition Proposal and
the terms and conditions of such proposal, inquiry or contact. If the
financial terms of such Acquisition Proposal are materially modified,
then Raptor shall notify Axent of the terms and conditions of such
modification within 24 hours of the receipt of such modification.
4.10 POOLING ACCOUNTING; AGREEMENTS FROM AFFILIATES.
(a) Axent and Raptor shall each use its best efforts to cause
the business combination to be effected by the Merger to be accounted
for as a pooling of interests. Each of Axent and Raptor shall use its
best efforts to cause its respective Affiliates not to take any action
that would adversely affect the ability of Axent to account for the
business combination to be effected by the Merger as a pooling of
interests.
(b) Concurrently with the execution of this Agreement, Raptor
shall deliver to Axent a list of all persons or entities who are at
such time Affiliates of Raptor (the "Raptor Affiliates"). In order to
help ensure that the issuance of Merger Shares will comply with the
Securities Act and that the Merger will be accorded pooling of interest
accounting treatment, Raptor shall cause each Raptor Affiliate to
execute and deliver to Axent on or before the date of this Agreement, a
written agreement substantially in the form attached hereto as EXHIBIT
C (the "Raptor Affiliate's Agreement").
(c) Concurrently with the execution of this Agreement, Axent
shall deliver to Raptor a list of all persons or entities who are at
such time Affiliates of Axent (the "Axent Affiliates"). In order to
help ensure that the issuance of Merger Shares will comply with the
Securities Act and that the Merger will be accorded pooling of interest
accounting treatment, Axent shall cause each Axent Affiliate and such
other Shareholders as are listed in Section 4.10(c) of the Disclosure
Schedule to execute and deliver to Raptor on or
- 42 -
before the date of this Agreement, a written agreement substantially in
the form attached hereto as EXHIBIT D (the "Axent Affiliate's
Agreement").
4.11 VOTING AGREEMENTS.
Concurrently with the execution and delivery of this Agreement, Raptor
shall cause those individuals and entities set forth on Schedule 4.11(a) and
Axent shall cause those individuals and entities set forth on Schedule 4.11(b)
to execute and deliver voting and support agreements in the applicable forms
annexed hereto as EXHIBITS E and F, respectively (the "Voting Agreements"),
agreeing, among other things, to vote in favor of the Merger and against any
competing proposals.
4.12 MERGER SHARES; STOCK OPTIONS.
Axent shall list the Merger Shares on The Nasdaq National Market and
shall cause such listing to be approved prior to the Effective Time. The Merger
Shares shall be issued pursuant to the Registration Statement. As soon as
practicable following the Closing, and in any event no later than 30 days after
the Closing, Axent shall file a registration statement on Form S-8 (or any
successor form) to cover the stock options to be exchanged by Axent.
4.13 PUBLIC DISCLOSURE.
Axent and Raptor shall consult with each other before issuing any press
release or otherwise making any public statement with respect to the Merger or
this Agreement and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
by the rules of the NASD.
4.14 TAX-FREE REORGANIZATION.
Axent and Raptor shall each use its best efforts to cause the Merger to
be treated as a reorganization within the meaning of Section 368(a) of the Code,
and to obtain the opinion of its respective counsel contemplated by Section 5.1.
Each party shall make, and shall use all reasonable efforts to cause those of
its respective stockholders that counsel to the parties shall reasonably request
to make, such customary representations and certificates as counsel to the
parties shall reasonably request to enable them to render such opinions.
4.15 CONFIDENTIALITY.
Except as otherwise expressly contemplated herein or except for any
data or information (i) which the owner of such has voluntarily disclosed to the
public, (ii) has been independently developed and disclosed by others not
subject to a confidentiality agreement, (iii) is generally known to the public
or within the owner's industry, (iv) enters the public domain through no fault
of either party hereto, as applicable (v) the holder of which is required to
disclose by applicable law, or (vi) disclosed by Raptor pursuant to Section
6.1(g) of this Agreement, each of the parties hereto agrees that it shall, and
shall cause its subsidiaries and the officers, employees and
- 43 -
authorized representatives of each of them to, hold in strict confidence all
data and information obtained by them from the other parties hereto (unless such
information is or becomes readily ascertainable from public or published
information) and shall not, and shall use its best efforts to ensure that such
subsidiaries, directors, officers, employees and authorized representatives do
not, disclose such information to others without the prior written consent of
the party from which such data or information was obtained, except as required
by law after consultation with counsel (provided that any such party shall
consult with the other party prior to making such disclosure). In the event of
the termination of this Agreement, each of the parties will return or destroy
all documents, work papers and other materials (including all copies made
thereof) obtained pursuant hereto.
4.16 AXENT'S BOARD OF DIRECTORS.
As of the Effective Time, Axent agrees to have fixed, in accordance
with applicable law, its Certificate of Incorporation and its By-laws, the
number of directors on its Board of Directors at seven (7) and duly elected or
appointed, in accordance with applicable law, its Certificate of Incorporation
and its By-laws, to its Board of Directors Xxxxxx X. Xxxxxxxxxxx, Xxxxx XxXxxxxx
and Xxxxxx Xxxxxxxx.
4.17 REGISTRATION RIGHTS TO CERTAIN RAPTOR AFFILIATES.
Prior to the such time as Axent has published (within the meaning of
SEC Accounting Series Release No. 130, as amended) financial results covering at
least 30 days of combined operations of the Axent and Raptor, Axent shall use
its best efforts to cause to be filed with, and declared effective by, the SEC a
shelf registration statement on Form S-3 covering the shares of Axent Common
Stock to be held by Affiliates of Raptor immediately following the Effective
Time and to keep such shelf registration effective for at least 270 days.
4.18 QUALIFICATION OF SUBSIDIARIES
Prior to the Effective Time, Axent and Raptor shall use their
respective best efforts to cause each of their respective Subsidiaries to be
duly qualified to conduct business and to be in corporate good standing under
the laws of each jurisdiction in which the nature of such Subsidiary's
businesses or the ownership or leasing of such Subsidiary's properties requires
such qualification.
4.19 INDEMNIFICATION.
(a) The By-laws and Certificate of Incorporation of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the By-laws and Certificate of
Incorporation of Raptor, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights
thereunder as of the Effective Time of individuals who at the Effective
Time were directors, officers, employees or agents of Raptor or its
- 44 -
Subsidiaries, unless such modification is required after the Effective
Time by law. At or prior to the Effective Time, Axent shall purchase or
assume directors' and officers' liability insurance coverage for
Raptor's directors and officers in a form acceptable to Raptor which
shall provide such directors and officers with coverage on
substantially similar terms as currently provided by Raptor for a
period of six (6) years following the Effective Time. Axent and the
Surviving Corporation each hereby agree that they will not amend,
modify or cancel such directors' and officers' liability insurance
during such six (6) year period.
(b) Axent or the Surviving Corporation shall, to the fullest
extent permitted under applicable law or under Raptor's current
Certificate of Incorporation or By-laws, indemnify and hold harmless
each present and former director, officer, employee or agent of Raptor
or any of its Subsidiaries or any such person who was serving in such
capacity, at the request of Raptor or any of its Subsidiaries, of
another corporation, partnership, joint venture, trust or enterprise
(collectively, the "Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in
connection with any actual or threatened claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative (collectively, "Actions"), (x) arising out of or
pertaining to the transactions contemplated by this Agreement, or (y)
otherwise with respect to any acts or omissions occurring at or prior
to the Effective Time, in each case to the same extent (including any
provision for the advancement of expenses) as provided in Raptor's
Certificate of Incorporation or By-laws or any written agreements
between Raptor and any such Indemnified Party regarding indemnification
as in effect on the date hereof, in each case for a period of six years
after the Effective Time; provided, however, that, in the event that
any claim or claims for indemnification are asserted or made within
such six-year period, all rights to indemnification in respect of any
such claim or claims shall continue until the disposition of any and
all such claims. In the event of any such Action (whether arising
before or after the Effective Time), the Indemnified Parties shall
promptly notify Axent or the Surviving Corporation in writing, but the
failure to so notify shall not relieve Axent or the Surviving
Corporation of its obligations under this Section 4.19(b) except to the
extent it is materially prejudiced by such failure, and Axent or the
Surviving Corporation shall have the right to assume the defense
thereof (unless legal counsel for such Indemnified Party shall in good
faith determine that such assumption would give rise to a conflict of
interest), including the employment of counsel reasonably satisfactory
to such Indemnified Parties. The Indemnified Parties shall have the
right to employ separate joint counsel in any such Action and to
participate in (but not control unless such legal counsel for the
Indemnified Party shall in good faith determine that Axent or the
Surviving Corporation's participation in such Action has given rise to
a conflict of interest) the defense thereof, and the fees and expenses
of such counsel shall be at the expense of Axent or the Surviving
Corporation in the event that legal counsel for the Indemnified Parties
shall in good faith determine that Axent or the Surviving Corporation's
participation in such Action has given rise to a conflict of interest.
In the
- 45 -
event that legal counsel for the Indemnified Parties determines in good
faith that a conflict of interest exists among the Indemnified Parties,
each Indemnified Party to which such conflict of interest applies shall
have the right to retain separate counsel and the fees and expenses of
such separate counsel shall be paid by Axent or the Surviving
Corporation. After the Effective Time, Axent or the Surviving
Corporation shall pay the reasonable fees and expenses of such counsel,
promptly after statements therefor are received and Axent or the
Surviving Corporation will cooperate in the defense of any such Action.
Axent or the Surviving Corporation shall not be liable for any
settlement of any such Action effected without its written consent.
Neither Axent nor the Surviving Corporation shall settle any Action
without the written consent of the relevant Indemnified Parties, which
consent shall not be unreasonably withheld.
(c) Axent and the Surviving Corporation shall honor and fulfill
in all respects the indemnification obligations of Raptor pursuant to
indemnification agreements and employment agreements (the employee
parties under such agreements being referred to as the "Officer
Employees") with Raptor's directors and officers existing on the date
hereof.
(d) The provisions of this Section 4.19 shall survive the
consummation of the Merger at the Effective Time, is intended for the
irrevocable benefit of Raptor, the Surviving Corporation, the
Indemnified Parties and the Officer Employees as third party
beneficiaries, shall be binding on all successors and assigns of Axent
or the Surviving Corporation and shall be enforceable by the
Indemnified Parties and the Officer Employees.
(e) This Section 4.19 is intended for the irrevocable benefit
of, and to grant third party rights to, the Indemnified Parties and the
Officer Employees and shall be binding on all successors and assigns of
Raptor, Axent and the Surviving Corporation. Each of the Indemnified
Parties and the Officer Employees shall be entitled to enforce the
covenants contained in this Section 4.19 and Axent acknowledges and
agrees that each Indemnified Party and Officer Employee would suffer
irreparable harm and that no adequate remedy at law exists for a breach
of such covenants.
ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER
5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS.
The respective obligations of each Party to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement and the Merger shall have received the
Requisite Raptor Shareholder Approval by Raptor Shareholders and the
Requisite Axent Shareholder Approval by Axent Shareholders;
- 46 -
(b) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and remain in effect;
(c) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal or regulatory restraint or prohibition preventing the
consummation of the Merger or limiting or restricting in a materially
adverse way Axent's conduct or operation of the business of the
Surviving Corporation after the Merger shall have been issued, nor
shall any proceeding brought by any Governmental Entity, seeking any of
the foregoing be pending; nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger which makes the consummation of the Merger
illegal;
(d) Axent shall have received all permits and other
authorizations required under applicable state securities laws for the
issuance of the Merger Shares;
(e) Axent shall have received the written opinion of its
counsel and Raptor shall have received the written opinion of counsel
to Raptor, substantially in the forms attached hereto as EXHIBITS H and
I respectively, to the effect that the Merger will be treated for
federal income tax purposes as either (i) a reorganization within the
meaning of Sections 368(a)(i)(A) and 368(a)(2)(E) of the Code or (ii)
if the Surviving Corporation is liquidated or merged upstream into
Axent after the Merger and if such liquidation or merger is determined
to be pursuant to the overall plan of reorganization contemplated
hereby, as a tax-free reorganization within the meaning of Section
368(a)(1)(A) or 368(a)(1)(C) of the Code, depending upon whether the
Surviving Corporation is merged upstream or liquidated after the Merger
(in rendering such opinions counsel may rely upon customary
representations and certificates of Axent, the Transitory Subsidiary,
Raptor and certain of their Shareholders, in a form reasonably
satisfactory to such counsel);
(f) the Merger Shares shall have been approved for quotation on
The Nasdaq National Market upon official notice of issuance.
5.2 CONDITIONS TO OBLIGATIONS OF AXENT AND THE TRANSITORY SUBSIDIARY.
The obligation of each of Axent and the Transitory Subsidiary to
consummate the Merger is subject to the satisfaction of the following additional
conditions:
(a) Raptor shall have obtained all of the waivers, permits,
consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, referred to in Section 4.2, except
for any which if not obtained or effected would not have a material
- 48 -
adverse effect on the assets, business, financial condition, results of
operations of Raptor or on the ability of the Parties to consummate the
transactions contemplated by this Agreement;
(b) The representations and warranties of Raptor set forth in
this Agreement shall be true and correct in all material respects as of
the date of this Agreement and (except to the extent such
representations and warranties expressly speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date,
except for changes contemplated by this Agreement, and Axent shall have
received a certificate signed on behalf of Raptor by the chief
executive officer or chief financial officer of Raptor to that effect;
(c) Axent shall have received a "comfort letter" dated as of a
date not more than two days prior to the date that the Registration
Statement is declared effective and shall have received a subsequent
similar letter dated as of a date not more than two days prior to the
Effective Time, from Coopers & Xxxxxxx L.L.P., auditors for Raptor,
addressed to Axent in a customary form reasonably satisfactory to
Axent;
(d) Axent and the Transitory Subsidiary shall have received the
resignations, effective as of the Effective Time, of each director of
Raptor;
(e) Axent shall have received a written opinion from Coopers &
Xxxxxxx L.L.P., dated as of the Closing Date, stating that the Merger
will qualify as a "pooling of interests" transaction under Accounting
Principles Board Opinion No. 16 and applicable SEC regulations, if the
Merger is consummated in accordance with this Agreement;
(f) Raptor shall have executed and delivered the Stock Option
Exchange Agreements, the form of which is attached hereto as EXHIBIT G;
and
(g) each Raptor Affiliate shall have executed and delivered an
Affiliate's Agreement, the form of which is attached hereto as EXHIBIT C.
5.3 CONDITIONS TO OBLIGATIONS OF RAPTOR.
The obligation of Raptor to consummate the Merger is subject to the
satisfaction of the following additional conditions:
(a) Axent and the Surviving Corporation shall have obtained all of the
waivers, permits, consents, approvals or other authorizations, and effected
all of the registrations, filings and notices referred to in Section 4.2,
except for any of which if not obtained or effected would not have a material
adverse effect on the assets, business, financial condition, results of
operations of Axent of the Surviving Corporation or the ability of the Parties
to consummate the transactions contemplated by this Agreement.
- 48 -
(b) The representations and warranties of Axent set forth in
this Agreement shall be true and correct in all material respects as of
the date of this Agreement and (except to the extent such
representations and warranties expressly speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date,
except for changes contemplated by this Agreement, and Raptor shall
have received a certificate signed on behalf of Axent by the chief
executive officer or chief financial officer of Axent to that effect;
(c) Raptor shall have received a "comfort letter" dated as of a
date not more than two days prior to the date that the Registration
Statement is declared effective and shall have received a subsequent
similar letter dated as of a date not more than two days prior to the
Effective Time, from Coopers & Xxxxxxx L.L.P., auditors for Axent,
addressed to Raptor in a customary form reasonably satisfactory to
Raptor;
(d) Raptor shall have received a written opinion from Coopers &
Xxxxxxx L.L.P., dated as of the Closing Date, stating that the Merger
will qualify as a "pooling of interests" transaction under Accounting
Principles Board Opinion No. 16 and applicable SEC regulations, if the
Merger is consummated in accordance with this Agreement;
(e) Axent shall have executed and delivered the Stock Option
Exchange Agreements, the form of which is attached hereto as EXHIBIT G;
(f) Each Axent Affiliate shall have executed and delivered an
Affiliate's Agreement, the form of which is attached hereto as EXHIBIT
D; and
(g) Axent shall have fixed the number of its directors at seven
and duly elected or appointed Xxxxxx Xxxxxxxxxxx, Xxxxx XxXxxxxx and
Xxxxxx Xxxxxxxx to its Board of Directors as required by Section 4.16
of this Agreement.
ARTICLE VI
TERMINATION
6.1 TERMINATION OF AGREEMENT.
The Parties may terminate this Agreement prior to the Effective Time
(whether before or after Requisite Shareholder Approval) as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) Axent may terminate this Agreement by giving written notice
to Raptor in the event that Raptor is in breach, and Raptor may
terminate this Agreement by giving written notice to Axent and the
Transitory Subsidiary in the event that Axent or the
- 49 -
Transitory Subsidiary is in breach, of any material representation,
warranty, or covenant contained in this Agreement, and such breach is
not remedied within 10 days of delivery of written notice thereof;
(c) (i) any Party may terminate this Agreement by giving
written notice to the other Parties at any time after Raptor
Shareholders have voted on whether to approve this Agreement and the
Merger in the event this Agreement and the Merger failed to receive the
Requisite Raptor Shareholder Approval; and (ii) any Party may terminate
this Agreement by giving written notice to the other Parties at any
time after Axent Shareholders have voted on whether to approve this
Agreement and the Merger in the event this Agreement and the Merger
failed to receive the Requisite Axent Shareholder Approval (provided,
however, that the right to terminate this Agreement under this Section
6.1(c) shall not be available to any party which has not complied with
its obligations under Sections 6.2 and 7.10, as applicable, of this
Agreement);
(d) any party may terminate this Agreement by giving written
notice to the other party if the Closing shall not have occurred on or
before May 15, 1998 (provided, however, that the right to terminate
this Agreement under this Section 6.1(d) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the cause of or resulted in the failure of the Merger to occur on
or before such date); or
(e) by either Axent or Raptor if a court of competent
jurisdiction or other Governmental Entity shall have issued a final
order, decree or ruling, or taken any other action, having the effect
of permanently restraining, enjoining or otherwise prohibiting the
Merger, and all appeals with respect to such order, decree, ruling or
action have been exhausted or the time for appeal of such order,
decree, ruling or action shall have expired;
(f) by Axent if (i) the Board of Directors of Raptor shall have
withdrawn or modified its recommendation of this Agreement or the
Merger in a manner adverse to Axent; (ii) an Acquisition Proposal to
which Raptor is a party shall have taken place or the Board of
Directors of Raptor shall have recommended such an Acquisition Proposal
(or a proposal or offer therefor) to the stockholders of Raptor or
shall have publicly announced its intention to recommend such an
Acquisition Proposal (or a proposal or offer therefor) or to engage in
an Acquisition Proposal; or (iii) a tender offer or exchange offer for
twenty percent (20%) or more of the outstanding shares of Raptor Common
Stock shall have been commenced or a registration statement with
respect thereto shall have been filed (other than by Axent or an
affiliate thereof) and the Board of Directors of Raptor shall have (A)
recommended that the stockholders of Raptor tender their shares in such
tender or exchange offer or (B) publicly announced its intention to
take no position with respect to such tender offer; or
- 51 -
(g) by Raptor, if the Board of Directors of Raptor
recommends to the holders of Raptor Common Stock approval or acceptance
of an Acquisition Proposal by a person other than Axent, but only in
the event that the Board of Directors of Raptor, after consultation
with and based upon the advice of its legal counsel, has determined in
good faith that such action is necessary for the Board of Directors of
Raptor to comply with its fiduciary duties to its stockholders under
applicable law.
6.2 EFFECT OF TERMINATION.
(a) If this Agreement is terminated (i) by Axent pursuant to
Section 6.1(f), or (ii) by Raptor pursuant to Section 6.1(c) as a
result of the failure to receive the requisite vote for adoption of
this Agreement and approval of the Merger by the stockholders of Raptor
at the Raptor Stockholders Meeting, or (iii) by Raptor pursuant to
Section 6.1(g) or (iv) by Axent pursuant to Section 6.1(c) as a result
of the failure to receive the requisite vote for adoption of this
Agreement and approval of the Merger by the stockholders of Raptor at
the Raptor Stockholders Meeting, and, in the case of a termination by
Axent pursuant to Section 6.1(c) or by Raptor pursuant to Section
6.1(c) at the time of the event giving rise to the right of Axent to
terminate under such Section 6.1(c) or the right of Raptor to terminate
under such Section 6.1(c), an Acquisition Proposal involving Raptor
shall have been announced or proposed which shall not have been
absolutely and unconditionally withdrawn and abandoned and Raptor shall
subsequently consummated such Acquisition Proposal within 270 days of
the termination of this Agreement, Raptor shall pay in cash to Axent a
termination fee equal to $8,850,316 (the "Raptor Termination Fee").
(b) The Raptor Termination Fee shall be paid in cash in
immediately available funds. If the Raptor Termination Fee is triggered
by a right to terminate this Agreement pursuant to Sections 6.1(f) or
6.1(g), such fee shall be paid prior to and as a condition precedent to
the effectiveness of such termination. If the Raptor Termination Fee is
triggered by the right to terminate this Agreement pursuant to Section
6.1(c), such fee shall be paid prior to and as a condition precedent to
the consummation of such Acquisition Proposal.
(c) In no event shall Raptor be required to pay to Axent any
Raptor Termination Fee, if, immediately prior to the applicable
termination of this Agreement, Axent was in material breach of any of
its material obligations under this Agreement.
(d) If one party fails to promptly pay to the other any fee or
expense due hereunder, the defaulting party shall pay the costs and
expenses (including reasonable documented legal fees and expenses) in
connection with any action, including the filing of any lawsuit or
other legal action, taken to collect payment, together with interest on
the amount of any unpaid fee at the publicly announced prime rate of
Citibank, N.A. from the date such fee was required to be paid.
- 51 -
ARTICLE VII
MISCELLANEOUS
7.1 NO THIRD PARTY BENEFICIARIES.
Except as set forth herein, this Agreement shall not confer any rights
or remedies upon any person other than the Parties and their respective
successors and permitted assigns; provided, however, that the provisions in
Article I concerning issuance of the Merger Shares are intended for the benefit
of the holders of Raptor Common Stock or Options.
7.2 ENTIRE AGREEMENT.
This Agreement (including the documents referred to herein) constitutes
the entire agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, with
respect to the subject matter hereof including without limitation the
Nondisclosure Agreement by and between Axent and Raptor dated September 3, 1997.
7.3 SUCCESSION AND ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit of the
Parties named herein and their respective successors and permitted assigns. No
Party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other Parties;
provided that the Transitory Subsidiary may assign its rights, interests and
obligations hereunder to an Affiliate of Axent.
7.4 COUNTERPARTS.
This 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.
7.5 HEADINGS.
The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
7.6 NOTICES.
All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly delivered two business days after
it is sent by registered or certified mail, return receipt requested, postage
prepaid, or one business day after it is sent via a reputable nationwide
overnight courier service, in each case to the intended recipient as set forth
below:
- 52 -
If to Raptor:
Raptor Systems, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxxx
Copies to:
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxx III, Esq.
If to Axent:
Axent Technologies, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Copy to:
Piper & Marbury L.L.P.
0000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx X. Xxxxxx, Xx., Esq.
If to the Transitory Subsidiary:
Axquisition Two, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Copy to:
Piper & Marbury L.L.P.
0000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx X. Xxxxxx, Xx., Esq.
- 53 -
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
7.7 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the internal laws (and not the law of conflicts) of the State of Delaware. Each
of Axent and Raptor hereby irrevocably and unconditionally consent to submit to
the exclusive jurisdiction of the courts of the State of Delaware and the United
States of America located in the State of Delaware (the "Delaware Courts") for
any litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agree not to commence any litigation relating thereto
except in such courts), consent to the service of process in such Delaware
Courts, waive any objection to the laying of venue of any such litigation in the
Delaware Courts and agree not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in any inconvenient forum.
7.8 AMENDMENTS AND WAIVERS.
The Parties may mutually amend any provision of this Agreement at any
time prior to the Effective Time; provided, however, that any amendment effected
subsequent to the Requisite Shareholder Approval shall be subject to the
restrictions contained in the Delaware General Corporation Law. No amendment of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by all of the Parties. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
7.9 SEVERABILITY.
Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope or
duration of the term or provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable
- 54 -
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
7.10 EXPENSES.
Except as set forth in Section 6.2, all fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, whether or not the Merger is
consummated; provided, however, that Axent and Raptor shall share equally all
fees and expenses, other than attorneys' and accounting fees and expenses,
incurred in relation to the printing and filing of the Joint Proxy Statement
(including any related preliminary materials) and the Registration Statement
(including financial statements and exhibits) and any amendments or supplements
thereto.
7.11 SPECIFIC PERFORMANCE.
Each of the Parties acknowledges and agrees that one or more of the
other Parties would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the other
Parties shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which it may be entitled, at law or
in equity. The prevailing party in any such action shall be entitled to recover
from the other party its reasonable attorneys' fees, costs and expenses incurred
in connection with regard to such action.
7.12 CONSTRUCTION.
The language used in this Agreement shall be deemed to be the language
chosen by the Parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any Party. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise.
7.13 INCORPORATION OF EXHIBITS AND SCHEDULES.
The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
7.14 NON-SURVIVABILITY OF PROVISIONS.
No portion of Article 2, Article 3, Sections 4.1 through 4.7, Article 5
or Article 6 shall survive the Closing. All other provisions of this Agreement
shall survive the Closing but only in accordance with their terms. Neither Party
nor any of such Party's stockholders, directors, officers, representatives or
agents shall have any recourse or rights or remedies against the other
- 55 -
Party or any of the other Party's shareholders, stockholders, directors,
officers, representatives or agents regarding any representations or warranties
or Sections 4.3, 4.4 and 4.7 set forth in this Agreement, absent fraud. The
Party alleging fraud shall bear the burden of proving fraud.
* * * *
[signatures on following page]
- 56 -
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
AXENT TECHNOLOGIES, INC.
/s/ Xxxx X. Xxxxxx
By: Xxxx X. Xxxxxx
Title: President and Chief Executive Officer
AXQUISITION TWO, INC.
/s/ Xxxx X. Xxxxxx
By: Xxxx X. Xxxxxx
Title: President
RAPTOR SYSTEMS, INC.
/s/ Xxxxx XxXxxxxx
By: Xxxxx XxXxxxxx
Title: Chief Executive Officer
- 57 -
