<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, For Use of the
[X] Definitive proxy statement Commission Only (as permitted
[ ] Definitive additional materials by Rule 14a-6(c)(2)
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
AXENT TECHNOLOGIES, INC.
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(Name of Registrant as Specified in Charter)
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(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
AXENT TECHNOLOGIES, INC.
2400 Research Boulevard, Suite 200
Rockville, Maryland 20850
[LOGO OF AXENT TECHNOLOGIES, INC. APPEARS HERE]
April 30, 1999
Dear Stockholders:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of AXENT Technologies, Inc. to be held at 9:30 a.m., local time, on Friday, June
4, 1999 at AXENT's headquarters at 2400 Research Boulevard, Rockville, Maryland.
Stockholders of record on April 9, 1999 are entitled to vote at the annual
meeting.
A Notice of Annual Meeting of Stockholders, Proxy Statement and proxy are
enclosed. Also enclosed is a copy of AXENT's Form 10-K for 1998. You may request
a copy of AXENT's 1998 Annual Report, which was not available at the time of
mailing these materials, on AXENT's Web page (www.axent.com) or by calling
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AXENT's investor relations personnel.
Whether or not you attend the annual meeting, please immediately sign, date
and return your proxy in the enclosed envelope so that as many shares as
possible are represented.
Sincerely,
John C. Becker
Chief Executive Officer and Chairman of the Board
<PAGE>
AXENT TECHNOLOGIES, INC.
2400 Research Boulevard, Suite 200
Rockville, Maryland 20850
[LOGO OF AXENT TECHNOLOGIES, INC. APPEARS HERE]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 4, 1999
AXENT Technologies, Inc. will hold its 1999 Annual Meeting of
Stockholders on Friday, June 4, 1999, at 9:30 a.m., local time, at 2400 Research
Boulevard, Suite 200, Rockville, Maryland 20850 for the following purposes:
1. To elect two (2) directors for terms of three years or until their
respective successors have been elected or appointed ;
2. To approve the AXENT Technologies, Inc. 1999 Incentive Stock Plan,
which provides for the issuance of up to 1,300,000 shares of AXENT
common stock; and
3. To transact any other business properly coming before the Annual
Meeting and any adjournment or postponement.
Stockholders of record of AXENT common stock as of the close of
business on April 9, 1999 are entitled to notice of, and to vote at, the Annual
Meeting or any adjournment or postponement.
Please immediately sign, date and return your proxy in the enclosed envelope.
If you attend the meeting, you may withdraw your proxy if you wish and vote in
person.
By Order of the Board of Directors,
Gary M. Ford
Secretary
Rockville, Maryland
April 30, 1999
<PAGE>
AXENT TECHNOLOGIES, INC.
[LOGO OF AXENT TECHNOLOGIES, INC. APPEARS HERE]
PROXY STATEMENT
AXENT Technologies, Inc. is furnishing this proxy statement in a
solicitation by AXENT's Board of Directors of proxies for use in voting at
AXENT's 1999 Annual Meeting of Stockholders and any adjournment or postponement
of that meeting. AXENT's annual meeting will be held on Friday, June 4, 1999 at
9:30 a.m., local time, at AXENT's principal offices, 2400 Research Boulevard,
Suite 200, Rockville, Maryland 20850. AXENT's telephone number is (301) 258-
5043. This proxy statement, the accompanying proxy and AXENT's Annual Report on
Form 10-K are first being mailed to stockholders on or about May 4, 1999.
The record date for AXENT's annual meeting is April 9, 1999, and
stockholders of record on AXENT's books as of 5:00 p.m. on that date will be
entitled to vote at AXENT's annual meeting. At the close of business on that
date, AXENT had outstanding 27,839,563 shares of its common stock, each of which
entitles its holder to cast one vote on each matter presented at AXENT's annual
meeting.
Votes cast by proxy or in person at the annual meeting will be tabulated
by the persons appointed by AXENT's Board of Directors as the inspector of
elections, with the assistance of AXENT's transfer agent. The inspector of
elections will also determine whether or not a quorum is present. Delaware law
provides that a quorum consists of a majority of the shares entitled to vote and
present in person or represented by proxy. The inspector of elections will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum and as negative votes for purposes of
determining the approval of any matter submitted to the stockholders for a vote.
Shares referred to as "broker non-votes" will be treated as shares that are
present for purposes of determining a quorum at the annual meeting but will not
be treated as present for the vote on any matter for which authority to vote is
lacking. For the passage of any matters other than the election of directors,
the affirmative vote of a majority of shares present or represented on such
matter is required.
The shares represented by the proxies received, properly dated and
executed and not revoked will be voted at the annual meeting in accordance with
the instructions of the stockholders. A proxy may be revoked at any time before
it is exercised by delivering to Georgeson & Company Inc. by facsimile to (212)
440-9009 a written notice of revocation or a duly executed proxy bearing a later
date or by attending the annual meeting and voting in person. Unless specified
otherwise, all shares represented by the enclosed form of proxy will be voted
FOR the election of the two nominees as directors, approval of the 1999
Incentive Stock Plan and other matters which the proxy holders deem advisable
during the annual meeting. AXENT had received no notice as of April 28, 1999
that any stockholder proposal is to be submitted at the annual meeting. AXENT
believes that the tabulation procedures to be followed by the inspector of
elections are consistent with Delaware statutory requirements for voting of
shares and determination of a quorum.
The cost of soliciting proxies will be borne by AXENT. Georgeson &
Company Inc. has been engaged by AXENT to act as proxy solicitors and to mail
proxies to the holders of common stock on the record date, and will receive a
fee for those services of approximately $7,500. In addition, AXENT may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to those
beneficial owners. Certain directors, officers and regular employees of AXENT,
without additional compensation, may also solicit proxies either personally or
by telephone or telegram.
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
AXENT's directors are divided into three classes. The number of
directors is determined from time to time by AXENT's Board of Directors and
currently is fixed at six. A single class of directors is elected each year at
the annual meeting of stockholders. Each director elected at each such meeting
will serve for a term ending at the third annual meeting of stockholders after
his election or when his successor is elected and duly qualified.
Two directors are to be elected at this annual meeting to serve until
the 2002 Annual Meeting of Stockholders or until their respective successors are
elected and duly qualified. The nominees who will stand for election are
Richard A. Lefebvre and Gabriel A. Battista, both of whom are currently members
of AXENT's Board of Directors. The two nominees receiving the highest number of
affirmative votes will be elected as directors for a term of three years. In
the event any nominee is unable or unwilling to serve as a nominee, the proxies
may be voted for the other named nominee and for any substitute nominee
designated by the present Board of Directors or the proxy holders, or the number
of directors constituting the Board of Directors may be reduced. The Board of
Directors has no reason to believe that Messrs. Lefebvre or Battista will be
unable or unwilling to serve as a nominee or as a director if elected.
Information Concerning Nominees and Other Incumbent Directors
Directors to be Elected at the 1999 Annual Meeting
Richard A. Lefebvre, age 52, has been a director of AXENT since March 1991.
He served as AXENT's Chairman of the Board from March 1991 through December
1998, as AXENT's Chief Executive Officer from March 1991 to July 1997 and as
AXENT's President from March 1991 to October 1996. He also served as President,
Chief Executive Officer and a director of a predecessor of AXENT from 1989 until
March 1991. From April 1987 to January 1989, Mr. Lefebvre was the Executive
Vice President and Chief Operating Officer of Sage Software, Inc., a provider of
software development tools. Mr. Lefebvre serves as a director of Best Software,
Inc.
Gabriel A. Battista, age 54, has been a director of AXENT since September
1995. Since January 1999, he has served as President, Chief Executive Officer
and Chairman of the Board of Tel-SAVE.com, Inc., which provides e-commerce
telecommunications services. From November 1996 to November 1998, he served as
Chief Executive Officer of Network Solutions, Inc., which assigns and
administers Internet domain names. From September 1995 through November 1996,
he served as Chief Executive Officer and President of Cable and Wireless, Inc.
("C&W"), a leading telecommunications company. He served as President and Chief
Operating Officer of C&W from 1993 to 1995, and as Chief Operating Officer from
1991 through 1993. Mr. Battista serves as a director of Tel-SAVE.com, Inc. and
Systems and Computer Technology Corporation.
Directors Whose Terms Expire in 2000
John C. Becker, age 41, has been a director of AXENT since October 1996. He
became AXENT's Chairman of the Board in January 1999 and has served as AXENT's
Chief Executive Officer since August 1997. From October 1996 to December 1998,
he served as President and Chief Operating Officer of AXENT. From October 1992
to October 1996, he served as Executive Vice President, Chief Financial Officer
and Treasurer and from March 1991 to October 1992, as Senior Vice President and
Chief Financial Officer, of AXENT. From November 1989 to March 1991, he served
as Vice President of a predecessor of AXENT and was responsible for finance and
administration. From 1979 to November 1989, Mr. Becker held various positions
involving financial matters at Marriott Corporation and MCI Communications, Inc.
John F. Burton, age 47, has been a director of AXENT since January 1997. He
has served as Managing Director of Updata Capital, Inc., an investment-banking
firm, since March 1997. From 1995 to March 1997, he
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was Managing Director of Burton Technology Partners, Ltd. He served as Chief
Executive Officer of Nat Systems International, Inc., a vendor of software
development products, from September 1995 to September 1996. Mr. Burton served
as President, Chief Executive Officer, Chief Operating Officer and a director of
Legent Corporation, a provider of information services solutions, from 1990
through January 1995. He served as General Manager of Legent's Software
Management Division and Vice President, Corporate Marketing of Legent from 1989
to 1990. He served as Executive Vice President, Chief Operating Officer and a
director of Business Software Technology, Inc., which he founded in 1984, until
1989. He serves as a director of Banyan Systems, Inc., Netrix Corporation,
Network Imaging Corporation and Map Info Corporation.
Directors Whose Terms Expire in 2001
Timothy A. Davenport, age 43, has been a director of AXENT since May 1998. He
has served as President, Chief Executive Officer and a director of Best
Software, Inc., a provider of corporate resource management software solutions,
since June 1995. From 1987 to June 1995, he served as Vice President, Developer
Tools Group, and Vice President, Graphics Division, of Lotus Development
Corporation, a software company providing productivity and work group
applications. From 1985 to 1987, Mr. Davenport served as Vice President of
Product Marketing for Decision Resources, a division of Ashton-Tate Corporation,
a software company that developed business graphics applications.
Kevin A. McNerney, age 40, has been a director of AXENT since October 1998.
Mr. McNerney has served with Heidrick & Struggles, International, a leading
executive search firm, since 1993, including as the Managing Partner of the
Tysons Corner, Virginia office since 1996. From 1983 to 1993, he served in
various positions with Systems Center, Inc., a leading provider of systems and
network management software for mainframe, distributed and open systems
environments, including as Executive Vice President, where he had general
management responsibility for the firm's worldwide operations.
Information Regarding the Board of Directors and Committees
During 1998, AXENT's Board of Directors met four times and acted four
times by written consent. The Board has a standing Audit Committee and
Compensation Committee. Each director attended more than 75% of the meetings of
the Board and any committee on which he served in 1998.
The Audit Committee recommends the firm to be appointed as independent
accountants to audit AXENT's financial statements, discusses the scope and
results of the audit with the independent accountants, reviews with management
and the independent accountants AXENT's interim and year-end operating results,
considers the adequacy of the internal accounting controls and audit procedures
of AXENT and reviews the non-audit services to be performed by the independent
accountants. During 1998, the Audit Committee met three times. Messrs.
Davenport and McNerney are the current members of the Audit Committee.
The Compensation Committee reviews and recommends the compensation
arrangements for management of AXENT and administers AXENT's stock option plans
and employee stock purchase plan. During 1998, the Compensation Committee met
seven times. Messrs. Battista and Burton comprised the Compensation Committee
from February 1998 to February 1999, when Mr. Burton resigned. At April 28,
1999, that vacancy had not been filled.
The Board of Directors currently does not have a nominating committee or
a committee performing the functions of a nominating committee. Although there
are no formal procedures for stockholders to nominate persons to serve as
directors, the Board of Directors will consider recommendations from
stockholders, which should be addressed to Gary M. Ford, Vice President and
General Counsel of AXENT, at AXENT's principal executive offices.
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During 1998, each non-employee director received an award of stock
options to purchase 2,000 shares under AXENT's 1996 Directors' Stock Option Plan
on the date of AXENT's 1998 Annual Meeting of Stockholders in lieu of any fees
for serving as a director of AXENT. Those options generally vest one year after
the date of grant. Any non-employee director first elected to the Board also
received an award of stock options to purchase 9,000 shares, which vests in
equal increments over three years, under AXENT's 1996 Directors' Stock Option
Plan. During 1998, Messrs. Battista and Burton received awards of stock options
to purchase 2,000 shares on May 20, 1998 with an exercise price of $25.469 per
share, Mr. Davenport received an award of stock options to purchase 9,000 shares
on May 20, 1998 with an exercise price of $25.469 per share and Mr. McNerney
received an award of stock options to purchase 9,000 shares on October 22, 1998
at $20.375 per share. Three non-employee directors elected on February 5, 1998
received awards to purchase 9,000 shares on that date, and two of them received
awards of stock options to purchase 2,000 shares on May 20, 1998, all of which
expired unexercised following their resignations in 1998. Other than those
option grants, no director received any fees or other compensation for serving
in such capacity during 1998.
The Board of Directors recommends a vote "FOR"
the election of the nominees named above.
PROPOSAL 2: APPROVAL OF THE 1999 INCENTIVE STOCK PLAN
The Board of Directors has approved and recommends that AXENT's
stockholders approve the AXENT Technologies, Inc. 1999 Incentive Stock Plan (the
"1999 Plan"), which provides for grants of stock options and other equity
rights, including stock appreciation rights, stock and phantom stock awards and
performance awards, to employees, officers, directors and consultants of AXENT
and its subsidiaries. The purpose of the 1999 Plan is to promote the long-term
growth and profitability of AXENT by providing key people with incentives to
improve stockholder value and contribute to the growth and financial success of
AXENT and by enabling AXENT to attract, retain and reward the best-available
persons for positions of substantial responsibility.
AXENT currently maintains its 1998 Incentive Stock Plan (the "1998 Plan"),
its 1996 Stock Option Plan (the "1996 Plan") and its 1991 Stock Option Plan (the
"1991 Plan"). As of March 31, 1999, options to purchase 824,528 shares were
outstanding under the 1998 Plan and 927,495 shares were available for future
awards thereunder; options to purchase 1,403,713 shares were outstanding under
the 1996 Plan and 152,717 shares were available for future grants thereunder;
and options to purchase 129,449 shares were outstanding under the 1991 Plan and
18,212 shares were available for future grants thereunder. AXENT believes that
the shares currently available for future award under the 1998 Plan and the 1996
Plan may not be sufficient for awards expected to be made before the next
currently anticipated meeting of stockholders of AXENT. In AXENT's view, the
adoption of the 1999 Plan and the reservation of 1,300,000 shares for awards
under the 1999 Plan are, when combined with shares available under the 1998 Plan
and the 1996 Plan, necessary for AXENT to be able to meet its need to provide
incentive awards until the next currently anticipated meeting of stockholders of
AXENT. Current and future awards under the 1998 Plan, the 1996 Plan and the
1991 Plan will continue to be subject to the terms of the respective plan. A
summary of the material features of the 1999 Plan is provided below and a copy
of the 1999 Plan is attached as Appendix A to this Proxy Statement.
Shares Available under the 1999 Plan
The number of shares of AXENT common stock that may be issued with respect
to awards granted under the 1999 Plan is 1,300,000 shares. The maximum number
of shares of AXENT common stock subject to awards of any combination that may be
granted under the 1999 Plan during any fiscal year of AXENT to any individual is
limited to 500,000. In any calendar year, the total number of awards of stock
options, stock appreciation rights and other equity rights that may be granted
under the 1999 Plan with an exercise or purchase price below fair market value
may not exceed 200,000 shares. These limits are subject to adjustment to
reflect certain corporate events,
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such as stock dividends, recapitalizations and business combinations. If any
award, or portion of an award, under the 1999 Plan expires or terminates
unexercised, becomes unexercisable or is forfeited or otherwise terminated,
surrendered or canceled as to any shares, or if any shares of AXENT common stock
are surrendered to AXENT in connection with any award (whether or not such
surrendered shares were acquired pursuant to any award), the shares subject to
such award and the surrendered shares will be available for further awards under
the 1999 Plan. The closing price of AXENT common stock on April 28, 1999 was
$9.75 per share.
Administration
The 1999 Plan will be administered by the AXENT Board, the Compensation
Committee or by such committee or committees as may be appointed by the AXENT
Board from time to time (the AXENT Board, committee or committees hereinafter
referred to as the "Administrator"). The Administrator shall have full power
and authority to take all other actions necessary to carry out the purpose and
intent of the 1999 Plan, including, but not limited to, the authority to: (i)
determine the eligible persons to whom, and the time or times at which, awards
shall be granted; (ii) determine the types of awards to be granted; (iii)
determine the number of shares to be covered by or used for reference purposes
for each award; (iv) impose such terms, limitations, restrictions and conditions
upon any such award as the Administrator shall deem appropriate; (v) modify,
amend, extend or renew outstanding awards, or accept the surrender of
outstanding awards and substitute new awards (provided, however, that except as
noted below, modifications and cancellations to reduce the price of an
outstanding award under the 1999 Plan are prohibited and any modification that
would materially adversely affect any outstanding award may generally not be
made without the consent of the holder); (vi) accelerate or otherwise change the
time in which an award may be exercised or becomes payable and waive or
accelerate the lapse, in whole or in part, of any restriction or condition with
respect to such award, including, but not limited to, any restriction or
condition with respect to the vesting or exercisability of an award following
termination of any grantee's employment; and (vii) establish objectives and
conditions, if any, for earning awards and determining whether awards will be
paid after the end of a performance period. The Administrator may not, without
the approval of AXENT's stockholders, reduce the price of stock options, stock
appreciation rights and other equity rights awarded under the 1999 Plan, whether
by amendment of the outstanding award or cancellation of the existing award and
issuance of a new award unless such adjustment is made to reflect certain
corporate events, such as stock dividends, recapitalizations and business
combinations.
Eligibility To Receive Awards
Participation in the 1999 Plan will be open to all employees, officers,
directors and consultants of AXENT or any of its affiliates, as may be selected
by the Administrator from time to time. As of March 31, 1999, four non-employee
directors and approximately 630 employees would have been eligible to
participate in the 1999 Plan.
Type of Awards
The 1999 Plan permits the grant of stock options, stock appreciation
rights, stock awards, phantom stock awards and performance awards. These awards
may be granted separately or in tandem with other awards. The Administrator
will determine the prices, expiration dates and other material conditions upon
which such awards may be exercised. As noted above, in any one calendar year,
the total number of awards of stock options, stock appreciation rights and other
equity rights that may be granted under the 1999 Plan with an exercise or
purchase price below fair market value may not exceed 200,000 shares.
Stock Options: The 1999 Plan allows the Administrator to grant either
awards of incentive stock options, as that term is defined in section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or nonqualified stock
options, but incentive stock options may only be granted to employees of AXENT
or a subsidiary. Options intended to qualify as incentive stock options under
Section 422 of the Code must have an exercise price at least equal to fair
market value on the date of grant. Nonqualified stock options must be granted
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with an exercise price at least 85% fair market value on the date of grant. The
option exercise price may be paid in cash, by tender of shares of AXENT common
stock, by a combination of cash and shares or by any other means the
Administrator approves.
Stock Appreciation Rights: The 1999 Plan allows the Administrator to grant
awards of stock appreciation rights ("SAR"). An SAR entitles the holder to
receive a payment in cash, in shares of AXENT common stock, or in a combination
of both, having an aggregate value equal to the product of (i) the excess of (A)
the fair market value on the exercise date of one share of AXENT common stock
over (B) the base price per share specified in the grant agreement, times (ii)
the number of shares specified by the SAR, or portion thereof, which is
exercised.
Stock and Phantom Stock Awards: The 1999 Plan allows the Administrator to
grant restricted or unrestricted stock awards, or awards denominated in stock-
equivalent units ("phantom stock") to eligible participants with or without
payment of consideration by the grantee. Stock awards and phantom stock awards
may be paid in cash, in shares of AXENT common stock or in a combination of
both.
Performance Awards: The 1999 Plan allows the Administrator to grant
performance awards which become payable in cash, in shares of AXENT common stock
or in a combination of both on account of attainment of one or more performance
goals established by the Administrator. Performance goals established by the
Administrator may be based on AXENT's or an affiliate's operating income or one
or more other business criteria selected by the Administrator that apply to an
individual or group of individuals, a business unit or AXENT or an affiliate as
a whole, over such performance period as the Administrator may designate.
Change of Control
Unless the grant agreement provides for more favorable treatment, the 1999
Plan provides for the automatic acceleration of vesting or exercisability of 50%
of the shares subject to awards held by a grantee in the event of any "Change of
Control" (as defined in the 1999 Plan). A Change of Control includes, but is
not limited to, an acquisition of AXENT, a merger or consolidation in which the
voting securities of AXENT outstanding immediately prior to the merger or
consolidation represent 50% or less of the voting power of AXENT or the
surviving entity immediately after the merger or consolidation, the acquisition
by a third party of beneficial ownership of 50% or more of the voting power of
AXENT's outstanding securities or certain changes in the composition of AXENT's
Board of Directors.
Awards Under The 1999 Plan
Because participation and the types of awards granted under the 1999 Plan
are subject to the discretion of the Administrator, the benefits or amounts that
will be received by any participant or groups of participants if the 1999 Plan
is approved are not currently determinable. Under the 1998 Plan, which provides
for benefits similar to those under the 1999 Plan, options had been granted as
of December 31, 1998 to Messrs. Becker, Jackson, Shinbrood, Edwards and
McDonough to purchase a total of 90,000, 40,000, 8,000, 10,000 and 10,000
shares, respectively, options had been granted under the 1998 Plan to all
current executive officers of AXENT as a group to purchase a total of 158,000
shares and options had been granted under the 1998 Plan to all other employees
to purchase a total of 888,700 shares.
Amendment And Termination
The AXENT Board may terminate, amend or modify the 1999 Plan or any portion
thereof at any time. However, no award may be granted more than ten years after
the 1999 Plan is effective.
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Federal Income Tax Consequences
The following is a general summary of the current federal income tax
treatment of stock options, SARs and other equity rights that may be granted
under the 1999 Plan based upon the current provisions of the Code and the
regulations promulgated thereunder. The discussion below, insofar as it relates
to the deductibility by AXENT of any compensation payable under the 1999 Plan,
is subject to the paragraph below relating to compensation in excess of
$1,000,000 payable to certain executive officers.
No tax consequences result from the grant of options which are intended to
qualify as incentive stock options ("ISOs"), within the meaning of Section 422
of the Code. If an option holder acquires stock upon the exercise of an ISO, no
income will be recognized by the option holder for ordinary income tax purposes
(although the difference between the option exercise price and the fair market
value of the stock subject to the option may result in alternative minimum tax
liability to the option holder) and AXENT will be allowed no deduction as a
result of such exercise provided that the following conditions are met: (a) at
all times during the period beginning on the date of grant of the ISO and ending
on the day three months before the date of such exercise, the option holder is
an employee of AXENT or a subsidiary; and (b) the option holder makes no
disposition of the stock within two years from the date the ISO was granted nor
within one year after the exercise of the ISO. The three-month period in (a),
above, is extended to one year in the event the option holder is disabled or
dies. If the holder of an ISO sells stock after compliance with these
conditions, any gain realized over the exercise price of the ISO ordinarily will
be treated as long-term capital gain, and any loss will be treated as long-term
capital loss, in the year of sale of the shares.
If the option holder fails to comply with the employment requirement
discussed above, the tax consequences will be the same as for a nonqualified
option, discussed below. If the option holder fails to comply with the holding
period requirements discussed above, the option holder will recognize ordinary
income in an amount equal to the lesser of (a) the excess of the fair market
value of the stock on the date the ISO was exercised over the exercise price or
(b) the excess of the amount realized upon such disposition over the exercise
price. Any additional gain ordinarily will be recognized by the option holder
as capital gain, either long-term or short-term, depending on the holding period
of the shares. If the option holder is treated as having received ordinary
income because of his or her failure to comply with either condition above,
AXENT is allowed an equivalent deduction in the same year.
AXENT anticipates that options granted under the 1999 Plan generally will
be nonqualified options. No tax consequences result from the grant of a
nonqualified option. An option holder who exercises a nonqualified option
generally will realize compensation taxable as ordinary income in an amount
equal to the difference between the option exercise price and the fair market
value of the shares on the date of exercise, and AXENT will be entitled to a
deduction from income in the same amount in the year in which the exercise
occurred. The option holder's basis in shares received in an exercise of a
nonqualified option with cash will be the fair market value of the shares on the
date income was realized, and when the holder disposes of the shares, he or she
will recognize capital gain or loss, either long-term or short-term, depending
on the holding period of the shares.
The grant of SARs or phantom stock will not result in taxable income to
the grantee or a deduction to AXENT. Upon exercise of an SAR or payment on
phantom stock, the grantee will recognize ordinary income and is allowed a
corresponding deduction in an amount equal to the cash or the fair market value
of the shares of common stock received by the grantee.
A grantee of a stock award will recognize taxable income for federal
income tax purposes at the time of the award, or, if the stock award is for
"restricted stock," the earliest date on which the award is within the meaning
of Section 83 of the Code, either transferable or no longer subject to a
substantial risk of forfeiture. However, the grantee of restricted stock may
elect under Section 83(b) of the Code to recognize compensation income in the
year of the award in an amount equal to the fair market value of the shares
subject to the award on the date of the award,
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determined without regard to the restrictions. If the grantee does not make such
a Section 83(b) election, the fair market value of the shares on the date the
restrictions lapse will be treated as compensation income to the grantee and
will be taxable in the year the restrictions lapse. AXENT generally will be
entitled to a deduction for compensation paid in the same amount treated as
compensation income to the grantee in the year the grantee is taxed on the
income.
The Code generally disallows deductions to public companies with respect
to compensation over $1,000,000 paid to the company's chief executive officer
and its four other most highly compensated executive officers. Qualifying
"performance-based" compensation, as defined in the Code, is not subject to the
deduction limit. The applicable conditions for "performance-based" compensation
include, among others, that the stockholders approve the plan. Stock options and
SARs granted under the 1999 Plan at not less than the fair market value of
AXENT's common stock on the date of grant are intended to qualify as
"performance-based" compensation. Other awards under the 1999 Plan will
generally not qualify as "performance-based" compensation.
Required Vote
Approval of the 1999 Plan requires the affirmative vote of the holders of
a majority of the shares of AXENT common stock present at the annual meeting in
person or by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1999 INCENTIVE
STOCK PLAN.
OFFICERS OF AXENT
In addition to Mr. Becker, for whom biographical information is included
in "Information Concerning Nominees and Other Incumbent Directors," the officers
of AXENT are as follows:
Brett M. Jackson, age 40, has served President and Chief Operating Officer
of AXENT since January 1999. From June 1997 to January 1999, he served as
Executive Vice President of AXENT. From August 1993 to June 1997 he served as a
Senior Vice President of AXENT responsible for worldwide sales and consulting
services. From April 1991 through July 1993, he served as a Vice President of
AXENT and was responsible for product operations and sales and marketing
matters. From July 1989 to April 1991, he served as Director of Marketing of a
predecessor of AXENT.
Marc S. Shinbrood, age 48, has served as a Senior Vice President of AXENT
responsible for business development matters since January 1997. He served as
Vice President of Marketing and Business Development of Nat Systems
International, Inc. from December 1995 through December 1996. Mr. Shinbrood
served as President of TechGnosis International, Inc. from December 1994 to
December 1995. From May 1993 to December 1994, he was an independent consultant
specializing in client/server computing matters. Mr. Shinbrood served as
President and Chief Executive Officer of ShowCase Corporation from 1991 to 1993,
President and General Manager of CARMS Division of Global Software from 1987 to
1991, founder and National Sales Director of Business Software Technology, Inc.
from 1983 to 1987 and Vice President of Cullinet Software, Inc. from 1979 to
1983.
Robert B. Edwards, Jr., age 42, has served as Chief Financial Officer of
AXENT since October 1996 and as a Vice President responsible for finance matters
and internal operations since June 1994. From March 1992 to May 1994, he served
as AXENT's Director of Finance. From 1989 to March 1992, he was an Audit
Manager with Arthur Andersen & Co.
-8-
<PAGE>
Gary M. Ford, age 44, has served as a Vice President, General Counsel and
Secretary of AXENT since August 1995. From 1984 through July 1995, Mr. Ford was
a member of the law firm of Tucker, Flyer & Lewis, a professional corporation.
Erich E. Baumgartner, Jr., age 39, has served as Vice President of AXENT
responsible for worldwide channels operations since November 1998. From
February 1998 to November 1998, he served as Vice President of AXENT responsible
for North American sales of network products. From April 1997 to February 1998,
he served as Vice President of North American Sales for Raptor Systems, Inc.,
which was acquired by AXENT in February 1998. From June 1996 to April 1997, he
served as Eastern Area Sales Director for Raptor, and from September 1995 to
June 1996, he served as Eastern Area Sales Manager for Raptor. From January
1995 to September 1995, Mr. Baumgartner was a sales representative for Raptor
covering sales territories in the mid-Atlantic region. Prior to joining Raptor,
Mr. Baumgartner was a District Sales Manager for Sun Microsystems, Inc. from
January 1992 until January 1995.
Edward W. Birss, age 46, has served as a Vice President of AXENT since
July 1997, including as General Manager of the Defender business unit. He was an
officer of AssureNet Pathways, Inc. from April 1996 until its acquisition by
AXENT in March 1997. From 1994 to April 1996, he served both as a Vice President
of Silicon Graphics, Inc. and President of Interactive Digital Solutions (an
interactive TV joint venture between AT&T and Silicon Graphics). From 1992 to
1994, Mr. Birss served as Chief Operating Officer at Taligent, Inc., a producer
of object-based technologies and development products. From 1980 to 1992, he
served in various positions at Apple Computer, Inc., including Director of
Software Engineering, Director of Product Engineering (1986 to 1988), Vice
President of Product Engineering, Senior Vice President Product Engineering
Operations (1988 to 1991) and Senior Vice President and General Manager of
Object Based Systems (1991 to 1992).
James R. Bowerman, age 43, has been a Vice President of AXENT since July
1993 and has been responsible for various product engineering matters, including
General Manager of AXENT's Resource Management business unit and, from 1993 to
1994, General Manager of AXENT's Storage Division. From October 1992 until July
1993, he served as Director and General Manager of AXENT's Unitech Products
Group, and from September 1989 to September 1992 he served as Director, Software
Products at Systems Center, Inc.
James A. Burdick, age 50, has served as a Vice President of AXENT since
January 1999 and is responsible for presales system engineer support to North
American sales. He was a founding principal of Secure Network Consulting, Inc.
and served as its Vice President for Enterprise Security Technology from January
1998 until it was acquired by AXENT in July 1998. From January 1994 until
January 1998, Mr. Burdick served in various positions with Trident Data Systems,
most recently as the Chief Engineer in Trident's Commercial Division.
Robert A. Clyde, age 39, has been a Vice President of AXENT since March
1991 and has been responsible for various product engineering, client services
and product management matters, including serving as General Manger of AXENT's
Security Management business unit and as General Manger responsible for the
security products group. Before March 1991, Mr. Clyde served as Vice President
of a predecessor of AXENT and Director of the Clyde product group.
Gregory Coticchia, age 38, has been a Vice President of AXENT responsible
for marketing communications and product management since January 1999. He
served as Chief Operating Officer, then Chief Executive Officer, of Mallett
Technology from November 1996 through May 1998. Mr. Coticchia served as Vice
President of Product Management, then Vice President of Marketing, of Nat
Systems International, Inc., a vendor of software development products, from
November 1995 to October 1996. From December 1994 until July 1995, Mr.
Coticchia served as Vice President of Marketing and Business Development at
Tartan, Inc. In addition, he founded, and was General Manager and Vice President
of Emprise Technologies, from October 1991 to November 1994. Mr. Coticchia
served as Vice President, Marketing of Legent Corporation responsible for its
Systems Productivity Division (SPD) products from November 1986 until September
1991.
-9-
<PAGE>
William Franklin, age 44, has served as a Vice President of AXENT
responsible for services since July 1998. From October 1996 to November 1997 he
served as Senior Vice President and General Manager, Eastern Region, for CODA
Inc., and was responsible for Sales, Marketing, Information Systems,
Professional and Technical Services. From September 1994 to October 1996, he
served as Vice President of Worldwide Customer Services at ASTEA International,
where he was responsible for Customer Support, Professional Services, Custom
Development, Training, Production, and Information Systems. From October 1993
to September 1994, he served as Director of North American Sales, Services, and
Marketing for Computervision Services.
John C.M. Holland, age 48, has served as a Vice President of AXENT
responsible for European operations since April 1997. He has served AXENT and
its UK operations in various capacities since January 1993, including as
Director of International Channel Operations from January 1996 to April 1997,
International Business Manager--Security from January 1995 to January 1996,
Security Product Manager from January 1994 to January 1995 and UNIX Business
Manager from January 1993 to January 1994. He was European UNIX Business
Manager for Systems Center, Inc. from March 1991 through 1992. Mr. Holland
served as Senior Vice President of Operations of Uniplex, Inc. from October 1989
to January 1991, and served in various capacities in the UK operations of
Uniplex, Inc. from 1985 to October 1989, including as Group Operations Director.
Bruce H. Johnson, age 42, has served as a Vice President of AXENT since
1997 and is been responsible for sales in AXENT's Western region of North
America. He was Vice President of North American Sales of AssureNet Pathways,
Inc. from September 1993 until AXENT acquired it in March 1997. From 1988 to
September 1993, Mr. Johnson was the Western Regional Sales Manager of AssureNet
Pathways, Inc.
Thomas M. McDonough, age 44, has served as a Vice President of AXENT since
September 1993 and has been responsible for North American sales since March
1994. From September 1993 to February 1994, he was responsible for business
development and corporate marketing. From October 1990 to August 1993, Mr.
McDonough served as Branch Manager, Telecommunications Accounts (Washington,
D.C.) of Digital Equipment Corporation.
Vimal Vaidya, age 35, Vimal Vaidya, age 35, has served as a Vice President
of AXENT responsible for intrusion detection products since January 1999. He
served as President and Chief Executive Officer of Internet Tools, Inc. from
June 1997 to January 1999, when it was acquired by AXENT. From January 1996 to
May 1997, he served as Vice President of ON Technology Corporation responsible
for the Security Products group. Mr. Vaidya was the founder, President and
Chief Executive Officer of neTrend Corporation from May 1995 to January 1996,
when neTrend was acquired by ON Technology. Mr. Vaidya served in various
engineering management positions at SBE, Inc. from July 1991 to December 1994,
including as Director of Engineering.
Officers of AXENT are selected by the Board of Directors on an annual
basis.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information for Mr. Becker,
AXENT's Chief Executive Officer during 1998, each of the four other most highly
compensated officers of AXENT and the most highly compensated officer of AXENT
(collectively, the "Named Officers").
-10-
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-term
Compensation
Annual Compensation Awards
------------------------------------------------------------------
Securities
Name and Fiscal Underlying All Other
Principal Position Year Salary($) Bonus($)(1) Options(#) Compensation($) (2)
- ------------------------------------ ------ --------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
John C. Becker 1998 $220,000 $ 62,400 225,000 $1,295
Chief Executive Officer and 1997 170,341 112,400 218,097 674
Chairman of the Board (since 1/99) 1996 143,750 80,000 60,000 698
Richard A. Lefebvre 1998 200,000 33,600 0 2,204
Chairman of the Board (until 1/99) 1997 249,671 116,400 113,511 1,565
1996 271,992 131,000 12,000 1,347
Brett M. Jackson 1998 160,000 63,840 100,000 1,117
President and Chief Operating 1997 140,625 91,680 150,198 552
Officer (since 1/99) 1996 129,125 85,000 32,000 678
Marc S. Shinbrood 1998 145,000 27,960 20,000 1,326
Senior Vice President 1997 145,000 41,600 40,000 331
Robert B. Edwards, Jr., Vice 1998 135,000 31,200 25,000 1,022
President and Chief Financial 1997 105,000 47,520 44,997 428
Officer 1996 92,500 25,000 16,000 427
Thomas M. McDonough, Vice President 1998 120,000 117,853 25,000 979
1997 99,583 129,928 70,000 534
1996 90,000 94,897 20,000 571
</TABLE>
____________
(1) AXENT's officers are eligible for annual cash bonuses. Such bonuses are
generally based upon achievement of corporate performance objectives
determined by the Compensation Committee. Amounts shown include actual
bonus earned and paid for 1998, 1997 and 1996, adjusted for a voluntary
reduction of bonus in April 1997. See "-Executive Bonus Plan."
(2) "All Other Compensation" includes the payment by AXENT of the annual
premium for certain term life insurance and long-term disability premiums
pursuant to a benefit program.
The following table sets forth certain information regarding options to
purchase AXENT common stock which were granted in 1998 to each of the Named
Officers:
-11-
<PAGE>
Option Grants in Last Fiscal Year
Individual Grants
-----------------
<TABLE>
<CAPTION> Potential Realizable Value
Number of at Assumed Annual Rates of
Securities % of Total Stock Price Appreciation for
Underlying Options Granted Exercise or Option Term (4)
Options(1) to Employees in Base Price ----------------
Name Granted(1) Fiscal Year(2) ($/Sh)(3) Expiration Date 5% 10%
- -------------------- ----------- -------------- ------------- --------------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
John Becker 225,000 13.81 $15.38-$19.25 1/27/08-2/05/08 $1,934,548 $4,730,340
Richard Lefebvre 0 0 0 0 0 0
Brett Jackson 100,000 6.14 $15.38-$19.25 1/27/08-2/05/08 859,799 2,102,373
Marc Shinbrood 20,000 1.23 $15.38-$19.25 1/27/08-2/05/08 171,960 420,475
Robert Edwards 25,000 1.53 $15.38-$19.25 1/27/08-2/05/08 214,950 525,593
Thomas McDonough 25,000 1.53 $15.38-$19.25 1/27/08-2/05/08 214,950 525,593
</TABLE>
_____________
(1) The stock options vest over four years in equal quarterly installments while
the officer remains employed by AXENT.
(2) Based on options to purchase 1,629,500 shares of AXENT common stock granted
during 1998.
(3) All stock options have exercise prices equal to the fair market value of
AXENT common stock on the date of grant.
(4) These amounts are based on annual compound stock price appreciation of five
and ten percent above the exercise price over the ten-year term of the
options and are mandated by rules of the Securities and Exchange Commission.
Actual gains, if any, on stock option exercises are dependent on future
performance of AXENT common stock, overall market conditions, as well as the
option holder's continued employment throughout the vesting period. The
amounts reflected in this table may not necessarily be achieved or may be
exceeded. The indicated amounts are net of the option exercise price but
before taxes that may be payable upon exercise.
The following table sets forth certain information regarding options to
purchase AXENT common stock exercised during 1998 or held as of December 31,
1998, by each of the Named Officers.
Aggregate Option Exercises in
Last Fiscal Year and Fiscal Year-End Option Values
--------------------------------------------------
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised in-the
Underlying Unexercised Money Options
Shares Options at Fiscal at Fiscal Year-End($)(2)
Acquired Year End ------------------------
On Value --------
Name Exercise Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ----- -------- -------------- --------------- ---------------- ------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
John Becker 80,000 $1,876,300 172,410 292,187 $3,075,636 $4,558,215
Richard Lefebvre 219,512 2,941,670 17,249 43,750 332,184 839,609
Brett Jackson 75,000 1,511,049 89,323 154,875 1,610,778 2,505,617
Marc Shinbrood 15,500 243,188 12,077 38,750 212,997 658,953
Robert Edwards 26,623 400,096 7,812 42,812 125,547 721,660
Thomas McDonough 18,750 240,213 11,063 60,062 146,644 869,645
</TABLE>
-12-
<PAGE>
(1) Calculated based on the market price of AXENT common stock at the time of
exercise, less the exercise price payable for such shares multiplied by the
number of shares acquired upon exercise.
(2) Calculated on the basis of the closing price of AXENT common stock at
December 31, 1998, $30.56255, less the exercise price payable for such
shares multiplied by the number of shares underlying the option.
Employment Agreements and Severance Arrangements
A Memorandum of Understanding dated July 22, 1997 and amended in November
1998 (the "Memorandum") between Mr. Lefebvre and the members of the Compensation
Committee, on behalf of the Board of Directors, sets out the compensation
arrangements regarding Mr. Lefebvre's service through July 21, 2000 and related
severance arrangements. The Memorandum provides that Mr. Lefebvre will receive
salary at a fixed annual rate through July 21, 1999 and at a lower annual rate
from July 22, 1999 through July 21, 2000, a bonus of a fixed maximum amount for
1998, no bonus for 1999 or 2000, car allowance at the rate in effect at the date
of the Memorandum through July 21, 1999 and all employee benefits made available
to full-time employees of AXENT through July 21, 2000. At its option, AXENT may
accelerate all future payments that may be due to Mr. Lefebvre and agree to pay
COBRA premiums as necessary to continue his medical, dental and vision coverage
through July 31, 2000. In addition, the Memorandum provides that any stock
options granted to Mr. Lefebvre will continue to vest so long as he serves as a
member of AXENT's Board (but will accelerate in full immediately if he is asked
to resign from the Board or is not re-elected) and will be exercisable until the
earlier of the stated expiration date of such option or ninety (90) days after
Mr. Lefebvre ceases to serve as a member of AXENT's Board. In the event of a
change of control (as defined in AXENT's 1996 Stock Option Plan in effect at the
date of the Memorandum), all compensation payable to Mr. Lefebvre through July
21, 2000 will be payable in a lump sum; in addition, the Board of Directors will
accelerate all stock options issued to Mr. Lefebvre to be fully exercisable
before the earliest date on which the change of control may be deemed to occur
and will provide that all exercisable portions of such stock options will be
assumed by any acquiring or successor corporation and will be exercisable for a
specified period after the change of control occurs.
In the event AXENT terminates the employment of an officer or key employee
without cause, the officer or key employee is entitled to receive certain
severance benefits, including full base salary, participation in medical, dental
and vision coverage, auto allowance and continued ability to exercise stock
options, in accordance with AXENT's executive severance guidelines, as follows:
(1) Chief Executive Officer--two years; (2) Chief Operating Officer--one year;
(3) Executive Vice President and Chief Financial Officer--one year; (4) Senior
Vice Presidents and Vice Presidents employed for less than one year--60 days;
(5) Senior Vice Presidents and Vice Presidents employed for more than one year
but less than three years--six months; (6) Senior Vice Presidents and Vice
Presidents employed for more than three years--one year; (7) other key
employees--up to three months. In the event of termination of employment of an
officer or key employee without cause occurring within nine months of a change
of control of AXENT, the officer or key employee would be entitled to receive
the same general benefits (but including full targeted bonus or commissions and
full acceleration of stock options) for the stated severance period except that
Senior Vice Presidents and Vice Presidents employed for less than three years
would receive one year of severance and other key employees would receive up to
six months of severance. Under these severance guidelines, Mr. Becker currently
would be entitled to receive the compensation and benefits specified above for
two years, Messrs. Jackson, Edwards and McDonough each currently would be
entitled to receive the compensation and benefits specified above for a period
of one year and Mr. Shinbrood currently would be entitled to receive the
compensation and benefits specified above for a period of six months.
Stock options of Messrs. Becker, Jackson, Shinbrood, Edwards and McDonough
generally vest in full upon an acquisition of AXENT, a merger or consolidation
in which the voting securities of AXENT outstanding immediately prior to the
merger or consolidation represent 50% or less of the voting power of AXENT or
the surviving entity immediately after the merger or consolidation, the
acquisition by a third party of beneficial ownership of 50% or more of the
voting power of AXENT's outstanding securities or certain changes in the
composition of AXENT's Board of Directors.
-13-
<PAGE>
Executive Bonus Plan
AXENT's executive bonus plan is designed to attract, retain and provide
performance incentives for key management personnel. The plan provides for a
cash bonus to be paid to the key management personnel upon attainment of
individualized predetermined performance objectives. Awards made to management
under the plan are determined by the Compensation Committee. For 1999, Messrs.
Becker, Jackson, Shinbrood, Edwards and McDonough will be eligible for annual
bonus payments in amounts up to $160,000, $150,000, $70,000, $60,000 and
$130,000, respectively.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
This report by the Compensation Committee of the Board of Directors
discusses the compensation objectives and policies generally applied by the
Compensation Committee in determining the compensation arrangements for
executive officers of AXENT for and during 1998. This report also discusses the
objectives and policies applied specifically in determining the compensation
arrangements for AXENT's Chief Executive Officer during 1998.
John F. Burton and Gabriel A. Battista comprised the Compensation Committee
from February 5, 1998 through December 31, 1998. They were responsible for
determining and implementing salary and bonus levels for executives of AXENT
other than continuing executives of Raptor Systems, Inc. and stock option grants
for all executives of AXENT for 1998. They were independent, non-employee
directors of AXENT at all times during 1998.
Compensation Philosophy
AXENT's executive compensation program is designed to reward the executives
based upon the business performance of AXENT, both short-term and long-term,
thereby aligning the interests of executive officers with the interests of
AXENT's stockholders. The program also seeks to retain and attract productive
executives by providing competitive total compensation packages. The principal
elements of compensation employed by the Compensation Committee are base salary,
short-term incentives through annual cash bonuses and long-term incentives
through stock option grants.
COMPENSATION PLAN
The Compensation Committee reviews at least annually AXENT's executive
compensation programs. In the review process, the Compensation Committee
considers and makes recommendations for each executive based upon factors that
the Compensation Committee believes are relevant, including compensation
packages for executives in comparable roles at other public companies, the
nature of the individual's responsibilities, the individual's contributions to
the growth and success of AXENT, AXENT's historical and recent financial
performance, the individual's historic compensation levels and length of service
with AXENT and the individual's level of compensation relative to the
compensation of other executives of AXENT. In fixing levels of base salary,
bonus and stock option grants for 1998, the Compensation Committee received and
considered a report prepared by a third party consultant that assessed cash and
equity compensation for executive management positions based upon the
consultant's review of publicly-available information for firms in AXENT's
industry and published survey research believed by the consultant to be
relevant. For those executives who served as executives of Raptor Systems, Inc.
immediately before its acquisition by AXENT in 1998, levels of base salary and
bonus continued for 1998 at the level fixed by Raptor before the acquisition.
-14-
<PAGE>
Base Salary. The Compensation Committee annually reviews and establishes
base salaries for all of AXENT's executives, including the Chief Executive
Officer, based primarily on each executive's responsibilities, experience,
knowledge and individual performance during the prior year, as well as the base
salaries for executives in comparable roles performing at comparable levels at
other companies in the same or related industries. In measuring individual
performance during the prior year for this purpose, the Compensation Committee
considers contributions to AXENT's recent financial performance, performance on
non-financial goals and other contributions to AXENT's success. For those
executives who served as executives of Raptor Systems, Inc. immediately before
its acquisition by AXENT in 1998, levels of base salary continued for 1998 at
the level fixed by Raptor before the acquisition.
The average increase for 1998 in base salaries for all executives who
served as such during 1997 was approximately thirteen percent. Mr. Becker's
base salary increased 22% for 1998 to reflect the increase in his
responsibilities as a result of his election as Chief Executive Officer in
August 1997, to reward his contributions to the growth and success of AXENT
(including the acquisition of Raptor Systems, Inc.) and to bring his salary into
greater parity with that of his peers in the industry.
Bonuses. Under AXENT's executive bonus plan, the Compensation Committee
establishes the amount of cash bonus to be paid to each executive upon
attainment of individualized performance objectives determined for each year.
For 1998, the maximum bonus for which executives who served as such in 1997 were
eligible increased an average of approximately twenty percent. For 1998, the
bonus plan for each executive was based upon one or more of the following
criteria: 1) achieving the established revenue targets for which an executive
was responsible; 2) achieving certain earnings-per-share targets; 3) achieving
timely delivery of product and/or 4) individual performance as measured by
achievement of defined objectives. The bonus plan for Mr. Becker was based upon
AXENT achieving established revenue and earnings-per-share targets. He received
approximately 52% of his potential bonus for 1998.
Stock Option Grants. The Compensation Committee makes grants of stock
options under AXENT's stock option plans to retain and reward key employees for
contributions to AXENT. The number of options granted to each executive during
1998 was based upon individual and company performance, future individual
potential to impact AXENT's performance, the shares owned by each executive, the
respective option position, both vested and unvested, of each executive and
equity compensation awarded by other companies in AXENT's industry.
Stock options awarded in 1998 to all executives, including Mr. Becker, were
based upon the above factors and were intended to provide rewards consistent
with stockholder returns. During 1998, Mr. Becker was granted stock options
covering a total of 225,000 shares, including options granted to reward him for
his contributions to AXENT's performance in 1997. Other executives of AXENT
named in the Summary Compensation Table were granted options during 1997
covering a total of 170,000 shares. See "Option Grants in Last Fiscal Year."
All options awarded in 1998 were granted at an exercise price at least
equal to the fair market value of AXENT's common stock on the grant date, and
all such options vest over a period of four years. A recipient of any such
option will earn no compensation unless the share price of AXENT's common stock
increases above the exercise price of the option.
Section 162(m) of the Internal Revenue Code. This provision generally
limits to $1,000,000 the tax deductible compensation paid to the Chief Executive
Officer and the four highest-paid executive officers who are employed as
executive officers on the last day of the year. However, the limitation does not
apply to performance-based compensation provided certain conditions are
satisfied. AXENT has imposed limits on options that may be granted to any
individual in any calendar year so that the Section 162(m) limitation does not
apply to performance-based compensation provided under AXENT's stock option
plans. None of AXENT's compensation payments for 1998 exceeded the tax
deductibility limit set forth in Section 162(m), nor is it expected that
compensation to be
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<PAGE>
paid in 1999 will exceed that limit. The Compensation Committee will continue to
monitor AXENT's executive compensation with the impact of Section 162(m) where
appropriate and consistent with AXENT's compensation policy.
John F. Burton
Gabriel A. Battista
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee were Messrs. Burton and Battista
from February 5, 1998 to December 31, 1998 and Jacqueline C. Morby and Richard
A. Hosley II prior to February 5, 1998. None of them was at any time during
1998, or at any other time, an officer or employee of AXENT. No executive
officer of AXENT serves as a member of the board of directors or compensation
committee of any entity that has one or more executive officers serving as a
member of AXENT's Compensation Committee.
PERFORMANCE GRAPH
The following graph shows a 32-month comparison of cumulative total return
on AXENT common stock, based on the market price of AXENT common stock assuming
reinvestment of dividends, with the cumulative total return of companies in the
CRSP Total Return Index for the NASDAQ Stock Market and the CRSP Index for
NASDAQ Computer and Data Processing Stocks for the period beginning April 24,
1996, the day AXENT common stock began trading on the NASDAQ National Market,
through December 31, 1998. The graph assumes the investment of $100 on April
24, 1996 in AXENT common stock and in each of the indices and assumes
reinvestment of all dividends. The graph presents information for a limited
period of time, and as a result, is not necessarily indicative of possible
future performance of AXENT common stock.
<TABLE>
<CAPTION>
STARTING
BASIS
DESCRIPTION 4/96 6/96 9/96 12/96 3/97 6/97 9/97 12/97 3/98 6/98 9/98 12/98
- -------------- ------- ------- ------- ------- ------ ------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AXENT $100.00 $117.86 $167.86 $107.14 $87.50 $108.93 $148.22 $123.22 $217.86 $218.75 $133.04 $218.31
NASDAQ COMPOSITE ($) $100.00 $99.88 $103.44 $108.51 $102.63 $121.45 $141.99 $133.15 $155.80 $160.31 $145.13 $187.18
NASDAQ COMPUTERS &
DATA PROCESS ($) $100.00 $99.52 $101.50 $105.54 $97.96 $125.62 $137.37 $129.65 $171.27 $190.08 $179.17 $232.01
</TABLE>
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<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of AXENT common stock as of March 31, 1999: (i) by each person who is
known by AXENT to own beneficially more than 5% of AXENT common stock; (ii) by
each director of AXENT and each nominee for election; (iii) by each of the Named
Officers (as defined in "Executive Compensation"); and (iv) by all directors and
executive officers of AXENT as a group. Except as otherwise noted, the persons
named in the table have sole voting and investment power with respect to all
shares of AXENT common stock shown as beneficially owned by them.
Amount and Nature of
Beneficial Ownership (1)
------------------------
Number Percent
----------- ----------
<TABLE>
<S> <C> <C>
John C. Becker (2) 226,022 *
Richard A. Lefebvre (3) 198,727 *
Gabriel A. Battista (4) 9,000 *
John F. Burton (5) 12,000 *
Timothy A. Davenport (6) 3,000 *
Kevin A. McNerney (6) 4,200 *
Brett M. Jackson (7) 106,028 *
Marc S. Shinbrood (8) 15,828 *
Robert B. Edwards, Jr. (9) 12,500 *
Thomas M. McDonough (10) 17,127 *
Executive officers and directors as a group
(10 persons) (11) 623,619 2.2%
</TABLE>
- --------------
* Less than 1% of the outstanding Common Stock.
(1) Applicable percentage of ownership is based upon 27,831,343 shares of AXENT
common stock outstanding on March 31, 1999. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission, and includes voting and investment power with respect to
shares. Shares of AXENT common stock subject to options exercisable
currently or within 60 days after March 31, 1999 are deemed outstanding for
computing the percentage ownership of the person holding such options, but
are not deemed outstanding for computing the percentage ownership of any
other person.
(2) Includes 200,223 shares issuable upon the exercise of vested options.
(3) Includes 23,000 shares issuable upon the exercise of vested options.
(4) Includes 9,000 shares issuable upon the exercise of vested options.
(5) Includes 10,000 shares issuable upon the exercise of vested options.
(6) Includes 3,000 shares issuable upon the exercise of vested options.
(7) Includes 105,074 shares issuable upon the exercise of vested options.
(8) Includes 15,828 shares issuable upon the exercise of vested options.
(9) Includes 12,500 shares issuable upon the exercise of vested options.
(10) Includes 17,127 shares issuable upon the exercise of vested options.
(11) See footnotes (2) through (9) above. Includes 406,909 shares issuable upon
the exercise of vested options.
CERTAIN TRANSACTIONS
In December 1998, AXENT engaged Updata Capital, Inc. to provide certain
investment banking services. Updata provided such services to AXENT in its
acquisition of CKS Limited, the corporate parent of PassGo Technologies, Ltd.,
in March 1999. Mr. Burton is a director of AXENT and Managing Director of
Updata.
AXENT entered into a Memorandum of Understanding with Mr. Lefebvre in 1997,
which was amended in November 1998. See "Employment Agreements and Severance
Arrangements."
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<PAGE>
AXENT believes these transactions were made on terms no less favorable to
AXENT than would have been obtained from unaffiliated third parties. In
accordance with AXENT's policy, these transactions were approved by
disinterested directors after disclosure of any interest of any officer or
director of AXENT involved.
STOCKHOLDER PROPOSALS
To be considered for inclusion in AXENT's proxy statement for AXENT's annual
meeting of stockholders to be held in 2000, a stockholder proposal must be
received by Gary M. Ford, Secretary, AXENT Technologies, Inc., 2400 Research
Boulevard, Suite 200, Rockville, Maryland 20850, no later than January 1, 2000.
The submission by a stockholder of a proposal for inclusion in the proxy
statement does not guarantee that it will be included. Any stockholder proposal
not included in the proxy materials disseminated by the management of AXENT for
AXENT's 2000 annual meeting in accordance with Rule 14a-8 under the Securities
Exchange Act of 1934 (the "Exchange Act") will be considered untimely for the
purposes of Rules 14a-4 and 14a-5 under the Exchange Act if notice of the
proposal is received after March 20, 2000. Management proxies will be
authorized to exercise discretionary authority with respect to any stockholder
proposal not included in AXENT's proxy materials unless (a) AXENT receives
notice of such proposal by March 20, 2000 and (b) the conditions set forth in
Rule 14-4(c)(2)(i)-(iii) under the Exchange Act are met.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires AXENT's executive officers and
directors and persons who own more than 10% of a registered class of AXENT's
equity securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Executive officers, directors and greater
than 10% stockholders are required by regulations of the Securities and Exchange
Commission to furnish AXENT with copies of all Section 16(a) reports they file.
Securities and Exchange Commission rules require AXENT to disclose all known
delinquent Section 16(a) filings by its executive officers, directors and 10%
stockholders in this proxy statement. Based solely on its review of the copies
of reports received by it, or written representations from certain reporting
persons that no such reports were required for those persons, AXENT believes
that, for 1998, all filing requirements applicable to its executive officers,
directors, and greater than 10% beneficial owners were made on a timely basis,
with the exception of a late Form 4 filing by Robert A Steinkrauss disclosing
certain stock option exercises on one date in February 1998.
OTHER MATTERS
The Board of Directors knows of no other business that will be presented to
the annual meeting. Representatives of PricewaterhouseCoopers L.L.P.,
independent accountants to AXENT for 1998, are expected to be present at the
annual meeting, will have an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
A copy of AXENT's Annual Report on Form 10-K for 1998 accompanies this proxy
statement. Any stockholder may request AXENT's 1998 Annual Report, which was
not available at the time of mailing this proxy statement, on AXENT's Web page
(www.axent.com) or by calling AXENT's investor relations personnel.
-------------
By Order of the Board of Directors
Gary M. Ford
Secretary
April 30, 1999
Rockville, Maryland
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APPENDIX A
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AXENT TECHNOLOGIES, INC.
1999 INCENTIVE STOCK PLAN
1. Establishment, Purpose and Types of Awards
AXENT Technologies, Inc. hereby establishes the AXENT Technologies, Inc.
1999 Incentive Stock Plan, as amended (the "Plan"). The purpose of the Plan is
to promote the long-term growth and profitability of AXENT Technologies, Inc.
(the "Corporation") by (i) providing key people with incentives to improve
stockholder value and to contribute to the growth and financial success of the
Corporation, and (ii) enabling the Corporation to attract, retain and reward the
best-available persons for positions of substantial responsibility.
The Plan permits the granting of stock options (including incentive stock
options qualifying under Code section 422 and nonqualified stock options), stock
appreciation rights, restricted or unrestricted stock awards, phantom stock,
performance awards, or any combination of the foregoing.
2. Definitions
Under this Plan, except where the context otherwise indicates, the following
definitions apply:
(a) "Affiliate" shall mean any entity, whether now or hereafter existing,
which controls, is controlled by, or is under common control with, the
Corporation (including, but not limited to, joint ventures, limited liability
companies, and partnerships). For this purpose, "control" shall mean ownership
of 50% or more of the total combined voting power or value of all classes of
stock or interests of the entity.
(b) "Award" shall mean any stock option, stock appreciation right, stock
award, phantom stock award, or performance award.
(c) "Board" shall mean the Board of Directors of the Corporation.
(d) "Change of Control" shall mean the occurrence of any of the following:
(i) any "person", as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Corporation, any trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation, or any
corporation owned directly or indirectly by the stockholders of the Corporation
in substantially the same proportion as their ownership of stock of the
Corporation), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 50% or more of the combined voting power of the
Corporation's then outstanding securities;
(ii) during any period of two consecutive years ending during the term
of the Plan (not including any period prior to the adoption of the Plan),
individuals who at the beginning of such period constitute the Board of
Directors of the Corporation, and any new Director (other than a Director
designated by a person who has entered into an agreement with the Corporation to
effect any transaction described in clause (i), (iii) or (iv) of this Section
2(d)) whose election by the Board of Directors or nomination for election by the
Corporation's stockholders was approved by a vote of at least two-thirds of the
Directors then still in office who were either Directors at the beginning of the
period or whose election or whose nomination for election was previously so
approved (collectively, the "Disinterested Directors"), cease for any reason to
constitute a majority of the Board of Directors;
<PAGE>
(iii) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other than (A) a
merger or consolidation which would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar transaction) in
which no "person" (as hereinabove defined) acquires more than 50% of the
combined voting power of the Corporation's then outstanding securities; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or the sale of all or substantially all of the
Corporation's assets which, in either case, has not previously been approved by
a majority of the Disinterested Directors.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
(f) "Common Stock" shall mean shares of common stock of the Corporation, par
value of two cents ($0.02) per share.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" of a share of the Corporation's Common Stock for
purposes of the granting of an Award under this Plan shall be determined in good
faith by the Administator at the time of the grant using any reasonable method
based on the principal stock exchange or market upon which the Company's stock
is traded; and for all other purposes on a particular date shall mean the last
reported sale price per share of Common Stock, regular way, on such date or, in
case no such sale takes place on such date, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on a national securities exchange or included for quotation
on the Nasdaq-National Market. If, as the case may be, the relevant date is not
a trading day, the determination shall be made as of the next preceding trading
day. As used herein, the term "trading day" shall mean a day on which public
trading of securities occurs and is reported in the principal consolidated
reporting system referred to above.
(i) "Grant Agreement" shall mean a written document memorializing the terms
and conditions of an Award granted pursuant to the Plan and shall incorporate
the terms of the Plan.
(j) "Parent" shall mean a corporation, whether now or hereafter existing,
within the meaning of the definition of "parent corporation" provided in Code
section 424(e), or any successor thereto.
(k) "Rule 16b-3" shall mean Rule 16b-3 as in effect under the Exchange Act
on the effective date of the Plan, or any successor provision prescribing
conditions necessary to exempt the issuance of securities under the Plan (and
further transactions in such securities) from Section 16(b) of the Exchange Act.
(l) "Subsidiary" and "subsidiaries" shall mean only a corporation or
corporations, whether now or hereafter existing, within the meaning of the
definition of "subsidiary corporation" provided in Section 424(f) of the Code,
or any successor thereto.
3. Administration
(a) Administration of the Plan. The Plan shall be administered by the Board
or by such committee or committees as may be appointed by the Board from time to
time (the Board, committee or committees hereinafter referred to as the
"Administrator").
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<PAGE>
(b) Powers of the Administrator. The Administrator shall have all the
powers vested in it by the terms of the Plan, such powers to include authority,
in its sole and absolute discretion, to grant Awards under the Plan, prescribe
Grant Agreements evidencing such Awards and establish programs for granting
Awards.
The Administrator shall have full power and authority to take all other
actions necessary to carry out the purpose and intent of the Plan, including,
but not limited to, the authority to: (i) determine the eligible persons to
whom, and the time or times at which Awards shall be granted; (ii) determine the
types of Awards to be granted; (iii) determine the number of shares to be
covered by or used for reference purposes for each Award; (iv) impose such
terms, limitations, restrictions and conditions upon any such Award as the
Administrator shall deem appropriate; (v) modify, amend, extend or renew
outstanding Awards, or accept the surrender of outstanding Awards (provided
however, that, except as provided in Section 7(d) of the Plan, any modification
that would materially adversely affect any outstanding Award shall not be made
without the consent of the holder, and provided, further, that, except as
provided in Section 7(d) of the Plan, the Administrator shall not modify any
Award under the Plan to reduce its exercise or purchase price or accept the
surrender of outstanding awards under the Plan in connection with the
substitution of like new Awards having a lower exercise or purchase price); (vi)
accelerate or otherwise change the time in which an Award may be exercised or
becomes payable and to waive or accelerate the lapse, in whole or in part, of
any restriction or condition with respect to such Award, including, but not
limited to, any restriction or condition with respect to the vesting or
exercisability of an Award following termination of any grantee's employment;
and (vii) establish objectives and conditions, if any, for earning Awards and
determining whether Awards will be paid after the end of a performance period.
The Administrator shall have full power and authority, in its sole and
absolute discretion, to administer and interpret the Plan and to adopt and
interpret such rules, regulations, agreements, guidelines and instruments for
the administration of the Plan and for the conduct of its business as the
Administrator deems necessary or advisable.
(c) Non-Uniform Determinations. The Administrator's determinations under
the Plan (including without limitation, determinations of the persons to receive
Awards, the form, amount and timing of such Awards, the terms and provisions of
such Awards and the Grant Agreements evidencing such Awards) need not be uniform
and may be made by the Administrator selectively among persons who receive, or
are eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.
(d) Limited Liability. To the maximum extent permitted by law, no member of
the Administrator shall be liable for any action taken or decision made in good
faith relating to the Plan or any Award thereunder.
(e) Indemnification. To the maximum extent permitted by law and by the
Corporation's charter and bylaws, the members of the Administrator shall be
indemnified by the Corporation in respect of all their activities under the
Plan.
(f) Effect of Administrator's Decision. All actions taken and decisions and
determinations made by the Administrator on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Administrator's
sole and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Corporation, its stockholders, any participants in the
Plan and any other employee of the Corporation, and their respective successors
in interest.
4. Shares Available for the Plan; Maximum Awards
Subject to adjustments as provided in Section 7(d) of the Plan, the shares
of Common Stock that may be issued with respect to Awards granted under the Plan
shall not exceed an aggregate of 1,300,000 shares of Common Stock. The
Corporation shall reserve such number of shares for Awards under the Plan,
subject to adjustments as provided in Section 7(d) of the Plan. If any Award,
or portion of an Award, under the Plan expires
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<PAGE>
or terminates unexercised, becomes unexercisable or is forfeited or otherwise
terminated, surrendered or canceled as to any shares, or if any shares of Common
Stock are surrendered to the Corporation in connection with any Award (whether
or not such surrendered shares were acquired pursuant to any Award), the shares
subject to such Award and the surrendered shares shall thereafter be available
for further Awards under the Plan; provided, however, that any such shares that
are surrendered to the Corporation in connection with any Award or that are
otherwise forfeited after issuance shall not be available for purchase pursuant
to incentive stock options intended to qualify under Code section 422.
Subject to adjustments as provided in Section 7(d) of the Plan, the maximum
number of shares of Common Stock subject to Awards of any combination that may
be granted under the Plan during any one fiscal year of the Corporation to any
one individual shall be limited to 500,000. Such per-individual limit shall not
be adjusted to effect a restoration of shares of Common Stock with respect to
which the related Award is terminated, surrendered or canceled.
Subject to adjustments as provided in Section 7(d) of the Plan, the maximum
number of shares of Common Stock subject to Awards of any combination that may
be granted during any one fiscal year of the Corporation at a price below Fair
Market Value on the date of grant or award shall be limited to 200,000. Such
limit shall not be adjusted to effect a restoration of shares of Common Stock
with respect to which the related Award is terminated, surrendered or canceled.
5. Participation
Participation in the Plan shall be open to all employees, officers,
directors and consultants of the Corporation, or of any Affiliate of the
Corporation, as may be selected by the Administrator from time to time.
6. Awards
The Administrator, in its sole discretion, establishes the terms of all
Awards granted under the Plan. Awards may be granted individually or in tandem
with other types of Awards. All Awards are subject to the terms and conditions
provided in the Grant Agreement.
(a) Stock Options. The Administrator may from time to time grant to
eligible participants Awards of incentive stock options as that term is defined
in Code section 422 or nonqualified stock options; provided, however, that
Awards of incentive stock options shall be limited to employees of the
Corporation or of any Parent or Subsidiary of the Corporation. Options intended
to qualify as incentive stock options under Code section 422 must have an
exercise price at least equal to Fair Market Value on the date of grant, and
nonqualified stock options (i.e., all stock options or portions thereof granted
----
other the Plan that do not qualify as incentive stock options under Code section
422 on the date of grant) must have an exercise price at least equal to 85% of
Fair Market Value on the date of grant. No stock option shall be an incentive
stock option unless so designated by the Administrator at the time of grant or
in the Grant Agreement evidencing such stock option.
(b) Stock Appreciation Rights. The Administrator may from time to time
grant to eligible participants Awards of Stock Appreciation Rights ("SAR"). An
SAR entitles the grantee to receive, subject to the provisions of the Plan and
the Grant Agreement, a payment having an aggregate value equal to the product of
(i) the excess of (A) the Fair Market Value on the exercise date of one share of
Common Stock over (B) the base price per share specified in the Grant Agreement,
times (ii) the number of shares specified by the SAR, or portion thereof, which
is exercised. Payment by the Corporation of the amount receivable upon any
exercise of an SAR may be made by the delivery of Common Stock or cash, or any
combination of Common Stock and cash, as determined in the sole discretion of
the Administrator. If upon settlement of the exercise of an SAR a grantee is to
receive a portion of such payment in shares of Common Stock, the number of
shares shall be determined by dividing such portion by the Fair Market Value of
a share of Common Stock on the exercise date. No fractional shares shall be
used for
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<PAGE>
such payment and the Administrator shall determine whether cash shall be given
in lieu of such fractional shares or whether such fractional shares shall be
eliminated.
(c) Stock Awards. The Administrator may from time to time grant restricted
or unrestricted stock Awards to eligible participants in such amounts, on such
terms and conditions, and for such consideration, including no consideration or
such minimum consideration as may be required by law, as it shall determine. A
stock Award may be paid in Common Stock, in cash, or in a combination of Common
Stock and cash, as determined in the sole discretion of the Administrator.
(d) Phantom Stock. The Administrator may from time to time grant Awards to
eligible participants denominated in stock-equivalent units ("phantom stock") in
such amounts and on such terms and conditions as it shall determine. Phantom
stock units granted to a participant shall be credited to a bookkeeping reserve
account solely for accounting purposes and shall not require a segregation of
any of the Corporation's assets. An Award of phantom stock may be settled in
Common Stock, in cash, or in a combination of Common Stock and cash, as
determined in the sole discretion of the Administrator. Except as otherwise
provided in the applicable Grant Agreement, the grantee shall not have the
rights of a stockholder with respect to any shares of Common Stock represented
by a phantom stock unit solely as a result of the grant of a phantom stock unit
to the grantee.
(e) Performance Awards. The Administrator may, in its discretion, grant
performance awards which become payable on account of attainment of one or more
performance goals established by the Administrator. Performance awards may be
paid by the delivery of Common Stock or cash, or any combination of Common Stock
and cash, as determined in the sole discretion of the Administrator.
Performance goals established by the Administrator may be based on the
Corporation's or an Affiliate's operating income or one or more other business
criteria selected by the Administrator that apply to an individual or group of
individuals, a business unit, or the Corporation or an Affiliate as a whole,
over such performance period as the Administrator may designate.
7. Miscellaneous
(a) Withholding of Taxes. Grantees and holders of Awards shall pay to the
Corporation, or make provision satisfactory to the Administrator for payment of,
any taxes required to be withheld in respect of Awards under the Plan no later
than the date of the event creating the tax liability. The Corporation may, to
the extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the grantee or holder of an Award. In the event that
payment to the Corporation of such tax obligations is made in shares of Common
Stock, such shares shall be valued at Fair Market Value on the applicable date
for such purposes.
(b) Loans. The Corporation may make or guarantee loans to grantees to
assist grantees in exercising Awards and satisfying any withholding tax
obligations.
(c) Transferability. Except as otherwise determined by the Administrator,
and in any event in the case of an incentive stock option or a stock
appreciation right granted with respect to an incentive stock option, no Award
granted under the Plan shall be transferable by a grantee otherwise than by will
or the laws of descent and distribution or pursuant to a domestic relations
order within the meaning of Section 414(p) of the Code. Unless otherwise
determined by the Administrator in accord with the provisions of the immediately
preceding sentence, an Award may be exercised during the lifetime of the grantee
or an alternate payee (as applicable), only by the grantee or the grantee's
alternate payee under a domestic relations order as described above, as the case
may be, or, during the period the grantee or alternate payee is under a legal
disability, by such individual's guardian or legal representative.
(d) Adjustments; Business Combinations. In the event of changes in the
Common Stock of the Corporation by reason of any stock dividend, split-up,
recapitalization, merger, consolidation, business combination or exchange of
shares and the like, the Administrator shall, in its discretion, make
appropriate
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<PAGE>
adjustments to the maximum number and kind of shares reserved for issuance or
with respect to which Awards may be granted under the Plan as provided in
Section 4 of the Plan and to the number, kind and price of shares covered by
Awards granted, and shall, in its discretion and without the consent of holders
of Awards, make any other adjustments in Awards, including but not limited to
reducing the number of shares subject to Awards or providing or mandating
alternative settlement methods such as settlement of the Awards in cash or in
shares of Common Stock or other securities of the Corporation or of any other
entity, or in any other matters which relate to Awards as the Administrator
shall, in its sole discretion, determine to be necessary or appropriate.
Subject to any provisions in any Grant Agreement providing a result more
favorable to the holder of such Award, in the event of a "Change in Control,"
any restrictions on vesting or exercising any outstanding Award issued pursuant
to the Plan prior to any given date shall terminate with respect to the number
of whole shares constituting 50% of the shares subject to any such restriction.
Notwithstanding anything in the Plan to the contrary and without the consent
of holders of Awards, the Administrator, in its sole discretion, may make any
modifications to any Awards, including but not limited to cancellation,
forfeiture, surrender or other termination of the Awards in whole or in part
regardless of the vested status of the Award, in order to facilitate any
business combination that is authorized by the Board to comply with requirements
for treatment as a pooling of interests transaction for accounting purposes
under generally accepted accounting principles.
The Administrator is authorized to make, in its discretion and without the
consent of holders of Awards, adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events affecting the Corporation, or the financial statements of the Corporation
or any Subsidiary, or of changes in applicable laws, regulations, or accounting
principles, whenever the Administrator determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
(e) Substitution of Awards in Mergers and Acquisitions. Awards may be
granted under the Plan from time to time in substitution for Awards held by
employees or directors of entities who become or are about to become employees
or directors of the Corporation or an Affiliate as the result of a merger or
consolidation of the employing entity with the Corporation or an Affiliate, or
the acquisition by the Corporation or an Affiliate of the assets or stock of the
employing entity. The terms and conditions of any substitute Awards so granted
may vary from the terms and conditions set forth herein to the extent that the
Administrator deems appropriate at the time of grant to conform the substitute
Awards to the provisions of the awards for which they are substituted.
(f) Termination, Amendment and Modification of the Plan. The Board may
terminate, amend or modify the Plan or any portion thereof at any time.
(g) Non-Guarantee of Employment or Service. Nothing in the Plan or in any
Grant Agreement thereunder shall confer any right on an individual to continue
in the service of the Corporation or shall interfere in any way with the right
of the Corporation to terminate such service at any time.
(h) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Corporation and a grantee or any other person. To the
extent that any grantee or other person acquires a right to receive payments
from the Corporation pursuant to an Award, such right shall be no greater than
the right of any unsecured general creditor of the Corporation.
(i) Governing Law. The validity, construction and effect of the Plan, of
Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Administrator
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<PAGE>
relating to the Plan or such Grant Agreements, and the rights of any and all
persons having or claiming to have any interest therein or thereunder, shall be
determined exclusively in accordance with applicable federal laws and the laws
of the State of Delaware, without regard to its conflict of laws principles.
(j) Effective Date; Termination Date. The Plan is effective as of the date
on which the Plan was adopted by the Board, subject to approval of the
stockholders within twelve months before or after such date. No Award shall be
granted under the Plan after the close of business on the day immediately
preceding the tenth anniversary of the effective date of the Plan. Subject to
other applicable provisions of the Plan, all Awards made under the Plan prior to
such termination of the Plan shall remain in effect until such Awards have been
satisfied or terminated in accordance with the Plan and the terms of such
Awards.
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AXENT Technologies, Inc.
The undersigned hereby appoints Robert B. Edwards, Jr. and Gary M. Ford
proxies, each with power to act without the other and with power of
substitution, and hereby authorizes each of them to represent and vote, as
designated on the reverse side, all the shares of stock of AXENT Technologies,
Inc. (the "Company") standing in the name of the undersigned with all powers
which the undersigned would possess if present at the Annual Meeting of
Stockholders of the Company to be held June 4, 1999 or any adjournment or
postponement thereof.
(this proxy is to be DATED and SIGNED)
Please mark
[X] votes as in
this example
1. ELECTION OF DIRECTORS
Nominees: Gabriel A. Battista and Richard A. Lefebvre
FOR WITHHELD FOR ALL
[ ] [ ]
YOU MAYWITHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY WRITING HIS NAME IN THE
SPACE PROVIDED BELOW:
- -------------------------------------------
2. APPROVAL OF THE AXENT TECHNOLOGIES, INC. 1999 INCENTIVE STOCK PLAN, WHICH
PROVIDES FOR THE ISSUANCE OF UP TO 1,300,000 SHARES OF THE COMPANY'S COMMON
STOCK.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the proxies are authorized to vote upon any other
matter that may come before the Annual Meeting of Stockholders or any
adjournment or postponement thereof if the Company had not received notice of
any such stockholder proposal by March 20, 1999 and a stockholder had not
previously sought to include the matter in the Company's proxy statement.
NOTE: Please sign exactly as your name appears hereon. Joint owners
should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
Signature: Date: Signature: Date:
--------------- ------- -------------- -------
IMPORTANT: PLEASE SIGN, DATE AND RETURN PROMPTLY
1
