<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 2000
REGISTRATION NO. 333-46264
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SYMANTEC CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7372 77-0181864
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
20330 STEVENS CREEK BOULEVARD
CUPERTINO, CALIFORNIA 95014-2132
(408) 253-9600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MR. JOHN W. THOMPSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SYMANTEC CORPORATION
20330 STEVENS CREEK BOULEVARD
CUPERTINO, CALIFORNIA 95014-2132
(408) 253-9600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
CRAIG E. CHASON TIMOTHY G. HOXIE
JOHN M. MCDONALD RICHARD A. PEERS
SHAW PITTMAN HELLER EHRMAN WHITE & MCAULIFFE LLP
1676 INTERNATIONAL DRIVE 333 BUSH STREET
MCLEAN, VA 22102-4835 SAN FRANCISCO, CA 94104-2878
TEL: (703) 790-7900 TEL: (415) 772-6000
FAX: (703) 790-7901 FAX: (415) 772-6268
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC:
Upon consummation of the merger described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement number for the same offering. [ ] __________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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--------------------------------------------------------------------------------
<PAGE> 2
[SYMANTEC LOGO] [AXENT LOGO]
November 10, 2000
Dear Stockholders of Symantec Corporation and AXENT Technologies, Inc.:
A MERGER PROPOSAL -- YOUR VOTE IS IMPORTANT
Symantec Corporation and AXENT Technologies, Inc. have agreed to merge
AXENT Technologies, Inc. with a subsidiary of Symantec. If the merger is
approved by stockholders of each company, AXENT will become a wholly owned
subsidiary of Symantec. We are proposing this merger because we believe the
combined strengths of our two companies will enable us to create the global
leader in Internet security software.
As networked communications continue to expand, security is increasingly
vital to consumers and businesses alike. Consumers want and businesses need a
single company capable of delivering solutions across the security
continuum -- from the desktop, across internal networks, onto the Internet and
back again. This merger will help Symantec to meet that demand more completely
and more effectively.
Symantec is a leader in Internet security technology providing a broad
range of content and network security solutions to individuals and enterprises.
In addition, Symantec provides a broad range of virus protection, professional
services and risk management, Internet content and e-mail filtering, remote
management and mobile code detection technologies to enterprises and individual
customers. AXENT is a leader in corporate security products and services with
its firewall, Intrusion Detection and Vulnerability Assessment solution and its
Managed Security Services.
Symantec believes that being able to offer a total security solution, sold
through multiple sales channels to consumers and businesses of all sizes, offers
a significant revenue growth opportunity for Symantec.
When the merger is completed, stockholders of AXENT will receive for each
share of AXENT common stock 0.50 of a share of Symantec common stock. Symantec
common stock is listed on the Nasdaq National Market under the trading symbol
"SYMC." On November 1, 2000, the closing price of Symantec common stock was
$37.00 per share.
The boards of directors of Symantec and AXENT have determined the merger to
be fair to the stockholders of their respective companies and in their best
interests. The boards of directors of both Symantec and AXENT have approved the
merger and recommend their respective stockholders vote FOR the merger proposal.
The joint proxy statement/prospectus provides detailed information concerning
Symantec, AXENT, the merger and proposals related to the merger. WE URGE YOU TO
READ THIS DOCUMENT, INCLUDING THE SECTION DESCRIBING RISK FACTORS THAT BEGINS ON
PAGE 13.
STOCKHOLDERS OF SYMANTEC AND AXENT ARE INVITED TO ATTEND THE STOCKHOLDER
MEETING FOR THEIR RESPECTIVE COMPANIES TO VOTE ON THE MERGER PROPOSAL. The
dates, times and places of the meetings are as follows:
<TABLE>
<S> <C>
FOR SYMANTEC CORPORATION STOCKHOLDERS: FOR AXENT TECHNOLOGIES, INC. STOCKHOLDERS:
DECEMBER 15, 2000 AT 10:00 A.M. (PST) DECEMBER 15, 2000 AT 9:00 A.M. (EST)
SYMANTEC CORPORATION AXENT TECHNOLOGIES, INC.
WORLD HEADQUARTERS 2400 RESEARCH BOULEVARD, SUITE 200
20330 STEVENS CREEK BOULEVARD ROCKVILLE, MARYLAND 20850
CUPERTINO, CALIFORNIA 95014
</TABLE>
YOUR VOTE IS VERY IMPORTANT, regardless of the number of shares you own.
Whether or not you plan to attend the special meeting, please vote as soon as
possible to make sure your shares are represented at the meeting. Please take
the time to vote by completing and mailing the enclosed proxy card in the
enclosed
<PAGE> 3
pre-paid envelope. Returning the proxy card does not deprive you of your right
to attend the meeting and to vote your shares in person.
We strongly support this combination of our companies and join with our
boards of directors in enthusiastically recommending that you vote in favor of
the merger.
<TABLE>
<S> <C>
/s/ John W. Thompson /s/ John C. Becker
-------------------------------------------- -----------------------------------------------------
John W. Thompson John C. Becker
Chairman of the Board of Directors, Chairman of the Board of Directors
President and Chief Executive Officer and Chief Executive Officer of
of Symantec Corporation AXENT Technologies, Inc.
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
regulator has approved the issuance of common stock in the merger or determined
if this joint proxy statement/prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense.
This joint proxy statement/prospectus is dated November 6, 2000, and was
first mailed to stockholders on or about November 10, 2000.
<PAGE> 4
[SYMANTEC LOGO]
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on December 15, 2000
To Our Stockholders:
A special meeting of stockholders of Symantec Corporation and holders of
exchangeable shares of Delrina Corporation, a wholly owned subsidiary of
Symantec, each of which is exchangeable for one share of Symantec Common Stock,
will be held at Symantec Corporation World Headquarters, 20330 Stevens Creek
Boulevard, Cupertino, California 95014 on December 15, 2000 at 10:00 a.m., local
time, for the following purposes:
1. To approve the issuance of shares of Symantec common stock to the
holders of AXENT common stock in the merger pursuant to which AXENT will
become a wholly owned subsidiary of Symantec. In connection with the
merger, Symantec will issue 0.50 of a share of its common stock for each
outstanding share of AXENT common stock. The merger agreement relating
to the proposed merger is included as Annex A to the attached joint
proxy statement/prospectus.
2. To approve an amendment to Symantec's 1996 Equity Incentive Plan ("1996
Plan") to make available for issuance thereunder an additional 2,400,000
shares of Symantec common stock, which will raise the 1996 Plan's limit
on shares that may be issued pursuant to awards granted thereunder from
15,236,102 to 17,636,102.
3. To approve an amendment to Symantec's certificate of incorporation to
increase the number of authorized shares of Symantec common stock by
200,000,000 shares to 300,000,000 shares.
4. To transact any other business that may properly come before the special
meeting or any adjournment.
Each of the foregoing items of business is more fully described in the
joint proxy statement/ prospectus, which we urge you to read carefully.
Stockholders of record at the close of business on November 3, 2000, are
entitled to notice of and to vote at the special meeting and any adjournment or
postponement thereof. The merger cannot be completed unless the holders of a
majority of the shares of Symantec common stock and the holders of Delrina
exchangeable shares represented in person or by proxy at the meeting approve the
issuance of common stock in connection with the merger. The vote required for
each of the other proposals is set forth in the section of the joint proxy
statement/prospectus titled "The Symantec Special Meeting."
TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING IN PERSON. ANY EXECUTED BUT UNMARKED PROXY CARDS WILL BE VOTED FOR
ADOPTION OF THE MERGER AGREEMENT. YOU MAY REVOKE YOUR PROXY IN THE MANNER
DESCRIBED IN THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS AT ANY TIME
BEFORE IT HAS BEEN VOTED AT THE SPECIAL MEETING. ANY STOCKHOLDER ATTENDING THE
SPECIAL MEETING MAY VOTE IN PERSON EVEN IF SUCH STOCKHOLDER HAS RETURNED A
PROXY.
By Order of the Board of Directors
of Symantec Corporation,
Signature
Derek Witte
Secretary
Cupertino, California
November 10, 2000
<PAGE> 5
AXENT LOGO
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 15, 2000
To the Stockholders of AXENT Technologies, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of AXENT
Technologies, Inc., a Delaware corporation, will be held at AXENT Technologies,
Inc. located at 2400 Research Boulevard, Suite 200, Rockville, Maryland 20850 on
Friday, December 15, 2000 at 9:00 a.m. local time, for the following purposes:
1. To consider and vote upon a proposal to adopt the merger agreement
providing for the merger of a wholly owned subsidiary of Symantec
Corporation with and into AXENT whereby, among other things, each
outstanding share of AXENT common stock will be converted into the right
to receive 0.50 of a share of Symantec common stock; and
2. To transact such other business as may properly come before the special
meeting and any adjournment or postponement thereof.
Each of the foregoing items of business is more fully described in the
joint proxy statement/ prospectus, which we urge you to read carefully.
Stockholders of record at the close of business on November 3, 2000, are
entitled to notice of and to vote at the special meeting and any adjournment or
postponement thereof. Adoption of the merger agreement will require the
affirmative vote of the holders of AXENT common stock representing a majority of
the outstanding shares of AXENT common stock entitled to vote.
TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING IN PERSON. ANY EXECUTED BUT UNMARKED PROXY CARDS WILL BE VOTED FOR
ADOPTION OF THE MERGER AGREEMENT. YOU MAY REVOKE YOUR PROXY IN THE MANNER
DESCRIBED IN THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS AT ANY TIME
BEFORE IT HAS BEEN VOTED AT THE SPECIAL MEETING. ANY STOCKHOLDER ATTENDING THE
SPECIAL MEETING MAY VOTE IN PERSON EVEN IF SUCH STOCKHOLDER HAS RETURNED A
PROXY.
PLEASE DO NOT SEND ANY AXENT STOCK CERTIFICATES IN YOUR PROXY ENVELOPE.
By Order of the Board of Directors
of AXENT Technologies, Inc.,
/s/ Brandon Hirsch
Brandon Hirsch
Acting Secretary
Rockville, Maryland
November 10, 2000
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS............. 4
Symantec's selected historical financial data............. 9
AXENT's selected historical financial data................ 10
Unaudited pro forma condensed combined financial
information............................................ 11
Comparative historical and unaudited pro forma per share
data................................................... 12
RISK FACTORS................................................ 13
Risks Related to the Proposed Merger...................... 13
Risks Common to the Businesses of Symantec and AXENT...... 15
Additional Risks Related to the Business of Symantec...... 19
Additional Risks Related to the Business of AXENT......... 21
THE SYMANTEC SPECIAL MEETING................................ 23
THE AXENT SPECIAL MEETING................................... 26
THE MERGER.................................................. 29
Background of the merger.................................. 29
Symantec's reasons for the merger......................... 31
Opinion of financial advisor to Symantec.................. 32
Recommendation of Symantec's board of directors........... 37
AXENT's reasons for the merger............................ 37
Opinion of financial advisor to AXENT..................... 38
Recommendation of AXENT's board of directors.............. 43
Interests of certain persons in the merger................ 43
Completion and effectiveness of the merger................ 43
Structure of the merger and conversion of AXENT common
stock.................................................. 43
Exchange of AXENT stock certificates for Symantec stock
certificates........................................... 44
Treatment of options...................................... 44
Material United States federal income tax consequences of
the merger............................................. 44
Accounting treatment of the merger........................ 46
Regulatory filings and approvals required to complete the
merger................................................. 46
Restrictions on sales of shares by affiliates of Symantec
or AXENT............................................... 46
Listing Symantec common stock to be issued in the
merger................................................. 47
Delisting and deregistration of AXENT common stock after
the merger............................................. 47
THE MERGER AGREEMENT........................................ 48
COMPARISON OF RIGHTS OF HOLDERS OF SYMANTEC COMMON STOCK AND
AXENT COMMON STOCK........................................ 56
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION................ 61
COMPARATIVE PER SHARE MARKET PRICE DATA..................... 67
ADDITIONAL MATTERS BEING SUBMITTED TO A VOTE OF ONLY
SYMANTEC STOCKHOLDERS..................................... 69
Proposal No. 2 -- Approval of amendment to Symantec's 1996
Equity Incentive Plan.................................. 69
Proposal No. 3 -- Approval of amendment to Certificate of
Incorporation.......................................... 74
STOCKHOLDER PROPOSALS....................................... 76
LEGAL MATTERS............................................... 76
EXPERTS..................................................... 76
DOCUMENTS INCORPORATED BY REFERENCE IN THIS JOINT PROXY
STATEMENT/PROSPECTUS...................................... 77
WHERE YOU CAN FIND MORE INFORMATION......................... 78
STATEMENT REGARDING FORWARD-LOOKING INFORMATION............. 79
</TABLE>
i
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ANNEXES
Annex A: Agreement and Plan of Merger with Exhibits......... A-1
Annex B: Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation............................................... B-1
Annex C: Opinion of Chase H&Q............................... C-1
</TABLE>
ii
<PAGE> 8
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY ARE WE PROPOSING THE MERGER?
A: We believe that combining the products and technologies of the two companies
will allow us to offer a complete Internet security solution to a broad
range of customers. The combined company will have a larger client base,
greater depth of skilled personnel, stronger research and development
capability, a more concentrated sales effort and a higher market profile,
all of which we believe will create greater market opportunities for us and
greater value for our respective stockholders.
Q: WHAT WILL HAPPEN IN THE MERGER?
A: In the merger, AXENT will become a wholly owned subsidiary of Symantec.
Based on the capitalization of Symantec and AXENT as of July 24, 2000, the
stockholders of AXENT will receive a number of shares of Symantec common
stock representing an aggregate of approximately 20% of Symantec's
outstanding common stock following the merger. Approximately 1,950,000
additional shares of Symantec common stock would become issuable upon the
exercise of AXENT stock options assumed by Symantec.
Q: WHAT WILL AXENT'S STOCKHOLDERS RECEIVE IN THE MERGER?
A: AXENT's stockholders will receive 0.50 of a share of Symantec common stock
for each share of AXENT common stock they own. Symantec will not issue
fractional shares of stock. Instead, AXENT's stockholders will receive cash
based on the closing price of a share of Symantec common stock on the
trading day immediately preceding the effective time of the merger instead
of any fractional share.
For example, a holder of 101 shares of AXENT common stock will receive 50
shares of Symantec common stock and an amount of cash equal to 0.50 times the
closing price of a share of Symantec common stock when the merger is
completed.
Q: WHAT IS THE VALUE PER SHARE TO BE RECEIVED BY THE AXENT STOCKHOLDERS?
A: The number of shares of Symantec common stock to be issued for each share of
AXENT common stock is fixed at 0.50 of a share and will not be adjusted
based upon changes in the respective values of these shares. As a result,
the value of the shares of Symantec common stock to be issued to AXENT's
stockholders in connection with the merger will not be known until
immediately prior to the closing of the merger, and may go up or down as the
market price of Symantec common stock fluctuates. AXENT is not permitted to
terminate its obligations to complete the merger or resolicit the vote of
its stockholders based solely on changes in the value of Symantec common
stock.
Symantec stockholders will continue to own their shares of Symantec common
stock after the merger.
Q: DO THE BOARDS OF DIRECTORS OF SYMANTEC AND AXENT RECOMMEND VOTING IN FAVOR
OF THE MERGER?
A: Yes. AXENT's board of directors has declared advisable, and recommends that
its stockholders vote in favor of adopting the merger agreement. Similarly,
Symantec's board of directors has declared advisable, and recommends that
its stockholders vote in favor of, the issuance of Symantec common stock in
the merger. For a more complete description of the recommendations of the
boards of directors of both companies, see the sections titled "The
Merger -- Symantec's reasons for the merger" on page 31, "-- Recommendation
of Symantec's board of directors" on page 37, "-- AXENT's reasons for the
merger" on page 37 and "-- Recommendation of AXENT's board of directors" on
page 43.
<PAGE> 9
Q: ARE THERE RISKS I SHOULD CONSIDER IN DECIDING WHETHER TO VOTE FOR THE
MERGER?
A: Yes. In evaluating the merger, you should carefully consider the factors
discussed in the section titled "Risk Factors" on page 13.
Q: WHAT DO I NEED TO DO NOW?
A: Mail your signed proxy card in the enclosed return envelope as soon as
possible so that your shares may be represented at your meeting. If you do
not include instructions on how to vote your properly signed proxy, your
shares will be voted "FOR" adoption of the merger agreement if you are an
AXENT stockholder, and "FOR" the issuance of Symantec common stock in the
merger, the amendment to the 1996 Equity Incentive Plan and the amendment to
Symantec's certificate of incorporation if you are a Symantec stockholder.
For a more complete description of voting at the meetings, see the sections
titled "The Symantec Special Meeting -- Voting of proxies" on page 24 and
"The AXENT Special Meeting -- Voting of proxies" on page 26.
Q: WHAT DO I DO IF I WANT TO CHANGE MY VOTE?
A: If you want to change your vote, send the secretary of Symantec or AXENT, as
appropriate, a later-dated, signed proxy card before your meeting or attend
your meeting in person. You may also revoke your proxy by sending written,
dated notice to the secretary of Symantec or AXENT, as appropriate, before
your meeting. For a more complete description of how to change your vote,
see the sections titled "The Symantec Special Meeting -- Voting of proxies"
on page 24 and "The AXENT Special Meeting -- Voting of proxies" on page 26.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on how to
vote by following the information provided to you by your broker. For a more
complete description of voting shares held in "street name," see the
sections titled "The Symantec Special Meeting -- Voting of proxies" on page
24 and "The AXENT Special Meeting -- Voting of proxies" on page 26.
Q: SHOULD I SEND IN MY AXENT STOCK CERTIFICATES NOW?
A: No. After the merger is completed, Symantec will send you written
instructions for exchanging your AXENT stock certificates for Symantec stock
certificates. PLEASE DO NOT SEND YOUR STOCK CERTIFICATES WITH YOUR PROXY.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We hope to complete the merger during the fourth calendar quarter of 2000.
However, the exact timing of completion of the merger cannot be determined
at this time because completion of the merger is subject to a number of
conditions. For a complete description of the conditions to completion of
the merger, see the sections titled "The Merger Agreement -- Conditions to
the merger" on page 53.
Q: AS AN AXENT STOCKHOLDER, WILL I RECOGNIZE A GAIN OR LOSS ON THE EXCHANGE OF
MY AXENT STOCK FOR SYMANTEC STOCK IN THE MERGER?
A: We expect that if the merger is completed, you will not recognize gain or
loss for United States federal income tax purposes, except that AXENT's
stockholders will recognize gain or loss with respect to cash received
instead of fractional shares. However, AXENT's stockholders are urged to
consult their own tax advisors to determine their particular tax
consequences. For a more complete description of the tax consequences, see
the section titled "The Merger -- Material United States federal income tax
consequences of the merger" on page 44.
2
<PAGE> 10
Q: AM I ENTITLED TO DISSENTERS' OR APPRAISAL RIGHTS?
A: Under Delaware law, holders of AXENT common stock and holders of Symantec
common stock are not entitled to dissenters' or appraisal rights in the
merger.
Q: WHOM SHOULD I CALL WITH QUESTIONS?
A: AXENT's stockholders should call AXENT Investor Relations at (301) 670-3637
with any questions about the merger. Symantec's stockholders should call
Symantec Investor Relations at (408) 446-8891 with any questions about the
merger. You may also obtain additional information about Symantec and AXENT
from documents each of us files with the Securities and Exchange Commission,
as more fully described in the section titled "Where you can find more
information" on page 78.
3
<PAGE> 11
SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS
THE COMPANIES
[SYMANTEC LOGO]
SYMANTEC CORPORATION
20330 STEVENS CREEK BOULEVARD
CUPERTINO, CALIFORNIA 95014
Symantec, a world leader in Internet security technology, provides a broad
range of content and network security solutions to individuals and enterprises.
Symantec is a leading provider of virus protection, risk management, Internet
content and e-mail filtering, remote management and mobile code detection
technologies to enterprise and individual customers.
Symantec's principal business is divided into four customer-centered
segments: Consumer and Small Business; Enterprise Solutions; e-Support; and
Professional Services. Symantec also operates a fifth segment for certain other
product lines.
The Consumer and Small Business segment provides solutions to individual
users, home offices and small businesses. The division's charter ensures that
consumers and their information are secure and protected in a connected world.
Symantec's Enterprise Solutions segment provides a broad range of security
solutions for its enterprise customers. Symantec's corporate customers need to
protect their businesses from the threats associated with the use of the
Internet. These threats are both external and internal to the organization.
External threats include such things as viruses or hacker intrusions; internal
threats include undesired use of network resources or potential liability
stemming from abuse of Internet access.
Symantec's e-Support segment offers products that enable companies to be
more effective and efficient within their information technology departments.
Remote management solutions help remote professionals to remain productive while
providing companies access to information, applications and data from any
location.
Symantec's Professional Services division provides fee-based technical
support and consulting services to enterprise customers to assist them with the
planning, design and implementation of enterprise security solutions in the
anti-virus and Internet content filtering technologies. In addition, the
Professional Services division provides complete vulnerability and security
assessments of enterprise customer information systems.
[AXENT LOGO]
AXENT TECHNOLOGIES, INC.
2400 RESEARCH BOULEVARD, SUITE 200
ROCKVILLE, MARYLAND 20850
AXENT Technologies, Inc., a global leader in electronic information
security, provides e-security solutions that enable its customers to conduct
their business more securely. AXENT delivers integrated products and service
expertise to assess, protect, enable and manage business processes and
information assets. The company provides electronic security software solutions
that address vital security issues facing organizations deploying business
applications over the Internet or internally via Intranets. AXENT's breadth of
security software products and depth of security service expertise assist
organizations in reducing risks associated with the inherent vulnerabilities of
today's Internet-based business environment.
AXENT develops, markets and supports security software products that
perform a broad range of security functions. It also provides consulting
services that complement these products and address other security needs. AXENT
assists its customers in proactively addressing security concerns by helping
them
4
<PAGE> 12
to assess potential vulnerabilities, develop security policies, practices and
metrics, select and implement solutions and insure appropriate monitoring and
compliance. In addition, AXENT provides a set of software solutions that address
risk assessment and understanding and the protection of systems, enabling secure
Internet usage and security management. AXENT provides e-security solutions in
the areas of vulnerability assessment, intrusion detection, firewalls, virtual
private networks, single sign-on, secure web access and management of security
environments. AXENT also provides security expertise in the form of consulting
services and maintenance and support services.
AXENT's security solutions have been licensed to thousands of customers,
including 45 of the 50 companies named to the Fortune 50 U.S. companies list and
one-third of the Fortune e-50 list. Five of the six largest public accounting
firms and industry leaders such as Sprint, Oppenheimer Funds, Toronto Dominion
Bank, Mobil, MCI, Australia Post and Tower Communications New Zealand license
AXENT's security solutions. AXENT also licenses its solutions to government
agencies such as the Environmental Protection Agency and the United States Air
Force. In addition, AXENT has established strategic partnerships with leading
organizations such as Baltimore Technologies, BMC Software, Cobalt Networks,
Compaq Computer Corporation, Entrust Technologies, Hewlett Packard, Radware and
Tivoli Systems. AXENT has both domestic and international sales channels that
market its products and services utilizing a direct sales organization and a
variety of indirect channels, including a two-tiered distribution channel,
original equipment manufacturers, distributors, resellers and system
integrators.
THE MERGER
In the merger, AXENT and a wholly owned subsidiary of Symantec will merge
and AXENT will become a wholly owned subsidiary of Symantec.
The merger agreement is attached to this joint proxy statement/prospectus
as Annex A. We encourage you to read the merger agreement carefully.
STOCKHOLDER MEETINGS
AXENT Meeting. There will be a special meeting of stockholders of AXENT at
AXENT Technologies, Inc., 2400 Research Boulevard, Suite 200, Rockville,
Maryland 20850 on Friday, December 15, 2000 at 9:00 a.m. local time. At this
meeting, AXENT stockholders will be asked to adopt the merger agreement.
Symantec Meeting. There will be a special meeting of stockholders of
Symantec at Symantec Corporation World Headquarters, 20330 Steven Creek
Boulevard, Cupertino, California 95014 on Friday, December 15, 2000 at 10:00
a.m. local time. At this meeting, Symantec stockholders will be asked to approve
the issuance of Symantec common stock to stockholders of AXENT in connection
with the merger. Symantec stockholders will also be asked to vote on other
matters. For a more complete description of the other proposals, please refer to
the section titled "Additional Matters Being Submitted to a Vote of Only
Symantec Stockholders" on pages 69 through 75.
VOTES REQUIRED TO APPROVE THE MERGER
The holders of a majority of the outstanding shares of AXENT common stock
must approve the merger agreement. AXENT stockholders are entitled to cast one
vote per share of AXENT common stock owned as of November 3, 2000, at the
meeting.
In order to approve the issuance of shares of Symantec common stock in the
merger, the holders of shares representing a majority of the votes present and
entitled to vote at the Symantec special meeting must approve the issuance of
the Symantec common stock in the merger.
5
<PAGE> 13
NO OTHER NEGOTIATIONS
Until the merger is completed or the merger agreement is terminated, AXENT
has agreed, with limited exceptions, not to take any action, directly or
indirectly, with respect to an Acquisition Proposal, as defined on page 51.
For a more complete description of these limitations on AXENT's actions
with respect to an Acquisition Proposal, please refer to the sections titled
"The Merger Agreement -- No solicitation," on page 51, "-- Termination of the
merger agreement" on page 55 and "-- Fees, expenses and termination fee" on page
52 and the corresponding sections of the merger agreement.
CONDITIONS TO COMPLETION OF THE MERGER
Symantec's and AXENT's respective obligations to complete the merger are
subject to the satisfaction or waiver of closing conditions. For a discussion of
these conditions, see the section titled "The Merger Agreement -- Conditions to
the merger" on page 53.
TERMINATION OF THE MERGER AGREEMENT
Under certain circumstances, Symantec and AXENT each have the right to
terminate the merger agreement. In certain cases, termination of the merger
agreement will require payment of a termination fee to Symantec by AXENT.
For a description of the manner in which the merger agreement may be
terminated, see the section titled "The Merger Agreement -- Termination of the
merger agreement" on page 55.
TERMINATION FEE
In certain instances, if the merger agreement is terminated by Symantec or
AXENT, AXENT will be obligated to pay Symantec a termination fee of $28.0
million.
For a more complete description of the termination fee and when it is
payable, see the section titled "The Merger Agreement -- Fees, expenses and
termination fee" on page 52.
OPINIONS OF FINANCIAL ADVISORS
In deciding to approve the merger, Symantec's board of directors
considered, among other things, an opinion from Donaldson, Lufkin & Jenrette
Securities Corporation, its financial advisor, as to the fairness from a
financial point of view to Symantec of the consideration paid by Symantec in the
merger. AXENT's board of directors considered, among other things, an opinion
from its financial advisor, Chase H&Q, a division of Chase Securities, Inc., as
to the fairness from a financial point of view to AXENT's stockholders of the
consideration receivable by them in the merger.
For a more complete description of the financial advisors' opinions, see
the sections entitled "The Merger -- Opinion of financial advisor to Symantec"
on page 32 and "-- Opinion of financial advisor to AXENT" on page 38. These
opinions are attached as Annexes B and C and we urge you to read them in their
entirety.
ACCOUNTING TREATMENT OF THE MERGER
We intend to account for the merger as a purchase for financial accounting
purposes under generally accepted accounting principles.
For a more complete description of the accounting treatment of the merger
see the section titled "The Merger -- Accounting treatment of the merger" on
page 46.
6
<PAGE> 14
INTERESTS OF CERTAIN PERSONS IN THE MERGER
When considering the recommendations of AXENT's board of directors, AXENT
stockholders should be aware that some of the AXENT directors and officers have
interests in the merger that are different from, or are in addition to, their
interests. These interests include:
- options to purchase approximately 3.9 million shares of AXENT common
stock, including those held by officers and directors of AXENT, will be
assumed by Symantec and will become options to acquire Symantec common
stock as adjusted for the exchange ratio of the merger, and the vesting
of options representing approximately 2.3 million shares will be
accelerated upon completion of the merger in accordance with the terms of
such option agreements and the applicable option plan; and
- some executive officers of AXENT will become executive officers or key
employees of Symantec.
As a result, these officers and directors of AXENT could be more likely to
recommend the adoption of the merger agreement by AXENT stockholders than if
they did not have these interests.
RESTRICTIONS ON THE ABILITY TO SELL SYMANTEC STOCK
All shares of Symantec common stock received by AXENT stockholders in
connection with the merger will be freely transferable unless the holder is
considered an affiliate of either of us under the Securities Act.
For a more complete description of transfer restrictions applicable to our
affiliates see the section titled "The Merger -- Restrictions on sales of shares
by affiliates of Symantec or AXENT" on page 46.
ADDITIONAL MATTERS TO BE VOTED UPON BY SYMANTEC STOCKHOLDERS
At the Symantec special meeting, the stockholders of Symantec will also
vote on:
- an amendment to Symantec's 1996 Equity Incentive Plan to increase the
number of shares of Symantec common stock for issuance thereunder by
2,400,000 shares, from 15,236,102 shares to 17,636,102 shares; and
- an amendment to Symantec's certificate of incorporation to increase the
number of authorized shares of common stock to 300,000,000 shares.
For a more complete description of these votes, see the section titled
"Additional Matters Being Submitted to a Vote of Only Symantec Stockholders" on
page 69.
FORWARD-LOOKING STATEMENTS IN THIS JOINT PROXY STATEMENT/PROSPECTUS
This joint proxy statement/prospectus and the documents incorporated into
this joint proxy statement/prospectus by reference contain forward-looking
statements within the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements include statements with respect
to Symantec's and AXENT's financial condition, results of operations and
business and on the expected impact of the merger on Symantec's financial
performance. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions identify
forward-looking statements.
These forward-looking statements are not guarantees of future performance
and are subject to risks and uncertainties that could cause actual results to
differ materially from the results contemplated by the forward-looking
statements. These risks and uncertainties include:
- the possibility that the value of Symantec common stock to be issued in
the merger will increase or decrease prior to completion of the merger;
- the possibility that by accounting for the merger as a purchase,
Symantec's earnings will be reduced by amortization charges that could
adversely affect the value of Symantec's stock;
7
<PAGE> 15
- the possibility that the merger will not be consummated;
- the possibility that the anticipated benefits from the merger will not be
fully realized;
- the possibility that costs or difficulties related to the integration of
our businesses and infrastructure will be greater than expected;
- our dependence on the timely development, introduction and customer
acceptance of new products and services;
- the impact of competition on revenues and margins;
- the impact of the costs of completing the merger and future amortization
of goodwill and other intangible assets on results of operations;
- rapidly changing technology;
- other risks and uncertainties, including the risks and uncertainties
involved in continued acceptance of the combined company's products and
services, AXENT's customer acceptance of Symantec's products and
services, the impact of competitive services, products and prices and the
ability to attract and retain key personnel; and
- other risk factors as may be detailed from time to time in Symantec's and
AXENT's public announcements and filings with the Securities and Exchange
Commission.
In evaluating the merger, you should carefully consider the discussion of
these and other factors in the section titled "Risk Factors" beginning on page
13.
OTHER DOCUMENTS TO REVIEW
This summary may not contain all of the information that is important to
you. You should read carefully this entire document and the other documents we
refer to for a more complete understanding of the merger. In particular, you
should read the documents attached to this joint proxy statement/ prospectus,
including the merger agreement, which is attached as Annex A, the opinion of
Donaldson, Lufkin & Jenrette Securities Corporation, which is attached as Annex
B, and the opinion of Chase H&Q, which is attached as Annex C.
In addition, we incorporate important business and financial information
about Symantec and AXENT into this joint proxy statement/prospectus by
reference. See the section titled "Documents Incorporated by Reference in this
Joint Proxy Statement/Prospectus" on page 77. You may obtain the information
incorporated into this joint proxy statement/prospectus by reference without
charge by following the instructions in the section titled "Where You Can Find
More Information" on page 78.
COMPARATIVE MARKET PRICE INFORMATION
Shares of both Symantec and AXENT common stock are listed on the Nasdaq
National Market. On July 26, 2000, the last full trading day prior to the public
announcement of the proposed merger, Symantec's common stock closed at $63.69
per share, and AXENT's common stock closed at $19.06 per share. On November 1,
2000, Symantec's common stock closed at $37.00 per share, and AXENT's common
stock closed at $18.25 per share. We urge you to obtain current market
quotations.
For a more complete description of market price information see the section
titled "Comparative per share market price data" on page 67.
8
<PAGE> 16
SYMANTEC'S SELECTED HISTORICAL FINANCIAL DATA
The following selected historical financial data of Symantec have been
derived from Symantec's historical financial statements and related notes, and
should be read together with those financial statements and related notes that
are incorporated by reference in this joint proxy statement/prospectus.
During fiscal 2000, Symantec acquired URLabs, L-3 Network Security's
operations and 20/20 Software. During fiscal 1999, Symantec acquired Quarterdeck
Corporation, the anti-virus businesses of Intel and IBM and the operations of
Binary Research Limited. Each of these acquisitions was accounted for as a
purchase and, accordingly, the operating results of these businesses have been
included in Symantec's consolidated financial statements since their respective
dates of acquisition. Symantec did not complete any acquisitions during fiscal
1998. During fiscal 1997, Symantec acquired Fast Track, Inc. in a transaction
accounted for as a pooling-of-interests. Since the results of operations of Fast
Track were not material to Symantec's consolidated financial statements, amounts
prior to the date of acquisition were not restated to reflect the combined
operations of the companies. In fiscal 1996, Symantec acquired Delrina
Corporation in a transaction accounted for as a pooling-of-interests, and
Symantec has restated the results of operations for all periods presented to
reflect the consolidated results of Delrina and Symantec.
On December 31, 1999, Symantec divested its ACT! and Visual Cafe product
lines. Because the divestitures of the ACT! and Visual Cafe product lines were
effective at the close of business on December 31, 1999, these product lines are
included in the results of operations through that date for the year ended March
31, 2000.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31, JUNE 30,
---------------------------------------------------- -------------------
1996 1997 1998 1999 2000 1999 2000
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT NET INCOME (LOSS) PER SHARE)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net revenue................................. $445,432 $452,933 $532,940 $592,628 $745,725 $175,138 $191,358
Acquisition, restructuring and other
expenses.................................. 27,617 8,585 -- 38,395 13,318 2,773 --
Operating (loss) income..................... (48,279) 17,550 54,924 27,841 135,203 27,746 45,321
Net (loss) income........................... (39,783) 26,068 85,089 50,201 170,148 23,727 38,397
Net (loss) income per share -- basic........ $ (0.76) $ 0.48 $ 1.52 $ 0.89 $ 2.94 $ 0.42 $ 0.63
Net (loss) income per share -- diluted...... $ (0.76) $ 0.47 $ 1.42 $ 0.86 $ 2.73 $ 0.41 $ 0.60
Shares used to compute net (loss) income per
share -- basic............................ 52,664 54,705 56,097 56,601 57,870 56,360 60,498
Shares used to compute net (loss) income per
share -- diluted.......................... 52,664 55,407 60,281 59,289 62,214 58,284 64,248
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
---------------------------------------------------- -------------------
1996 1997 1998 1999 2000 1999 2000
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................. $134,643 $129,569 $175,537 $ 94,036 $319,020 $121,300 $380,137
Total assets................................ 282,674 339,398 476,460 563,476 846,027 565,628 929,319
Long-term obligations, less current
portion................................... 15,393 15,066 5,951 1,455 1,553 1,091 2,104
Stockholders' equity........................ 180,317 217,979 317,507 345,113 617,957 360,101 660,163
</TABLE>
9
<PAGE> 17
AXENT'S SELECTED HISTORICAL FINANCIAL DATA
The following selected historical financial data of AXENT have been derived
from AXENT's historical financial statements and related notes, and should be
read together with those financial statements and related notes that are
incorporated by reference in this joint proxy statement/prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1999 2000
------- ------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenue:
Product licenses.......................... $13,592 $29,490 $ 56,202 $ 80,912 $ 77,852 $ 32,731 $ 41,825
Services.................................. 5,038 7,199 13,707 20,118 34,961 15,142 22,571
------- ------- -------- -------- -------- -------- --------
Total net revenues...................... 18,630 36,689 69,909 101,030 112,813 47,873 64,396
Cost of net revenues...................... 2,055 2,758 6,124 9,354 16,049 6,864 10,084
------- ------- -------- -------- -------- -------- --------
Gross profit............................ 16,575 33,931 63,785 91,676 96,764 41,009 54,312
------- ------- -------- -------- -------- -------- --------
Operating expenses:
Sales and marketing....................... 15,160 21,606 31,856 41,209 61,252 29,315 31,788
Research and development.................. 5,343 8,322 12,885 18,956 26,859 13,216 13,824
General and administrative................ 3,546 4,704 7,030 6,445 11,572 5,369 6,861
Amortization of acquired intangible
assets.................................. -- -- 432 450 4,184 1,460 2,952
Acquisition-related charges............... -- -- 34,154 17,422 3,753 3,753 --
------- ------- -------- -------- -------- -------- --------
Total operating expenses................ 24,049 34,632 86,357 84,482 107,620 53,113 55,425
Income (loss) from continuing operations
before interest, royalties and taxes...... (7,474) (701) (22,572) 7,194 (10,856) (12,104) (1,113)
Interest income (expense) and other......... (53) 3,321 6,349 4,895 4,755 2,118 2,721
Royalty income.............................. -- 3,479 2,977 1,862 -- -- --
Income tax benefit (provision).............. 2,146 (1,159) (5,744) (7,507) (859) 1,717 (406)
------- ------- -------- -------- -------- -------- --------
Income (loss) from continuing operations.... (5,381) 4,940 (18,990) 6,444 (6,940) (8,269) 1,202
Income from discontinued operations, net of
tax....................................... 5,050 2,395 255 -- -- -- --
------- ------- -------- -------- -------- -------- --------
Net income (loss)........................... $ (331) $ 7,335 $(18,735) $ 6,444 $ (6,940) $ (8,269) $ 1,202
======= ======= ======== ======== ======== ======== ========
Net income (loss) per common share (basic):
Continuing operations..................... $ (0.56) $ 0.27 $ (0.83) $ 0.26 $ (0.25) $ (0.30) $ 0.04
Discontinued operations................... 0.52 0.13 0.01 -- -- -- --
------- ------- -------- -------- -------- -------- --------
Net income (loss) per common share
(basic)................................... $ (0.04) $ 0.40 $ (0.82) $ 0.26 $ (0.25) $ (0.30) $ 0.04
======= ======= ======== ======== ======== ======== ========
Number of shares used to compute basic
earnings per common share................. 9,635 18,553 22,780 25,204 27,561 27,124 28,630
Net income (loss) per common share
(diluted):
Continuing operations..................... $ (0.56) $ 0.23 $ (0.83) $ 0.24 $ (0.25) $ (0.30) $ 0.04
Discontinued operations................... 0.52 0.11 0.01 -- -- -- --
------- ------- -------- -------- -------- -------- --------
Net income (loss) per common share
(diluted)................................. $ (0.04) $ 0.34 $ (0.82) $ 0.24 $ (0.25) $ (0.30) $ 0.04
======= ======= ======== ======== ======== ======== ========
Number of shares used to compute diluted
earnings per common share................. 9,635 21,577 22,780 26,740 27,561 27,124 29,732
======= ======= ======== ======== ======== ======== ========
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................... $ 7,973 $54,828 $ 51,632 $ 80,035 $ 61,534 $ 97,985 $ 56,751
Marketable securities....................... -- 34,026 40,882 31,774 47,331 8,774 64,558
Net identifiable liabilities from
discontinued operations................... 1,319 163 -- -- -- -- --
Working capital............................. 2,869 85,280 94,541 117,289 107,314 102,034 119,262
Total assets................................ 12,646 107,185 124,813 161,276 198,880 187,273 204,869
Total debt.................................. 1,835 -- -- -- 827 921 --
Stockholders' equity (deficit).............. (1,500) 93,435 104,280 134,328 157,059 152,206 167,897
Cash dividend per share..................... -- -- -- -- -- -- --
</TABLE>
10
<PAGE> 18
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following selected unaudited pro forma condensed combined financial
information for Symantec and AXENT is derived from the Unaudited Pro Forma
Combined Consolidated Statements of Operations of Symantec for the year ended
March 31, 2000 and of AXENT for the year ended December 31, 1999, and the
Unaudited Pro Forma Combined Consolidated Statements of Operations of Symantec
and AXENT for the three months ended June 30, 2000, included elsewhere in this
proxy statement/prospectus. The pro forma statement of operations data gives
effect to the merger as if it had occurred on April 3, 1999; the pro forma
balance sheet data gives effect to the merger as if it had occurred on June 30,
2000.
The pro forma financial statements should be read in conjunction with the
audited consolidated financial statements and notes of Symantec and AXENT,
included or incorporated by reference elsewhere in this joint proxy
statement/prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
JUNE 30, 2000 MARCH 31, 2000
------------------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................................................ $225,411 $858,538
Operating loss.............................................. (2,297) (66,682)
Net loss.................................................... (5,704) (17,869)
Basic net loss per share.................................... (0.08) (0.25)
Diluted net loss per share.................................. (0.08) (0.25)
</TABLE>
<TABLE>
<CAPTION>
AS OF
JUNE 30, 2000
--------------
(IN THOUSANDS,
EXCEPT PER
SHARE DATA)
<S> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 485,199
Total assets................................................ 1,855,963
Long-term obligations, less current portion................. 2,104
Total stockholders' equity.................................. 1,535,635
Book value per share........................................ 20.38
</TABLE>
The following table presents certain unaudited historical per share data,
equivalent AXENT per share data and pro forma combined per share data of
Symantec and AXENT after giving effect to the merger using the purchase method
of accounting and assuming the issuance of approximately 14,451,000 shares of
Symantec common stock for all shares of AXENT common stock outstanding as of
July 26, 2000, the date the merger agreement was signed. The actual number of
shares of Symantec common stock to be exchanged for all of the outstanding AXENT
common stock will be determined at the effective time of the merger. The pro
forma data is not indicative of the results of future operations or the results
that would have occurred had the merger been consummated at the beginning of the
periods presented.
11
<PAGE> 19
COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER-SHARE DATA
The following table should be read in conjunction with Symantec's and
AXENT's audited and unaudited consolidated financial statements and related
notes included or incorporated by reference elsewhere in this joint proxy
statement/prospectus and the unaudited pro forma condensed combined financial
information and the related notes included or incorporated by reference
elsewhere in this joint proxy statement/prospectus.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
OR AS OF OR AS OF
MARCH 31, 2000 JUNE 30, 2000
-------------- ------------------
<S> <C> <C>
SYMANTEC HISTORICAL:
Net income per common share:
Basic..................................................... $ 2.94 $ 0.63
Diluted................................................... 2.73 0.60
Book value per share(1)..................................... 10.25 10.84
AXENT HISTORICAL(2):
Net income (loss) per common share:
Basic..................................................... $(0.25) $ 0.04
Diluted................................................... (0.25) 0.04
Book value per share(1)..................................... 5.78 5.82
PRO FORMA COMBINED:
Net loss per common share:
Basic(3).................................................. $(0.25) $(0.08)
Diluted(3)................................................ (0.25) (0.08)
Book value per share(4)..................................... 20.38
EQUIVALENT AXENT PRO FORMA:
Pro forma net loss per AXENT share(5)....................... $(0.13) $(0.04)
Pro forma book value per AXENT share(5)..................... 10.19
</TABLE>
-------------------------
(1) The historical book value per share is computed by dividing total
stockholders' equity by the number of shares of common stock outstanding at
the end of the period.
(2) Historical year ended information is for the year ended December 31, 1999.
(3) Pro forma combined net loss per share for the year ended March 31, 2000
reflects the combination of the separate historical statement of operations
of Symantec for the year ended March 31, 2000 and of AXENT for the year
ended December 31, 1999. The pro forma combined net loss per share for the
three months ended June 30, 2000 reflects the combination of the separate
historical statement of operations of Symantec and AXENT for the three
months ended June 30, 2000. The pro forma combined net loss per share for
periods presented is based upon the weighted average shares of Symantec
common stock outstanding for the periods presented, plus 14,451,000 of
Symantec common stock assumed to be issued for all of the outstanding shares
of AXENT common stock for the periods presented.
(4) The pro forma combined book value per share is computed by dividing total
pro forma stockholders' equity by the number of shares of common stock
outstanding at the end of the period.
(5) The equivalent AXENT pro forma share amounts are calculated by multiplying
the pro forma combined per share amounts by the exchange ratio of 0.50 share
of Symantec common stock for each share of AXENT common stock.
12
<PAGE> 20
RISK FACTORS
The merger involves a high degree of risk for both AXENT and Symantec
stockholders. AXENT's stockholders will be choosing to invest in Symantec common
stock by voting in favor of adoption of the merger agreement. An investment in
Symantec common stock involves a high degree of risk. Symantec's stockholders
will decide to combine the businesses of Symantec and AXENT, which will change
the business of Symantec. That, too, involves risk. In addition to the other
information contained or incorporated by reference in this joint proxy
statement/prospectus, both Symantec's and AXENT's stockholders should carefully
consider the following risk factors in deciding whether to vote for the issuance
of shares of Symantec common stock in connection with the merger, in the case of
Symantec stockholders, or for adoption of the merger agreement, in the case of
AXENT's stockholders.
RISKS RELATED TO THE PROPOSED MERGER
THE EXCHANGE RATIO IS FIXED, SO THE CONSIDERATION RECEIVED BY AXENT STOCKHOLDERS
WILL DECLINE IF THE PRICE OF SYMANTEC COMMON STOCK GOES DOWN.
The exchange ratio is fixed at 0.50 of a share of Symantec common stock for
each share of AXENT common stock and will not be adjusted in the event of
changes in the prices of either the Symantec common stock or the AXENT common
stock. If the market price of the Symantec common stock changes, the value of
the consideration to be received by the AXENT stockholders will also change. For
instance, if the market price of the Symantec common stock decreases, the value
of the consideration to be received by the AXENT stockholders will also
decrease. Neither company may terminate the merger agreement or elect not to
complete the merger because of changes in their stock prices.
The price of Symantec common stock on the date of the merger may be
different from its price on the date of the merger agreement, the date of this
joint proxy statement/prospectus or the date of the special meeting. Because the
merger may occur on a date later than the special meeting, the price of Symantec
common stock on the date of the special meeting may not be indicative of its
price on the date of the merger. You are urged to obtain current market
quotations for Symantec common stock.
INTEGRATION OF THE TWO BUSINESSES MAY BE DIFFICULT TO ACHIEVE, WHICH MAY
ADVERSELY AFFECT OPERATIONS.
The merger involves risks related to the integration and management of
acquired technology, operations and personnel. The integration of the businesses
of Symantec and AXENT will be a complex, time-consuming and expensive process
and may disrupt Symantec's business if not completed in a timely and efficient
manner. Following the merger, Symantec must operate as a combined organization
utilizing common information and communications systems, operating procedures,
financial controls and human resources practices.
Symantec and AXENT may encounter substantial difficulties, costs and delays
involved in integrating their operations, including:
- potential conflicts between business cultures;
- perceived adverse changes in business focus;
- potential conflicts in distribution, marketing or other important
relationships; and
- the loss of key employees and/or the diversion of management's attention
from other ongoing business concerns.
THE COSTS TO COMPLETE THE MERGER ARE SUBSTANTIAL. THESE COSTS AND THE MANNER OF
ACCOUNTING FOR THE MERGER MAY AFFECT SYMANTEC'S RESULTS OF OPERATIONS.
Completion of the merger will result in total pre-tax costs of
approximately $14 million, primarily relating to costs associated with combining
the businesses of the two companies and the fees of financial
13
<PAGE> 21
advisors, attorneys, consultants and accountants. Although we do not believe the
merger costs will significantly exceed our estimate, our estimate may not be
correct and unanticipated events could occur that would substantially increase
the costs of combining the two companies. In addition, Symantec will incur
additional costs upon completion of the merger, or shortly thereafter, related
to consolidation of sites and severance paid to certain employees as a result of
this consolidation. The extent of these additional costs is not yet determined.
In any event, any costs associated with the merger would negatively affect
Symantec's results of operations in the quarter in which the merger is completed
or future quarters as some additional costs would result in additional quarterly
amortization.
In the quarter in which the merger is completed, Symantec expects to incur
a one-time accounting charge of approximately $22.3 million related to AXENT's
in-process research and development expenses. This charge is likely to
considerably reduce Symantec's earnings in that quarter. For example, as shown
in the pro forma financial statements beginning on page 61, the combined
company's pro forma combined operating results for the fiscal year ended March
31, 2000 reflect a net loss of $0.25 per share, while Symantec's historical
earnings per share for the same period reflect net income of $2.73. The pro
forma combined operating results for the fiscal year ended March 31, 2000 give
effect to the transaction as if it had occurred on April 3, 1999.
Furthermore, if the merger is completed, Symantec will amortize over four
years approximately $758.9 million in value of the tradename,
workforce-in-place, goodwill, developed technology and other intangible AXENT
assets it will capitalize on its balance sheet as a result of the merger. This
amortization will reduce Symantec's earnings over that period. In addition,
AXENT's historical operating results have been considerably less profitable than
Symantec's, which may adversely affect the combined company's operating results
in the future. Symantec's future operating results will be adversely affected if
Symantec does not achieve benefits from this merger commensurate with these
charges.
IF SYMANTEC DOES NOT SUCCESSFULLY INTEGRATE AXENT, OR IF THE MERGER'S BENEFITS
DO NOT MEET THE EXPECTATIONS OF FINANCIAL OR INDUSTRY ANALYSTS, THE MARKET PRICE
OF SYMANTEC COMMON STOCK COULD DECLINE.
The market price of Symantec common stock could decline if:
- the integration of Symantec and AXENT is unsuccessful;
- Symantec is unable to successfully market its products and services to
AXENT's customers or AXENT's products and services to Symantec customers;
- Symantec does not achieve the perceived benefits of the merger as rapidly
as, or to the extent, anticipated by financial or industry analysts, or
such analysts do not perceive the same benefits to the merger as do
Symantec and AXENT; or
- the effect of the merger on Symantec's financial results is not
consistent with the expectations of financial or industry analysts.
AXENT FACES RISKS RELATED TO THE PROPOSED MERGER.
The announcement of the proposed merger may have a negative impact on
AXENT's ability to sell its services and products, attract and retain employees
and clients, and maintain strategic relationships with third parties. These
could adversely affect AXENT's operating results, which could adversely affect
Symantec's results of operations following the merger. Symantec's business
differs from AXENT's business, and Symantec's results of operations, as well as
the price of Symantec's common stock, may be affected by factors different than
those affecting AXENT's results of operations and the price of its common stock
before the merger.
While the merger is pending, subject to limited exceptions as set forth in
the merger, AXENT is prohibited from soliciting, initiating, encouraging or
inducing, directly or indirectly, an Acquisition Proposal, as that term is
defined on page 51 of this document, from any third party.
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FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT SYMANTEC'S AND/OR AXENT'S
STOCK PRICES, FUTURE BUSINESS AND OPERATIONS.
If the merger is not completed for any reason, Symantec and AXENT may be
subject to a number of material risks, including the following:
- AXENT may be required, under certain circumstances, to pay Symantec a
termination fee of up to $28.0 million; and
- the costs related to the merger, such as legal, accounting, financial
printing and a portion of the financial advisor fees, must be paid even
if the merger is not completed.
RISKS COMMON TO THE BUSINESSES OF SYMANTEC AND AXENT
SYMANTEC'S AND AXENT'S MARKETS ARE HIGHLY COMPETITIVE AND THEIR OPERATING
RESULTS AND FINANCIAL CONDITION COULD BE ADVERSELY AFFECTED BY THIS COMPETITION.
Both Symantec's and AXENT's markets are intensely competitive. This
competition could adversely affect operating results by reducing sales or the
prices they can charge for products. For example, recently many of Symantec's
competitors have significantly reduced the price of utility and anti-virus
products and further price reductions could occur for these or other products
offered by Symantec. This could have a negative effect on Symantec's margins and
could reduce its sales.
The ability of Symantec and AXENT to remain competitive depends, in part,
on their ability to enhance their products or develop new products that are
compatible with new hardware and operating systems. Neither company has control
over, and each has limited insight into, development efforts by third parties
with respect to new hardware and operating systems and may not be able to
respond effectively or timely to such changes in the market. In addition, both
companies have finite resources and must make strategic decisions as to the best
allocation of their resources to position themselves for changes in their
markets. Both companies may from time to time allocate resources to projects or
markets that do not develop as rapidly or as fully as they expect. Both
companies may fail to allocate resources to third party products or to markets
that are more successful than they anticipate.
SYMANTEC'S AND AXENT'S EARNINGS AND STOCK PRICE ARE SUBJECT TO SIGNIFICANT
FLUCTUATIONS.
Due to many factors, including those noted in this section, Symantec's and
AXENT's earnings and stock price have been and may continue to be subject to
significant volatility. There have been previous quarters in which Symantec and
AXENT have experienced shortfalls in revenue and earnings from levels expected
by securities analysts and investors, which have had an immediate and
significant adverse effect on the trading price of their common stock. This may
occur again in the future.
FLUCTUATIONS IN THE COMBINED COMPANY'S QUARTERLY OPERATING RESULTS COULD AFFECT
THE COMBINED COMPANY'S STOCK PRICE.
If the combined company's quarterly operating results fail to meet the
expectations of analysts, the trading price of shares of Symantec common stock
following the merger could be negatively affected. Each of Symantec's and
AXENT's quarterly operating results have varied substantially in the past and
those of the combined company may vary substantially in the future depending
upon a number of factors, including:
- the timing of announcements and releases of new or enhanced versions of
Symantec's and AXENT's products and product upgrades;
- the introduction of competitive products by existing or new competitors;
- reduced demand for any given product;
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- seasonality in the end-of-period buying patterns of foreign and domestic
software markets; and
- the market's transition between new releases of operating systems.
In addition to the foregoing factors, the risk of quarterly fluctuations is
increased by the fact that significant portion of both Symantec's and AXENT's
net revenues have historically been generated during the last month of each
fiscal quarter.
In Symantec's case, most resellers tend to make a majority of their
purchases at the end of a fiscal quarter. In addition, many enterprise customers
negotiate site licenses near the end of each quarter. In part, this is because
these two groups are able, or believe that they are able, to negotiate lower
prices and more favorable terms at that time. Symantec's reliance on a large
portion of revenue occurring at the end of the quarter and the increase in the
dollar value of transactions that occur at the end of a quarter can result in
increased uncertainty relating to quarterly revenues. Due to this end-of-period
buying pattern, forecasts may not be achieved, either because expected sales do
not occur or because they occur at lower prices or on terms that are less
favorable to Symantec. In addition, these factors increase the chances that
Symantec's results could diverge from the expectations of investors and
analysts.
AXENT's business has also experienced significant quarterly fluctuations in
its operating results and may continue to do so as part of Symantec. AXENT has
generally experienced seasonal variations in its operating results, with higher
revenues, operating income and net income, in its fourth quarter than in the
first quarter of the following year, and with lower revenues, operating income
and net income in the summer months, when businesses often defer purchase
decisions. The higher rate of increase during the last quarter may also be due
to AXENT's quota-based compensation plans, year-end budgetary pressures on
AXENT's customers and the tendency of some of AXENT's customers to implement
changes in enterprise network or data security just before the end of the
calendar year. In addition, revenue tends to increase at lower rates in the
summer months, particularly in Europe.
AXENT has historically recognized a substantial portion of its license
revenues in the last month of each quarter, and even in the last week or last
several days of each quarter. Because AXENT has little or no backlog, quarterly
revenues and operating results depend on the volume and timing of orders
received during each quarter, especially during the last several weeks and days
of each quarter, which are difficult to forecast. Because AXENT's operating
expenses are fixed, a small variation in the timing of when revenue is
recognized could cause significant variations in operating results from quarter
to quarter. These factors will continue to contribute to the combined company's
quarterly fluctuations and results of operations.
SYMANTEC AND AXENT MAY NOT BE ABLE TO ADAPT QUICKLY ENOUGH TO RAPID
TECHNOLOGICAL CHANGE.
The information security industry changes rapidly. Changes can be
attributable to frequent new product introductions, continuing advances in
technology and changes in customer requirements and preferences. The
introduction of new technologies could render existing products obsolete or
unmarketable or require Symantec and AXENT to invest in research and development
at much higher rates with no assurance of developing competitive products.
Changes in technologies or customer requirements may also cause the development
cycle for Symantec's and AXENT's new products to be significantly longer than
its historical product development cycle, resulting in higher development costs
or a loss in market share. Neither Symantec nor AXENT may be able to counter
challenges to its current products, and future product offerings may not keep
pace with the technological changes implemented by competitors, developers of
operating systems or networking systems or persons seeking to breach information
security. Symantec's and AXENT's products may not satisfy evolving preferences
of customers and prospects. Failure to develop and introduce new products and
product enhancements in a timely fashion could have a material adverse effect on
the financial condition and results of operations of Symantec and AXENT. Because
of the complexity of their software products, which operate on or utilize
multiple platforms and communications protocols, Symantec and AXENT each have
experienced delays from time to time in introducing new products and product
enhancements primarily due to development difficulties or shortages of
development personnel. There can be no assurance that Symantec and AXENT will
not experience
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longer delays or other difficulties that could delay or prevent the successful
development, introduction or marketing of new products or product enhancements.
SYMANTEC'S AND AXENT'S PRODUCTS ARE COMPLEX AND ARE OPERATED IN A WIDE VARIETY
OF COMPUTER CONFIGURATIONS, WHICH COULD RESULT IN ERRORS OR PRODUCTS FAILURES.
Because Symantec and AXENT offer very complex products, undetected errors,
failures or bugs may occur when they are first introduced or when new versions
are released. Both Symantec's and AXENT's products often are installed and used
in large-scale computing environments with different operating systems, system
management software and equipment and networking configurations, which may cause
errors or failures in its products or may disclose undetected errors, failures
or bugs in its products. In the past, Symantec and AXENT have discovered
software errors, failures and bugs in certain of their respective product
offerings after their introduction and each has experienced delays or lost
revenues during the period required to correct these errors. Symantec's and
AXENT's customers' computer environments are often characterized by a wide
variety of standard and non-standard configurations that make pre-release
testing for programming or compatibility errors very difficult and
time-consuming. Despite testing by Symantec or AXENT, respectively, and by
others, errors, failures or bugs may not be found in new products or releases
after commencement of commercial shipments. Errors, failures or bugs in products
released by either Symantec or AXENT could result in negative publicity, product
returns, loss of or delay in market acceptance of its products or claims by
customers or others. Alleviating such problems could require significant
expenditures of the combined company's capital and resources and could cause
interruptions, delays or cessation of its product licensing, which would
adversely affect results of operations.
Most of Symantec's and AXENT's license agreements with customers contain
provisions designed to limit their exposure to potential product liability
claims. It is possible, however, that the provisions limiting liability may not
be valid as a result of federal, state, local or foreign laws or ordinances or
unfavorable judicial decisions.
SYMANTEC AND AXENT FACE RISKS ASSOCIATED WITH THEIR FOREIGN OPERATIONS.
A significant portion of the net revenues, manufacturing costs and
operating expenses of Symantec and AXENT result from transactions outside of the
United States, often in foreign currencies. As a result, their operating results
could be materially and adversely affected by fluctuations in currency exchange
rates and general uncertainty with each country's political and economic
structure.
SYMANTEC AND AXENT ARE SUBJECT TO LITIGATION THAT COULD ADVERSELY AFFECT THEIR
FINANCIAL RESULTS.
From time to time, Symantec and AXENT may be subject to claims that they
have infringed the intellectual property rights of others, or other product
liability claims, or other claims incidental to their business. Symantec and
AXENT are currently involved in a number of lawsuits. They intend to defend all
of these lawsuits vigorously. However, it is possible they could suffer an
unfavorable outcome in one or more of these cases. Depending on the amount and
timing of any unfavorable resolutions of these lawsuits, Symantec's and AXENT's
future results of operations or cash flows could be materially adversely
affected in a particular period.
Although infringement claims may ultimately prove to be without merit, they
are expensive to defend and may consume Symantec's and AXENT's resources or
divert their attention from day-to-day operations. If a third party alleges that
Symantec or AXENT has infringed their intellectual property rights, it may
choose to litigate the claim and/or seek an appropriate license from the third
party. If Symantec or AXENT engages in litigation and the third party is found
to have a valid patent claim against Symantec or AXENT and a license is not
available on reasonable terms, its business, operating results and financial
condition may be materially adversely affected.
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THE TREND TOWARD CONSOLIDATION IN THE SOFTWARE INDUSTRY COULD IMPEDE SYMANTEC'S
AND AXENT'S ABILITY TO COMPETE EFFECTIVELY.
Consolidation is underway among companies in the software industry as firms
seek to offer more extensive suites of software products and broader arrays of
software solutions. Changes resulting from this consolidation may negatively
impact the competitive condition of Symantec and AXENT. In addition, to the
extent that Symantec and AXENT seek to expand their product lines, and skills
and capacity through acquisitions, the trend toward consolidation may result in
its encountering competition, and paying higher prices, for acquired businesses.
SYMANTEC AND AXENT HAVE GROWN, AND MAY CONTINUE TO GROW, THROUGH ACQUISITIONS,
WHICH GIVE RISE TO A NUMBER OF RISKS THAT COULD HAVE ADVERSE CONSEQUENCES FOR
THEIR FUTURE OPERATING RESULTS.
Both Symantec and AXENT have made several acquisitions in the past and may
make additional material acquisitions in the future. Integrating acquired
businesses into the existing businesses of Symantec and AXENT may distract
management focus from other opportunities and challenges. Past acquisitions made
by Symantec and AXENT have given rise to, and this acquisition, as well as
future acquisitions, may result in substantial levels of goodwill and other
intangible assets that will be amortized in future years and future operating
results of each company and the combined company will be adversely affected if
Symantec and AXENT do not achieve benefits from these acquisitions commensurate
with these charges. In addition, a number of recent acquisitions made by
Symantec and AXENT have resulted in their incurring substantial write-offs of
acquired in-process research and development costs and this also may occur as a
result of future acquisitions. Symantec (and, if the merger is not consummated,
AXENT) may issue equity, or incur debt financing, for future acquisitions that
are dilutive to their existing stockholders.
SYMANTEC AND AXENT MUST ATTRACT AND RETAIN PERSONNEL WHILE COMPETITION FOR
PERSONNEL IN THEIR INDUSTRY IS INTENSE.
Symantec and AXENT believe that their future success will depend in part on
their ability to recruit and retain highly skilled management, marketing and
technical personnel. Competition in recruiting personnel in the software
industry is intense. To accomplish this, Symantec and AXENT believe that they
must provide personnel with a competitive compensation package, including stock
options, which requires ongoing stockholder approval. Such approval may not be
forthcoming and, as a result, Symantec and AXENT may be impaired in their
efforts to attract necessary personnel.
THE INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS OF SYMANTEC AND AXENT MAY NOT
BE ADEQUATELY PROTECTED FROM ALL UNAUTHORIZED USES.
Symantec and AXENT regard their software and underlying technology as
proprietary. Symantec and AXENT seek to protect their proprietary rights through
a combination of confidentiality agreements and copyright, patent, trademark and
trade secret laws. Third parties may copy aspects of their products or otherwise
obtain and use their proprietary information without authorization or develop
similar technology independently. All of Symantec's and AXENT's products are
protected by copyright laws, and Symantec and AXENT each has a number of patents
and patent applications pending. Symantec and AXENT may not achieve the desired
protection from, and third parties may design around, their patents. In
addition, existing copyright laws afford limited practical protection.
Furthermore, the laws of some foreign countries do not offer the same level of
protection of the proprietary rights of Symantec and AXENT as the laws of the
United States, and Symantec and AXENT may be subject to unauthorized use of its
products. Any legal action that Symantec or AXENT may bring to protect
proprietary information could be expensive and may distract management from
day-to-day operations.
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ADDITIONAL RISKS RELATED TO THE BUSINESS OF SYMANTEC
SYMANTEC's INCREASED SALES OF ENTERPRISE-WIDE SITE LICENSES MAY INCREASE
FLUCTUATIONS IN ITS FINANCIAL RESULTS.
Sales of enterprise-wide site licenses through Symantec's Enterprise
Solutions segment are a major and expanding portion of Symantec's business. This
enterprise market has significantly different characteristics than the consumer
market and requires different skills and resources to penetrate. Licensing
arrangements tend to involve a longer sales cycle than sales through other
distribution channels, require greater investment of resources in establishing
the enterprise relationship and can sometimes result in lower operating margins.
The timing of the execution of volume licenses, or their nonrenewal or
renegotiation by large customers, could cause Symantec's results of operations
to vary significantly from quarter to quarter and could have a material adverse
impact on its results of operations.
SYMANTEC RECENTLY RESTRUCTURED ITS INTERNAL FOCUS AND OPERATIONS AND SYMANTEC
COULD INCUR ADVERSE OPERATING CONSEQUENCES AS A RESULT OF THESE CHANGES.
In fiscal 2000, Symantec restructured its operations on the basis of a
customer segment orientation rather than a product structure. Symantec also
divested two product lines that did not fit with its future focus. Changes of
this nature inevitably cause disruptions within an organization that may
adversely affect results as the changes are being absorbed, and these changes
may not achieve their desired long-term benefits. Overseeing these changes
requires significant attention from Symantec's senior management and may detract
from management's ability to focus on other important opportunities or problems
that might confront Symantec. Symantec has lost personnel, including management,
and Symantec may continue to do so as a consequence of these types of changes.
In addition, Symantec may not be able to introduce new products that are as
beneficial to Symantec as those that Symantec divested.
SYMANTEC's SOFTWARE PRODUCTS AND WEB SITE MAY BE SUBJECT TO INTENTIONAL
DISRUPTION.
Although Symantec believes it has sufficient controls in place to prevent
intentional disruptions, such as software viruses specifically designed to
impede the performance of its products, Symantec expects to be an ongoing target
of such disruptions. Similarly, experienced computer programmers, or hackers,
may attempt to penetrate Symantec's network security or the security of its web
site and misappropriate proprietary information or cause interruptions of its
services. Symantec's activities could be substantially disrupted and its
reputation, and future sales, harmed if these efforts are successful.
INTRODUCTION OF NEW OPERATING SYSTEMS MAY ADVERSELY AFFECT SYMANTEC'S FINANCIAL
RESULTS AND STOCK PRICE.
The inclusion of security or anti-virus tools in new operating systems and
hardware packages could adversely affect Symantec's sales. For example, the
inclusion of features by Microsoft in new or upcoming versions of Windows, such
as current and future editions of Windows 2000, which directly compete with
Symantec's products, may decrease or delay the demand for certain of its
products, including those currently under development and products specifically
intended for Windows 2000. Symantec's financial results and its stock price
declined significantly within approximately six months after the releases of
Windows 3.1, Windows 95 and Windows 98. Additionally, as hardware vendors
incorporate additional server-based network management and security tools into
network operating systems, the demand may decrease for some of Symantec's
products, including those currently under development.
With the rise of Linux-based operating systems being introduced into the
market, Symantec may lose market share if Symantec is unable to significantly
penetrate the Linux-based market timely and effectively.
THE RESULTS OF SYMANTEC'S RESEARCH AND DEVELOPMENT EFFORTS ARE UNCERTAIN.
Symantec believes that it will need to incur significant research and
development expenditures to remain competitive. The products Symantec is
currently developing or may develop in the future may not
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be technologically successful. In addition, the length of Symantec's product
development cycle has generally been greater than Symantec originally expected.
Symantec is likely to experience delays in future product development. If they
are not technologically successful, Symantec's resulting products may not
achieve market acceptance or compete effectively with products of its
competitors.
SYMANTEC IS DEPENDENT UPON CERTAIN DISTRIBUTION CHANNELS.
A large portion of Symantec's sales is made through the retail distribution
channel, which is subject to events that create unpredictability in consumer
demand. This increases the risk that Symantec may not plan effectively for the
future, which could result in adverse operating results in future periods.
Symantec's retail distribution customers also carry its competitors' products.
These retail distributors may have limited capital to invest in inventory. Their
decisions to purchase Symantec's products are partly a function of pricing,
terms and special promotions offered by its competitors and other factors that
Symantec does not control nor can Symantec predict. Symantec's agreements with
retail distributors are generally nonexclusive and may be terminated by them or
by Symantec without cause. Symantec would be adversely affected if companies in
its chain of distributors chose to increase purchases from its competition
relative to the amount they buy from Symantec.
Some distributors and resellers have experienced financial difficulties in
the past. Distributors that account for a significant portion of Symantec's
sales may experience financial difficulties in the future. If these distributors
do experience financial difficulties and Symantec is unable to move their
inventories to other distributors, Symantec may experience reduced sales or
increased write-offs, which would adversely affect its operating results.
SYMANTEC MAY BE UNSUCCESSFUL IN UTILIZING NEW DISTRIBUTION CHANNELS.
Symantec currently offers a broad range of products and services over the
Internet, which is a relatively new distribution channel for its business.
Symantec may not be able to effectively adapt its existing, or adopt new,
methods of distributing its software products utilizing the rapidly evolving
Internet and related technologies. The adoption of new channels may adversely
impact existing channels and/or product pricing, which may reduce Symantec's
future revenues and profitability.
CHANNEL FILL AND PRODUCT RETURNS MAY NEGATIVELY AFFECT SYMANTEC'S NET REVENUES.
Symantec's pattern of net revenues and earnings may be affected by "channel
fill." Distributors may fill their distribution channels in anticipation of
price increases, sales promotions or incentives. Channels may also become filled
simply because the distributors do not sell their inventories to retail
distribution or from retailers to end-users as anticipated. If sales to
retailers or end-users do not occur at a sufficient rate, distributors will
delay purchases or cancel orders in later periods or return prior purchases in
order to reduce their inventories.
Product returns can occur when Symantec introduces upgrades and new
versions of products or when distributors or retailers have excess inventories.
Symantec's return policy allows distributors, subject to various limitations, to
return purchased products in exchange for new products or for credit towards
future purchases. End-users may return Symantec's products through dealers and
distributors within a reasonable period from the date of purchase for a full
refund. In addition, subject to limitations, retailers may return older versions
of Symantec's products. Symantec estimates and maintains reserves for product
returns. Future returns could, however, exceed the reserves Symantec has
established, which could have a material adverse affect on its operating
results.
THE TRANSITION TO INTEGRATED SUITES OF UTILITIES MAY RESULT IN REDUCED CONSUMER
REVENUES.
Symantec and its competitors sell integrated suites of utility products for
prices significantly less than the aggregate separate prices of the stand-alone
products that are included in these suites. As a result of the shift to
integrated utility suites, price competition is intense in the consumer market
and Symantec has experienced cannibalization of its stand-alone products that
are included within the suite. Additionally,
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Symantec's products may not compete effectively with competitors' integrated
suites introduced in the future.
SYMANTEC DEPENDS ON INTERNAL COMMUNICATIONS SYSTEMS THAT MAY BE DISRUPTED.
Symantec's order entry and product shipping centers are geographically
dispersed. A business disruption could occur as a result of natural disasters or
the interruption in service by communications carriers. If Symantec's
communications between these centers are disrupted, particularly at the end of a
fiscal quarter, Symantec may suffer an unexpected shortfall in net revenues and
a resulting adverse impact on Symantec's operating results. Communications and
Internet connectivity disruptions may also cause delays in customer access to
Symantec's Internet-based services or product sales.
SYMANTEC MUST EFFECTIVELY ADAPT TO CHANGES IN A DYNAMIC TECHNOLOGICAL
ENVIRONMENT.
Symantec is increasingly focused on the Internet security market, which, in
turn, is dependent on further acceptance of the Internet. The following critical
issues concerning the use of the Internet remain unresolved and may affect the
market for Symantec's products and the use of the Internet as a medium to
distribute or support its software products and the functionality of some of its
products:
- security;
- reliability;
- cost;
- ease of use;
- accessibility;
- quality of service; and
- potential tax or other government regulations.
In addition, new technologies, such as non PC-based Internet access devices
and handheld organizers are gaining acceptance. Symantec must adapt to these
changing technological demands. If Symantec is unable to timely assimilate
changes brought about by the Internet and non PC-based environments, its future
net revenues and operating results could be adversely affected.
INCREASED UTILIZATION AND COSTS OF SYMANTEC'S TECHNICAL SUPPORT SERVICES MAY
ADVERSELY AFFECT ITS FINANCIAL RESULTS.
Like many companies in the software industry, technical support costs
comprise a significant portion of Symantec's operating costs and expenses. Over
the short term, Symantec may be unable to respond to fluctuations in customer
demand for support services. Symantec also may be unable to modify the format of
its support services to compete with changes in support services provided by
competitors. Further customer demand for these services could cause increases in
the costs of providing such services and adversely affect Symantec's operating
results.
ADDITIONAL RISKS RELATED TO THE BUSINESS OF AXENT
ANY FAILURE TO OBTAIN LARGE INDIVIDUAL CONTRACTS WILL HAVE A NEGATIVE EFFECT ON
AXENT'S REVENUES.
The value of individual transactions as a percentage of AXENT's quarterly
revenues can be substantial, and particular transactions may generate a
significant portion of AXENT's operating profits for the quarter in which they
are signed. The licensing of many of AXENT's products generally involves a long
sales cycle (between six and twelve months) and is subject to a number of
significant risks over which AXENT has little or no control. Because many of
AXENT's operating expenses are based on anticipated revenue levels, a
substantial portion of which is not typically generated until the end of each
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quarter, and a high percentage of its expenses are fixed, delays in the receipt
of orders can cause a significant variation in AXENT's operating results from
quarter to quarter. In addition, AXENT may expend significant resources pursuing
potential sales that will not be consummated. AXENT also may choose to reduce
prices or to increase spending in response to competition or to pursue new
market opportunities, which may significantly reduce operating results in the
short-term. For these reasons, you should not rely on AXENT's prior operating
results or projections of future operating results as an indication of its
future performance.
AXENT'S PRODUCTS ARE SUBJECT TO EXPORT AND IMPORT REGULATIONS.
Under regulations issued by the U.S. Department of Commerce in January
2000, encryption products of any key length, like those produced and marketed by
AXENT, may be exported, after a one-time technical review, to all end-users
other than governmental end-users. AXENT expects to complete the necessary
technical reviews of the products and services it currently exports in the near
future. Following export of certain of its products, AXENT will be subject to
various post-shipment reporting requirements. Encryption products may be
exported to governmental end-users under special encryption licensing
arrangements or individual export licenses which may be issued at the discretion
of the U.S. Department of Commerce. These regulations may be modified at any
time, and there can be no assurance that, in the event of any such modification,
AXENT will be authorized to export encryption products from the United States
without a license. If there is such a modification, AXENT might be at a
disadvantage in competing for international sales compared to companies located
outside of the United States that would not be subject to such restrictions.
While AXENT believes its products meet the regulatory standards of many foreign
markets, any inability to obtain foreign regulatory approvals on a timely basis
could have a material adverse effect on its financial condition or results of
operations.
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THE SYMANTEC SPECIAL MEETING
DATE, TIME, PLACE AND PURPOSE OF THE SYMANTEC SPECIAL MEETING
The special meeting of stockholders of Symantec will be held at 10:00 a.m.,
Pacific time, on Friday, December 15, 2000 at Symantec Corporation World
Headquarters, 20330 Stevens Creek Boulevard, Cupertino, California 95014. At the
special meeting, stockholders at the close of business on November 3, 2000 will
be asked:
1. To approve the issuance of shares of Symantec common stock to the
holders of AXENT common stock in the merger pursuant to which AXENT will
become a wholly owned subsidiary of Symantec. In the merger, Symantec will
issue 0.50 of a share of common stock for each share of outstanding AXENT
common stock. The merger agreement relating to the proposed merger is
included as Annex A to the joint proxy statement/prospectus.
2. To approve an amendment to Symantec's 1996 Equity Incentive Plan
(the "1996 Plan") to make available for issuance thereunder an additional
2,400,000 shares of Symantec common stock, which will raise the 1996 Plan's
limit on shares that may be issued pursuant to awards granted thereunder
from 15,236,102 to 17,636,102.
3. To approve an amendment to Symantec's certificate of incorporation
to increase the number of authorized shares of Symantec common stock by
200,000,000 shares to 300,000,000 shares.
4. To transact any other business that may properly come before the
special meeting or any adjournment.
RECORD DATE AND OUTSTANDING SHARES
The stockholders of record of Symantec common stock at the close of
business on the record date are entitled to notice of and to vote at the special
meeting. As of the close of business on November 3, 2000, there were
approximately 61,139,891 shares of Symantec common stock outstanding and
entitled to vote, held of record by approximately 680 stockholders, although
Symantec has been informed that there are in excess of 54,000 beneficial owners.
As described in that certain Joint Management Information Circular and
Proxy Statement distributed to the holders of exchangeable shares and the
holders of Symantec's common stock on October 17, 1995, the holders of
exchangeable shares of Delrina Corporation, a wholly owned subsidiary of
Symantec, are entitled to vote at the special meeting. Holders of exchangeable
shares are entitled to the same rights, benefits and privileges, including
voting rights, as the holders of Symantec's common stock, and are therefore
urged to exercise their votes at the special meeting.
On the record date, directors and executive officers of Symantec and their
affiliates beneficially owned, and were entitled to vote, approximately 147,596
shares of Symantec common stock, or approximately 0.24% of the shares
outstanding as of the record date.
VOTE REQUIRED
Holders of Symantec's common stock and the holders of exchangeable shares
of Delrina Corporation are entitled to one vote for each share held as of the
record date.
Issuance of shares in the merger
Approval of the issuance of shares in the merger with AXENT requires the
affirmative vote of a majority of the shares of Symantec common stock (including
Delrina exchangeable shares) present and entitled to vote at the special
meeting.
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Approval of amendment to certificate of incorporation
Approval of the amendment to Symantec's certificate of incorporation
requires the affirmative vote of a majority of the outstanding shares of
Symantec common stock (including Delrina exchangeable shares) as of the record
date.
Other proposals
Approval of each of the other proposals requires the affirmative vote of a
majority of the shares of Symantec common stock (including Delrina exchangeable
shares) represented in person or by proxy at the special meeting and entitled to
vote on the proposal.
QUORUM REQUIREMENTS
A quorum of stockholders is necessary to hold a valid meeting. The
presence, in person or by proxy, of the holders of shares representing a
majority of the issued and outstanding shares of Symantec common stock
(including Delrina exchangeable shares) entitled to vote as of the record date
is a quorum. Abstentions and broker non-votes count as present at the special
meeting for establishing a quorum. A broker non-vote occurs with respect to any
proposal when a broker is not permitted to vote on that proposal without
instruction from the beneficial owner of the shares and no instruction is given.
VOTING OF PROXIES
The proxy accompanying this joint proxy statement/prospectus is solicited
on behalf of the Symantec board of directors for use at the meeting. You may
vote in person at the Symantec meeting or by proxy. Symantec recommends that you
vote by proxy even if you plan to attend the meeting. You can always change your
vote at the meeting.
If a stockholder's shares are held of record in "street name" by a broker,
bank or other nominee and the stockholder intends to vote the shares in person
at the Symantec meeting, the stockholder must bring to the meeting a letter from
the broker, bank or other nominee confirming the stockholder's beneficial
ownership of the shares to be voted.
HOW TO VOTE BY PROXY
Voting instructions are included on the proxy accompanying this joint proxy
statement/prospectus. If you properly give your proxy and submit it to Symantec
in time to vote, one of the individuals named as your proxy will vote your
shares as you have directed. You may vote for or against the proposals or
abstain from voting. Please complete, sign, date and return the accompanying
proxy in the enclosed envelope. If you submit your proxy but do not make
specific choices, your proxy will follow the board recommendations and vote your
shares FOR the proposals.
REVOKING YOUR PROXY
You may revoke your proxy before it is voted by:
- notifying Symantec's Secretary in writing before the meeting that you
have revoked your proxy;
- submitting a new proxy with a later date; or
- voting in person at the meeting.
VOTING IN PERSON
If you plan to attend the meeting and wish to vote in person, Symantec will
give you a ballot at the meeting. You should realize that attendance at a
stockholders meeting, however, will not in and of itself constitute a revocation
of a proxy.
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<PAGE> 32
EFFECT OF ABSTAINING
You may abstain from voting on any of the proposals. Abstentions will be
included in determining the number of shares present and voting at the special
meeting. Since the required vote of holders of common stock to approve proposal
no. 3 is based on the total number of shares outstanding, if you mark your proxy
"ABSTAIN" with respect to the proposal no. 3, you will be in effect voting
against that proposal. In addition, if you fail to send in your proxy, this will
also have the effect of a vote against proposal no. 3.
BROKER NON-VOTE
If you are a Symantec stockholder and your broker holds shares in its name,
the broker cannot vote your shares on proposal no. 3 without your instructions.
This is a "broker non-vote." A "broker non-vote" with respect to proposal no. 3
will have the effect of a vote against the proposal. Broker non-votes will have
no effect on any of the other proposals.
PROXY SOLICITATION
Symantec will pay its own costs of soliciting proxies. Symantec has
retained Innisfree M&A, Inc., "Innisfree", to aid in the solicitation of proxies
and to verify records relating to the solicitations. Innisfree will receive
customary fees and expense reimbursement for these services. The extent to which
these proxy soliciting efforts will be necessary depends entirely upon how
promptly proxies are received. You should send in your proxy by mail without
delay. Symantec also reimburses brokers and other custodians, nominees and
fiduciaries for their expenses in sending these materials to you and getting
your voting instructions. For a more complete description of how to send your
proxy, see the section titled "-- How to vote by proxy" on page 24.
OTHER BUSINESS; ADJOURNMENTS
Symantec is not currently aware of any business other than the named
proposals to be acted upon at the Symantec special meeting. If, however, any
other matters are properly brought before the meeting, or any adjournment or
postponement thereof, the persons named in the enclosed form of proxy, and
acting under that proxy, will have discretion to vote or act on those matters in
accordance with their best judgment, including any proposal to adjourn the
meeting (provided, however, that a proxy voted against adoption of the merger
agreement will not be voted in favor of adjournment of the meeting).
Adjournments may be made for the purpose of, among other things soliciting
additional proxies. Any adjournment may be made from time to time by approval of
the holders of shares representing a majority of the votes present in person or
by proxy at the meeting, whether or not a quorum exists, without further notice
other than by an announcement at the meeting. Symantec does not currently intend
to seek an adjournment of its meeting unless such an adjournment is necessary to
solicit additional votes.
NO APPRAISAL RIGHTS
Holders of Symantec common stock are not entitled to dissenters' rights or
appraisal rights with respect to the matters to be considered at the Symantec
special meeting.
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<PAGE> 33
THE AXENT SPECIAL MEETING
DATE, TIME, AND PLACE AND PURPOSE OF THE AXENT SPECIAL MEETING
The special meeting of stockholders of AXENT will be held at 9:00 a.m.,
Eastern time, on Friday, December 15, 2000 at AXENT Technologies, Inc., 2400
Research Boulevard, Suite 200, Rockville, Maryland 20850. At the special
meeting, stockholders at the close of business on November 3, 2000 will be
asked:
1. To adopt the Agreement and Plan of Merger pursuant to which AXENT
will become a wholly owned subsidiary of Symantec. The merger agreement
relating to the proposed merger is included as Annex A to this joint proxy
statement/prospectus. In the merger, Symantec will issue 0.50 of a share of
common stock for each outstanding share of AXENT common stock.
2. To transact any other business that may properly come before the
special meeting or any adjournment.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of AXENT common stock at the close of business on
the record date are entitled to notice of and to vote at the special meeting. As
of the close of business on November 3, there were approximately 29,165,936
shares of AXENT common stock outstanding and entitled to vote.
VOTE REQUIRED
Holders of AXENT's common stock are entitled to one vote for each share
held as of the record date.
Adoption of the merger agreement requires the affirmative vote of a
majority of the total outstanding shares of AXENT common stock on the record
date.
QUORUM REQUIREMENTS
A quorum of stockholders is necessary to hold a valid meeting. The
presence, in person or by proxy, of the holders of shares representing a
majority of the issued and outstanding shares of AXENT common stock entitled to
vote as of the record date is a quorum. Abstentions and broker non-votes count
as present at the special meeting for establishing a quorum. A broker non-vote
occurs with respect to any proposal when a broker is not permitted to vote on
that proposal without instruction from the beneficial owner of the shares and no
instruction is given.
SHARES BENEFICIALLY OWNED BY AXENT DIRECTORS AND EXECUTIVE OFFICERS AS OF THE
RECORD DATE
On the record date, directors and executive officers of AXENT and their
affiliates beneficially owned, and were entitled to vote, 749,420 shares of
AXENT common stock, or approximately 2.5% of the shares outstanding as of the
record date.
VOTE NECESSARY TO APPROVE THE MERGER
The affirmative vote by holders of a majority of the outstanding shares of
AXENT common stock on the record date is necessary to adopt the merger
agreement. Broker non-votes and abstentions have the same effect as a vote
against adoption of the merger agreement.
VOTING OF PROXIES
The proxy accompanying this joint proxy statement/prospectus is being
solicited on behalf of the AXENT board of directors for use at the meeting. You
may vote in person at the AXENT meeting or by proxy. AXENT recommends that you
vote by proxy even if you plan to attend the meeting. You can always change your
vote at the meeting.
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<PAGE> 34
If a stockholder's shares are held of record in "street name" by a broker,
bank or other nominee and the stockholder intends to vote the shares in person
at the AXENT meeting, the stockholder must bring to the meeting a letter from
the broker, bank or other nominee confirming the stockholder's beneficial
ownership of the shares to be voted.
HOW TO VOTE BY PROXY
Voting instructions are included on the proxy accompanying this joint proxy
statement/prospectus. If you properly give your proxy and submit it to AXENT in
time to vote, one of the individuals named as your proxy will vote your shares
as you have directed. You may vote for or against the proposal to adopt the
merger agreement or abstain from voting. Please complete, sign, date and return
the accompanying proxy in the enclosed envelope. If you submit your proxy but do
not make specific choices, your proxy will follow the board's recommendations
and vote your shares FOR the proposal to adopt the merger agreement.
REVOKING YOUR PROXY
You may revoke your proxy before it is voted by:
- notifying AXENT's Secretary in writing before the meeting that you have
revoked your proxy;
- submitting a new proxy with a later date; or
- voting in person at the meeting.
VOTING IN PERSON
If you plan to attend the meeting and wish to vote in person, AXENT will
give you a ballot at the meeting. You should realize that attendance at a
stockholders meeting will not in and of itself constitute a revocation of a
proxy.
EFFECT OF ABSTAINING
You may abstain from voting on the proposal to adopt the merger agreement.
If you mark your proxy "ABSTAIN" with respect to the proposal, you will in
effect be voting against that proposal. In addition, if you fail to send in your
proxy, this, too, will have the effect of a vote against the proposal.
BROKER NON-VOTE
If you are an AXENT stockholder and your broker holds shares in its name,
the broker cannot vote your shares on the proposal to adopt the merger agreement
without your instructions. This is a "broker non-vote." A "broker non-vote" with
respect to the proposal will have the effect of a vote against the proposal.
PROXY SOLICITATION
AXENT will pay its own costs of soliciting proxies. AXENT has retained
Georgeson Shareholder Communications, Inc. to aid in the solicitation of proxies
and to verify records relating to the solicitations. Georgeson will receive
customary fees and expense reimbursement for these services. The extent to which
these proxy soliciting efforts will be necessary depends entirely upon how
promptly proxies are received. You should send in your proxy by mail without
delay. AXENT also reimburses brokers and other custodians, nominees and
fiduciaries for their expenses in sending these materials to you and getting
your voting instructions.
Do not send in any stock certificates with your proxy. The exchange agent
will mail transmittal forms with instructions for the surrender of stock
certificates for AXENT common shares to former AXENT stockholders as soon as
practicable after the completion of the merger.
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<PAGE> 35
OTHER BUSINESS; ADJOURNMENTS
AXENT is not currently aware of any business other than the proposal to
adopt the merger agreement to be acted upon at the AXENT special meeting. If,
however, any other matters are properly brought before the meeting, or any
adjournment or postponement thereof, the persons named in the enclosed form of
proxy, and acting under that proxy, will have discretion to vote or act on those
matters in accordance with their best judgment, including any proposal to
adjourn the meeting (provided, however, that a proxy voted against adoption of
the merger agreement will not be voted in favor of adjournment of the meeting).
Adjournments may be made for the purpose of, among other things, soliciting
additional proxies. Any adjournment may be made from time to time by approval of
the holders of shares representing a majority of the votes present in person or
by proxy at the meeting, whether or not a quorum exists, without further notice
other than by an announcement at the meeting. AXENT does not currently intend to
seek an adjournment of its meeting unless such an adjournment is necessary to
solicit additional votes.
NO APPRAISAL RIGHTS
Holders of AXENT common stock are not entitled to dissenters' rights or
appraisal rights with respect to the matters to be considered at the AXENT
special meeting.
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<PAGE> 36
THE MERGER
This section describes the proposed merger and the merger agreement. While
Symantec and AXENT believe that the description covers the material terms of the
proposed merger, this summary may not contain all of the information that is
important to you. Stockholders should carefully read this entire document and
the other documents referred to in this joint proxy statement/prospectus, such
as the merger agreement, for a more complete understanding of the merger.
BACKGROUND OF THE MERGER
AXENT has been advised by Updata Capital, Inc. since 1998 on a variety of
financial and strategic transactions. As part of this ongoing relationship,
Updata Capital acted as a financial advisor to AXENT in this merger transaction.
On June 5, 2000, Updata Capital contacted John Becker, AXENT's chairman and
chief executive officer, to inform him that John Thompson, Symantec's president
and chief executive officer, wanted to discuss a possible business combination
between Symantec and AXENT.
On June 13, 2000, Mr. Thompson met with Mr. Becker. Messrs. Thompson and
Becker discussed their respective business strategies and plans for the
respective companies' futures. Mr. Thompson expressed Symantec's interest in
acquiring AXENT, for a price to be determined following due diligence and
further internal discussions at Symantec.
On June 19, 2000, Symantec and AXENT entered into a confidentiality
agreement to facilitate the companies' review of each others' proprietary
information in connection with a possible merger transaction.
On June 29, 2000, Symantec engaged Donaldson, Lufkin & Jenrette Securities
Corporation to assist Symantec in evaluating a possible transaction with AXENT.
On June 29, 2000, Mr. Becker and Greg Cottichia, AXENT's vice president of
marketing, visited Symantec's corporate headquarters. Messrs. Becker and
Cottichia met with Mr. Thompson and other senior executives of Symantec.
From July 5 to July 7, 2000, Symantec carried out an extensive due
diligence investigation of AXENT. During this period, members of Symantec's
senior management held meetings with members of AXENT's senior management
regarding operational and integration issues, and Symantec's in-house and
outside legal counsel and DLJ reviewed the due diligence materials provided by
AXENT.
On July 11, 2000, Updata gathered information about the business and
prospects of Symantec, as well as information regarding a business combination
and synergies between the two companies, and sent the information it had
compiled to AXENT's board of directors.
On July 20, 2000, Symantec's board of directors held a meeting during which
it considered the acquisition of AXENT. After receiving presentations from Mr.
Thompson, Gail Hamilton, Symantec's Enterprise Solutions Division senior vice
president and DLJ, the board unanimously concluded that it was willing to
authorize Symantec's senior management to continue negotiations with AXENT
regarding an acquisition. The board authorized a subcommittee consisting of Mr.
Thompson, Charles Boesenberg, Robert Dykes and certain senior staff members of
Symantec to conduct negotiations with AXENT. Also on July 20, Symantec's board
of directors authorized DLJ to forward to AXENT's outside legal counsel and
investment bankers a draft merger agreement which had been prepared in advance
of the board meeting.
On July 21, 2000, Mr. Thompson met with Mr. Becker. General financial terms
of a possible acquisition of AXENT by Symantec were discussed.
Throughout the day on July 22, 2000, Messrs. Thompson and Becker held
negotiations regarding the consideration AXENT stockholders would receive in the
transaction and the structure of the transaction. Late on the evening of July
22, Mr. Thompson sent an offer letter to Mr. Becker outlining the terms upon
29
<PAGE> 37
which Symantec would be willing to proceed with negotiations over definitive
documentation relating to the proposed merger.
From July 22 to July 23, 2000, Updata contacted Chase H&Q on behalf of
AXENT in order to engage it as a second financial advisor for AXENT in
connection with the potential acquisition by Symantec.
On July 23, 2000, AXENT's board met. At the meeting, Mr. Becker reviewed
the status of discussions with Symantec and the terms of the offer letter
presented to him on the evening of July 22. AXENT's board authorized Mr. Becker
to pursue further discussions with Symantec.
On July 23, 2000, Messrs. Thompson and Becker held additional discussions
and agreed that their respective companies were prepared to move forward with a
proposal in which Symantec would acquire AXENT in a tax-free reorganization,
subject to completion of AXENT's due diligence review of Symantec, Symantec's
due diligence review of AXENT, mutual agreement on definitive agreements and
board approval by each company. Messrs. Thompson and Becker further agreed to
finalize the definitive agreement providing for the merger as soon as possible.
Messrs. Thompson, Boesenberg and Dykes held a meeting in which Mr. Thompson
updated Messrs. Boesenberg and Dykes on the status of the negotiations with
AXENT, including a proposed exchange ratio.
From July 24 to July 26, 2000, Symantec completed its due diligence on
AXENT, AXENT completed its due diligence on Symantec, and intensive negotiations
continued between the two companies and their respective financial and legal
advisors regarding the definitive agreement.
On July 24 and 25, 2000, Messrs. Becker and Cottichia, along with Brett
Jackson, AXENT's president and chief operating officer, and Phil Salopek,
AXENT's vice president of finance, accompanied by representatives from Updata
and Shaw Pittman, AXENT's outside legal counsel, conducted due diligence
investigations of Symantec. In addition, AXENT's senior management met with
Symantec's senior management to discuss possible terms of the transaction.
On July 25, 2000, Symantec's board of directors received detailed
presentations from Mr. Thompson, Ms. Hamilton and DLJ regarding the status of
the proposed transaction and the results of Symantec's due diligence
investigation of AXENT. After discussing the matter, Symantec's board of
directors unanimously directed Mr. Thompson, with the assistance of Symantec's
financial and legal advisors, to finalize the definitive agreement.
At a special meeting held on the afternoon of July 26, 2000, Symantec's
board of directors received further updates from Mr. Thompson, DLJ and
Symantec's chief financial officer regarding the outcome of the negotiations
that had taken place since the previous day's meeting. This included
finalization of the accounting treatment for the transaction and final
determination of the exchange ratio. Symantec's board of directors also received
DLJ's oral opinion, later confirmed in writing, that, as of that date, based on
and subject to the assumptions set forth in the opinion, the consideration to be
paid by Symantec in the merger was fair to Symantec from a financial point of
view (see "-- Opinion of Symantec's financial advisor"). After discussion,
Symantec's board of directors unanimously approved the merger agreement and the
issuance of Symantec common stock in the merger.
On the morning of July 26, 2000, AXENT's board of directors met with senior
management, representatives of Chase H&Q and Updata and representatives of Shaw
Pittman and Richards, Layton & Finger, AXENT's outside Delaware counsel. During
the meeting, the board heard presentations from Chase H&Q and Updata on the
status of negotiations, results of the financial analysis of Symantec and the
proposed merger and outstanding issues to be resolved. Shaw Pittman explained
the fiduciary duties and obligations of the directors relating to the potential
merger, explained the terms and conditions contained in the merger agreement and
discussed open issues. The board discussed acceptable exchange ratios and
potential accounting treatment for the proposed transaction. The directors voted
to adjourn the meeting and reconvene later in the day to continue deliberations
regarding the transaction.
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<PAGE> 38
In the evening of July 26, 2000, AXENT's board reconvened. Representatives
of Chase H&Q, Updata, Shaw Pittman and Richards, Layton & Finger were also
present. Mr. Becker reported that agreement had been reached on a final exchange
ratio and the accounting treatment for the transaction. Richards Layton & Finger
explained the fiduciary duties and obligations of the directors regarding their
approval of the merger agreement and Shaw Pittman discussed the changes that had
been made to the merger agreement since the morning meeting of the board. Chase
H&Q rendered an oral opinion that, as of the date of the merger agreement and
subject to certain matters, the consideration to be received by the stockholders
of AXENT in the merger was fair to such stockholders from a financial point of
view. After further discussion and for the reasons contained in the section
titled "-- AXENT's reasons for the merger," the AXENT board members voting upon
the merger proposal voted unanimously to approve the merger agreement in
substantially the form presented to it at the meeting and to recommend its
approval to AXENT's stockholders.
After the close of trading on July 26, 2000, the merger agreement was
executed and was publicly announced in a joint press release on July 27, 2000,
prior to the commencement of trading.
SYMANTEC'S REASONS FOR THE MERGER
At meetings held on July 25 and July 26, 2000, the board of directors of
Symantec concluded that the merger was in the best interests of Symantec and its
stockholders and determined to recommend that its stockholders approve the
issuance of shares to AXENT's stockholders in the merger.
The decision of the board of directors of Symantec was reached after
considering the opinion of Donaldson, Lufkin & Jenrette, Symantec's financial
advisor, and was based upon several potential benefits of the merger, including
the following:
- the opportunity for Symantec to focus on the enterprise market by
utilizing AXENT's enterprise network expertise;
- the opportunity to expand Symantec's Internet security strategy;
- the potential enhancement of revenue growth associated with combining
complementary product lines and sales channels;
- the potential acceleration of new product development created by uniting
the technical resources and security expertise of Symantec and AXENT;
- the opportunity to integrate the technical support resources and talent
to respond to customer service needs; and
- the opportunity to leverage the global capabilities of Symantec and
AXENT.
The foregoing discussion of the information and factors considered by the
board of directors of Symantec is not intended to be exhaustive. In view of the
wide variety of the material factors considered in connection with the
evaluation of the merger and the complexity of these matters, the board of
directors of Symantec did not find it practicable to, and did not, quantify or
otherwise attempt to assign any relative weight to the various factors
considered. In addition, the board of directors of Symantec did not undertake to
make any specific determination as to whether any particular factor, or any
aspect of any particular factor, was favorable or unfavorable to the ultimate
determination of the board of directors of Symantec, but rather the board of
directors of Symantec conducted an overall analysis of the factors described
above, including discussions with and questioning of Symantec's senior
management, and legal and financial advisors.
There can be no assurance that the potential savings, synergies or
opportunities considered by the board of directors of Symantec will be achieved
though consummation of the merger. See "Risk Factors" beginning on page 13.
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<PAGE> 39
OPINION OF FINANCIAL ADVISOR TO SYMANTEC
Symantec asked DLJ, in its role as financial advisor to Symantec, to render
an opinion to the Symantec board as to the fairness, from a financial point of
view, to Symantec of the consideration to be paid by Symantec in the merger. On
July 26, 2000, DLJ delivered to the Symantec board its written opinion, dated
July 26, 2000, which stated that, as of that date, based on and subject to the
assumptions, limitations and qualifications set forth in its written opinion,
the consideration to be paid by Symantec in the merger was fair to Symantec from
a financial point of view. The full text of DLJ's opinion is attached as Annex B
to this joint proxy statement/prospectus.
DLJ expressed no opinion as to the price at which Symantec common stock
would actually trade at any time. DLJ's opinion did not address the relative
merits of the merger and the other business strategies considered by the
Symantec board nor did it address the Symantec board's decision to proceed with
the merger. DLJ's opinion did not constitute a recommendation to any Symantec
stockholder as to how such stockholder should vote on the proposed transaction.
Symantec and AXENT determined the consideration to be paid by Symantec in
arm's length negotiations, in which DLJ advised Symantec.
Symantec selected DLJ as its financial advisor because DLJ is an
internationally recognized investment banking firm that has substantial
experience providing strategic advisory services. As part of its investment
banking business, DLJ is regularly engaged in the valuation of businesses and
securities in connection with mergers, acquisitions, underwritings, sales and
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes.
In arriving at its opinion, DLJ:
- reviewed the draft dated July 25, 2000 of the merger agreement and
assumed the final form of the merger agreement would not vary in any
material respect from the draft DLJ reviewed;
- reviewed financial and other information that was publicly available or
that Symantec and AXENT furnished, including information provided during
discussions with their respective managements. Included in the
information provided during discussions with AXENT's management were
certain financial projections of AXENT for the period beginning January
1, 2000 and ending December 31, 2002 prepared by the management of AXENT.
Included in the information provided during discussions with Symantec's
management were certain financial projections of Symantec for the period
beginning July 1, 2000 and ending March 31, 2003 prepared by the
management of Symantec, as well as certain financial projections of AXENT
for the period beginning January 1, 2000 and ending March 31, 2003
prepared by the management of Symantec;
- compared certain financial and securities data of AXENT with various
other companies whose securities are traded in public markets;
- reviewed the historical stock prices and trading volumes of AXENT common
stock;
- reviewed prices and premiums paid in certain other business combinations;
and
- conducted other financial studies, analyses and investigations as DLJ
deemed appropriate for purposes of rendering its opinion.
In rendering its opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
it from public sources, that was provided to it by Symantec, AXENT, or their
respective representatives, or that was otherwise reviewed by it. DLJ has also
assumed that Symantec is not aware of any information prepared by it or its
other advisors that might be material to DLJ's opinion that has not been made
available to DLJ. In particular, DLJ relied upon the estimates of the management
of Symantec of the operating synergies achievable as a result of the merger and
upon its discussion of such synergies with the management of Symantec and AXENT.
With respect to the financial projections supplied to DLJ, DLJ relied on
representations that the projections were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
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<PAGE> 40
management of Symantec and AXENT as to the future operating and financial
performance of Symantec and AXENT. DLJ expressed no opinion with respect to
these projections or the assumptions upon which they were based. DLJ did not
assume responsibility for making any independent evaluation of the assets or
liabilities, or for making any independent verification of the information DLJ
reviewed. DLJ relied as to certain legal matters on advice of counsel to
Symantec.
DLJ necessarily based its opinion on economic, market, financial and other
conditions as they existed on, and on the information made available to DLJ as
of, the date of its opinion. DLJ states in its opinion that, although subsequent
developments may affect the conclusions reached in its opinion, DLJ does not
have any obligation to update, revise or reaffirm its opinion.
Summary of Financial Analyses Performed by DLJ
The following is a summary of the financial analyses DLJ presented to the
Symantec board of directors on July 26, 2000 in connection with the preparation
of DLJ's opinion. No company or transaction DLJ used in the analyses described
below is directly comparable to AXENT, Symantec or the contemplated transaction.
In addition, mathematical analysis such as determining the mean or median is not
in itself a meaningful method of using selected company or transaction data. The
analyses DLJ performed are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
these analyses. The information summarized in the tables which follow should be
read in conjunction with the accompanying text.
Common Stock Trading History. DLJ examined the historical closing prices of
AXENT common stock from July 1, 1998 to July 25, 2000. During this time period,
AXENT common stock reached a high of $38.13 per share and a low of $8.06 per
share. DLJ also examined the historical closing prices of Symantec common stock
from July 24, 1998 to July 25, 2000. During this time period, Symantec common
stock reached a high of $80.81 per share and a low of $8.69 per share.
Historical Exchange Ratio Analysis. DLJ reviewed the historical exchange
ratios implied by the daily closing prices per share of Symantec common stock to
those of AXENT common stock for the period beginning on July 26, 1999 and ending
on July 25, 2000. This analysis showed that the average historical exchange
ratios on the date for the period indicated below prior to July 25, 2000 were as
follows:
<TABLE>
<CAPTION>
HISTORICAL
EXCHANGE
RATIO
----------
<S> <C>
1 year............................................. 0.378x
180 calendar days.................................. 0.353x
120 calendar days.................................. 0.340x
90 calendar days................................... 0.356x
60 calendar days................................... 0.379x
30 calendar days................................... 0.439x
July 25, 2000...................................... 0.331x
Proposed Exchange Ratio............................ 0.500x
</TABLE>
ANALYSIS OF AXENT
Comparable Publicly Traded Company Analysis. DLJ analyzed the market values
and trading multiples of selected publicly traded software companies that DLJ
believed were reasonably comparable to AXENT. These comparable companies
consisted of:
- Baltimore Technologies
- Bindview Development
- Computer Associates
- Check Point Software
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<PAGE> 41
- Entrust Technologies
- ISS Group
- Network Associates
- Netegrity
- VeriSign
- Watchguard Technologies
In examining these comparable companies, DLJ calculated the enterprise
value of each company as a multiple of its respective LTM revenue and projected
calendar year 2000 and 2001 revenue. The enterprise value of a company is equal
to the value of its fully diluted common equity plus debt and the liquidation
value of outstanding preferred stock, if any, minus cash and the value of
certain other assets, including minority interests in other entities. LTM means
the last twelve-month period for which financial data for the company at issue
has been reported. DLJ also calculated the equity value of each company as a
multiple of its respective LTM net income and projected calendar year 2000 and
2001 net income. All historical data were derived from publicly available
sources and all projected data were obtained from Wall Street research reports
from which DLJ excluded non-recurring and non-cash charges. DLJ's analysis of
the comparable companies yielded the following multiple ranges:
<TABLE>
<CAPTION>
LTM 2000 2001
REVENUE REVENUE REVENUE
------- ------- -------
<S> <C> <C> <C>
High..................................................... 126.6x 72.4x 47.5x
Low...................................................... 2.5x 1.8x 1.5x
Average (excluding high and low values).................. 44.6x 28.7x 17.1x
Median................................................... 40.5x 23.3x 13.6x
</TABLE>
<TABLE>
<CAPTION>
LTM 2000 2001
NET INCOME NET INCOME NET INCOME
---------- ---------- ----------
<S> <C> <C> <C>
High.............................................. 1,324.4x 661.8x 319.4x
Low............................................... 11.1x 7.2x 6.2x
Average (excluding high and low values)........... 228.4x 153.4x 86.0x
Median............................................ 181.4x 193.8x 81.6x
</TABLE>
Based on an analysis of this data, an assessment of the comparability of
these comparable companies, its understanding that AXENT and these comparable
companies publicly trade based on multiples of their 2000 and 2001 revenues and
its judgment of the relevant multiple range, DLJ derived a selected range of
2000 revenues multiples of 7.0x to 9.0x and a selected range of 2001 revenue
multiples of 5.0x to 6.0x. Using AXENT's projected results for comparable
periods, DLJ estimated a value per share of AXENT common stock ranging from
$28.00 to $33.00, compared to the proposed price of $30.00 per share of AXENT
common stock to be paid in the merger. For purposes of DLJ's valuation analysis,
DLJ implied a purchase price per share of $30.00 based on the closing prices of
Symantec common stock and AXENT common stock as of July 25, 2000. The actual
price (based on the July 26, 2000 closing price) was $31.84.
Precedent Merger and Acquisition Transaction Analysis. DLJ reviewed
selected mergers and acquisitions involving companies in the software industry
that DLJ believed are reasonably comparable to the merger. These transactions
consisted of:
- Harbinger Corp./Peregrine Systems
- Network Solutions/VeriSign
- Sterling Software/Computer Associates
- Platinum Technology/Computer Associates
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<PAGE> 42
- New Dimension Software Unlimited/BMC Software
- Boole & Babbage, Inc./BMC Software
- MEMCO Software, Ltd./Platinum Technology, Inc.
- Dr Solomon's Group PLC/Network Associates, Inc.
- Trusted Information Systems, Inc./Network Associates, Inc.
- BGS Systems/BMC Software
- Raptor Systems, Inc./AXENT Technologies, Inc.
- OpenVision/Veritas
In examining these acquisitions, DLJ calculated the enterprise value of the
acquired company implied by each of these transactions as a multiple of LTM
revenue and projected revenue for the next two calendar years. DLJ also
calculated the market value of the acquired company implied by each of these
transactions as a multiple of LTM net income and projected net income for the
next two calendar years. DLJ's analysis of these comparable acquisitions yielded
the following multiple ranges:
<TABLE>
<CAPTION>
LTM CY+1 CY+2
REVENUE REVENUE REVENUE
------- ------- -------
<S> <C> <C> <C>
High..................................................... 72.0x 57.7x 35.6x
Low...................................................... 3.8x 3.0x 4.3x
Average (excluding high and low values).................. 7.6x 5.8x 4.8x
Median................................................... 7.5x 5.5x 4.8x
</TABLE>
<TABLE>
<CAPTION>
LTM CY+1 CY+2
NET INCOME NET INCOME NET INCOME
----------- ----------- -----------
<S> <C> <C> <C>
High............................................ 574.0x 398.1x 232.4x
Low............................................. 28.4x 19.0x 17.7x
Average (excluding high and low values)......... 79.0x 81.7x 21.4x
Median.......................................... 62.1x 46.4x 21.4x
</TABLE>
Based on an analysis of this data, an assessment of the comparability of
these comparable acquisitions, its understanding that the merger and these
comparable transactions are analyzed based on multiples of 2000 and 2001
revenues and its judgment of the relevant multiple range, DLJ derived a selected
range of 2000 revenue multiples of 7.0x to 8.0x and a selected range of 2001
revenue multiples of 5.0x to 6.5x. Using AXENT's historical and projected
operating results, DLJ estimated a value per share of AXENT common stock ranging
from $27.00 to $32.00.
Premiums Paid Analysis. DLJ determined the premium over the common stock
trading prices for one day, one week and four weeks prior to the announcement
date in software transactions ranging from $500 million to $4 billion in size
announced and completed between January 1, 1998 and July 24, 2000, in which the
target was a public company in the software business and in which at least 75%
of the target was acquired. DLJ obtained the premiums for these transactions
from Securities Data Company. The median premiums for the selected transactions
over the common stock trading prices for one day, one week and four weeks prior
to the announcement date were 36.7%, 38.0% and 52.1%, respectively. Applying the
above premiums to the closing price of AXENT common stock on comparable days,
DLJ estimated a value per share of AXENT common stock ranging from $27.00 to
$34.00.
Discounted Cash Flow Analysis. DLJ performed a DCF analysis of the
projected cash flows of AXENT for the fiscal years ending December 31, 2000
(from June 30, 2000 to December 31, 2000) through December 31, 2002, using
projections and assumptions provided by the management of AXENT and assuming no
synergies from the merger. DCF means discounted cash flow. The DCFs for AXENT
were estimated using discount rates ranging from 17.5% to 19.5%, based on
estimates related to the weighted average costs of capital of AXENT, and
terminal multiples of estimated revenue for AXENT's
35
<PAGE> 43
fiscal year ending December 31, 2002 ranging from 3.5x to 5.5x. Based on this
analysis, DLJ estimated a value per share of AXENT common stock ranging from
$26.50 to $32.00.
In addition, DLJ performed a DCF analysis of the projected cash flows of
AXENT for the fiscal years ending December 31, 2000 (from June 30, 2000 to
December 31, 2000) through December 31, 2002, using projections and assumptions
provided by the management of AXENT and assuming synergies from the merger
provided by the management of Symantec for the fiscal years ending December 31,
2000 (from June 30, 2000 to December 31, 2000), December 31, 2001 and December
31, 2002 in the amount of $0.8 million, $25.5 million and $44.9 million,
respectively. The DCFs for AXENT were estimated using discount rates ranging
from 17.5% to 19.5%, based on estimates related to the weighted average costs of
capital of AXENT, and terminal multiples of estimated revenue for AXENT's fiscal
year ending December 31, 2002 ranging from 3.5x to 5.5x. Based on this analysis,
DLJ estimated a value per share of AXENT common stock ranging from $33.00 to
$40.00.
Contribution Analysis. DLJ analyzed the relative contributions of Symantec
and AXENT to the pro forma combined company for the years 2000 and 2001 based on
selected financial data, assuming no anticipated cost savings or related
expenses. DLJ analyzed the respective contributions of each company's projected
revenues, gross profit and operating profit (excluding goodwill), for each of
2000 and 2001 based on estimates provided by the management of Symantec and
AXENT. DLJ then compared such amounts to the enterprise value contributed by
AXENT and Symantec, which is 18.7% and 81.3%, respectively. DLJ also analyzed
the respective contributions of each company's projected cash earnings for each
of 2000 and 2001 based on estimates provided by the management of Symantec and
AXENT. DLJ then compared such amounts to the equity value contributed by AXENT
and Symantec, which is 18.7% and 81.3%, respectively.
<TABLE>
<CAPTION>
AXENT SYMANTEC
CONTRIBUTION CONTRIBUTION
------------ ------------
<S> <C> <C>
Revenues
2000...................................................... 15.7% 84.3%
2001...................................................... 16.5% 83.5%
Gross Profit
2000...................................................... 15.9% 84.1%
2001...................................................... 16.6% 83.4%
Operating Profit (excluding goodwill)
2000...................................................... 6.3% 93.7%
2001...................................................... 7.5% 92.5%
Cash Earnings
2000...................................................... 8.6% 91.4%
2001...................................................... 8.2% 91.8%
</TABLE>
The summary set forth above does not purport to be a complete description
of the analyses performed by DLJ but describes the material elements of the
presentation that DLJ made to the Symantec board on July 26, 2000 in connection
with the preparation of DLJ's fairness opinion. The preparation of a fairness
opinion involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of these methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. DLJ conducted each of the analyses in order
to provide a different perspective on the transaction and to add to the total
mix of information available. DLJ did not form a conclusion as to whether any
individual analysis, considered in isolation, supported or failed to support an
opinion as to fairness from a financial point of view. Rather, in reaching its
conclusion, DLJ considered the results of the analyses in light of each other
and ultimately reached its opinion based on the results of all analyses taken as
a whole. DLJ did not place any particular reliance or weight on any individual
analysis, but instead concluded that its analyses, taken as a whole, supported
its determination. Accordingly, notwithstanding the separate factors summarized
above, DLJ has indicated to Symantec that it believes that its analyses must be
considered as a whole and that selecting portions of its analyses and the
factors considered by it, without considering all analyses and factors, could
create an incomplete view
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<PAGE> 44
of the evaluation process underlying its opinion. The analyses DLJ performed are
not necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by these analyses.
Engagement Letter
Pursuant to the terms of an engagement agreement dated June 15, 2000,
Symantec has agreed to pay a fee that is customary in transactions of this
nature, a substantial portion of which is contingent upon the consummation of
the merger. In addition, Symantec agreed to reimburse DLJ, upon DLJ's request
from time to time, for all out-of-pocket expenses (including the reasonable fees
and expenses of counsel) DLJ incurred in connection with its engagement
thereunder and to indemnify DLJ and certain related persons against certain
liabilities in connection with its engagement, including liabilities under U.S.
federal securities laws. DLJ and Symantec negotiated the terms of the fee
arrangement.
Other Relationships
In the ordinary course of business, DLJ and its affiliates may own or
actively trade the securities of Symantec and AXENT for their own accounts and
for the accounts of their customers and, accordingly, may at any time hold a
long or short position in Symantec or AXENT securities. DLJ has performed
investment banking and other services for Symantec in the past, including acting
as financial advisor to Symantec in connection with the disposition of
Symantec's ACT! product line, and received usual and customary compensation for
such services.
RECOMMENDATION OF SYMANTEC'S BOARD OF DIRECTORS
Symantec's board of directors has determined the merger agreement and the
merger to be fair to and in the best interests of Symantec. In connection with
the merger, Symantec's board of directors recommends that stockholders vote
"FOR" approval of the issuance of shares of Symantec common stock in the merger
as described in this joint proxy statement/prospectus.
AXENT'S REASONS FOR THE MERGER
At the meeting of the board of directors of AXENT on July 26, 2000, the
directors voting on the transaction voted unanimously to enter into the merger
agreement and to recommend that AXENT stockholders vote to adopt the merger
agreement. Because of Updata's role as financial advisor to AXENT in connection
with the transaction and because of his position as a managing director for
Updata, Mr. Burton abstained from voting on the transaction to avoid the
appearance of a conflict of interest.
In the course of reaching its decision to enter into the merger agreement,
the board of directors of AXENT consulted with AXENT's senior management,
outside legal counsel and financial advisors, reviewed a significant amount of
information and considered a number of factors:
- Management's view that by combining complementary operations, the
combined company would have better opportunities for future growth;
- The strategic fit between Symantec and AXENT, and the belief that the
combined company has the potential to enhance stockholder value through
additional opportunities and operating efficiencies;
- The opportunity for AXENT's stockholders to participate in a larger, more
competitive company;
- Information concerning the business, earning, operations, competitive
position and prospects of AXENT and Symantec both individually and on a
combined basis including, but not limited to, the compatibility of the
two companies' operations as a result of the consolidation of AXENT's and
Symantec's operations;
- The opinion of AXENT's financial advisor that, as of July 26, 2000, and
subject to the assumptions and limitations set forth in the opinions, the
exchange ratio was fair, from a financial point of view,
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<PAGE> 45
to the holders of the outstanding shares of AXENT common stock, and the
financial presentations made by AXENT's financial advisors to the board of
directors of AXENT in connection with the delivery of their opinions;
- The amount and form of consideration to be received by AXENT's
stockholders in the merger and information on the historical trading
ranges of AXENT common stock and Symantec common stock;
- The opportunity provided by the merger to AXENT's stockholders to receive
a premium over the market price for their AXENT common stock immediately
prior to the announcement of the merger. On July 26, 2000, the last
trading day prior to the announcement of the merger, the exchange ratio
for the merger represented a premium of approximately 60% over the
closing sales price of $19.06 per share of AXENT common stock on July 26,
2000;
- The likely impact of the merger on AXENT's employees and customers;
- The expected effect of the merger on AXENT's existing relationships with
third parties;
- The interests that certain executive officers and directors of AXENT may
have with respect to the merger in addition to their interests as
stockholders of AXENT generally as described in "The merger -- Interests
of certain persons in the merger;" and
- The qualification of the merger as a tax-free transaction for U.S.
Federal income tax purposes (except for tax resulting from any cash
received for fractional shares by the holders of AXENT common stock).
The foregoing discussion of the information and factors considered by the
board of directors of AXENT is not intended to be exhaustive. In view of the
wide variety of the material factors considered in connection with the
evaluation of the merger and the complexity of these matters, the board of
directors of AXENT did not find it practicable to, and did not, quantify or
otherwise attempt to assign any relative weight to the various factors
considered. In addition, the board of directors of AXENT did not undertake to
make any specific determination as to whether any particular factor, or any
aspect of any particular factor, was favorable or unfavorable to the ultimate
determination of the board of directors of AXENT, but rather the board of
directors of AXENT conducted an overall analysis of the factors described above,
including discussions with and questioning of AXENT's senior management, and
legal and financial advisors. In considering the factors described above,
individual members of the board of directors of AXENT may have given different
weight to different factors.
There can be no assurance that the potential savings, synergies or
opportunities considered by the board of directors of AXENT will be achieved
though consummation of the merger. See "Risk Factors" beginning on page 13.
OPINION OF FINANCIAL ADVISOR TO AXENT
AXENT engaged Chase H&Q to act as one of its financial advisors in
connection with the proposed merger. The AXENT board of directors selected Chase
H&Q to act as a financial advisor based on Chase H&Q's qualifications, expertise
and reputation, as well as Chase H&Q's historic investment banking relationship
and familiarity with AXENT. Chase H&Q delivered its oral opinion, subsequently
confirmed in writing, on July 26, 2000 to the AXENT board of directors that, as
of such date, based upon and subject to the assumptions made, matters considered
and limits of the review undertaken by Chase H&Q, the consideration to be
received by the holders of AXENT common stock was fair from a financial point of
view.
THE FULL TEXT OF THE OPINION DELIVERED BY CHASE H&Q TO THE AXENT BOARD OF
DIRECTORS, DATED JULY 26, 2000, WHICH SETS FORTH THE ASSUMPTIONS MADE, GENERAL
PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITATIONS ON THE SCOPE OF REVIEW
UNDERTAKEN BY CHASE H&Q IN RENDERING ITS OPINION, IS ATTACHED AS ANNEX C TO THIS
JOINT PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE
CHASE H&Q OPINION DOES NOT CONSTITUTE A RECOMMENDATION TO ANY AXENT STOCKHOLDER
AS TO HOW SUCH
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<PAGE> 46
STOCKHOLDER SHOULD VOTE WITH RESPECT TO THE MERGER AGREEMENT. THE SUMMARY OF THE
CHASE H&Q OPINION SET FORTH BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE FULL TEXT OF SUCH OPINION ATTACHED HERETO AS ANNEX C. AXENT STOCKHOLDERS ARE
URGED TO READ THE OPINION CAREFULLY IN ITS ENTIRETY.
In reviewing the proposed transactions, and in arriving at its opinion,
Chase H&Q, among other things:
- reviewed the publicly available financial statements of Symantec for
recent years and interim periods to date and certain other relevant
financial and operating data of Symantec (including its capital
structure) made available to Chase H&Q from published sources;
- discussed the business, financial condition and prospects of Symantec
with certain members of Symantec's senior management;
- reviewed the publicly available financial statements of AXENT for recent
years and interim periods to date and certain other relevant financial
and operating data of AXENT made available to Chase H&Q from published
sources and from the internal records of AXENT;
- reviewed certain internal financial and operating information, including
certain projections, relating to AXENT prepared by senior management of
AXENT;
- discussed the business, financial condition and prospects of AXENT with
certain members of AXENT's senior management;
- reviewed the recent reported prices and trading activity for the common
stocks of Symantec and AXENT and compared such information and certain
financial information for Symantec and AXENT with similar information for
certain other companies engaged in businesses Chase H&Q considered
comparable;
- reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions;
- reviewed a draft of the merger agreement dated July 26, 2000;
- discussed the tax and accounting treatment of the Proposed Transaction
with AXENT and AXENT's lawyers and accountants; and
- performed such other analyses and examinations and considered such other
information, financial studies, analyses and investigations and
financial, economic and market data as Chase H&Q deemed relevant.
Chase H&Q did not assume responsibility for independent verification of,
and did not independently verify, any of the information concerning AXENT or
Symantec considered in connection with its review of the proposed transactions,
including without limitation any financial information, forecasts or
projections, considered in connection with the rendering of its opinion.
Accordingly, for purposes of its opinion, Chase H&Q assumed and relied upon the
accuracy and completeness of all such information. In connection with its
opinion, Chase H&Q did not prepare or obtain any independent valuation or
appraisal of any of the assets or liabilities of AXENT or Symantec, and it did
not conduct a physical inspection of the properties and facilities of AXENT or
Symantec. With respect to the financial forecasts and projections used in its
analysis, Chase H&Q assumed that they reflected the best currently available
estimates and judgments of the expected future financial performance of AXENT
and Symantec, and Chase H&Q expressed no view as to the reasonableness of such
forecasts and projections or the assumptions on which such forecasts or
projections were based. For the purposes of its opinion, Chase H&Q also assumed
that neither AXENT nor Symantec was a party to any pending transactions,
including without limitation external recapitalizations or material merger or
acquisition discussions, other than the proposed merger and transactions in the
ordinary course of conducting their respective businesses. AXENT advised Chase
H&Q, and for purposes of its opinion Chase H&Q assumed, that the proposed merger
would qualify as a tax-free reorganization under the U.S. Internal Revenue Code
and would be treated as a purchase for financial accounting purposes.
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<PAGE> 47
In performing its analyses, Chase H&Q used published Wall Street estimates
of fiscal year 2001 and 2002 financial performance of AXENT and Symantec and
made numerous assumptions with respect to industry performance, general business
and economic conditions and other matters, many of which are beyond the control
of AXENT, Symantec or Chase H&Q. The analyses performed by Chase H&Q and
summarized below are not necessarily indicative of actual values or actual
future results, which may be significantly more or less favorable than suggested
by such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of AXENT,
Symantec or their respective advisors, neither AXENT, Chase H&Q nor any other
person assumes responsibility if future results or actual values are materially
different from the results of analyses based on forecasts or assumptions.
Additionally, analyses relating to the values of businesses do not purport to be
appraisals or to reflect the prices at which businesses or securities actually
may be acquired or bought or sold.
Chase H&Q's opinion is necessarily based upon market, economic, financial
and other conditions as they existed and can be evaluated as of the date of the
opinion and any subsequent change in such conditions would require a
reevaluation of such opinion. Although subsequent developments may affect its
opinion, Chase H&Q has assumed no obligation to update, revise or reaffirm it.
Chase H&Q assumed for purposes of its analysis that the value of the Symantec
common stock to be received by stockholders of AXENT in the proposed merger is
equal to the closing trading price of Symantec common stock as of July 26, 2000,
and Chase H&Q expresses no opinion or view on the price or value of Symantec
common stock.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to summary description. The summary of Chase H&Q's
analyses set forth below summarizes the material analyses presented to the AXENT
board of directors but is not a complete description of the presentation by
Chase H&Q to the AXENT board of directors or the analysis performed by Chase H&Q
in connection with preparing its opinion. In arriving at its opinion, Chase H&Q
did not attribute any particular weight to any analyses or factors considered by
it, but rather made subjective, qualitative judgments as to the significance and
relevance of each analysis and factor. Accordingly, Chase H&Q believes that its
analyses and the summary set forth below must be considered as a whole and that
selecting portions of its analyses, without considering all analyses, or of the
following summary, without considering all factors and analyses, could create an
incomplete view of the processes underlying the analyses set forth in the Chase
H&Q presentation to the AXENT board of directors and Chase H&Q's opinion.
The terms of the proposed merger were determined through negotiations
between AXENT and Symantec and were approved by the AXENT board of directors.
Although Chase H&Q provided advice to AXENT during the course of these
negotiations, the decision to enter into the merger was solely that of the AXENT
board of directors. As described above, the opinion of Chase H&Q and its
presentation to the AXENT board of directors were only one of a number of
factors taken into consideration by the AXENT board of directors in making its
determination to approve the proposed merger.
The following is a brief summary of the material financial analyses
performed by Chase H&Q in connection with providing its opinion to the AXENT
board of directors on July 26, 2000. The summary includes information presented
in tabular format. You should read these tables together with the text of each
summary, because the tables alone are not a complete description of the
financial analysis.
Valuation Analysis of AXENT
Analysis of Publicly Traded Companies Considered Comparable to AXENT. This
analysis reviews a business' operating performance and outlook relative to a
group of peer companies to determine an implied value. Using published Wall
Street estimates, Chase H&Q compared, among other things, the projected
revenues, price-earnings multiple and price/earnings to growth multiple for
AXENT for calendar year 2001 to corresponding measures for certain publicly
traded software companies that Chase H&Q considered comparable to AXENT. Chase
H&Q used revenues when making its comparisons, because valuations based on
revenues are generally accepted in the analysis of technology companies which,
in
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<PAGE> 48
many cases, have not achieved profitability. The software companies that Chase
H&Q considered comparable to AXENT were:
- Baltimore Technologies
- Certicom
- Check Point Software
- Cylink
- Entrust
- ISS Group
- Intertrust Technologies
- Network Associates
- RSA Security
- Rainbow Technologies
- Secure Computing
- VeriSign
Chase H&Q determined mean revenue multiples, price/earning multiples and
price/earnings to growth multiples for these companies. Applying such multiples
for the comparable companies to projected calendar year 2001 results of
operations of AXENT resulted in a range of implied value per share of AXENT of
$19.06 to $51.79. Chase H&Q observed that the value per share of AXENT implied
by the proposed merger of $31.85 per share was within the implied range.
Analysis of Selected Transactions. This analysis provides a valuation range
based on financial information of selected public companies which have been
recently acquired and are in similar industries as the business being evaluated.
Using published Wall Street estimates, Chase H&Q compared the proposed merger
with eleven selected mergers and acquisitions transactions involving companies
in the internet industry. The acquirors and targets in the transactions that
Chase H&Q deemed comparable to the proposed merger were:
- CheckFree/BlueGill Technologies
- VeriSign/Signio
- Security First Technologies/VerticalOne Corporation
- Security First Technologies/FICS
- Go2Net/Authorize.Net
- Security First Technologies/Edify
- Computer Associates/Platinum Technologies
- BMC Software/New Dimension Software
- Carreker-Antinori/Genisys Operation Inc.
- PLATINUM Technology/MEMCO Software
- Security Dynamics/Intrusion Detection
- Network Associates/Trusted Information Systems
- AXENT/Raptor Systems
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<PAGE> 49
In examining these transactions, Chase H&Q analyzed, among other things,
the multiples of offer prices to (1) revenues of the target for the last four
fiscal quarters preceding the public announcement of the transaction, (2) EBITDA
of the target for the last four fiscal quarters preceding the public
announcement of the transaction and (3) projected net income of the target for
the calendar year following the public announcement of the transaction. All
multiples for the selected transactions were based on public information
available at the time of public announcement, and Chase H&Q's analysis did not
take into account different market and other conditions during the three-year
period during which the selected transactions occurred. Applying the medians of
the foregoing sets of multiples to AXENT revenues for the last four fiscal
quarters and projected calendar year 2000 net income resulted in a range of
implied per share value of AXENT of $14.55 to $32.34. Chase H&Q observed that
the value per share of AXENT implied by the proposed merger of $31.85 per share
was within the implied range.
Chase H&Q also observed that no company or transaction used in the above
analyses is identical to AXENT or the proposed merger, and the reasons for and
circumstances surrounding each of the analyzed transactions are inherently
different. Accordingly, an analysis of the results of the foregoing is not
mathematical; rather it involves complex, qualitative considerations and
judgments, reflected in Chase H&Q's opinion, concerning differences in the
financial and operating characteristics of the compared companies, the
characteristics of the selected transactions and other factors that could affect
the public trading values of the comparable companies, AXENT and Symantec.
Premium Analysis. Chase H&Q calculated the implied premium over the closing
price of AXENT common stock on July 26, 2000 and on the twentieth trading day
prior to July 26, 2000 of the consideration to be paid in the proposed merger,
assuming the value of Symantec common stock was its closing price on July 26,
2000 of $63.69.
<TABLE>
<CAPTION>
DATE OF SALES PRICE COMPARISON IMPLIED PREMIUM PAID
------------------------------ --------------------
<S> <C>
July 26, 2000............................................... 67.1%
20 trading days prior....................................... 34.1%
</TABLE>
Pro Forma Contribution Analysis. Chase H&Q determined the implied pro forma
ownership of the combined company, assuming an exchange ratio in the merger of
0.5 shares of Symantec common stock per share of AXENT common stock. Chase H&Q
then computed the portion of the combined company's pro forma fiscal year 2001
and 2002 revenues, operating income and net income contributed by AHT, based on
Wall Street estimates. Chase H&Q noted that stockholders of AXENT would own
19.1% of the outstanding common stock of the combined company on a pro forma
basis, and that AXENT would account for 8.3% to 18.0% of the combined company's
operations.
The foregoing description of Chase H&Q's opinion is qualified in its
entirety by reference to the full text of such opinion which is attached as
Annex C to this joint proxy statement/prospectus.
Chase H&Q, as part of its investment banking services, is regularly engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, strategic transactions, corporate restructurings, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. In the
ordinary course of business, Chase H&Q acts as a market maker and broker in the
publicly traded securities of AXENT, receives customary compensation in
connection therewith and provides research coverage for AXENT. In the ordinary
course of business, Chase H&Q may actively trade in the equity and derivative
securities of AXENT and Symantec for its own account and for the accounts of its
customers and, accordingly, may at any time hold a long or short position in
such securities. Chase H&Q may in the future provide investment banking or other
financial advisory services to AXENT or Symantec.
Pursuant to an engagement letter with Chase H&Q, AXENT has agreed to pay
Chase H&Q a customary fee in connection with the financial advisory services
provided by Chase H&Q and the delivery of the fairness opinion. AXENT also
agreed to reimburse Chase H&Q for its reasonable out-of-pocket expenses and to
indemnify Chase H&Q against certain liabilities, including liabilities under the
federal securities laws or relating to or arising out of Chase H&Q's engagement
as financial advisor.
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<PAGE> 50
RECOMMENDATION OF AXENT'S BOARD OF DIRECTORS
The board of directors of AXENT believes that the terms of the merger are
fair to and in the best interests of AXENT and its stockholders and recommends
to its stockholders that they vote "FOR" the proposal to adopt the merger
agreement.
In considering the recommendation of the AXENT board of directors with
respect to the merger, you should be aware that certain directors and officers
of AXENT have certain interests in the merger that are different from, or are in
addition to, the interests of AXENT's stockholders generally. Please see the
section titled "The Merger -- Interests of certain persons in the merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
When considering the recommendations of AXENT's board of directors, the
stockholders of AXENT should be aware that some of the directors and officers of
AXENT have interests in the merger that are different from, or are in addition
to, their interests. These interests include:
- options to purchase shares of AXENT common stock, including those held by
officers and directors of AXENT, will be assumed by Symantec and will
become options to acquire Symantec common stock as adjusted for the
exchange ratio of the merger, and the vesting of some of these options
will be accelerated upon completion of the merger in accordance with the
terms of such option agreements and the applicable option plan; and
- some executive officers of AXENT will become executive officers or key
employees of Symantec.
COMPLETION AND EFFECTIVENESS OF THE MERGER
The merger will be completed when all of the conditions to completion of
the merger are satisfied or waived, including adoption of the merger agreement
by a majority of the stockholders of AXENT and approval of the issuance of
shares of Symantec common stock in the merger by a majority of the shares of
Symantec common stock (including Delrina Corporation exchangeable shares)
represented at the Symantec special meeting of Symantec. The merger will become
effective upon the filing of a certificate of merger with the Secretary of State
of the State of Delaware.
Currently, both Symantec and AXENT anticipate that they will satisfy all
conditions to the merger at or prior to consummation of the merger.
STRUCTURE OF THE MERGER AND CONVERSION OF AXENT COMMON STOCK
Apache Acquisition Corp., a newly formed and wholly owned subsidiary of
Symantec referred to herein as "Merger Sub," will be merged with and into AXENT.
As a result of the merger, the separate corporate existence of Merger Sub will
cease and AXENT will survive the merger as a wholly owned subsidiary of
Symantec.
Upon completion of the merger, each outstanding share of AXENT common
stock, other than shares held by AXENT, Merger Sub, Symantec or any subsidiary
of Symantec, will be converted into the right to receive 0.50 of a share of
Symantec common stock. The number of shares of Symantec common stock issuable in
the merger will be proportionately adjusted for any stock split, stock dividend
or similar event with respect to Symantec common stock or AXENT common stock
effected between the date of the merger agreement and the completion of the
merger.
No fractional shares will be issued in connection with the merger. Instead
of a fractional share of Symantec common stock, each AXENT stockholder will
receive from Symantec an amount of cash (rounded down to the nearest whole cent)
equal to the product of (i) such fraction, multiplied by (ii) the closing price
of a share of Symantec common stock on the last trading day immediately
preceding the effective time, as reported on the Nasdaq National Market.
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EXCHANGE OF AXENT STOCK CERTIFICATES FOR SYMANTEC STOCK CERTIFICATES
When the merger is completed, Symantec's exchange agent will mail to AXENT
stockholders a letter of transmittal and instructions for use in surrendering
AXENT stock certificates in exchange for Symantec stock certificates. When an
AXENT stockholder delivers AXENT stock certificates to the exchange agent along
with an executed letter of transmittal and any other required documents, the
AXENT stock certificates will be canceled and the AXENT stockholder will receive
Symantec common stock certificates representing the number of full shares of
Symantec common stock to which the stockholder is entitled under the merger
agreements. AXENT stockholders will receive payment in cash in lieu of any
fractional shares of Symantec common stock.
TREATMENT OF OPTIONS
As of July 26, 2000, AXENT had outstanding options to purchase
approximately 3.9 million shares of AXENT common stock under the AXENT stock
option plans. Upon the merger, Symantec will assume all options to purchase
AXENT common stock then outstanding under the AXENT stock option plans. Of the
outstanding options to purchase AXENT common stock under the stock option plans,
as of July 26, 2000 approximately 2.3 million shares will be immediately
exercisable at the effective time of the merger.
Upon the merger Symantec will also assume all outstanding purchase rights
under AXENT's Employee Stock Purchase Plan.
Each AXENT option that is outstanding and unexercised upon the merger will
be converted into an option to purchase 0.50 Symantec common shares for each
share of AXENT common stock covered by an option before the merger. The exercise
price per Symantec common share subject to each option will equal its
pre-conversion price per share of AXENT common stock subject to such option
divided by 0.50.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes the material federal income tax
considerations generally applicable to AXENT stockholders.
The discussion below is based on current law. Changes in the law could
affect the federal income tax consequences of the merger to AXENT stockholders.
This discussion assumes that AXENT stockholders hold their AXENT common stock as
capital assets within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the "Code"). We have not sought and will not seek a ruling
from the Internal Revenue Service ("IRS") in connection with the merger. This
discussion does not address the consequences of the merger under state, local or
foreign law, nor does the discussion address all aspects of federal income
taxation that may be important to an AXENT stockholder in light of his or her
particular circumstances or address tax issues that may be significant to AXENT
stockholders subject to special rules, such as:
- financial institutions;
- insurance companies;
- foreign individuals and entities;
- tax-exempt entities;
- dealers in securities;
- persons who are subject to the alternative minimum tax provisions of the
Code;
- persons who acquired AXENT common stock pursuant to the exercise of an
employee option (or otherwise as compensation); or
- persons who hold AXENT common stock as part of an integrated investment
(including a "straddle") composed of AXENT common stock and one or more
other positions.
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Accordingly, AXENT stockholders are urged to consult their own tax advisors
as to the specific tax consequences of the merger, including the applicable
federal, state, local and foreign tax consequences to them of the merger.
Completion of the merger is conditioned upon (i) the delivery of an opinion
to Symantec from Heller Ehrman White & McAuliffe LLP, its legal counsel, and
(ii) the delivery of an opinion to AXENT from Shaw Pittman, AXENT's legal
counsel, in each case to the effect that: (i) the merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code; (ii) each of
Symantec, Merger Sub and AXENT will be a party to such reorganization within the
meaning of Section 368(b) of the Code; and (iii) except with respect to cash
received in lieu of fractional share interests in Symantec common stock, no gain
or loss will be recognized, for United States federal income tax purposes, by a
stockholder of AXENT as a result of the merger with respect to the shares of
AXENT common stock converted into Symantec common stock.
The opinions of counsel referred to above will (i) assume the absence of
any changes in existing material facts, and (ii) rely on assumptions,
representations and covenants including those contained in the merger agreement
and certificates executed by officers of Symantec and AXENT.
These opinions do not bind the IRS or the courts nor do they preclude the
IRS or a court from adopting a contrary position. Accordingly, there can be no
assurance that the IRS will not challenge the conclusions set forth in the
closing tax opinions or that a court will not sustain such a challenge. A
successful IRS challenge to the "reorganization" status of the merger would
result in AXENT stockholders being treated as if they sold their AXENT shares in
a fully taxable transaction. In such event, each AXENT stockholder would
recognize gain or loss with respect to each share of AXENT common stock
surrendered equal to the difference between the stockholder's adjusted tax basis
in such share and the sum of the cash, if any, and fair market value, as of the
time the merger becomes effective, of the Symantec common stock received in
exchange therefor. In such event, an AXENT stockholder's aggregate basis in the
Symantec common stock so received would equal its fair market value as of the
effective time of the merger, and the stockholder's holding period for such
Symantec common stock would begin the day after the merger.
Based upon the opinions of their respective tax counsel to be delivered as
mentioned above, Symantec and AXENT believe that the merger will have the U.S.
federal income tax consequences described below.
Exchange of AXENT Common Stock for Symantec Common Stock. Except as
discussed below, no gain or loss will be recognized for federal income tax
purposes by AXENT stockholders who exchange their AXENT common stock for
Symantec common stock pursuant to the merger. Each AXENT stockholder's aggregate
tax basis in the Symantec common stock that he or she receives in the merger
will be the same as his or her aggregate tax basis in the AXENT common stock
surrendered in the merger (reduced by any tax basis allocable to fractional
shares exchanged for cash), and the holding period of the Symantec common stock
received will include the holding period of the AXENT common stock surrendered.
Cash Received Instead of Fractional Shares. The payment of cash to an AXENT
stockholder instead of a fractional share in SYMANTEC common stock generally
should result in the recognition of capital gain or loss measured by the
difference between the amount of cash received and the portion of the tax basis
of the AXENT common stock allocable to that fractional share interest. In the
case of an individual, capital gain is generally subject to United States
federal income tax at the reduced rates applicable to long-term capital gains if
such individual has held his or her AXENT common stock for more than one year at
the time of the merger, and at ordinary income rates (as a short-term capital
gain) if the individual has held his or her AXENT common stock for one year or
less at the time of the consummation of the merger.
Reporting Requirements. Each AXENT stockholder that receives Symantec
common stock in the merger will be required to file a statement with his or her
federal income tax return setting forth his or her
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basis in the AXENT common stock surrendered and the fair market value of the
Symantec common stock and cash received in the merger, and to retain permanent
records of these facts relating to the merger.
Backup Withholding. Unless an exemption applies, the exchange agent will
withhold 31% of any cash payment in lieu of fractional shares made to an AXENT
stockholder who does not provide appropriate information when requested to do
so. AXENT stockholders should consult their tax advisors regarding the
imposition of backup withholding.
The preceding discussion is not meant to be a complete analysis or
discussion of all potential tax effects relevant to the merger. Thus, AXENT
stockholders are urged to consult their own tax advisors as to the specific tax
consequences to them of the merger, including tax return reporting requirements,
federal, state, local and other applicable tax laws and the effect of any
proposed changes in the tax laws.
ACCOUNTING TREATMENT OF THE MERGER
We intend to account for the merger as a purchase for financial reporting
and accounting purposes, under generally accepted accounting principles. After
the merger, the results of operations of AXENT will be included in the
consolidated financial statements of Symantec. The purchase price, i.e., the
aggregate merger consideration, will be allocated based on the fair values of
the assets acquired and the liabilities assumed. An excess of cost over fair
value of the net tangible assets of AXENT acquired of approximately $758,900,000
will be recorded as goodwill and other intangible assets and will be amortized
by charges to operations over a period of four years under generally accepted
accounting principles. These allocations were made based upon valuations by
experts that have not yet been finalized.
REGULATORY FILINGS AND APPROVALS REQUIRED TO COMPLETE THE MERGER
The merger is subject to the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act, which prevents certain transactions from being
completed until required information and materials are furnished to the
Antitrust Division of the Department of Justice and the Federal Trade Commission
and the appropriate waiting periods end or expire. Symantec and AXENT have filed
the required information and materials with the Department of Justice and the
Federal Trade Commission on August 4, 2000. The waiting period terminated thirty
days later. The requirements of Hart-Scott-Rodino will be satisfied if the
merger is completed within one year from the termination of the waiting period.
The Antitrust Division of the Department of Justice or the Federal Trade
Commission may challenge the merger on antitrust grounds either before or after
expiration of the waiting period. Other persons could also take action under the
antitrust laws, including seeking to enjoin the merger, regardless of whether
the waiting period has ended.
Neither Symantec nor AXENT is aware of any other material governmental or
regulatory approval required for completion of the merger, other than the
effectiveness of the registration statement of which this joint proxy
statement/prospectus is a part, and compliance with applicable corporate law of
the State of Delaware.
RESTRICTIONS ON SALES OF SHARES BY AFFILIATES OF SYMANTEC OR AXENT
The shares of Symantec common stock to be issued in the merger will be
registered under the Securities Act. These shares will be freely transferable
under the Securities Act, except for shares of Symantec common stock issued to
any person who is an affiliate of either of Symantec or AXENT. Persons who may
be deemed to be affiliates include individuals or entities that control, are
controlled by, or are under common control of either Symantec or AXENT and may
include some of the officers and directors of Symantec and AXENT, as well as the
principal stockholders of Symantec and AXENT. Affiliates may not sell their
shares of Symantec common stock acquired in the merger except pursuant to (1) an
effective registration statement under the Securities Act covering the resale of
those shares, (2) an exemption under paragraph (d) of Rule 145 under the
Securities Act or (3) any other applicable exemption under the Securities Act.
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LISTING SYMANTEC COMMON STOCK TO BE ISSUED IN THE MERGER
It is a condition to the closing of the merger that the shares of Symantec
common stock to be issued in the merger be approved for listing on the Nasdaq
National Market, subject to official notice of issuance.
DELISTING AND DEREGISTRATION OF AXENT COMMON STOCK AFTER THE MERGER
If the merger is completed, AXENT common stock will be delisted from the
Nasdaq National Market and will be deregistered under the Securities Exchange
Act.
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THE MERGER AGREEMENT
The following summary of the merger agreement is qualified in its entirety
by reference to the complete text of the merger agreement, which is incorporated
by reference and attached as Annex A to this joint proxy statement/prospectus.
Stockholders are urged to read the full text of the merger agreement.
EFFECTIVE TIME; EFFECT OF MERGER
The merger will become effective upon the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware or at such later time as is
agreed to in writing by Symantec, AXENT and Merger Sub and specified in the
Certificate of Merger. That time is the "effective time" of the merger. The
closing of the merger will occur at the offices of Symantec's outside legal
counsel on a date to be specified by the parties, which will be no later than
the third business day after the satisfaction or waiver of the conditions to the
merger unless the parties agree otherwise. That date is the "closing date" of
the merger. The Certificate of Merger will be filed on the closing date. The
closing and the effective time are anticipated to be on or about December 15,
2000.
At the effective time Merger Sub will be merged with and into AXENT, the
separate corporate existence of Merger Sub will cease, and AXENT will be the
surviving corporation. AXENT, as the surviving corporation after the merger, is
sometimes referred to in this joint proxy statement/prospectus as the "surviving
corporation."
CONVERSION OF SHARES
At the effective time, each outstanding share of AXENT common stock will be
canceled and converted into the right to receive 0.50 of a share of Symantec
common stock.
The exchange ratio of 0.50 will be adjusted for any stock split, reverse
stock split, stock dividend, extraordinary dividend or distribution,
reorganization, recapitalization or other similar change with respect to
Symantec common stock or AXENT common stock occurring or having a record or
effective date after the date of the merger agreement.
Each share of common stock of Merger Sub outstanding immediately prior to
the effective time will be converted into and exchanged for one share of AXENT
common stock as the surviving corporation.
No fractional shares of Symantec common stock will be issued in the merger.
Rather than fractional shares of Symantec common stock, each AXENT stockholder
will receive from Symantec cash (rounded down to the nearest whole cent) in an
amount equal to the product of (a) such fraction, multiplied by (b) the closing
price of a share of Symantec common stock on the last trading day immediately
preceding the effective time.
Promptly after the effective time, Symantec, acting through an exchange
agent, will deliver to each AXENT stockholder of record as of the effective time
a letter of transmittal with instructions to be used by that stockholder in
surrendering certificates which represented shares of AXENT common stock prior
to the effective time. Certificates should not be surrendered by holders of
AXENT common stock until the holders receive the letter of transmittal from the
exchange agent.
TREATMENT OF OPTIONS
At the effective time, Symantec will assume all options to purchase AXENT
common stock then outstanding under the AXENT stock option plans and purchase
rights under the AXENT Employee Stock Purchase Plan so that they will be
exercisable after the effective time on the same terms and conditions as under
the AXENT stock option plan under which they were granted and the related option
agreements.
Each option to purchase AXENT common stock granted under AXENT's stock
plans that is outstanding and unexercised as of the effective time of the
merger, will be converted into an option to purchase 0.50 Symantec common shares
for each share of AXENT common stock covered by the option
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before the merger. The exercise price per Symantec common share subject to each
option will equal its pre-conversion price per share of AXENT common stock
subject to such option divided by 0.50. Approximately 60% of the options
outstanding under AXENT's stock option plans will accelerate and become vested
as of July 26, 2000, the date of the merger agreement. Stock purchase rights
will be similarly converted.
REPRESENTATIONS AND WARRANTIES
AXENT, Symantec and Merger Sub have made representations in the merger
agreement relating to, among other things:
- capitalization and organization;
- authorization, execution, delivery and enforceability of the merger
agreement;
- conflicts under charter documents, required consents or approvals, and
violations of contracts or law;
- the accuracy of information contained in documents filed with the SEC;
- absence of material adverse events, changes or effects;
- tax matters;
- the absence of undisclosed liabilities;
- compliance with laws;
- litigation;
- fees payable to finders and brokers in connection with the merger;
- intellectual property matters; and
- year 2000 compliance.
In addition, AXENT has made additional representations, including
representations relating to:
- compliance with environmental laws and regulations;
- retirement and other employee plans and matters;
- business matters relating to permits and licenses and insurance;
- liabilities relating to employees, labor unions or other organizations;
- the absence of other existing discussions relating to an acquisition of
AXENT; and
- title to property.
None of the representations and warranties of AXENT, Symantec or Merger Sub
in the merger agreement described above will survive the effective time.
In addition, Symantec and AXENT have agreed to make representations that
will serve as the basis for the tax opinions of Heller Ehrman White & McAuliffe
and Shaw Pittman described under "The Merger -- Material United States federal
income tax consequences of the merger."
CONDUCT OF AXENT'S BUSINESS PRIOR TO THE MERGER
Until the earlier of the termination of the merger agreement or the
effective time, AXENT has agreed to:
- conduct its operations according to its ordinary and usual course of
business consistent with past practice;
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- use commercially reasonable efforts to preserve intact its business
organization, to keep available the services of its officers and
employees in each business function and to maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with it; and
- refrain from taking any action which could reasonably be expected to
adversely affect its ability to consummate the merger or the other
transactions contemplated by the merger agreement.
The merger agreement further provides that, during the period from the date
of the merger agreement until the effective time, AXENT and its subsidiaries
will not, subject to certain exceptions, take any of the following actions:
- enter into, violate or amend the terms of its material agreements except
in the ordinary course of business and consistent with past practice;
- split, combine or reclassify any shares of its capital stock;
- authorize or enter into any agreement with respect to:
- any plan of liquidation or dissolution,
- any acquisition or disposition of a material amount of assets or
securities,
- any material partnership, joint venture, joint development, technology
transfer, or other material business alliance, or
- any material change in capitalization;
- fail to renew any insurance policy naming it as a beneficiary or a loss
payee or allow any policy to be canceled, terminated or materially and
adversely altered;
- maintain its books and records in a manner other than in the ordinary
course of business and consistent with past practice;
- enter into any hedging, option, derivative or other similar transaction
or any foreign exchange position or contract for the exchange of currency
other than in the ordinary course of business and consistent with past
practice;
- institute any change in its accounting methods other than as required by
generally accepted accounting principles or SEC rules;
- make any change or material election with respect to its taxes;
- issue any capital stock or other options, warrants or other rights to
purchase or acquire capital stock, other than pursuant to its stock
purchase plan, exercise of outstanding stock options or grant of options
to newly-hired employees in the ordinary course of business; or
- take any action which would make its representations or warranties
contained in the merger agreement untrue or incorrect.
CONDUCT OF BUSINESS FOLLOWING THE MERGER
Pursuant to the merger, Merger Sub will cease to exist as a corporation and
will be merged with and into AXENT, with AXENT as the surviving corporation. All
property, rights, privileges, powers and franchises of AXENT and Merger Sub will
vest in the surviving corporation. All debts, liabilities and duties of AXENT
and Merger Sub will become the debts, liabilities and duties of the surviving
corporation, and the surviving corporation will be a wholly owned subsidiary of
Symantec.
Pursuant to the merger agreement, the certificate of incorporation of AXENT
in effect immediately prior to the effective time will be restated in a manner
agreed to by the parties and the name of the surviving corporation will continue
to be "AXENT Technologies, Inc." and the bylaws of Merger Sub will become the
bylaws of the surviving corporation. The directors of Merger Sub at the
effective time will
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become the initial directors of the surviving corporation. The officers of
Merger Sub immediately prior to the effective time will become the initial
officers of the surviving corporation.
NO SOLICITATION
Until the earlier of the termination of the merger agreement or the
effective time, AXENT has agreed not to:
- solicit, initiate, encourage or induce any Acquisition Proposal (as
defined below);
- participate in negotiations or discussions with, or furnish to any person
any non-public information with respect to, or take any other actions to
facilitate any inquiries or the making of any proposal that constitutes
or is reasonably likely to lead to any Acquisition Proposal;
- engage in discussions with any person with respect to any Acquisition
Proposal;
- approve, endorse or recommend any Acquisition Proposal; or
- enter into any letter of intent or similar document or any contract,
agreement or commitment relating to any Acquisition Transaction.
An "Acquisition Proposal" is any offer or proposal relating to any
Acquisition Transaction. An "Acquisition Transaction" is any transaction or
series of related transactions involving:
- any purchase from AXENT or acquisition by any person or group of more
than a 30% interest in the total outstanding voting securities of AXENT
or any of its subsidiaries;
- any tender offer or exchange offer that if consummated would result in
any person or group beneficially owning 30% or more of the total
outstanding voting securities of AXENT or any of its subsidiaries;
- any merger, consolidation, business combination or similar transaction
involving AXENT;
- any sale, lease outside the ordinary course of business, exchange,
transfer, license outside the ordinary course of business, acquisition or
disposition of more than 30% of the assets of AXENT; or
- any liquidation or dissolution of AXENT.
However, AXENT and AXENT's board of directors may take the following
actions:
- participate in discussions with or furnish non-public information or data
to any third party that has made an unsolicited Acquisition Proposal; and
- may participate in negotiations with any third party that has made an
unsolicited Acquisition Proposal and approve an unsolicited Acquisition
Proposal if AXENT's board of directors determines in good faith:
(a) after receiving advice from its financial advisor, that such
Acquisition Proposal is a Superior Offer (as defined below); and
(b) following consultation with outside legal counsel, that the failure
to participate in those negotiations or to approve that Acquisition
Proposal would be inconsistent with the fiduciary duties of AXENT's
board of directors under applicable law.
A "Superior Offer" is an unsolicited, bona fide written offer made by a
third party to complete any of the following transactions:
- a merger or consolidation involving AXENT pursuant to which the
stockholders of AXENT immediately preceding the transaction would hold
less than a 50% equity interest in the surviving or resulting entity of
the transaction; or
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- the acquisition by any person or group, including by way of a tender
offer or an exchange offer or a two step transaction involving a tender
offer followed with reasonable promptness by a cash-out merger involving
AXENT, directly or indirectly, of ownership of 90% of the outstanding
shares of capital stock of AXENT;
in either case, on terms that AXENT's board of directors determines, in its
reasonable judgment, based on the advice of its financial advisor, to be more
favorable to AXENT's stockholders than the terms of the merger. An offer will
not be a "Superior Offer" if any financing required to complete the transaction
is not committed and is not likely in the reasonable judgment of AXENT's board
of directors, based on the advice of its financial advisor, to be obtained on a
timely basis.
In addition, AXENT has agreed to inform Symantec in writing promptly, and
in any event within 24 hours, of any Acquisition Proposal, or any material
amendment to an Acquisition Proposal previously received, and must furnish to
Symantec the identity of the recipient of the information to be provided and/or
the potential acquiror and the terms of such Acquisition Proposal or material
amendment.
AXENT's board of directors is required to unanimously recommend the
adoption of the merger agreement and may not:
- withdraw, amend or modify, or propose to withdraw, amend or modify, in
any manner adverse to Symantec, its approval and recommendation of the
merger agreement and the merger; or
- approve or recommend, or propose to approve or recommend, any Acquisition
Proposal;
unless, in each case, AXENT's board of directors has determined that a Superior
Offer is made to AXENT and is not withdrawn; and
- AXENT has provided written notice to Symantec advising Symantec that
AXENT has received a Superior Offer, specifying the material terms and
conditions of such Superior Offer and identifying the person or entity
making such Superior Offer;
- Symantec does not, within five business days after receiving the Notice,
make an offer that AXENT's board of directors by a majority vote
determines in its good faith judgment, based on the written advice of its
financial advisor, to be at least as favorable to AXENT's stockholders as
such Superior Proposal;
- AXENT's board of directors concludes in good faith, after consultation
with its outside counsel, that, in light of such Superior Offer, the
failure to withhold, withdraw, amend or modify such recommendation would
be inconsistent with the fiduciary obligations of AXENT's board of
directors to AXENT's stockholders under applicable law; and
- AXENT has not violated specified provisions of the merger agreement.
RECOMMENDATION OF SYMANTEC'S BOARD OF DIRECTORS
Symantec's board of directors is required to unanimously recommend the
approval of issuance of Symantec common stock in the merger to its stockholders
and may not withdraw or modify, or propose to withdraw or modify, in any manner
adverse to AXENT, its approval and recommendation of issuance of Symantec common
stock in the merger.
FEES, EXPENSES AND TERMINATION FEE
In general, all fees and expenses incurred in connection with the merger
agreement and the transactions contemplated by the merger agreement will be paid
by the party that incurs them. Symantec and AXENT will share equally the filing
fees paid in connection with the filing of this joint proxy statement/prospectus
and the registration statement of which this joint proxy statement/prospectus is
a part, and the costs of printing and mailing this joint proxy
statement/prospectus. Symantec has paid all fees incurred in connection with the
filings made under the Hart-Scott-Rodino Antitrust Improvements Act.
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Subject to the exceptions specified in the merger agreement, AXENT has
agreed to pay Symantec a termination fee of $28.0 million if:
(a) the merger has not been consummated by January 31, 2001, for any reason
other than Symantec's action or failure to act which has been a
principal cause of or resulted in the failure of the merger to occur
before January 31, 2001, and which constitutes a material breach of the
merger agreement; or
(b) if the required approval of AXENT's stockholders has not been obtained
by reason of the failure to hold the meeting or the failure to obtain
the required vote at a duly convened meeting of AXENT's stockholders;
and
(c) in either case, prior to the termination of the merger agreement, a
third party publicly announces an Acquisition Proposal and within nine
months following the termination of the merger agreement, AXENT enters
into an agreement providing for an acquisition of AXENT.
An "AXENT Acquisition" is any of the following transactions:
- a merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving AXENT pursuant
to which the stockholders of AXENT immediately preceding such transaction
hold less than 50% of the aggregate equity interests in the surviving or
resulting entity of such transaction;
- a sale or other disposition by AXENT of assets representing in excess of
50% of the aggregate fair market value of AXENT's business immediately
prior to such sale; or
- an acquisition by any person or group (including by way of a tender offer
or an exchange offer or issuance by AXENT), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing in excess of 50% of the voting power of the then outstanding
shares of capital stock of AXENT.
AXENT will also pay a termination fee of $28.0 million if an "AXENT
Triggering Event" occurs. An AXENT Triggering Event will occur if:
- AXENT's board of directors withdraws, amends or modifies in a manner
adverse to Symantec its recommendation in favor of the adoption of the
merger agreement;
- AXENT fails to include in this joint proxy statement/prospectus the
recommendation of its board of directors in favor of the adoption of the
merger agreement;
- AXENT's board of directors fails to reaffirm its recommendation in favor
of the adoption of the merger agreement and its approval of the merger
within ten days after Symantec requests in writing that its
recommendation and approval be reaffirmed at any time following the
public announcement of an Acquisition Proposal;
- AXENT's board of directors approves or recommends any Acquisition
Proposal; or
- a tender or exchange offer relating to securities of AXENT is commenced
by a person or entity unaffiliated with Symantec and AXENT does not send
to its security holders pursuant to Rule 14e-2 of the Securities Act,
within ten business days after the tender or exchange offer is first
published, sent or given, a statement disclosing that AXENT recommends
rejection of such tender or exchange offer.
CONDITIONS TO THE MERGER
The obligations of each of AXENT, Symantec and Merger Sub to consummate the
merger are subject to the satisfaction or waiver in writing at or prior to the
effective time of the following conditions:
- AXENT's stockholders must approve and adopt the merger agreement and the
merger;
- Symantec's stockholders must approve the issuance of Symantec common
stock in the merger;
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<PAGE> 61
- the registration statement of which this joint proxy statement/prospectus
is a part must be effective and not subject to any stop order suspending
that effectiveness or proceedings seeking a stop order;
- the Symantec common stock issuable in the merger must be approved for
listing on the Nasdaq National Market;
- the applicable waiting period to consummation of the merger under the
antitrust laws must expire or terminate, and all similar governmental
requirements the failure with which to comply would be reasonably likely
to have a material adverse effect on Symantec or AXENT have been met;
- each of Symantec and AXENT must receive an opinion from its tax counsel
to the effect that the merger will constitute a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code and that each of
Symantec, Merger Sub and AXENT will be treated as parties to such
reorganization, and the AXENT stockholders will not recognize gain on the
exchange of AXENT common stock for Symantec common stock; and
- no governmental entity shall have enacted or issued any law, regulation
or order that has the effect of making the merger illegal or otherwise
prohibiting the closing of the merger.
AXENT's obligation to consummate the merger is subject to the satisfaction
or waiver of each of the following additional conditions:
- the representations and warranties of Symantec and Merger Sub contained
in the merger agreement must be true and correct in all material respects
as of the closing date with the same force and effect as if made on the
closing date, except:
- for changes specifically permitted by the terms of the merger agreement;
and
- where the failure of those representations and warranties to be so true
and correct does not have a material adverse effect on Symantec; and
- Symantec and Merger Sub must have performed and complied in all material
respects with all agreements and obligations required by the merger
agreement to be performed or complied with by them on or prior to the
closing date.
The obligations of Symantec and Merger Sub to consummate the merger are
subject to the satisfaction or waiver of each of the following additional
conditions:
- the representations and warranties of AXENT contained in the merger
agreement must be true and correct in all material respects as of the
closing date with the same force and effect as if made at the closing
date, except:
- for changes specifically permitted by the terms of the merger agreement;
and
- where the failure of those representations and warranties to be so true
and correct does not have a material adverse effect on AXENT;
- AXENT must have performed or complied in all material respects with all
agreements and obligations required by the merger agreement to be
performed or complied with by it on or prior to the closing date; and
- all required approvals and consents must have been obtained unless the
failure to obtain any such approval or consent would not have a material
adverse effect on Symantec or AXENT.
Currently, both Symantec and AXENT anticipate that they will satisfy all
conditions to the merger at or prior to consummation of the merger.
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<PAGE> 62
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at any time prior to the effective
time, whether before or after approval of the merger by AXENT's stockholders and
approval of the issuance of Symantec common stock in the merger by Symantec's
stockholders:
- by mutual written consent;
- by either Symantec or AXENT if the merger is not consummated on or before
January 31, 2001, except that the right to terminate will not be
available to any party that breached its obligations under the merger
agreement in any material respect and consequently contributed to the
failure to consummate the merger by that date;
- by either Symantec or AXENT if a governmental authority issues a final
and nonappealable order permanently enjoining the merger;
- by either AXENT or Symantec if AXENT's stockholders do not adopt the
merger agreement or Symantec's stockholders do not approve the issuance
of Symantec common stock in the merger at either special meeting, except
that the right to terminate will not be available to any party that
breached its obligations under the merger agreement in any material
respect in a manner that proximately contributed to the failure to obtain
that stockholder approval;
- by Symantec if an AXENT Triggering Event occurs; or
- by Symantec or AXENT if the other party materially breaches any of its
representations, warranties, covenants or agreements in the merger
agreement and that breach is not cured within 20 business days after
notice of the breach has been received by the party allegedly in breach,
provided that neither party may terminate the agreement based on the
other party's material breach of the agreement if that party is also in
material breach of the merger agreement on the date of termination.
AXENT AFFILIATE AGREEMENT
The following is a brief summary of material terms of the AXENT affiliate
agreement executed by affiliates of AXENT. A copy of the form of AXENT affiliate
agreement is attached as Exhibit C to Annex A to this joint proxy
statement/prospectus and incorporated herein by this reference. This summary is
qualified in its entirety by reference to the full text of the AXENT affiliate
agreement. You are urged to read the AXENT affiliate agreement in its entirety
for a more complete description of the rights and obligations of the parties
under the agreement.
Shares of Symantec common stock received by persons who are deemed to be
"affiliates" (as that term is defined in the Securities Act) of AXENT at the
time of the special meeting, or affiliates of Symantec after the merger, may be
resold by them only in transactions permitted by the resale provisions of Rule
145 promulgated under the Securities Act or as otherwise permitted under the
Securities Act. Persons who may be deemed to be affiliates of AXENT or Symantec
generally include individuals or entities that control, are controlled by, or
are under common control with, that party and may include certain officers and
directors of that party as well as principal stockholders of that party.
The merger agreement requires AXENT to use commercially reasonable efforts
to cause each of its affiliates to execute a written affiliates' agreement to
the effect that such person or entity will not sell, transfer, or otherwise
dispose of any of the shares of Symantec common stock issued to that person in
or pursuant to the merger unless:
- the sale, transfer or other disposition has been registered under the
Securities Act;
- the sale, transfer or other disposition is made in conformity with Rule
145 under the Securities Act;
- the limitations imposed by Rule 145 no longer apply; or
- in the opinion of counsel the sale, transfer or other disposition is
exempt from registration under the Securities Act.
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COMPARISON OF RIGHTS OF HOLDERS OF SYMANTEC COMMON STOCK AND
AXENT COMMON STOCK
This section of the joint proxy statement/prospectus describes differences
between Symantec common stock and AXENT common stock. While we believe that the
description covers the material differences between the two, this summary may
not contain all of the information that is important to you, including the
certificates of incorporation and bylaws of each company. You should read this
entire document and the other documents we refer to carefully for a more
complete understanding of the differences between Symantec common stock and
AXENT common stock. You may obtain the information incorporated by reference
into this joint proxy statement/prospectus without charge by following the
instructions in the section titled "Where you can find more information."
After the merger, the holders of AXENT common stock will become
stockholders of Symantec. Because Symantec and AXENT are both Delaware
corporations, the Delaware General Corporation Law, or the DGCL, will continue
to govern the rights of all stockholders. The AXENT certificate of incorporation
and the AXENT bylaws currently govern the rights of the stockholders of AXENT.
As stockholders of Symantec after the merger, the Symantec certificate of
incorporation and the Symantec bylaws will instead govern their rights following
the merger. The following paragraphs compare certain provisions of the
certificates of incorporation and bylaws of Symantec and AXENT, as applicable.
VOTING
Each stockholder of AXENT and Symantec has the right to one vote for each
share of common stock held by the stockholder. In addition, the stockholder of
record of the special voting stock of Symantec shall have a number of votes
equal to the number of exchangeable non-voting shares of Delrina Corporation, an
Ontario corporation, which are not owned by Symantec, its subsidiaries or any
person directly or indirectly under the control of Symantec.
SPECIAL MEETING OF STOCKHOLDERS
The Symantec bylaws provide that only the chairman of the board, the
president or the board of directors may call special meetings of the
stockholders.
The AXENT bylaws provide that special meetings of the stockholders may be
called by the chairman of the board or the president, and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of the stockholders owning a majority of
AXENT shares issued and outstanding and entitled to vote.
ACTION BY WRITTEN CONSENT IN LIEU OF A STOCKHOLDER'S MEETING
Symantec and AXENT stockholders have the ability to take action by written
consent so long as the action is signed by the holders having the minimum number
of shares to approve the action if the action were taken at a meeting at which
all outstanding shares of common stock were present and voting.
VOTING BY WRITTEN BALLOT
Both the Symantec and AXENT certificates of incorporation provide that
written ballots for the election of directors are not required.
RECORD DATE FOR DETERMINING STOCKHOLDERS
The Symantec bylaws provide that the board of directors may fix a record
date that shall not be more than 60 nor less than 10 days before the date of the
stockholder meeting nor more than 60 days prior to any other action. In
addition, the Symantec bylaws provide that if the board of directors does not
fix a record date in the manner described above, then the record date shall be
as provided by law.
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The AXENT bylaws provide that the board of directors may fix a record date
that is not more than 60 nor less than 10 days before the date of the
stockholder meeting nor more than 60 days prior to any other action.
NOTICE OF BOARD NOMINATION AND OTHER STOCKHOLDER BUSINESS -- ANNUAL MEETINGS
The Symantec bylaws require that nominations of persons for election to the
board of directors and the proposal of business to be considered by the
stockholders shall be made at an annual meeting of stockholders (1) pursuant to
Symantec's notice of such meeting, (2) by or at the direction of the board of
directors or (3) by any stockholder of Symantec who was a stockholder of record
at the time of giving of Symantec's notice who is entitled to vote at such
meeting and who complies with the notice procedures. If made by a stockholder,
the proposal or nomination must be made by advance written notice given to
Symantec between 60 and 90 days prior to the first anniversary of the preceding
year's annual meeting of stockholders. However, if the date of the annual
meeting at which the nomination or business is proposed by a stockholder is more
than 30 days before or more than 60 days after that anniversary, then the notice
may be given by the stockholder no earlier than the 90th day prior to the
meeting and not later than the later of 60 days prior to the meeting or the 10th
day following the first public announcement of the meeting. These notice
provisions are subject to certain exceptions with respect to electing directors
to fill board seats resulting from increases in the size of the board of
directors not publicly announced at least 70 days prior to the annual meeting.
In addition, certain other information regarding the business proposed for
discussion must be included in the stockholder notice to Symantec.
The AXENT bylaws contain no similar provisions.
NOTICE OF BOARD NOMINATION AND OTHER STOCKHOLDER BUSINESS -- SPECIAL MEETINGS
The Symantec bylaws provide that, at special meetings of stockholders, the
only business that can be conducted will be the items of business set forth in
the notice of the special meeting. The bylaws also provide that nominations of
candidates for directors at a special meeting at which directors are to be
elected shall be made (1) by the board of directors or (2) if the board of
directors has determined that directors will be elected at the meeting, by a
stockholder meeting certain qualifications who gives Symantec advance written
notice of the nominations no earlier than 90 days prior to that special meeting
and no later than the later of (a) 60 days before the special meeting, or (b)
the 10th day after the first public announcement of the meeting and the nominees
proposed by the board of directors to be elected at the meeting.
The AXENT bylaws contain no similar provisions.
NUMBER OF DIRECTORS
The Symantec bylaws provide that the board of directors shall consist of
one or more members, with changes in the number of directors permitted
exclusively by a resolution of the board of directors.
The AXENT bylaws provide that the number of directors shall be determined
by the board of directors, except that if no such determination is made, the
number of directors shall be eight.
ELECTION OF DIRECTORS
The AXENT certificate of incorporation and bylaws provide for a staggered
board of directors divided into three classes. The term of office of the first
class, Class I, expires at the annual meeting of the stockholders held in 2002;
the term of office of the second class, Class II, expires at the annual meeting
of stockholders held in 2001; the term of office of the third class, Class III,
expires at the annual meeting of stockholders held in 2003; and, thereafter, for
each term to expire at each third succeeding annual meeting of stockholders
after the corresponding election.
The Symantec certificate of incorporation and bylaws contain no similar
provisions.
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REMOVAL OF DIRECTORS
The Symantec bylaws provide that any director or the entire board of
directors may be removed, with or without cause, by the holders of a majority of
the shares then entitled to vote at an election of directors.
The AXENT bylaws provide that any director or directors, but not the entire
board of directors, may be removed, only for cause, by the holders of a majority
of the shares then entitled to vote at an election of directors.
BOARD OF DIRECTORS VACANCIES
The Symantec bylaws provide that vacancies may be filled by the
stockholders, by a majority of the directors then in office, although less than
a quorum, or by a sole remaining director.
The AXENT bylaws provide that vacancies may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director.
NOTICE OF SPECIAL MEETINGS OF THE BOARD OF DIRECTORS
The Symantec bylaws provide that the chairman of the board, the president
or a majority of the members of the board of directors then in office may call a
special meeting of the board of directors. The bylaws require that written
notice of the time and place of these meetings be given at least four days
before the meeting if the notice is mailed, or at least twenty-four hours before
the meeting if notice is given by telephone, hand delivery, telegram, telex,
mailgram, facsimile or similar communication method.
The AXENT bylaws provide that the chairman of the board, the president or
two or more directors may call a special meeting of the board of directors. The
bylaws require that notice of the time, date and place of the meeting be given
at least three days before the meeting if the notice is mailed, or at least
twenty-four hours before the meeting if notice is delivered personally or given
by telegram or telecopy.
BOARD ACTION -- GENERALLY
Both the Symantec and AXENT bylaws provide that, except as required by the
DGCL, their respective boards of directors take action on the vote of a majority
of the directors present at a meeting at which a quorum is present or a written
consent to action executed by all members of the board of directors.
ACTION BY COMMITTEES
Both the Symantec bylaws and the AXENT bylaws authorize their respective
boards of directors to establish committees by resolution of a majority of the
whole board.
PREFERRED STOCK
Both the Symantec and AXENT certificates of incorporation authorize the
respective board of directors to issue shares of preferred stock in one or more
series and to fix the designations, preferences, powers and rights of the shares
to be included in each series. The Symantec certificate of incorporation
reserves for issuance 1,000,000 shares of preferred stock, and the AXENT
certificate of incorporation reserves for issuance 5,000,000 shares of preferred
stock.
INDEMNIFICATION
The Symantec bylaws and the AXENT certificate of incorporation provide that
its respective directors and officers shall be indemnified to the full extent
authorized by Delaware law against all expenses, liabilities and losses
reasonably incurred by that person in connection with any action, proceeding or
suit brought against that person by reason of the fact that he or she is or was
a director or officer of Symantec or AXENT, as the case may be, or is or was
serving at the request of Symantec or AXENT, as the case may be, as a director
or officer of another corporation, partnership, joint venture, trust or similar
entity.
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The Symantec bylaws and AXENT bylaws authorize the respective corporations to
pay all expenses incurred by a director or officer in defending any proceeding
within the scope of the indemnification provisions as these expenses are
incurred in advance of its final disposition.
LIMITATION ON LIABILITY
Both the Symantec certificate of incorporation and AXENT certificate of
incorporation provide that a director of the respective corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (a) for any
breach of the director's duty of loyalty to the corporation and its
stockholders; (b) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law; (c) under section 174 of
the DGCL; or (d) for any transaction from which the director derived an improper
personal benefit.
INTERESTED DIRECTORS
The Symantec and AXENT bylaws provide that no contract or transaction
between the corporation and one or more of its directors or officers, or between
the corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the board of directors or committee thereof which
authorizes the contract or transaction or solely because his, her or their votes
are counted for such purpose if: (1) the material facts as to his, her or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the board of directors or the committee, and the board of directors
or committee in good faith authorizes the contract or transaction by the
affirmative vote of a majority of the disinterested directors, even though the
disinterested directors constitute less than a quorum; (2) the material facts as
to his, her or their relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the stockholders; or (3) the contract or transaction is fair as to
the corporation as of the time it is authorized, approved or ratified by the
board of directors, a committee thereof, or the stockholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the board of directors or of a committee thereof
which authorizes the contract or transaction.
DIVIDENDS
The Symantec bylaws provide that holders of common stock shall be entitled
to receive, when, as and if declared by the board of directors, out of the
assets of the corporation which are by law available therefor, dividends payable
either in cash, in property or in shares of capital stock and the holders of
special voting stock shall not be entitled to receive any such dividends.
The AXENT bylaws provide that stockholders are entitled to receive
dividends, subject to the provisions of law and the certificate of
incorporation, including provisions relating to preferences of any outstanding
preferred stock, from funds legally available therefor as and when determined by
the board of directors.
LIQUIDATION
In the event of any liquidation, dissolution or winding up of Symantec, the
holders of common stock shall be entitled to receive, pro rata, all of the
remaining assets of Symantec available for distribution to its stockholders and
the holders of special voting stock shall not be entitled to receive any such
assets.
Upon the dissolution or liquidation of AXENT, whether voluntary or
involuntary, holders of common stock will be entitled to receive all assets of
AXENT available for distribution to its stockholders, subject to the
preferential rights of any then outstanding preferred stock.
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AMENDMENT OF BYLAWS
The Symantec bylaws provide that stockholders holding a majority of
Symantec's outstanding voting stock may adopt, amend or repeal the bylaws. The
Symantec certificate of incorporation and bylaws provide that the board of
directors also has the power to adopt, amend or repeal the bylaws, except as
such power may be expressly limited by the bylaws adopted by the stockholders.
The AXENT certificate of incorporation and bylaws authorize the board of
directors to make, alter and repeal the bylaws, and to adopt new bylaws, by an
affirmative vote of a majority of the whole board, provided that notice of the
proposal to make, alter or repeal the bylaws, or to adopt new bylaws, must be
included in the notice of the meeting of the board of directors at which such
action takes place. The stockholders may not amend these provisions unless the
amendment is approved by the affirmative vote of at least two-thirds of the
outstanding capital stock of AXENT.
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PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
OVERVIEW
On July 26, 2000, Symantec entered into the merger agreement to acquire
AXENT in a transaction to be accounted for using the purchase method of
accounting. Symantec will issue approximately 14,451,000 shares of Symantec
common stock (based on 28,902,000 shares of AXENT shares outstanding at July 26,
2000, which will be exchanged at the ratio of 0.50 shares of Symantec common
stock for each share of AXENT common stock). Symantec will also assume all of
AXENT'S issued and outstanding stock options (equivalent to options to purchase
approximately 1,950,000 shares of Symantec common stock). Symantec also
anticipates incurring approximately $14 million in acquisition expenses,
including financial advisory and legal fees and other direct transaction costs
which will also be included as a component of the purchase price. The combined
total of the common stock issued, options assumed and transaction costs is
approximately $903 million, based on the average of the closing price of
Symantec's common stock on the agreement date of July 26, 2000 and for the three
days before and after July 26, 2000.
All AXENT options will be assumed by Symantec and are included as part of
the purchase price based on their fair value as of July 26, 2000. Any unvested
AXENT options to be assumed by Symantec are also included as part of the
purchase price based on their fair value; however, the portion of the intrinsic
value of the unvested options that will be deemed to be earned over the
remaining vesting period of those options has been allocated as part of the
purchase price to deferred compensation and will be amortized over the remaining
vesting period. The fair value of the options to be assumed has been based on
the Black-Scholes option pricing model using the following assumptions: fair
market value of the underlying shares which is based on the average closing
price of Symantec's common stock on July 26, 2000 and for the three days before
and after July 26, 2000; the remaining contractual life of each option was used
for the expected life; expected volatility of 0.65; no expected dividend rate;
and risk-free interest rate of 6.5%.
The purchase price allocation will be updated at the consummation of the
transaction to reflect the number of Symantec shares actually issued, the number
of options actually exchanged, the receipt of the closing balance sheet of AXENT
and the final independent appraisal of certain intangible assets of AXENT. In
addition, Symantec will incur additional costs related to severance and
restructuring of the AXENT sites. These amounts have not yet been determined.
The aggregate purchase price is expected to be allocated as follows, based
on a preliminary independent appraisal of AXENT (in thousands):
<TABLE>
<S> <C>
Net tangible assets of AXENT................................ $142,000
========
In-process research and development......................... 22,300
--------
Tradename................................................... 4,200
--------
Workforce-in-place.......................................... 10,700
--------
Developed technology........................................ 79,300
--------
Deferred income taxes....................................... (10,000)
--------
Transaction costs........................................... (14,200)
--------
Deferred compensation....................................... 3,700
--------
Goodwill.................................................... 664,700
--------
$902,700
========
</TABLE>
Because the valuation has not been completed, the actual amount of the
allocations could vary from the estimates above. In-process research and
development has not reached technological feasibility based on identifiable
technological risk factors which indicate that even though successful completion
is expected, it is not assured at the acquisition date and will be immediately
charged to operations. The amount allocated to tradename, workforce-in-place and
developed technology will be amortized over the estimated
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useful lives of four years. The purchase price in excess of tangible assets and
identifiable intangible assets will be allocated to goodwill and amortized over
its expected useful life of four years.
The tangible assets of AXENT acquired in the merger principally included
cash, marketable securities, accounts receivable and fixed assets. Liabilities
of AXENT assumed in the merger principally included accounts payable and
deferred revenue.
The accompanying unaudited pro forma combined consolidated balance sheet
gives effect to the merger of Symantec and AXENT as if such transaction occurred
on June 30, 2000. The unaudited pro forma combined consolidated balance sheet
combines the unaudited consolidated balance sheet of Symantec and AXENT as of
June 30, 2000.
To determine the value of the developed technology, the expected future
cash flow attributable to all existing technology was discounted, taking into
account the risks related to the characteristics and applications of the
technology, existing and future markets and assessments of the life cycle stage
of the technology. The analysis resulted in a valuation of approximately $79
million for developed technology which has reached technological feasibility and
therefore was capitalizable. The developed technology is being amortized on a
straight-line basis over a four-year period.
The value of the workforce-in-place was derived by estimating the costs to
replace the existing employees, including recruiting and hiring costs and
training costs for each category of employee. The analysis determined a
valuation of approximately $11 million for the workforce-in-place, and is being
amortized on a straight-line basis over a four-year period.
The value of the tradename of approximately $4 million was derived by
estimating the expected future cash flows attributable to royalties on revenues
from existing products that have established name recognition and customer
acceptance. The value of the customer base is being amortized on a straight-line
basis over a four-year period.
The value of the deferred compensation of approximately $4 million was
derived using the guidance of Financial Accounting Standards Board
Interpretation 44.
The accompanying unaudited pro forma combined consolidated statements of
operations present the results of operations of Symantec for the year ended
March 31, 2000 and the three month period ended June 30, 2000, combined with the
statement of operations of AXENT for the year ended December 31, 1999 and the
three month period ended June 30, 2000. The unaudited pro forma combined
consolidated statements of operations give effect to this acquisition as if it
had occurred as of April 3, 1999.
The unaudited pro forma combined consolidated balance sheet and statement
of operations are not necessarily indicative of the financial position and the
operating results that would have been achieved had the transaction been in
effect as of the dates indicated and should not be construed as being a
representation of financial position or future operating results of the combined
companies.
The unaudited pro forma combined consolidated financial information should
be read in conjunction with the audited consolidated financial statements and
related notes of Symantec and the audited consolidated financial statements and
related notes of AXENT which are both incorporated in this joint proxy
statement/prospectus by reference.
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PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET -- UNAUDITED
AS OF JUNE 30, 2000 (IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
-------------------------
SYMANTEC AXENT ADJUSTMENTS COMBINED
-------- -------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments................................. $522,922 $121,309 $ $ 644,231
Trade accounts receivable...................... 52,285 30,002 82,287
Inventories.................................... 2,532 -- 2,532
Deferred income taxes.......................... 45,195 -- 45,195
Other.......................................... 24,255 4,923 29,178
-------- -------- -------- ----------
Total current assets........................ 647,189 156,234 803,423
Restricted investments........................... 71,070 -- 71,070
Equipment and leasehold improvements............. 52,566 13,664 66,230
Deferred income taxes............................ 38,827 2,161 (10,000)B 30,988
Acquired product rights and other intangibles.... 31,498 1,125 93,075B 125,698
Goodwill......................................... 77,797 25,251 639,345A 742,393
Other............................................ 10,372 6,434 (645)B 16,161
-------- -------- -------- ----------
$929,319 $204,869 $721,775 $1,855,963
======== ======== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................... $ 48,271 $ 3,826 $ $ 52,097
Accrued compensation and benefits.............. 22,669 7,225 29,894
Deferred revenue............................... 114,561 19,536 134,097
Other accrued expenses......................... 53,359 5,327 14,200C 72,886
Income taxes payable........................... 28,192 1,058 29,250
-------- -------- -------- ----------
Total current liabilities................... 267,052 36,972 14,200 318,224
Long-term obligations............................ 2,104 -- 2,104
Stockholders' equity:
Preferred stock................................ -- -- --
Common stock................................... 609 577 (432)D 754
Capital in excess of par value................. 447,249 201,516 701,070D 1,349,835
Notes receivable from stockholders............. (24) -- (24)
Deferred compensation.......................... (514) -- (3,712)H (4,226)
Accumulated other comprehensive loss........... (35,653) (1,247) (36,900)
Retained earnings.............................. 248,496 (32,949) 10,649E 226,196
-------- -------- -------- ----------
Total stockholders' equity.................. 660,163 167,897 707,575 1,535,635
-------- -------- -------- ----------
$929,319 $204,869 $721,775 $1,855,963
======== ======== ======== ==========
</TABLE>
See accompanying Notes to Pro Forma Combined Consolidated Financial Information.
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<PAGE> 71
PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS -- UNAUDITED
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------
SYMANTEC AXENT
MARCH 31, 2000 DECEMBER 31, 1999 ADJUSTMENTS COMBINED
-------------- ----------------- ----------- --------
<S> <C> <C> <C> <C>
Net revenues............................. $745,725 $112,813 $ $858,538
Cost of revenues....................... 121,073 16,049 22,500F 159,622
-------- -------- --------- --------
Gross margin............................. 624,652 96,764 (22,500) 698,916
Operating expenses
Research and development............... 108,425 26,859 135,284
Sales and marketing.................... 306,755 61,252 368,007
General and administrative............. 42,150 11,572 1,330H 55,052
Acquired in-process research and
development......................... 4,300 2,000 6,300
Amortization of goodwill and other
acquisition related intangibles..... 18,801 4,184 167,199F 190,184
Restructuring and other expenses....... 9,018 1,753 10,771
-------- -------- --------- --------
Total operating expenses................. 489,449 107,620 168,529 765,598
-------- -------- --------- --------
Operating income (loss).................. 135,203 (10,856) (191,029) (66,682)
Interest income and other.............. 14,730 4,775 19,505
Income, net of expense, from sales of
technologies........................ 107,358 -- 107,358
-------- -------- --------- --------
Income (loss) before income taxes........ 257,291 (6,081) (191,029) 60,181
Provision (benefit) for income taxes..... 87,143 859 (9,952)I 78,050
-------- -------- --------- --------
Net income (loss)........................ $170,148 $ (6,940) $(181,077) $(17,869)
======== ======== ========= ========
Net income (loss) per share -- basic..... $ 2.94 $ (0.25)
======== ========
Net income (loss) per share -- diluted... $ 2.73 $ (0.25)
======== ========
Shares to compute basic earnings per
share.................................. 57,870 72,321G
======== ========
Shares to compute diluted earnings per
share.................................. 62,214 72,321G
======== ========
</TABLE>
See accompanying Notes to Pro Forma Combined Consolidated Financial Information.
64
<PAGE> 72
PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS -- UNAUDITED
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, 2000
----------------------------------------------
SYMANTEC AXENT ADJUSTMENTS COMBINED
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
Net revenues.................................... $191,358 $34,053 $ $225,411
Cost of revenues.............................. 27,837 5,437 5,625F 38,899
-------- ------- -------- --------
Gross margin.................................... 163,521 28,616 (5,625) 186,512
Operating expenses
Research and development...................... 25,769 7,028 32,797
Sales and marketing........................... 76,975 16,525 93,500
General and administrative.................... 10,001 3,450 333H 13,784
Amortization of goodwill and other acquisition
related intangibles........................ 5,455 1,473 41,800F 48,728
-------- ------- -------- --------
Total operating expenses........................ 118,200 28,476 42,133 188,809
-------- ------- -------- --------
Operating income (loss)......................... 45,321 140 (47,758) (2,297)
Interest income and other..................... 7,071 1,392 8,463
Income, net of expense, from sales of
technologies............................... 5,914 -- 5,914
-------- ------- -------- --------
Income before income taxes...................... 58,306 1,532 (47,758) 12,080
Provision (benefit) for income taxes............ 19,909 363 (2,488)I 17,784
-------- ------- -------- --------
Net income (loss)............................... $ 38,397 $ 1,169 $(45,270) $ (5,704)
======== ======= ======== ========
Net income (loss) per share -- basic............ $ 0.63 $ (0.08)
======== ========
Net income (loss) per share -- diluted.......... $ 0.60 $ (0.08)
======== ========
Shares to compute basic earnings per share...... 60,498 74,949G
======== ========
Shares to compute diluted earnings per share.... 64,248 74,949G
======== ========
</TABLE>
See accompanying Notes to Pro Forma Combined Consolidated Financial Information.
65
<PAGE> 73
NOTES TO PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The unaudited pro forma combined consolidated statements of operation have
been prepared to reflect the acquisition of AXENT by Symantec as if the
acquisition had occurred as of April 3, 1999. The pro forma combined
consolidated statement of operations for the year ended March 31, 2000 reflects
the combination of the separate historical statement of operations of Symantec
for the year ended March 31, 2000 and of AXENT for the year ended December 31,
1999. The pro forma combined consolidated statement of operations for the three
months ended June 30, 2000 reflects the combination of the separate historical
statement of operations of Symantec and AXENT for the three months ended June
30, 2000. Revenues of AXENT of approximately $30 million and net income of
approximately $33,000 for the period from January 1, 2000 through March 31, 2000
are not included in either of the unaudited pro forma combined consolidated
statements of operations.
NOTE 2 -- PRO FORMA ADJUSTMENTS
(A) To record the anticipated value of goodwill as described in the
overview and elimination of AXENT's goodwill related to historical
acquisitions.
(B) To record the anticipated value of developed technology,
workforce-in-place, tradename, deferred income tax liabilities
associated with these intangible assets, deferred income tax assets
associated with assumption of stock options and elimination of AXENT's
other intangible assets related to historical acquisitions.
(C) To reflect anticipated acquisition expenses, primarily transaction fees
and professional services, of approximately $14 million.
(D) To reflect the elimination of AXENT's common stock and capital in
excess of par value ($202 million) and the issuance of 14.5 million
shares of Symantec Common Stock valued at approximately $814 million
and the assumption of outstanding AXENT stock options valued at
approximately $89 million.
(E) Reflects in-process technology charge of $22 million and elimination
of AXENT's accumulated deficit ($33 million). The in-process research
and development cost is treated as an expense and therefore decreases
the retained earnings.
(F) To record the amortization of goodwill and identifiable intangible
assets related to the acquisition of AXENT as if the transaction
occurred on April 3, 1999. Goodwill and identifiable intangible assets
recorded in relation to the acquisition were approximately $665
million and $94 million, respectively, and are being amortized on a
straight-line basis over four years.
(G) Weighted average shares used to calculate pro forma basic and diluted
net loss per share for the period presented is computed using the
weighted average number of shares of common stock outstanding for the
period presented and the shares to be issued in conjunction with the
acquisition of AXENT as if such issued shares were outstanding as of
April 3, 1999.
(H) To record the portion of intrinsic value of unvested stock options that
will be deemed to be earned over the remaining vesting period and the
related deferred compensation amortization expense.
(I) To record the income tax benefit associated with the amortization of
developed technology, workforce-in-place, tradename and amortization
of deferred compensation.
66
<PAGE> 74
COMPARATIVE PER SHARE MARKET PRICE DATA
Symantec common stock is quoted on the Nasdaq National Market and traded
under the symbol "SYMC". The table below sets forth for the periods indicated
the high and low closing sale prices per share of Symantec common stock. For
current price information with respect to Symantec common stock, you are urged
to consult publicly available sources. No assurance can be given as to future
prices of, or markets for, Symantec common stock.
<TABLE>
<CAPTION>
SYMANTEC
COMMON STOCK
----------------
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR ENDED MARCH 31, 1999
First Quarter............................................. $32.13 $22.63
Second Quarter............................................ 28.00 10.13
Third Quarter............................................. 21.81 8.69
Fourth Quarter............................................ 22.88 14.47
FISCAL YEAR ENDED MARCH 31, 2000
First Quarter............................................. 28.00 13.00
Second Quarter............................................ 35.97 25.75
Third Quarter............................................. 66.44 36.75
Fourth Quarter............................................ 80.81 48.06
FISCAL YEAR ENDING MARCH 31, 2001
First Quarter............................................. 71.50 52.75
Second Quarter............................................ 63.69 41.38
Third Quarter (through November 3, 2000)..................
</TABLE>
AXENT common stock is quoted on the Nasdaq National Market and traded under
the symbol "AXNT". The table below sets forth for the periods indicated the high
and low closing sale prices per share of AXENT common stock. For current price
information with respect to AXENT common stock, you are urged to consult
publicly available sources. AXENT has never declared or paid any cash dividends
on AXENT Common Stock.
<TABLE>
<CAPTION>
AXENT
COMMON STOCK
----------------
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1998
First Quarter............................................. $30.50 $14.44
Second Quarter............................................ 32.00 22.75
Third Quarter............................................. 32.06 14.88
Fourth Quarter............................................ 31.13 13.50
FISCAL YEAR ENDED DECEMBER 31, 1999
First Quarter............................................. 38.13 24.06
Second Quarter............................................ 20.00 8.06
Third Quarter............................................. 17.25 11.31
Fourth Quarter............................................ 23.63 12.06
FISCAL YEAR ENDED DECEMBER 31, 2000
First Quarter............................................. 31.81 18.56
Second Quarter............................................ 25.56 14.06
Third Quarter.............................................
Fourth Quarter (through November 3, 2000).................
</TABLE>
67
<PAGE> 75
Set forth below are the last reported sale prices of Symantec common stock
and AXENT common stock on July 26, 2000, the last trading day prior to the
public announcement of the merger agreement, and on November 1, 2000, the last
practicable trading day prior to the date of this joint proxy statement/
prospectus, as well as the equivalent pro forma sale prices of AXENT common
stock on those dates, as determined by multiplying the applicable last reported
sale price of Symantec common stock on the Nasdaq National Market by the
exchange ratio.
<TABLE>
<CAPTION>
SYMANTEC AXENT AXENT
COMMON STOCK COMMON STOCK EQUIVALENT
------------ ------------ ----------
<S> <C> <C> <C>
July 26, 2000................................ $63.69 $19.06 $31.84
November 1, 2000............................. $37.00 $18.25 $18.50
</TABLE>
68
<PAGE> 76
ADDITIONAL MATTERS BEING SUBMITTED TO A VOTE
OF ONLY SYMANTEC STOCKHOLDERS
In addition to proposal no. 1 related to the issuance of shares in the
merger, Symantec stockholders are being asked to approve the following
proposals:
PROPOSAL NO. 2 -- APPROVAL OF AMENDMENT TO SYMANTEC'S 1996 EQUITY INCENTIVE PLAN
PROPOSED AMENDMENT
Symantec's stockholders are being asked to consider and vote upon a
proposal to amend Symantec's 1996 Equity Incentive Plan (the "1996 Plan") to
make available for issuance under the 1996 Plan 2,400,000 additional shares of
Symantec common stock. This will raise the 1996 Plan's limit on shares that may
be issued pursuant to awards granted under the Plan from 15,236,102 to
17,636,102. This increase is in addition to approximately up to 1.95 million
shares of Symantec common stock potentially issuable to holders of options to
acquire AXENT common stock under options plans of AXENT being assumed by
Symantec. Symantec will not issue new options under any of the assumed AXENT
plans.
The board believes that the amendment to increase the shares of Symantec
common stock available for issuance under the 1996 Plan is in the best interests
of Symantec. The purpose of the 1996 Plan is to provide employees of Symantec
with a convenient means to acquire an equity interest in Symantec, to provide to
employees incentives based on an increase in the value of Symantec's common
stock, and to provide an incentive for continued employment. Because the number
of employees of Symantec will increase substantially upon completion of the
merger, the board believes that the additional reserve of shares with respect to
which shares may be issued is needed to ensure that Symantec can meet these
goals. In addition, the Board believes that the level of dilution reflected by
Symantec's current practices and the requested increase in shares available
under the 1996 Plan are appropriate in the Company's highly competitive business
environment and that the Company in general has a level of dilution from
employee equity plans similar to, or less than, other similarly situated
software and other high technology companies in the industry. The shares awarded
under the 1996 Plan come from authorized but unissued shares of Symantec common
stock.
Without the 2,400,000 shares that are the subject of this proposal, there
are a total of 15,236,102 shares of Symantec's common stock authorized for
issuance upon the exercise of options granted under the 1996 Plan. As of June
30, 2000, a total of 2,641,598 shares had been purchased upon the exercise of
options issued under the 1996 Plan, and a total of 8,656,741 shares of Symantec
common stock were subject to outstanding options that have been granted pursuant
to the 1996 Plan to an aggregate of approximately 2,836 persons, leaving 914,863
shares reserved for grant of options under the 1996 Plan. The outstanding
options are exercisable at an average exercise price of $38.47 per share. During
the 2000 fiscal year, 4,343,592 options were granted by Symantec to employees
and 100,000 options were granted to non-employee directors under the 1996 Plan.
SUMMARY OF THE 1996 PLAN
GENERAL. The 1996 Plan was adopted by Symantec's board of directors on
March 4, 1996 and approved by its stockholders on May 14, 1996 and amended
effective September 18, 1997, September 17, 1998, September 15, 1999 and October
3, 2000. The purpose of the 1996 Plan is to provide incentives to attract,
retain and motivate eligible persons whose present and potential contributions
are important to the success of Symantec, by offering them an opportunity to
participate in the company's future performance through awards of options.
ADMINISTRATION. The 1996 Plan permits either the board of directors or a
committee appointed by the board to administer the 1996 Plan. If the board
establishes such a committee, and two or more members of the board are "outside
directors," the committee must be comprised of at least two members of the
board, all of whom are outside directors and "disinterested persons."
"Disinterested persons" and "outside directors" are defined in the 1996 Plan and
comply with definitions given such terms under the Exchange Act, and Section
162(m) of the U.S. Internal Revenue Code, respectively. References herein to the
"Committee" mean
69
<PAGE> 77
either the committee appointed to administer the 1996 Plan or the board. Subject
to the terms of the 1996 Plan, the Committee determines the persons who are to
receive awards, the number of shares subject to each such award and the terms
and conditions of such awards. Notwithstanding the foregoing, the Committee
cannot reprice options issued under the Plan by lowering the exercise price of a
previously granted award, by canceling outstanding options and issuing
replacements, or by otherwise replacing existing options with substitute options
with a lower exercise price, without prior approval of the Company's
stockholders. The Committee also has the authority to construe and interpret any
of the provisions of the 1996 Plan or any awards granted thereunder and to
modify awards granted under the 1996 Plan.
ELIGIBILITY. The 1996 Plan provides that awards may be granted to
employees, officers, directors, consultants, independent contractors and
advisors of Symantec or of any parent, subsidiary or affiliate of Symantec as
the Committee may determine. As of June 30, 2000, approximately 2,763 people
were eligible to participate in the 1996 Plan. Over the term of the 1996 Plan,
the following named executive officers have been granted options to purchase
shares of common stock under the 1996 Plan as follows:
<TABLE>
<S> <C>
John W. Thompson 1,020,000 options,
Dana Siebert 106,646 options,
Dieter Giesbrecht 122,000 options,
Greg Myers 148,973 options, and
Derek Witte 113,500 options.
</TABLE>
Over the term of the 1996 Plan, current executive officers as a group have
been granted options to purchase 1,840,719 shares, current non-employee
directors have been granted options to purchase 120,000 shares, and all
employees as a group, other than executive officers and directors, have been
granted options to purchase 11,303,189 shares (excluding 3,491,168 options which
were subject to cancellation). No person will be eligible to receive more than
500,000 shares in any calendar year pursuant to the grant of awards under the
1996 Plan other than new employees of Symantec, or any parent, subsidiary or
affiliate of Symantec, who are eligible to receive up to a maximum of 800,000
shares in the calendar year in which they commence employment. A person may be
granted more than one award under the 1996 Plan.
STOCK RESERVED FOR ISSUANCE. The stock reserved for issuance under the 1996
Plan consists of shares of Symantec common stock authorized but unissued common
stock. The aggregate number of shares that may be issued under awards pursuant
to the 1996 Plan as amended by the proposal is 17,636,102. In addition, shares
that are subject to issuance upon exercise of an option under the 1996 Plan but
cease to be subject to such option for any reason (other than exercise of such
option), and shares that are subject to an award granted under the 1996 Plan but
are forfeited or repurchased by Symantec at the original issue price, or that
are subject to an award that terminates without shares being issued, will again
be available for grant and issuance under the 1996 Plan.
TERMS OF OPTIONS. Subject to the terms and conditions of the 1996 Plan, the
Committee, in its discretion, determines for each option certain terms and
conditions, including, whether the option is to be an incentive stock option
("ISO") or a non-qualified stock option ("NQSO"), the number of shares for which
the option will be granted, the exercise price of the option and the periods
during which the option may be exercised. Each option is evidenced by a stock
option agreement in such form as the Committee approves and is subject to the
following conditions, in addition to those described elsewhere herein or in the
1996 Plan:
Date of Grant. The date of grant of an option will be the date on which the
Committee decides to grant the option, unless the Committee specifies otherwise.
The related stock option agreement and a copy of the 1996 Plan will be delivered
to the optionee within a reasonable time after the option is granted.
Term of Exercise of Options. Except with respect to options granted to
non-employee directors described below, options are exercisable within the
period, or upon the events, determined by the Committee as set forth in the
related stock option agreement. However, no option may be exercisable after ten
years from the date of grant, and no ISO granted to a 10% stockholder can be
exercisable after five years from the date of grant. Symantec anticipates that
most of the options that will be granted under the
70
<PAGE> 78
1996 Plan will be exercisable for ten years and options granted under the 1996
Plan will generally vest and become exercisable at a rate of 25% one year after
the date of grant, and then at the rate of 2.0833% per month over the succeeding
three years of employment. Options granted to non-employee directors are
immediately exercisable subject to repurchase to the extent that such options
have not vested (see "Formula for Non-Employee Director Option Grants and
Vesting" below).
Exercise Price. Each stock option agreement states the related option
exercise price, which may not be less than 100% of the fair market value of the
shares of common stock on the date of the grant. The exercise price of an ISO
granted to a 10% stockholder may not be less than 110% of the fair market value
of shares of Symantec common stock on the date of grant. The exercise price for
non-employee director formula option grants may not be less than 100% of the
fair market value of the shares of common stock on the date of grant. On
November 1, 2000, the fair market value of Symantec common stock was $37.0.
Method of Exercise. Options may be exercised only by delivery to Symantec
of a written stock option exercise agreement, stating the number of shares
purchased, the restrictions imposed on the shares purchased, if any, and certain
representations and covenants regarding optionee's investment intent and access
to information, together with payment in full of the exercise price for the
number of shares purchased. The option exercise price is typically payable in
cash or by check, but may also be payable, at the discretion of the Committee,
in a number of other forms of consideration, including cancellation of
indebtedness, fully paid shares of Symantec common stock, delivery of a
promissory note, waiver of compensation due or accrued to an optionee for
services rendered, through a "same day sale," through a "margin commitment," or
any combination of the foregoing.
Termination of Employment. If an optionee ceases to provide services as an
employee, director, consultant, independent contractor or advisor to Symantec,
or a parent, subsidiary or affiliate of Symantec (except in the case of death,
disability, sick leave, military leave, or any other leave of absence approved
by the Committee which does not exceed 90 days, or if reinstatement upon
expiration of such leave is guaranteed by law), the optionee typically has three
months to exercise any then-exercisable options except as may otherwise be
provided. (See "Formula for Non-Employee Director Option Grants and Vesting"
below); provided, however, that the exercise period may be extended by the
Committee for up to five years. A twelve-month exercise period applies in cases
of optionee's disability (as defined in the 1996 Plan) or death. If optionee is
terminated for reason of having committed an alleged criminal act or intentional
tort, optionee's options expire upon termination.
Recapitalization; Change of Control. The number of shares subject to any
award, and the number of shares issuable under the 1996 Plan, are subject to
proportionate adjustment in the event of a stock dividend, recapitalization,
stock split, reverse stock split, subdivision, combination, reclassification or
similar change relating to the capital structure of Symantec without
consideration. In the event of a dissolution or liquidation of Symantec, a
merger or consolidation in which Symantec does not survive (other than a merger
with a wholly owned subsidiary or where there is no substantial change in the
stockholders of the corporation and the options granted are assumed, converted
or replaced by the successor corporation), a merger in which Symantec is the
surviving corporation, but after which the stockholders of Symantec cease to own
an equity interest in Symantec, a sale of all or substantially all of Symantec's
assets or any other transaction that qualifies as a "corporate transaction"
under Section 424(a) of the Code, all outstanding awards may be assumed,
converted or replaced by the successor corporation, or the successor corporation
may substitute equivalent awards or provide substantially similar consideration
to participants as was provided to stockholders; provided that formula option
grants to non-employee directors shall accelerate and be fully vested upon such
merger, consolidation or corporate transaction.
Rights as Stockholder. An optionee has no rights as a stockholder with
respect to any shares covered by an option until the option has been validly
exercised and shares of Symantec common stock are issued to the optionee.
Other Provisions. The option grant and exercise agreements authorized under
the 1996 Plan, which may be different for each option, may contain such other
provisions as the Committee deems advisable, including without limitation, (i)
restrictions upon the exercise of the option and (ii) a right of repurchase
71
<PAGE> 79
in favor of Symantec to repurchase unvested shares held by an optionee upon
termination of the optionee's employment at the original purchase price.
FORMULA FOR NON-EMPLOYEE DIRECTOR OPTION GRANTS AND VESTING. Symantec will
automatically grant options, in accordance with a formula, to each director of
the company who is not an employee of Symantec (or of any parent or subsidiary
of Symantec) ("non-employee director"). As of November 3, 2000, seven directors
were in the class of persons eligible to receive options under this formula. The
award formula for nonqualified stock option grants is as follows: An initial
grant of 20,000 shares will be made to a new director upon such director first
becoming a director. An award grant of 10,000 shares will be made to a
continuing director other than the chairman of the board, and an award grant of
20,000 shares will be made to the chairman of the board, at the first board
meeting following the first day of each fiscal year of the company; provided
that no such grant shall be made within six months of an initial grant. Options
granted shall remain exercisable for a period of seven months following the
non-employee director's termination as a director or consultant of Symantec.
Prior to July 1998, non-employee directors were eligible to receive grants
pursuant to the 1993 Directors Stock Option Plan. The 1993 Directors Stock
Option Plan expired in July, 1998. All option grants to directors are currently
made under the 1996 Plan.
AMENDMENT AND TERMINATION OF THE 1996 PLAN. The Committee, to the extent
permitted by law, and with respect to any shares at the time not subject to
awards, may suspend or discontinue the 1996 Plan or revise or amend the 1996
Plan in any respect whatsoever; provided that the Committee may not, without
approval of the stockholders, amend the 1996 Plan in a manner that requires
stockholder approval.
TERM OF THE 1996 PLAN. Awards may be granted pursuant to the 1996 Plan from
time to time until the expiration of the ten-year period commencing with the
date the 1996 Plan was adopted by Symantec's board of directors.
FEDERAL INCOME TAX INFORMATION. Options so designated under the 1996 Plan
are intended to qualify as ISOs. All options that are not designated as ISOs are
intended to be NQSOs.
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS JOINT PROXY
STATEMENT/PROSPECTUS OF THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO SYMANTEC AND
PARTICIPATING EMPLOYEES ASSOCIATED WITH STOCK OPTIONS GRANTED UNDER THE 1996
PLAN. THE U.S. FEDERAL TAX LAWS MAY CHANGE AND THE U.S. FEDERAL, STATE AND LOCAL
TAX CONSEQUENCES FOR ANY OPTIONEE WILL DEPEND UPON HIS OR HER INDIVIDUAL
CIRCUMSTANCES. EACH PARTICIPATING EMPLOYEE HAS BEEN AND IS ENCOURAGED TO SEEK
THE ADVICE OF A QUALIFIED TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF
PARTICIPATION IN THE 1996 PLAN.
TAX TREATMENT OF THE OPTIONEE; INCENTIVE STOCK OPTIONS. An optionee will
recognize no income upon grant of an ISO and will incur no tax upon exercise of
an ISO unless the optionee is subject to the alternative minimum tax. If the
optionee holds the shares purchased upon exercise of the ISO (the "ISO Shares")
for more than one year after the date the option was exercised and for more than
two years after the option grant date, the optionee generally will realize
long-term capital gain or loss (rather than ordinary income or loss) upon
disposition of the ISO Shares. This gain or loss will be equal to the difference
between the amount realized upon such disposition and the amount paid for the
ISO Shares.
If the optionee disposes of ISO Shares (including by gift, but not
including certain tax-free exchanges) prior to the expiration of either required
holding period (a "disqualifying disposition"), then gain realized upon such
disposition, up to the difference between the option exercise price and the fair
market value of the ISO Shares on the date of exercise (or, if less, the amount
realized on a sale of such ISO Shares), will be treated as ordinary income. Any
additional gain will be capital gain, which could be long-term capital gain
depending upon the amount of time the ISO Shares were held by the optionee.
72
<PAGE> 80
ALTERNATIVE MINIMUM TAX. The difference between the exercise price and fair
market value of the ISO Shares on the date of exercise is an adjustment to
income for purposes of the alternative minimum tax ("AMT"). The AMT (imposed to
the extent it exceeds the taxpayer's regular tax) is currently 26% of an
individual taxpayer's alternative minimum taxable income (28% percent in the
case of alternative minimum taxable income in excess of $175,000). Alternative
minimum taxable income is determined by adjusting regular taxable income for
certain items, increasing that income by certain tax preference items and
reducing this amount by the applicable exemption amount ($45,000 in the case of
a joint return, subject to reduction under certain circumstances). If a
disqualifying disposition of the ISO Shares occurs in the same calendar year as
exercise of the ISO, there is no AMT adjustment with respect to those ISO
Shares. Also, upon a sale of ISO Shares that is not a disqualifying disposition,
alternative minimum taxable income is reduced in the year of sale by the excess
of the fair market value of the ISO Shares at exercise over the amount paid for
the ISO Shares.
NONQUALIFIED STOCK OPTIONS. An optionee is not taxed upon the award of a
NQSO. The federal income tax consequences upon exercise will depend upon whether
the shares thereby acquired are subject to a right of repurchase in favor of
Symantec as described above. If the shares are not subject to a right of
repurchase (or if they are so restricted and the optionee files a Section 83(b)
Election with respect to the shares), the optionee will have ordinary income at
the time of exercise measured by the option spread on the exercise date. The
optionee's tax basis in the shares will be their fair market value on the date
of exercise, and the holding period for purposes of determining whether capital
gain or loss upon sale is long-or short-term also will begin on that date. If
the shares are subject to a right of repurchase and no Section 83(b) Election is
filed, the optionee will not be taxable upon exercise, but instead will have
ordinary income, on the date the restrictions lapse, in an amount equal to the
spread as of the date of lapse; in addition, the optionee's holding period will
then begin on the date of lapse.
Whether or not the shares are subject to a right of repurchase, the amount
of ordinary income taxable to an optionee who was an employee at the time of
grant constitutes "supplemental wages" subject to withholding of income and
employment taxes by Symantec.
SALE OF OPTION SHARES. Upon sale, other than to Symantec, of shares
acquired under a NQSO, an optionee generally will recognize capital gain or loss
to the extent of the difference between the sale price and the optionee's tax
basis in the shares, which will be long-term gain or loss if the shares are held
more than one year as of the date of the sale.
ESTIMATED TAXES. Estimated tax payments may be due on amounts an optionee
includes in income if the income recognition event occurs before the last month
of his or her taxable year and no other exceptions to the underpayment of
estimated tax penalties applies. Generally, estimated taxes must be paid with
respect to regular and alternative minimum tax liabilities if the amount of a
taxpayer's withheld taxes together with any estimated taxes is less than 90
percent of that taxpayer's total regular or alternative minimum tax liability
for the year, unless an exception applies.
MAXIMUM TAX RATES. The maximum rate applicable to ordinary income is 39.6%.
Long-term capital gain on stock held for more than twelve months will be taxed
at a maximum rate of 20%. Capital gains may be offset by capital losses, and up
to $3,000 of additional capital losses may be offset annually against ordinary
income.
TAX TREATMENT OF SYMANTEC. Symantec will be entitled to a deduction in
connection with the exercise of a NQSO by a domestic employee or other person to
the extent that the optionee recognizes ordinary income. Symantec will be
entitled to a deduction in connection with the disposition of shares acquired
under an ISO only to the extent that the optionee recognizes ordinary income on
a disqualifying disposition of the ISO Shares.
ERISA INFORMATION. The 1996 Plan is not subject to any of the provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
73
<PAGE> 81
BENEFITS TO CERTAIN PERSONS
Because awards to employees under the 1996 Plan will vary depending on the
timing of participants' exercise decisions and on the fair market value of
Symantec's common stock at various future dates, it is not possible to determine
exactly what benefits might be received by Symantec's directors, executive
officers and other employees under the 1996 Plan.
The following table summarizes the benefits that were received by various
persons under the 1996 Plan in the fiscal year ending March 31, 2000:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE
SHARES PRICE
--------- --------
<S> <C> <C>
John Thompson............................................... 1,020,000 *
Dana Siebert................................................ 50,000 *
Dieter Giesbrecht........................................... 35,000 *
Greg Myers.................................................. 65,000 *
Derek Witte................................................. 50,000 *
Current Executive Group (nine persons)...................... 1,519,000 *
Non-executive director group (ten persons).................. 100,000 *
Non-executive officer employee group........................ 4,343,592 *
</TABLE>
-------------------------
* The exercise price of the options granted under the 1996 Plan is the fair
market value of Symantec common stock on the date such options are granted.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE 1996
EQUITY INCENTIVE PLAN
PROPOSAL NO. 3 -- APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
Symantec's certificate of incorporation currently authorizes Symantec to
issue up to 100,000,000 shares of common stock, 1,000,000 shares of preferred
stock and 1 share of special voting stock. This proposal would amend the
certificate of incorporation to authorize Symantec to issue up to 300,000,000
shares of common stock, 1,000,000 shares of preferred stock and one share of
special voting stock. The larger number of authorized shares of common stock
provided for in this proposal will provide Symantec the certainty and
flexibility to undertake various types of transactions, including stock splits,
in the form of stock dividends, financings, increases in the shares reserved for
issuance under stock incentive plans or other corporate transactions not yet
determined.
In order for the Symantec board to be able to respond to future
circumstances with a reasonable degree of flexibility, Symantec must have a
sufficient number of authorized shares to cover any stock dividends or other
transactions. There are currently 100,000,000 shares authorized and
approximately 61 million issued and outstanding shares of Symantec's common
stock and approximately another 16 million shares reserved for issuance under
Symantec's stock plans. In addition, Symantec will issue approximately 15
million shares in the merger, and may issue up to 1.9 million shares to holders
of AXENT options being assumed in the merger if those options are exercised.
Under the proposed amendment to the certificate of incorporation, the additional
shares of common stock would be available for issuance without further
stockholder action, unless stockholder action is otherwise required by Delaware
law or the rules of any stock exchange or automated quotation system on which
the common stock may then be listed or quoted. Symantec has no current plans to
issue the remainder of the additional authorized shares other than shares that
could be issued in connection with any additional stock options granted as a
result of any approved increase in the number of shares reserved for issuance
under the 1996 Plan or the Stock Purchase Plan.
Based on the number of shares of common stock outstanding as of July 26,
2000 and on consummation of the merger, the Symantec would have approximately 78
million shares of common stock being issued and outstanding. This number does
not include approximately 14 million shares of common
74
<PAGE> 82
stock reserved for issuance upon exercise of options outstanding and equity
awards to be granted under Symantec's equity compensation plans, shares reserved
for issuance under Symantec's stock option and purchase plans and shares to
subject to options (as of July 26, 2000) to be assumed in the merger. Although
Symantec currently has no agreements or understandings with respect to any other
material acquisitions, the increase in the authorized number of shares of
Symantec common stock will provide Symantec with additional flexibility with
regard to any future acquisitions.
The additional shares of Symantec common stock that would become available
for issuance if the proposed amendment were adopted could also be used by
Symantec to oppose a hostile takeover attempt or delay or prevent changes of
control of Symantec or changes in or removal of management of Symantec. For
example, without further stockholder approval, the Symantec board could
strategically sell shares of common stock in a private transaction to purchasers
who would oppose a takeover or favor the current board. Although this proposal
to increase the number of authorized shares of common stock has been prompted by
business and financial considerations, not by the threat of any attempt to
accumulate shares or otherwise gain control of Symantec, stockholders
nevertheless should be aware that approval of the proposal could facilitate
future efforts by Symantec to deter or prevent changes of control of Symantec,
including transactions that are favored by a majority of the independent
stockholders or in which the stockholders might otherwise receive a premium for
their shares over then-current market prices or benefit in some other manner.
Symantec's certificate of incorporation and bylaws contain provisions that
could have an anti-takeover effect, including the following:
- Symantec's board must be given advance notice regarding
stockholder-sponsored proposals for consideration at annual meetings and
for stockholder nominations for the election of directors; and
- special meetings of stockholders may only be called by the chairman of
the board, the president or the board, not by Symantec's stockholders.
In addition, the authority granted by Symantec's certificate of
incorporation to the board to fix the designation, powers, preferences, rights,
qualifications, limitations and restrictions of any class or series of
Symantec's preferred stock could be used for anti-takeover purposes. The
proposal to increase the number of authorized shares of common stock, however,
is not part of any plan to adopt a series of amendments having an anti-takeover
effect, and Symantec's management presently does not intend to propose anti-
takeover measures in future proxy solicitations.
THE BOARD RECOMMENDS A VOTE "FOR" THE AMENDMENT TO SYMANTEC'S CERTIFICATE
OF INCORPORATION.
75
<PAGE> 83
STOCKHOLDER PROPOSALS
AXENT held its 2000 Annual Meeting of Stockholders on June 6, 2000. AXENT
will hold an annual meeting in 2001 only if the merger is not consummated. In
the event that such a meeting is held, any proposal of an AXENT stockholder must
be received by the secretary of AXENT no later than January 1, 2001 in order to
be considered for inclusion in the AXENT 2001 annual meeting proxy materials.
Any such proposal will be subject to Rule 14a-8 of the Rules and Regulations
under the Exchange Act.
Symantec held its 2000 annual meeting on September 18, 2000 with
adjournments to September 22, 2000 and October 3, 2000. For stockholder
proposals to be considered properly brought before Symantec's 2001 annual
meeting, a stockholder must give timely notice of approval in writing to
Symantec's secretary. To be timely for the 2001 annual meeting, a stockholder's
notice must be delivered to or mailed and received by the secretary of Symantec
at its principal executive offices, between May 23, 2001, and June 22, 2001. A
stockholder's notice to the secretary must set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the class and number
of shares of Symantec that are beneficially owned by the stockholder, and (iv)
any material interest of the stockholder in such business.
Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange
Act and intended to be presented at Symantec's 2001 Annual Meeting of
Stockholders must be received by Symantec not later than March 30, 2001, in
order to be considered for inclusion in the Company's proxy materials for that
meeting.
LEGAL MATTERS
The validity of the Symantec common stock offered by this joint proxy
statement/prospectus will be passed upon for Symantec by Heller Ehrman White &
McAuliffe LLP, Palo Alto, California.
Heller Ehrman White & McAuliffe LLP will provide an opinion to Symantec and
Shaw Pittman will provide an opinion to AXENT as to the qualification of the
merger as a reorganization under Section 368(a) the Internal Revenue Code.
EXPERTS
Ernst & Young LLP, independent auditors, have audited Symantec's
consolidated financial statements and schedule included in Symantec's Annual
Report on form 10-K for the year ended March 31, 2000, as set forth in their
report, which is incorporated by reference in this joint proxy
statement/prospectus and elsewhere in this registration statement. Symantec's
financial statements and schedule are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
Ernst & Young LLP, independent auditors, have audited AXENT's consolidated
financial statements and schedule included in AXENT's Annual Report on Form 10-K
for the year ended December 31, 1999, as set forth in their report, which is
incorporated by reference in this joint proxy statement/prospectus and elsewhere
in this registration statement. AXENT's financial statements and schedule are
incorporated by reference in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
AXENT's December 31, 1998 and 1997 financial statements incorporated in
this joint proxy statement/prospectus by reference to the Annual Report on Form
10-K for the year ended December 31, 1999, have been so incorporated in reliance
on the reports of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
76
<PAGE> 84
DOCUMENTS INCORPORATED BY REFERENCE
IN THIS JOINT PROXY STATEMENT/PROSPECTUS
This joint proxy statement/prospectus incorporates documents by reference
that are not presented in or delivered with this document. All documents filed
by Symantec and AXENT under section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act, after the date hereof and before the date of the AXENT and
Symantec special meetings are incorporated by reference into and to be a part of
this joint proxy statement/prospectus from the date of filing of those
documents. You should rely only on the information contained in this document or
that we have referred you to. We have not authorized anyone to provide you with
information that is different.
This joint proxy statement/prospectus incorporates by reference the
documents listed below that Symantec and AXENT have previously filed with the
Securities and Exchange Commission.
Symantec filings:
- Annual Report on Form 10-K for the year ended March 31, 2000;
- Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000;
- Current Report on Form 8-K dated July 26, 2000;
- Proxy Statement on Schedule 14A for Symantec's 2000 annual meeting; and
- Registration Statements on Form 8-A, SEC dated May 24, 1989 and August
19, 1998, as amended, which describes Symantec's common stock.
AXENT filings:
- Annual Report on Form 10-K for the fiscal year ended December 31, 1999;
- Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31 and
June 30, 2000;
- Current Reports on Form 8-K dated February 28 and July 26, 2000;
- Proxy Statement on Schedule 14A for AXENT's 2000 annual meeting; and
- Registration Statement on Form 8-A dated March 29, 1996, as amended,
which describes AXENT's common stock.
Any statement contained in a document incorporated or deemed to be
incorporated in this document by reference will be deemed to be modified or
superseded for purposes of this joint proxy statement/ prospectus to the extent
that a statement contained in this document or any other subsequently filed
document that is deemed to be incorporated in this document by reference
modifies or supersedes the statement. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part of
this joint proxy statement/prospectus.
77
<PAGE> 85
WHERE YOU CAN FIND MORE INFORMATION
The documents incorporated by reference into this joint proxy
statement/prospectus are available from us upon request. We will provide a copy
of any of the information that is incorporated by reference in this joint proxy
statement/prospectus not including exhibits to the information unless those
exhibits are specifically incorporated by reference into this joint proxy
statement/prospectus, to you, without charge, upon written or oral request. You
should make any request for documents by November 30, 2000 to ensure timely
delivery of the documents.
<TABLE>
<CAPTION>
REQUESTS FOR DOCUMENTS RELATING TO REQUESTS FOR DOCUMENTS RELATING TO
SYMANTEC SHOULD BE DIRECTED TO: AXENT SHOULD BE DIRECTED TO:
---------------------------------- ----------------------------------
<S> <C>
Helyn Corcos Anita Willis-Boyland
Investor Relations Director, Investor Relations
Symantec Corporation AXENT Technologies, Inc.
20330 Stevens Creek Boulevard 2400 Research Blvd.
Cupertino, California 95014-2132 Suite 200
(408) 253-9600 Rockville, Maryland 20850
(301) 670-3637
</TABLE>
Symantec and AXENT file reports, proxy statements and other information
with the Securities Exchange Commission, or SEC. Copies of these reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the SEC:
Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
1-800-SEC-0330
New York Regional Office
7 World Trade Center
Suite 1300
New York, New York 10048
Chicago Regional Office
Citicorp Center
500 West Madison Street,
Suite 1400
Chicago, Illinois 60661-2511
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC
maintains a website that contains reports, proxy statements and other
information regarding each Symantec and AXENT. The address of the SEC website is
http://www.sec.gov.
Symantec has filed a registration statement under the Securities Act with
the SEC with respect to Symantec's common stock to be issued to AXENT
stockholders in the merger. This joint proxy statement/prospectus constitutes
the prospectus of Symantec filed as part of the registration statement. This
joint proxy statement/prospectus does not contain all of the information set
forth in the registration statement because some parts of the registration
statement are omitted as provided by the rules and regulations of the SEC.
You may inspect and copy the registration statement at any of the addresses
listed above.
This document does not constitute an offer to sell, or a solicitation of an
offer to purchase, the Symantec common stock or the solicitation of a proxy, in
any jurisdiction to or from any person to whom or from whom it is unlawful to
make the offer, solicitation of an offer or proxy solicitation in that
jurisdiction. Neither the delivery of this joint proxy statement/prospectus nor
any distribution of securities means, under any circumstances, that there has
been no change in the information set forth or incorporated in this document by
reference or in our affairs since the date of this joint proxy statement/
prospectus. The information contained in this document with respect to AXENT and
its subsidiaries was provided by AXENT and the information contained in this
document with respect to Symantec was provided by Symantec.
78
<PAGE> 86
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This joint proxy statement/prospectus and the documents incorporated in
this document by reference contain forward-looking statements within the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995 with
respect to our financial condition, results of operations and business, and on
the expected impact of the merger on Symantec's financial performance. Words
such as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates" and similar expressions identify forward-looking statements. These
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties that could cause actual results to differ
materially from the results contemplated by the forward-looking statements.
These risks and uncertainties include:
- the possibility that the value of the Symantec common stock to be issued
to AXENT stockholders in the merger will decrease prior to completion of
the merger and no corresponding adjustment to the number of shares of
Symantec stock to be received by AXENT stockholders will be made;
- the possibility that the merger will not be consummated;
- the possibility that the anticipated benefits from the merger cannot be
fully realized;
- the possibility that costs or difficulties related to the integration of
our businesses and infrastructure are greater than expected;
- the impact of competition on revenues and margins;
- rapidly changing technology and shifting demand requirements;
- other risks and uncertainties, including the risks and uncertainties
involved in continued acceptance of the combined company's products and
services; and
- other risk factors as may be detailed from time to time in AXENT's and
Symantec's public announcements and filings with the Securities and
Exchange Commission.
In evaluating the merger, you should carefully consider the discussion of
these and other factors in the section titled "Risk Factors."
79
<PAGE> 87
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SYMANTEC CORPORATION
APACHE ACQUISITION CORP.
AND
AXENT TECHNOLOGIES, INC.
DATED AS OF JULY 26, 2000
<PAGE> 88
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I -- THE MERGER..................................... A-1
1.1 -- The Merger......................................... A-1
1.2 -- Closing; Effective Time............................ A-1
1.3 -- Effects of the Merger.............................. A-1
1.4 -- Certificate of Incorporation; Bylaws............... A-2
1.5 -- Directors and Officers of the Surviving
Corporation............................................ A-2
ARTICLE II -- CONVERSION OF SHARES.......................... A-2
2.1 -- Conversion of Stock................................ A-2
2.2 -- AXENT Options; AXENT Purchase Plan................. A-3
2.3 -- Exchange of Stock Certificates..................... A-4
2.4 -- Lost, Stolen or Destroyed Certificates............. A-4
2.5 -- Tax Consequences................................... A-5
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF AXENT...... A-5
3.1 -- Organization, Etc.................................. A-5
3.2 -- Authority Relative to This Agreement............... A-6
3.3 -- No Violations, Etc................................. A-6
3.4 -- Board Recommendation State Takeover Statutes....... A-7
3.5 -- Fairness Opinion................................... A-7
3.6 -- Capitalization..................................... A-7
3.7 -- SEC Filings........................................ A-7
3.8 -- Financial Statements............................... A-8
3.9 -- Absence of Undisclosed Liabilities................. A-8
3.10 -- Absence of Changes or Events...................... A-8
3.11 -- Capital Stock of Subsidiaries..................... A-9
3.12 -- Litigation........................................ A-9
3.13 -- Insurance......................................... A-9
3.14 -- Contracts and Commitments......................... A-9
3.15 -- Labor Matters; Employment and Labor Contracts..... A-11
3.16 -- Compliance with Laws.............................. A-11
3.17 -- Intellectual Property Rights...................... A-11
3.18 -- Taxes............................................. A-12
3.19 -- Employee Benefit Plans; ERISA..................... A-13
3.20 -- Environmental Matters............................. A-15
3.21 -- Officer's Certificate as to Tax Matters........... A-18
3.22 -- Affiliates........................................ A-18
3.23 -- Finders or Brokers................................ A-18
3.24 -- Registration Statement; Joint Proxy
Statement/Prospectus................................... A-18
3.25 -- [Intentionally Omitted]........................... A-18
3.26 -- Title to Property................................. A-18
3.27 -- Year 2000 Compliance.............................. A-19
3.28 -- No Existing Discussions........................... A-19
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF SYMANTEC AND
MERGER SUB................................................ A-19
4.1 -- Organization, Etc.................................. A-19
4.2 -- Authority Relative to This Agreement............... A-20
4.3 -- No Violations, Etc................................. A-20
</TABLE>
i
<PAGE> 89
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
4.4 -- Capitalization..................................... A-20
4.5 -- Registration Statement; Joint Proxy
Statement/Prospectus................................... A-21
4.6 -- SEC Filings........................................ A-21
4.7 -- Compliance with Laws............................... A-21
4.8 -- Financial Statements............................... A-21
4.9 -- Absence of Undisclosed Liabilities................. A-22
4.10 -- Absence of Changes or Events...................... A-22
4.11 -- Litigation........................................ A-22
4.12 -- Fairness Opinion.................................. A-22
4.13 -- [Intentionally Omitted]........................... A-22
4.14 -- [Intentionally Omitted]........................... A-22
4.15 -- Officer's Certificate as to Tax Matters........... A-23
4.16 -- Taxes............................................. A-23
4.17 -- Intellectual Property............................. A-23
4.18 -- Year 2000 Compliance.............................. A-24
ARTICLE V -- COVENANTS...................................... A-24
5.1 -- Conduct of Business During Interim Period.......... A-24
5.2 -- No Solicitation.................................... A-25
5.3 -- Access to Information.............................. A-26
5.4 -- Special Meetings; Registration Statement; Board
Recommendations........................................ A-26
5.5 -- Commercially Reasonable Efforts.................... A-29
5.6 -- Public Announcements............................... A-29
5.7 -- Notification of Certain Matters.................... A-29
5.8 -- Indemnification.................................... A-29
5.9 -- [Intentionally Omitted]............................ A-30
5.10 -- AXENT Affiliate Agreements........................ A-30
5.11 -- Nasdaq Listing.................................... A-30
5.12 -- Resignation of Directors and Officers............. A-30
5.13 -- Consents of Symantec's and AXENT's Accountants.... A-30
5.14 -- Form S-8.......................................... A-30
5.15 -- Notification of Certain Matters................... A-30
5.16 -- SEC Filings....................................... A-32
5.17 -- Employee Benefit Matters.......................... A-32
5.18 -- Certain Matters................................... A-32
ARTICLE VI -- CONDITIONS TO THE OBLIGATIONS OF EACH PARTY... A-33
6.1 -- Registration Statement............................. A-33
6.2 -- AXENT Stockholder Approval......................... A-33
6.3 -- Symantec Stockholder Approval...................... A-33
6.4 -- Listing of Additional Shares....................... A-33
6.5 -- Governmental Clearances............................ A-33
6.6 -- Tax Matters........................................ A-33
6.7 -- Statute or Decree.................................. A-33
ARTICLE VII -- CONDITIONS TO THE OBLIGATIONS OF AXENT AND
SYMANTEC.................................................. A-34
7.1 -- Additional Conditions To The Obligations Of
AXENT.................................................. A-34
7.2 -- Additional Conditions To The Obligations Of
Symantec And Merger Sub................................ A-34
ARTICLE VIII -- TERMINATION................................. A-34
8.1 -- Termination........................................ A-34
</TABLE>
ii
<PAGE> 90
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
8.2 -- Notice of Termination; Effect of Termination....... A-36
8.3 -- Fees and Expenses.................................. A-36
8.4 -- Amendment.......................................... A-37
8.5 -- Extension; Waiver.................................. A-37
ARTICLE IX -- MISCELLANEOUS................................. A-37
9.1 -- Amendment and Modification......................... A-37
9.2 -- Waiver of Compliance; Consents..................... A-37
9.3 -- Survival; Investigations........................... A-37
9.4 -- Notices............................................ A-37
9.5 -- Assignment; Third Party Beneficiaries.............. A-38
9.6 -- Governing Law...................................... A-38
9.7 -- Waiver Of Jury Trial............................... A-38
9.8 -- Counterparts....................................... A-38
9.9 -- Severability....................................... A-39
9.10 -- Interpretation.................................... A-39
9.11 -- Entire Agreement.................................. A-39
9.12 -- Definition of "law"............................... A-39
9.13 -- Rules of Construction............................. A-39
EXHIBITS
</TABLE>
<TABLE>
<S> <C> <C>
Exhibit A -- Certificate of Merger.................................... A-41
-- Form of Restated Certificate of Incorporation of
Exhibit B Surviving Corporation....................................... A-43
Exhibit C -- Form of AXENT Affiliate Agreement........................ A-45
</TABLE>
iii
<PAGE> 91
INDEX OF DEFINED TERMS
<TABLE>
<S> <C>
"Acquisition Proposal"...................................... Section 5.2(a)
"Acquisition Transaction"................................... Section 5.2(a)
"Action".................................................... Section 3.12(a)
"Affiliates"................................................ Section 3.22
"Agreement"................................................. Preamble
"Antitrust Division"........................................ Section 5.5(a)
"AXENT"..................................................... Preamble
"AXENT Acquisition"......................................... Section 8.3(b)
"AXENT Affiliate Agreement"................................. Section 5.10
"AXENT Balance Sheet"....................................... Section 3.8
"AXENT Certificate"......................................... Section 2.3(c)
"AXENT Common Stock"........................................ Recitals
"AXENT Contract"............................................ Section 3.14(b)
"AXENT Disclosure Statement"................................ Article III
"AXENT Financial Statements"................................ Section 3.8
"AXENT IP Rights"........................................... Section 3.17(a)
"AXENT Material Adverse Effect"............................. Section 3.1(a)
"AXENT Options"............................................. Section 2.2(a)
"AXENT Preferred Stock"..................................... Section 3.6(a)
"AXENT Purchase Plan"....................................... Section 2.2(b)
"AXENT SEC Reports"......................................... Section 3.7(a)
"AXENT Special Meeting"..................................... Section 5.4(a)
"AXENT Stock Plans"......................................... Section 2.2(a)
"AXENT Triggering Event".................................... Section 8.1(i)
"CERCLA".................................................... Section 3.20(a)(iii)
"Certificate of Merger"..................................... Section 1.2
"Closing"................................................... Section 1.2
"Closing Date".............................................. Section 1.2
"COBRA"..................................................... Section 3.15(b)
"Code"...................................................... Recitals
"Confidentiality Agreement"................................. Section 5.3
"Contractor"................................................ Section 3.20(a)(i)
"Delaware Law".............................................. Section 1.1
"Effective Time"............................................ Section 1.2
"Employee Benefit Plans".................................... Section 3.19(a)
"End Date".................................................. Section 8.1(b)
"Environment"............................................... Section 3.20(a)(ii)
"Environmental Law"......................................... Section 3.20(a)(iii)
"Environmental Permit"...................................... Section 3.20(a)(iv)
"ERISA"..................................................... Section 3.19(a)
"ERISA Affiliate"........................................... Section 3.19(a)
"Exchange Act".............................................. Section 3.3
"Exchange Agent"............................................ Section 2.3(a)
"Exchange Multiple"......................................... Section 2.1(g)
"Exchange Quotient"......................................... Section 2.1(g)
"Exchange Ratio"............................................ Section 2.1(a)
"Foreign Plan".............................................. Section 3.19(n)
</TABLE>
iv
<PAGE> 92
<TABLE>
<S> <C>
"FTC"....................................................... Section 5.5(a)
"GAAP"...................................................... Section 3.8
"Government Entity"......................................... Section 3.3
"group health plan"......................................... Section 3.19(k)
"Hazardous Material"........................................ Section 3.20(a)(v)
"Holder".................................................... Section 2.3(c)
"HSR Act"................................................... Section 3.3
"Indemnified Parties"....................................... Section 5.8(a)
"IRS"....................................................... Section 3.19(d)
"Joint Proxy Statement/Prospectus".......................... Section 3.24
"law"....................................................... Section 9.11
"Merger".................................................... Recitals
"Merger Sub"................................................ Preamble
"Merger Sub Common Stock"................................... Section 2.1(d)
"Nasdaq".................................................... Section 2.1(f)
"Notice of Superior Offer".................................. Section 5.4(e)
"Pension Plans"............................................. Section 3.19(a)
"Person".................................................... Section 2.1(g)
"Potential Acquiror"........................................ Section 5.2(a)
"Real Property"............................................. Section 3.20(b)(iv)
"Reference Date"............................................ Section 3.8
"Registration Statement".................................... Section 3.24
"SEC"....................................................... Section 3.7
"Securities Act"............................................ Section 3.7
"Subsidiary"................................................ Section 2.1(g)
"Superior Offer"............................................ Section 5.4(e)
"Surviving Corporation"..................................... Section 1.1
"Symantec".................................................. Preamble
"Symantec Balance Sheet".................................... Section 4.8
"Symantec Certificates"..................................... Section 2.1(b)
"Symantec Closing Value".................................... Section 2.1(f)
"Symantec Common Stock"..................................... Recitals
"Symantec Disclosure Statement"............................. Article IV
"Symantec Exchange Options"................................. Section 2.2(a)
"Symantec Financial Statements"............................. Section 4.8
"Symantec IP Rights"........................................ Section 4.17
"Symantec Material Adverse Effect".......................... Section 4.1
"Symantec Purchase Plan".................................... Section 2.2(b)
"Symantec SEC Reports"...................................... Section 4.6(a)
"Symantec Special Meeting".................................. Section 5.4(b)
"Symantec Subsidiaries"..................................... Section 4.1
"Tax" or "Taxes"............................................ Section 3.18(a)
"Tax Return"................................................ Section 3.18(b)
"Termination Fee"........................................... Section 8.3(b)
"Welfare Plans"............................................. Section 3.19(a)
"Year 2000 Compliant"....................................... Section 3.27
</TABLE>
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ANNEX A
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of July 26, 2000 by and among Symantec Corporation, a Delaware
corporation ("Symantec"), Apache Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Symantec ("Merger Sub"), and AXENT Technologies,
Inc., a Delaware corporation ("AXENT"), with respect to the following facts:
A. The respective boards of directors of Symantec, Merger Sub and
AXENT have approved and declared advisable the merger of Merger Sub with
and into AXENT (the "Merger"), upon the terms and subject to the conditions
set forth herein, and have determined that the Merger and the other
transactions contemplated by this Agreement are fair to, and in the best
interests of, their respective stockholders.
B. Pursuant to the Merger, among other things, the outstanding shares
of AXENT Common Stock, $0.02 par value ("AXENT Common Stock"), will be
converted into the right to receive shares of Symantec Common Stock, $0.01
par value ("Symantec Common Stock"), at the rate set forth herein.
C. For United States federal income tax purposes, it is intended that
the Merger will qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
D. For financial accounting purposes, it is intended that the Merger
will be accounted for under the purchase method.
The parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware General Corporation Law (the "Delaware Law"),
(i) Merger Sub shall be merged with and into AXENT, (ii) the separate corporate
existence of Merger Sub shall cease, and (iii) AXENT shall be the surviving
corporation. AXENT, as the surviving corporation after the Merger, is
hereinafter sometimes referred to as the "Surviving Corporation."
1.2 Closing; Effective Time. The closing of the Merger and the other
transactions contemplated hereby (the "Closing") will take place at 8:00 a.m.,
local time, on a date to be specified by the parties (the "Closing Date"), which
shall be no later than the third business day after satisfaction or waiver of
the conditions set forth in Articles VI and VII, unless another time or date is
agreed to by the parties hereto. The Closing shall take place at the offices of
Heller Ehrman White & McAuliffe LLP, 525 University Avenue, Palo Alto,
California, or at such other location as the parties hereto shall mutually
agree. At the Closing, the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger substantially in the form of
Exhibit A (the "Certificate of Merger") with the Secretary of State of the State
of Delaware, in accordance with the relevant provisions of Delaware Law (the
time of such filing, or such later time as may be agreed in writing by the
parties and specified in the Certificate of Merger, being the "Effective Time").
1.3 Effects of the Merger. The effects of the Merger shall be as provided
in this Agreement, the Certificate of Merger and the applicable provisions of
Delaware Law. Without limiting the foregoing, at the Effective Time all the
property, rights, privileges, powers and franchises of AXENT and Merger Sub
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of AXENT and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
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1.4 Certificate of Incorporation; Bylaws.
(a) Subject to Section 5.8, from and after the Effective Time, the
certificate of incorporation of the Surviving Corporation shall be amended in
its entirety to read substantially as set forth in Exhibit B attached hereto.
(b) Subject to Section 5.8, from and after the Effective Time the bylaws of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
bylaws of the Surviving Corporation.
1.5 Directors and Officers of the Surviving Corporation. The directors and
officers of Merger Sub immediately prior to the Effective Time shall serve as
the initial directors and officers of the Surviving Corporation, until their
respective successors are duly elected or appointed and qualified.
ARTICLE II
CONVERSION OF SHARES
2.1 Conversion of Stock. Pursuant to the Merger, and without any action on
the part of the holders of any outstanding shares of capital stock or securities
of AXENT or Merger Sub:
(a) As of the Effective Time, each share of AXENT Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares
of AXENT Common Stock to be canceled pursuant to Section 2.1(c)) shall be
automatically converted into 0.50 (the "Exchange Ratio") of a fully paid
and nonassessable share of Symantec Common Stock.
(b) As of the Effective Time, each holder of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of AXENT Common Stock shall cease to have any rights
with respect thereto, except the right to receive (i) a certificate (or, at
the Holder's request, direct registration) representing the number of whole
shares of Symantec Common Stock into which such shares have been converted
(the "Symantec Certificates"), and (ii) cash in lieu of fractional shares
of Symantec Common Stock in accordance with Section 2.1(f), without
interest.
(c) As of the Effective Time, each share of AXENT Common Stock held of
record immediately prior to the Effective Time by AXENT, Merger Sub,
Symantec or any Subsidiary (as defined in Section 2.1(g)) of Symantec shall
be canceled and extinguished without any conversion thereof.
(d) As of the Effective Time, each share of Common Stock, $0.001 par
value, of Merger Sub (the "Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall be canceled, extinguished and
automatically converted into one validly issued, fully paid and
nonassessable share of Common Stock, $0.001 par value, of the Surviving
Corporation. Each certificate evidencing ownership of a number of shares of
Merger Sub Common Stock shall be deemed to evidence ownership of the same
number of shares of Common Stock, $0.001, of the Surviving Corporation.
(e) Without limiting any other provision of this Agreement, the
Exchange Ratio shall be adjusted to reflect fully the effect of any stock
split, reverse stock split, stock dividend (including any dividend or
distribution of securities convertible into Symantec Common Stock or AXENT
Common Stock), extraordinary dividend or distribution, reorganization,
reclassification, recapitalization or other like change with respect to
Symantec Common Stock or AXENT Common Stock occurring or having a record
date or an effective date on or after the date hereof and prior to the
Effective Time.
(f) No fraction of a share of Symantec Common Stock will be issued by
virtue of the Merger. Instead, each holder of shares of AXENT Common Stock
who would otherwise be entitled to a fraction of a share of Symantec Common
Stock (after aggregating all fractional shares of Symantec Common Stock to
be received by such holder) shall receive from Symantec an amount of cash
(rounded down to the nearest whole cent) equal to the product of (i) such
fraction, multiplied by (ii) the Symantec Closing Value. For the purposes
of this Agreement, "Symantec Closing Value"
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shall mean the closing price per share of Symantec Common Stock as reported
on the Nasdaq National Market System ("Nasdaq") on the trading day
immediately preceding the Effective Time.
(g) For the purposes of this Agreement, the "Exchange Multiple" of any
quantity means the product obtained from multiplying such quantity by the
Exchange Ratio, and the "Exchange Quotient" of any quantity means the
quotient obtained from dividing such quantity by the Exchange Ratio. For
purposes of this Agreement, (i) the term "Subsidiary", when used with
respect to any Person, means any corporation, entity or other organization,
whether incorporated or unincorporated, of which (A) at least a majority of
the securities or other interests having by their terms ordinary voting
power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation, entity or other
organization is directly or indirectly owned or controlled by such Person
(through ownership of securities, by contract or otherwise) or (B) such
Person or any Subsidiary of such Person is a general partner of any general
partnership or a manager of any limited liability company. For the purposes
of this Agreement, the term "Person" means any individual, group,
organization, corporation, partnership, joint venture, limited liability
company, trust or entity of any kind.
2.2 AXENT Options; AXENT Purchase Plan.
(a) As of the Effective Time, Symantec shall assume all of the stock
options of AXENT, whether or not vested or immediately exercisable, outstanding
immediately prior to the Effective Time under the AXENT Stock Plans (as defined
below) (the "AXENT Options"). For purposes of this Agreement, "AXENT Stock
Plans" means the plans listed on Schedule 2.2(a). Each AXENT Option, whether or
not exercisable at the Effective Time, shall be assumed by Symantec in such a
manner that it shall be exercisable upon the same terms and conditions as under
the AXENT Stock Plan pursuant to which it was granted and the applicable option
agreement issued thereunder; provided that (i) each such option thereafter shall
be exercisable for a number of shares of Symantec Common Stock (rounded down to
the nearest whole share) equal to the Exchange Multiple of the number of shares
of AXENT Common Stock subject to such option, and (ii) the option price per
share of Symantec Common Stock thereafter shall equal the Exchange Quotient of
the option price per share of AXENT Common Stock subject to such option in
effect immediately prior to the Effective Time (the "Symantec Exchange
Options"); provided that if the Exchange Quotient results in an aggregate
exercise price that requires the payment of a fraction of a cent at the time of
exercise of Symantec Exchange Options for one or more shares of Symantec Common
Stock (with the exercise price considered in the aggregate for all such options
being exercised), then the aggregate exercise price for such shares shall be
further adjusted upwards to the nearest whole cent.
(b) AXENT shall amend the AXENT Employee Stock Purchase Plan (the "AXENT
Purchase Plan") so that as of the Effective Time: (i) the AXENT Purchase Plan
shall provide that no additional purchase rights shall be issued under it; (ii)
each purchase right granted under the AXENT Purchase Plan shall terminate, if it
has not previously terminated by its terms, on the date that the holder thereof
enrolls in the Symantec 1998 Employee Stock Purchase Plan (the "Symantec
Purchase Plan"); provided that if the purchase date under the AXENT Purchase
Plan coincides with the enrollment date under the Symantec Purchase Plan, the
purchase rights under the AXENT Purchase Plan shall not terminate prior to the
purchase on such date; and (iii) make such other modifications to the AXENT
Purchase Plan so as to permit the implementation of this Section 2.2(b). As of
the Effective Time, each then-outstanding purchase right granted under the AXENT
Purchase Plan shall be assumed by Symantec in such a manner that it shall be
exercisable upon the same terms and conditions (as amended as described above)
as under the AXENT Purchase Plan immediately before the Effective Time; provided
that each such purchase right shall thereafter be exercisable for whole shares
of Symantec Common Stock (rounded down to the nearest whole share) equal to the
Exchange Multiple of the number of shares of AXENT Common Stock for which such
purchase right would otherwise have been exercisable determined as of the
relevant grant date under the AXENT Purchase Plan at a purchase price per share
equal to 85% of the lower of: (i) the Exchange Quotient (rounded up to the
nearest whole cent) of the fair market value of a share of AXENT
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Common Stock on the relevant grant date under the AXENT Purchase Plan or (ii)
the fair market value of a share of a Symantec Common Stock on the relevant
purchase date.
2.3 Exchange of Stock Certificates.
(a) At or prior to the Effective Time, Symantec shall enter into an
agreement with a bank or trust company selected by Symantec and reasonably
acceptable to AXENT to act as the exchange agent for the Merger (the "Exchange
Agent").
(b) At or prior to the Effective Time, Symantec shall supply or cause to be
supplied to or for the account of the Exchange Agent in trust for the benefit of
the holders of AXENT Common Stock, for exchange pursuant to this Section 2.3 (i)
certificates (or, at the Holder's request, direct registration) evidencing the
shares of Symantec Common Stock issuable pursuant to Section 2.1 to be exchanged
for outstanding shares of AXENT Common Stock, and (ii) cash in an aggregate
amount sufficient to make the payments in lieu of fractional shares provided for
in Section 2.1(f).
(c) Promptly after the Effective Time, Symantec shall mail or shall cause
to be mailed to each Holder a letter of transmittal in customary form (which
shall specify that delivery shall be effected, and risk of loss and title to the
AXENT Certificates shall pass, only upon proper delivery of the AXENT
Certificates to the Exchange Agent) and instructions for surrender of the AXENT
Certificates. Upon surrender to the Exchange Agent of an AXENT Certificate,
together with such letter of transmittal duly executed, the Holder shall be
entitled to receive in exchange therefor: (i) certificates evidencing that
number of shares of Symantec Common Stock issuable to such Holder in accordance
with this Article II; (ii) any dividends or other distributions that such Holder
has the right to receive pursuant to Section 2.3(d); and (iii) cash in respect
of fractional shares as provided in Section 2.1(f), and such AXENT Certificate
so surrendered shall forthwith be canceled. No certificate representing shares
of Symantec Common Stock will be issued to a Person who is not the registered
owner of a surrendered AXENT Certificate unless (i) the AXENT Certificate so
surrendered has been properly endorsed or otherwise is in proper form for
transfer, and (ii) such Person shall either (A) pay any transfer or other tax
required by reason of such issuance or (B) establish to the reasonable
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
2.3, from and after the Effective Time, each AXENT Certificate shall be deemed
to represent, for all purposes other than payment of dividends, the right to
receive a certificate representing the number of full shares of Symantec Common
Stock as determined in accordance with this Article II and cash in lieu of
fractional shares as provided in Section 2.1(f). For purposes of this Agreement,
"AXENT Certificate" means a certificate which immediately prior to the Effective
Time represented shares of AXENT Common Stock, and "Holder" means a person who
holds one or more AXENT Certificates as of the Effective Time.
(d) No dividend or other distribution shall be paid or declared with
respect to Symantec Common Stock prior to the Effective Time. No dividend or
other distribution declared with respect to Symantec Common Stock with a record
date after the Effective Time will be paid to Holders of unsurrendered AXENT
Certificates until such Holders surrender their AXENT Certificates. Upon the
surrender of such AXENT Certificates, there shall be paid to such Holders,
promptly after such surrender, the amount of dividends or other distributions,
excluding interest, declared with a record date after the Effective Time and not
paid because of the failure to surrender AXENT Certificates for exchange.
(e) Notwithstanding anything to the contrary in this Agreement, neither the
Exchange Agent, Symantec, the Surviving Corporation nor any party hereto shall
be liable to any holder of shares of AXENT Common Stock for shares of Symantec
Common Stock or cash in lieu of fractional shares delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
2.4 Lost, Stolen or Destroyed Certificates. In the event that any AXENT
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue and pay in respect of such lost, stolen or destroyed AXENT Certificates,
upon the making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Symantec Common Stock as may be required pursuant to
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Section 2.1 and cash in lieu of fractional shares, if any, as may be required
pursuant to Section 2.1(f) and any dividends or distributions payable pursuant
to Section 2.3(d); provided, however, that Symantec may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed AXENT Certificates to deliver a bond in such sum as it
may reasonably direct as indemnity against any claim that may be made against
Symantec or the Exchange Agent with respect to the AXENT Certificates alleged to
have been lost, stolen or destroyed.
2.5 Tax Consequences. For United States federal income tax purposes, it is
intended by the parties hereto that this Agreement is a "plan of reorganization"
and that the Merger qualify as a reorganization within the meaning of Section
368(a) of the Code.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AXENT
AXENT makes to Symantec and Merger Sub the representations and warranties
contained in this Article III, in each case subject to the exceptions set forth
in the disclosure statement, dated as of the date hereof (the "AXENT Disclosure
Statement"). The AXENT Disclosure Statement shall be arranged in schedules
corresponding to the numbered and lettered Sections of this Article III, and the
disclosure in any Schedule of the AXENT Disclosure Statement shall only qualify
the corresponding Section of this Article III, unless the disclosure contained
in such Section contains such information so as to enable a reasonable person to
determine that such disclosure qualifies or otherwise applies to other Sections
of this Article III.
3.1 Organization, Etc.
(a) Each of AXENT and its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Each of AXENT and its Subsidiaries is duly qualified as a foreign Person to do
business, and is in good standing, in each jurisdiction where the character of
its owned or leased properties or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, reasonably be expected to
have an AXENT Material Adverse Effect. For the purposes of this Agreement,
"AXENT Material Adverse Effect" means any change, event or effect that is
materially adverse to the consolidated business, results of operations or
financial condition of AXENT and its Subsidiaries taken as a whole; provided,
however, that: (i) any adverse change, event or effect arising from or relating
to general business or economic conditions which does not affect AXENT in a
materially disproportionate manner, shall not be deemed to constitute, and shall
not be taken into account in determining whether there has been, an "AXENT
Material Adverse Effect"; (ii) any adverse change, event or effect relating to
or affecting the software industry generally or the security software industry
generally, which does not affect AXENT in a materially disproportionate manner,
shall not be deemed to constitute, and shall not be taken into account in
determining whether there has been, an "AXENT Material Adverse Effect"; and
(iii) any adverse change, event or effect arising from or relating to the
announcement or pendency of the Merger, including, but not limited to, changes
or effects which result from the loss of customers or delay, cancellation or
cessation of orders for AXENT's products, shall not be deemed to constitute, and
shall not be taken into account in determining whether there has been, an "AXENT
Material Adverse Effect".
(b) Neither AXENT nor any of its Subsidiaries is in violation of any
provision of its certificate of incorporation, bylaws or any other charter
document. Schedule 3.1(b) of the AXENT Disclosure Statement sets forth (i) the
full name of each Subsidiary of AXENT, its capitalization and the ownership
interest of AXENT and each other Person (if any) therein, (ii) the jurisdiction
in which each such Subsidiary is organized, (iii) each jurisdiction in which
AXENT and each of its Subsidiaries is qualified to do business as a foreign
Person, and (iv) the names of the current directors and officers of AXENT and of
each Subsidiary of AXENT. AXENT has made available to Symantec accurate and
complete copies of
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the certificate of incorporation, bylaws and any other charter documents, as
currently in effect, of AXENT and each of its Subsidiaries.
3.2 Authority Relative to This Agreement. AXENT has full corporate power
and authority to (i) execute and deliver this Agreement and (ii) assuming the
approval of the Merger by a majority of the outstanding shares of AXENT Common
Stock at the AXENT Special Meeting or any adjournment or postponement thereof in
accordance with Delaware Law, consummate the Merger and the other transactions
contemplated hereby. The execution and delivery of this Agreement, and the
consummation of the Merger and the other transactions contemplated hereby, have
been duly and validly authorized by the unanimous vote of the board of directors
of AXENT, and no other corporate proceedings on the part of AXENT are necessary
to authorize this Agreement or to consummate the Merger and the other
transactions contemplated hereby (other than, with respect to the Merger, the
approval of the Merger by a majority of the outstanding shares of AXENT Common
Stock at the AXENT Special Meeting or any adjournment or postponement thereof in
accordance with the Delaware Law and the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware). This Agreement has been
duly and validly executed and delivered by AXENT and, assuming due
authorization, execution and delivery by Symantec and Merger Sub, constitutes a
valid and binding agreement of AXENT, enforceable against AXENT in accordance
with its terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general equitable
principles.
3.3 No Violations, Etc. No filing with or notification to, and no permit,
authorization, consent or approval of, any court, administrative agency,
commission, or other governmental or regulatory body, authority or
instrumentality ("Government Entity") is necessary on the part of AXENT for the
consummation by AXENT of the Merger and the other transactions contemplated
hereby, or for the exercise by Symantec and the Surviving Corporation of full
rights to own and operate the business of AXENT and its Subsidiaries as
presently being conducted, except (i) for the filing of the Certificate of
Merger as required by Delaware Law, (ii) the applicable requirements of the
Securities and Exchange Act of 1934, as amended (together with the Rules and
Regulations promulgated thereunder, the "Exchange Act"), state securities or
"blue sky" laws and state takeover laws, and (iii) any filing required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). Neither
the execution and delivery of this Agreement, nor the consummation of the Merger
and the other transactions contemplated hereby, nor compliance by AXENT with all
of the provisions hereof and thereof, nor the exercise by Symantec and the
Surviving Corporation of full rights to own and operate the business of AXENT
and its Subsidiaries as presently being conducted will, subject to obtaining the
approval of the this Agreement by the holders of a majority of the outstanding
shares of AXENT Common Stock at the AXENT Special Meeting or any adjournment
thereof in accordance with Delaware Law, (i) conflict with or result in any
breach of any provision of the certificate of incorporation, bylaws or other
charter document of AXENT or any of its Subsidiaries, (ii) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to AXENT or any
of its Subsidiaries, or by which any of their properties or assets may be bound,
or (iii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default under, or result in any change in, or
give rise to any right of termination, cancellation, acceleration, redemption or
repurchase under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, contract, agreement or other
instrument or obligation to which AXENT or any of its Subsidiaries is a party or
by which any of them or any of their properties or assets may be bound, except
in the case of clauses (ii) or (iii) above, for any such conflicts, breaches,
violations, defaults or other occurrences that would not (x) individually or in
the aggregate, reasonably be expected to have an AXENT Material Adverse Effect,
or (y) prevent or materially impair or delay the consummation of the
transactions contemplated by this Agreement. Schedule 3.3 of the AXENT
Disclosure Statement lists all consents, waivers and approvals required to be
obtained in connection with the consummation of the transactions contemplated
hereby under any of AXENT's or any of its Subsidiaries' notes, bonds, mortgages,
indentures, deeds of trust, licenses or leases, contracts, agreements or other
instruments or obligations the failure to obtain which would reasonably be
expected to have an AXENT Material Adverse Effect.
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3.4 Board Recommendation; State Takeover Statutes. The board of directors
of AXENT has, at a meeting of such board duly held on June 26, 2000, (i)
approved and adopted this Agreement, (ii) determined that this Agreement is
advisable, fair to and in the best interests of the stockholders of AXENT, (iii)
resolved to recommend adoption of this Agreement to the stockholders of AXENT,
and (iv) resolved that AXENT take all action necessary to make inapplicable any
restrictions on the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby that may result from
the provisions of all applicable state antitakeover statutes or regulations
including but not limited to Section 203 of the Delaware Law.
3.5 Fairness Opinion. AXENT has received the opinion of Chase Securities
Inc. dated the date of the approval of this Agreement by the board of directors
of AXENT to the effect that the Exchange Ratio is fair to AXENT's stockholders
from a financial point of view, and has provided a copy of such opinion to
Symantec.
3.6 Capitalization.
(a) The authorized capital stock of AXENT consists of 50,000,000 shares of
AXENT Common Stock and 5,000,000 shares of Preferred Stock, $0.02 par value
("AXENT Preferred Stock"). As of July 24, 2000, there were (i) 28,886,050 shares
of AXENT Common Stock outstanding, (ii) no shares of AXENT Preferred Stock
outstanding, and (iii) no treasury shares.
(b) There are no equity securities of any class of AXENT, or any securities
convertible into or exercisable for any such equity securities, issued, reserved
for issuance or outstanding. Except for the AXENT Options and purchase rights
under the AXENT Purchase Plan, there are no warrants, options, convertible
securities, calls, rights, stock appreciation rights, preemptive rights, rights
of first refusal, or agreements or commitments of any nature obligating AXENT to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity interests of AXENT, or obligating AXENT
to grant, issue, extend, accelerate the vesting of, or enter into, any such
warrant, option, convertible security, call, right, stock appreciation right,
preemptive right, right of first refusal, agreement or commitment. To the
knowledge of AXENT, there are no voting trusts, proxies or other agreements or
understandings with respect to the capital stock of AXENT. For purposes of this
Agreement, "to the knowledge of AXENT," or words of similar import, shall mean
the actual knowledge of directors and executive officers of AXENT and the
persons set forth on Schedule 3.6(b).
(c) True and complete copies of each AXENT Stock Plan and the AXENT
Purchase Plan, and of the forms of all agreements and instruments relating to or
issued under each thereof, have been made available to Symantec. Such
agreements, instruments, and forms have not been amended, modified or
supplemented, and there are no agreements to amend, modify or supplement any
such agreements, instruments or forms.
(d) Schedule 3.6(d) of the AXENT Disclosure Statement sets forth the
following information with respect to each AXENT Option: the aggregate number of
shares issuable thereunder, the type of option, the grant date, the expiration
date, the exercise price and the vesting schedule. Each AXENT Option was granted
in accordance with the terms of the AXENT Stock Plan applicable thereto. The
terms of each of the AXENT Stock Plans do not prohibit the assumption of the
AXENT Options as provided in Section 2.2(a). Except as set forth on Schedule
3.6(d), consummation of the Merger will not accelerate vesting of any AXENT
Option.
3.7 SEC Filings. AXENT has filed with the Securities and Exchange
Commission (the "SEC") all required forms, reports, registration statements and
documents required to be filed by it with the SEC (collectively, all such forms,
reports, registration statements and documents filed since January 1, 1997 are
referred to herein as the "AXENT SEC Reports"). All of the AXENT SEC Reports
complied as to form, when filed (or, if amended or superseded by filing prior to
the date hereof, then on the date of such filing), in all material respects with
the applicable provisions of the Securities Act of 1933, as amended (together
with the rules and regulations promulgated thereunder, the "Securities Act") and
the Exchange Act. Accurate and complete copies of the AXENT SEC Reports have
been made available to Symantec.
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The AXENT SEC Reports (including all exhibits and schedules thereto and
documents incorporated by reference therein) did not, at the time they were
filed (or, if amended or superseded by filing prior to the date hereof, then on
the date of such filing), contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. To the knowledge of AXENT, except as disclosed in the
AXENT SEC Reports, each of AXENT's officers and directors has complied with all
filing requirements under Section 13 and Section 16(a) of the Exchange Act.
3.8 Financial Statements. Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the AXENT SEC
Reports (the "AXENT Financial Statements"), (x) was prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited interim financial statements, as may be permitted
by the SEC on Form 10-Q under the Exchange Act) and (y) fairly presented the
consolidated financial position of AXENT and its Subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows for the periods indicated, consistent with the books and records of AXENT,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not, or are not expected to
be, material in amount. The balance sheet of AXENT contained in AXENT's Form
10-Q for the quarter ended March 31, 2000 (the "Reference Date") is hereinafter
referred to as the "AXENT Balance Sheet."
3.9 Absence of Undisclosed Liabilities. Neither AXENT nor any of its
Subsidiaries has any liabilities (absolute, accrued, contingent or otherwise)
other than liabilities or obligations: (i) included in the AXENT Balance Sheet
and the related notes to the financial statements; (ii) reflected in the AXENT
SEC Reports through the date of the filing of AXENT's Quarterly Report on Form
10-Q in respect of the fiscal quarter ending March 31, 2000; (iii) liabilities
incurred since the Reference Date in the ordinary course of business consistent
with past practice which, individually or in the aggregate, would not reasonably
be expected to have an AXENT Material Adverse Effect; (iv) which otherwise are
not and will not have, individually or in the aggregate, an AXENT Material
Adverse Effect; or (v) under this Agreement.
3.10 Absence of Changes or Events. Except as contemplated by this
Agreement, since the Reference Date, AXENT has not incurred, suffered or made:
(i) any AXENT Material Adverse Effect as of the date of this Agreement; (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of AXENT's or any of its
Subsidiaries' capital stock, or any purchase, redemption or other acquisition by
AXENT of any of AXENT's capital stock or any other securities of AXENT or its
Subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases which are not, individually or
in the aggregate, material in amount from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase agreements;
(iii) any split, combination or reclassification of any of AXENT's or any of its
Subsidiaries' capital stock; (iv) any material change by AXENT in its accounting
methods, principles or practices, except as required by concurrent changes in
GAAP; (v) any material revaluation by AXENT of any of its material assets,
including writing off notes or accounts receivable other than in the ordinary
course of business; (vi) any granting by AXENT or any of its Subsidiaries of any
increase in compensation or fringe benefits to any of their officers or
employees, or any payment by AXENT or any of its Subsidiaries of any bonus to
any of their officers or employees, or any granting by AXENT or any of its
Subsidiaries of any increase in severance or termination pay, other than in the
ordinary course, consistent with past practice, or any entry by AXENT or any of
its Subsidiaries into, or material modification or amendment of, any currently
effective employment, severance, termination or indemnification agreement or any
agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving AXENT of the
nature contemplated hereby; (vii) any indebtedness for borrowed money exceeding
$250,000 in the aggregate, or any responsibility for the obligations of any
other individual or entity exceeding $100,000 in the aggregate, or any loans or
advances to any other individual or entity exceeding $100,000 in the aggregate,
or any oral or
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written material agreement or commitment material to AXENT and its Subsidiaries
taken as a whole, or involving in excess of $250,000 in the aggregate; (viii)
any disposition of any material properties (including intangibles, real,
personal or mixed); (ix) any amendment to the AXENT certificate of
incorporation, bylaws, or any other charter document, or execution of any
merger, consolidation, share exchange, business combination or recapitalization;
(x) any capital expenditure in any calendar month which, when added to all other
capital expenditures made by AXENT and its Subsidiaries in such calendar month
resulted in such capital expenditures exceeding $250,000 in the aggregate; (xi)
any payment, discharge or satisfaction of any material claims other than the
payment, discharge or satisfaction of liabilities (including accounts payable)
in the ordinary course of business, or any collection or acceleration of the
collection of any amounts owed (including accounts receivable) other than
collection in the ordinary course of business; (xii) any resolution of any
material claim or litigation, or any commencement of a lawsuit other than for
the routine collection of bills; or (xiii) any agreement or proposal to do any
of the things described in the preceding clauses (i) through (xiii) other than
as expressly contemplated or provided for in this Agreement.
3.11 Capital Stock of Subsidiaries. AXENT is directly or indirectly the
record and beneficial owner of all of the outstanding shares of capital stock or
other equity interests of each of its Subsidiaries. All of such shares have been
duly authorized and are validly issued, fully paid, nonassessable and free of
preemptive rights with respect thereto and are owned by AXENT free and clear of
any claim, lien or encumbrance of any kind with respect thereto. There are no
proxies or voting agreements with respect to such shares, and there are not any
existing options, warrants, calls, subscriptions, or other rights or other
agreements or commitments obligating AXENT or any Subsidiaries to issue,
transfer or sell any shares of capital stock of any Subsidiary or any other
securities convertible into, exercisable for, or evidencing the right to
subscribe for any such shares. AXENT does not directly or indirectly own any
interest in any Person except the Subsidiaries.
3.12 Litigation.
(a) Except as set forth in AXENT's Form 10-K for the year ended December
31, 1999, there is no private or governmental claim, action, suit (whether in
law or in equity), investigation or proceeding of any nature ("Action") pending
or, to the knowledge of AXENT, threatened against AXENT or any of its
Subsidiaries, or any of their respective officers and directors (in their
capacities as such), or involving any of their assets, before any court,
governmental or regulatory authority or body, or arbitration tribunal, except
for those Actions which, individually and in the aggregate, would not reasonably
be expected to have an AXENT Material Adverse Effect. There is no Action pending
or, to the knowledge of AXENT, threatened which in any manner challenges, seeks
to, or is reasonably likely to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement.
(b) There is no outstanding judgment, order, writ, injunction or decree of
any court, governmental or regulatory authority or body, or arbitration tribunal
in a proceeding to which AXENT, any Subsidiary of AXENT, or any of their assets
is or was a party or by which AXENT, any Subsidiary of AXENT, or any of their
assets is bound, except for those judgments, orders, writs, injunctions or
decrees which, individually or in the aggregate, would not reasonably be
expected to have an AXENT Material Adverse Effect.
3.13 Insurance. Schedule 3.13 of the AXENT Disclosure Statement lists all
insurance policies (including without limitation workers' compensation insurance
policies) covering the business, properties or assets of AXENT and its
Subsidiaries, the premiums and coverages of such policies, and all claims in
excess of $50,000 made against any such policies since January 1, 1997. All such
policies are in effect, and true and complete copies of all such policies have
been made available to Symantec. AXENT has not received notice of the
cancellation or threat of cancellation of any of such policy.
3.14 Contracts and Commitments.
(a) Except as filed as an exhibit to an AXENT SEC Report, neither AXENT nor
its Subsidiaries is a party to or bound by any oral or written contract,
obligation or commitment which is a "material
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contract" for purposes of Rule 601 of Regulation S-K or otherwise required to be
filed as an exhibit to any AXENT SEC Report in any of the following categories:
(i) agreements or arrangements that contain severance pay,
understandings with respect to tax arrangements, understandings with
respect to expatriate benefits, or post-employment liabilities or
obligations;
(ii) agreements or plans under which benefits will be increased or
accelerated by the occurrence of any of the transactions contemplated by
this Agreement, or under which the value of the benefits will be calculated
on the basis of any of the transactions contemplated by this Agreement;
(iii) agreements, contracts or commitments currently in force relating
to the disposition or acquisition of assets other than in the ordinary
course of business, or relating to an ownership interest in any
corporation, partnership, joint venture or other business enterprise;
(iv) agreements, contracts or commitments for the purchase of
materials, supplies or equipment which provide for purchase prices
substantially greater than those presently prevailing for such materials,
supplies or equipment, or which are with sole or single source suppliers;
(v) guarantees or other agreements, contracts or commitments under
which AXENT or any of its Subsidiaries is absolutely or contingently liable
for (A) the performance of any other person, firm or corporation (other
than AXENT or its Subsidiaries), or (B) the whole or any part of the
indebtedness or liabilities of any other person, firm or corporation (other
than AXENT or its Subsidiaries);
(vi) powers of attorney authorizing the incurrence of a material
obligation on the part of AXENT or its Subsidiaries;
(vii) agreements, contracts or commitments which limit or restrict (A)
where AXENT or any of its Subsidiaries may conduct business, (B) the type
or lines of business (current or future) in which they may engage, or (C)
any acquisition of assets or stock (tangible or intangible) by AXENT or any
of its Subsidiaries;
(viii) agreements, contracts or commitments containing any agreement
with respect to a change of control of AXENT or any of its Subsidiaries;
(ix) agreements, contracts or commitments for the borrowing or lending
of money, or the availability of credit (except credit extended by AXENT or
any of its Subsidiaries to customers in the ordinary course of business and
consistent with past practice);
(x) any hedging, option, derivative or other similar transaction and
any foreign exchange position or contract for the exchange of currency;
(xi) any joint marketing or joint development agreement, or any
license or distribution agreement relating to any AXENT product.
(b) Neither AXENT nor any of its Subsidiaries, nor to AXENT's knowledge,
any other party to an AXENT Contract (as defined below), has breached, violated
or defaulted under, or received notice that it has breached, violated or
defaulted under, (nor does there exist any condition under which, with the
passage of time or the giving of notice or both, could reasonably be expected to
cause such a breach, violation or default under), any material agreement,
contract or commitment to which AXENT or any of its Subsidiaries is a party or
by which any of them or any of their properties or assets may be bound (any such
agreement, contract or commitment, an "AXENT Contract"), other than any
breaches, violations or defaults which individually or in the aggregate would
not reasonably be expected to have an AXENT Material Adverse Effect.
(c) Each AXENT Contract is a valid, binding and enforceable obligation of
AXENT and to AXENT's knowledge, of the other party or parties thereto, in
accordance with its terms, and in full force and effect, except where the
failure to be valid, binding, enforceable and in full force and effect would not
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reasonably be expected to have an AXENT Material Adverse Effect and to the
extent enforcement may be limited by applicable bankruptcy, insolvency,
moratorium or other laws affecting the enforcement of creditors' rights
governing or by general principles of equity.
(d) An accurate and complete copy of each material AXENT Contract has been
made available to Symantec.
3.15 Labor Matters; Employment and Labor Contracts.
(a) None of AXENT or any of its Subsidiaries is a party to any union
contract or other collective bargaining agreement, nor to the knowledge of AXENT
or any of its Subsidiaries are there any activities or proceedings of any labor
union to organize any of its employees. Each of AXENT and its Subsidiaries is in
compliance with all applicable (i) laws, regulations and agreements respecting
employment and employment practices, (ii) terms and conditions of employment,
and (iii) occupational health and safety requirements, except for those failures
to comply which, individually or in the aggregate, would not reasonably be
expected to have an AXENT Material Adverse Effect.
(b) There is no labor strike, slowdown or stoppage pending (or any labor
strike or stoppage threatened) against AXENT or any of its Subsidiaries. No
petition for certification has been filed and is pending before the National
Labor Relations Board with respect to any employees of AXENT or any of its
Subsidiaries who are not currently organized. Neither AXENT nor any of its
Subsidiaries has any obligations under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), with respect to any former
employees or qualifying beneficiaries thereunder, except for obligations that
would not reasonably be expected to have, individually or in the aggregate, an
AXENT Material Adverse Effect. There are no controversies pending or, to the
knowledge of AXENT or any of its Subsidiaries, threatened, between AXENT or any
of its Subsidiaries and any of their respective employees, which controversies
would reasonably be expected to have, individually or in the aggregate, an AXENT
Material Adverse Effect.
3.16 Compliance with Laws. Neither AXENT nor any of its Subsidiaries has
violated or failed to comply with any statute, law, ordinance, rule or
regulation (including without limitation relating to the export or import of
goods or technology) of any foreign, federal, state or local government or any
other governmental department or agency, except where any such violations or
failures to comply would not, individually or in the aggregate, reasonably be
expected to have an AXENT Material Adverse Effect. AXENT and its Subsidiaries
have all permits, licenses and franchises from governmental agencies required to
conduct their businesses as now being conducted and as proposed to be conducted,
except for those, the absence of which, would not, individually or in the
aggregate, reasonably be expected to have an AXENT Material Adverse Effect.
3.17 Intellectual Property Rights.
(a) AXENT and its Subsidiaries own or have the right to use all
intellectual property used to conduct their respective businesses (such
intellectual property and the rights thereto are collectively referred to herein
as the "AXENT IP Rights"). No royalties or other payments are payable to any
Person with respect to commercialization of any products presently sold or under
development by AXENT or its Subsidiaries.
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
material breach of any instrument or agreement governing any AXENT IP Rights,
will not (i) cause the modification of any terms of any licenses or agreements
relating to any AXENT IP Rights including but not limited to the modification of
the effective rate of any royalties or other payments provided for in any such
license or agreement, (ii) cause the forfeiture or termination of any AXENT IP
Rights, (iii) give rise to a right of forfeiture or termination of any AXENT IP
Rights or (iv) materially impair the right of AXENT, the Surviving Corporation
or Symantec to use, sell or license any AXENT IP Rights or portion thereof.
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(c) Neither the manufacture, marketing, license, sale or intended use of
any product or technology currently licensed or sold or under development by
AXENT or any of its Subsidiaries (i) violates in any material respect any
license or agreement between AXENT or any of its Subsidiaries and any third
party or (ii) infringes in any material respect any patents or other
intellectual property rights of any other party; and there is no pending or, to
the knowledge of AXENT, threatened claim or litigation contesting the validity,
ownership or right to use, sell, license or dispose of any AXENT IP Rights, or
asserting that any AXENT IP Rights or the proposed use, sale, license or
disposition thereof, or the manufacture, use or sale of any AXENT products,
conflicts or will conflict with the rights of any other party.
(d) AXENT has heretofore provided to Symantec a worldwide list of all
patents, trade names, trademarks and service marks, and applications for any of
the foregoing owned or possessed by AXENT or any of its Subsidiaries and true
and complete copies of such materials have been made available to Symantec.
(e) AXENT has provided to Symantec a true and complete copy of its standard
form of employee confidentiality agreement and taken commercially reasonably
necessary steps to ensure that all employees have executed such an agreement.
All consultants or third parties with access to proprietary information of AXENT
have executed appropriate agreements or are otherwise under obligations not to
disclose confidential AXENT IP Rights.
(f) Neither AXENT nor any of its Subsidiaries is aware or has reason to
believe that any of its employees or consultants is obligated under any
contract, covenant or other agreement or commitment of any nature, or subject to
any judgment, decree or order of any court or administrative agency, that would
interfere with the use of such employee's or consultant's best efforts to
promote the interests of AXENT and its Subsidiaries or that would conflict with
the business of AXENT as presently conducted or proposed to be conducted.
Neither AXENT nor any of its Subsidiaries has entered into any agreement to
indemnify any other person, including but not limited to any employee or
consultant of AXENT or any of its Subsidiaries, against any charge of
infringement, misappropriation or misuse of any intellectual property, other
than indemnification provisions contained in purchase orders, license
agreements, distribution agreements or other agreements arising in the ordinary
course of business. To the knowledge of AXENT, all current and former employees
and consultants of any of AXENT or any of its Subsidiaries have signed valid and
enforceable written assignments to AXENT or its Subsidiaries of any and all
rights or claims in any intellectual property that any such employee or
consultant has or may have by reason of any contribution, participation or other
role in the development, conception, creation, reduction to practice or
authorship of any invention, innovation, development or work of authorship or
any other intellectual property that is used in the business of AXENT, and AXENT
and its Subsidiaries possess signed copies of all such written assignments by
such employees and consultants.
3.18 Taxes.
(a) For the purposes of this Agreement, "Tax" or "Taxes" refers to any and
all federal, state, local and foreign taxes, assessments and other governmental
charges, duties, impositions and liabilities relating to taxes, including taxes
based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts and any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
entity. For purposes of this Agreement, "Tax Return" or "Tax Returns" refers to
all federal, state and local and foreign returns, estimates, information
statements and reports relating to Taxes.
(b) AXENT and each of its Subsidiaries have filed all Tax Returns required
to have been filed by them, and have paid (or AXENT has paid on behalf of its
Subsidiaries), all Taxes required to have been paid as shown on such Tax
Returns. The most recent financial statements contained in the AXENT SEC Reports
reflect an adequate accrual (which accruals were established in accordance with
GAAP) for the payment of all Taxes payable by AXENT and its Subsidiaries, as of
the date of such financial statements. Except as reasonably would not be
expected to have an AXENT Material Adverse Effect, no deficiencies
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for any Taxes have been proposed, asserted or assessed against AXENT or any of
its subsidiaries. Neither AXENT nor any of its Subsidiaries has filed for any
extension of time to file any Tax Return which has not since been filed.
(c) AXENT and its Subsidiaries are not a party to any contract, agreement,
plan or arrangement, including but not limited to the provisions of this
Agreement, covering any employee or former employee of AXENT or any of its
Subsidiaries that, (i) could give rise to the payment of any amounts that would
constitute excess parachute payments within the meaning of Sections 280G
exceeding one million dollars in the aggregate with respect to the change in
ownership or control that may occur upon the consummation of the Merger, or (ii)
could give rise to the payment of any amount that would constitute a parachute
payment within the meaning of Sections 280G with respect to any change in
ownership or control of AXENT occurring after the Closing Date, other than
payments that (A) may be deemed to arise pursuant to acceleration provisions
contained in options issued by AXENT as described in Schedule 3.6(d), (B) may
arise pursuant to the terms of the Executive Severance Guidelines referred to in
Section 5.17, (C) are described in Prop. Treas. Regs. sec.1.280G-1, Q & A 25, or
(D) may arise in connection with any event which may be considered to be closely
associated with a change in ownership or control described in Prop. Treas. Regs.
sec.1.280G-1, Q & A 22. During the taxable year ending on the Closing Date,
AXENT and its Subsidiaries have not become obligated to make any payment the
deduction of which would be disallowed pursuant to Section 162(m) of the Code to
the extent of the excess of one million dollars over the amount of any excess
parachute payments referred to in (i) of the first sentence of this Section
3.18(c).
(d) None of AXENT and its Subsidiaries has filed any consent agreement
under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as defined in Section
341(f)(4) of the Code) owned by AXENT.
(e) None of AXENT and its Subsidiaries (i) has received any notice that it
is being audited by any taxing authority; (ii) has granted any presently
operative waiver of any statute of limitations with respect to, or any extension
of a period for the assessment of, any Tax; (iii) has permitted any Tax lien to
be placed on any asset of AXENT or any of its Subsidiaries except with respect
to Taxes not yet due and payable; and (iv) has availed itself of any Tax amnesty
or similar relief in any taxing jurisdiction.
(f) None of AXENT and its Subsidiaries is aware of any reason why the
Merger will fail to qualify as a reorganization under the provisions of Section
368(a) of the Code.
(g) AXENT has never been a United States real property holding corporation
within the meaning of Section 897 of the Code.
(h) Neither AXENT nor any of its Subsidiaries has any liability for the
Taxes of any person other than itself, AXENT or another Subsidiary. Neither
AXENT nor any of its Subsidiaries is a party to any tax sharing or tax indemnity
agreement.
(i) None of the Subsidiaries is, or has ever been, a passive Foreign
investment company within the meaning of Section 1297 of the Code.
(j) Neither AXENT nor any of its Subsidiaries has, within the two-year
period ending on the Closing Date, made a distribution to which Code Section 355
(or so much of Section 356 as relates to Section 355) applies.
(k) AXENT is not subject to limitations under Code Section 382 that limit
the use of net operating losses otherwise available to it in its current taxable
year or built-in losses which may be recognized by it during such taxable year.
3.19 Employee Benefit Plans; ERISA.
(a) There are no "employee pension benefit plans" as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("Pension Plans"), "welfare benefit plans" as defined in Section 3(1)
of ERISA ("Welfare Plans"), or stock bonus, stock option, restricted
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stock, stock appreciation right, stock purchase, bonus, incentive, deferred
compensation, severance, holiday, or vacation plans, or any other employee
benefit plan, program, policy or arrangement covering employees (or former
employees) employed in the United States that either is maintained or
contributed to by AXENT or any of its Subsidiaries or any of their ERISA
Affiliates (as hereinafter defined) or to which AXENT or any of its Subsidiaries
or any of their ERISA Affiliates is obligated to make payments or otherwise may
have any liability (collectively, the "Employee Benefit Plans") with respect to
employees or former employees of AXENT, its Subsidiaries, or any of their ERISA
Affiliates. For purposes of this Agreement, "ERISA Affiliate" shall mean any
person (as defined in Section 3(9) of ERISA) that is or has been a member of any
group of persons described in Section 414(b), (c), (m) or (o) of the Code,
including without limitation AXENT or a Subsidiary.
(b) AXENT and each of its Subsidiaries, and each of the Pension Plans and
Welfare Plans, are in compliance with the applicable provisions of ERISA, the
Code and other applicable laws, except where the failure to comply would not,
individually or in the aggregate, reasonably be expected to have an AXENT
Material Adverse Effect.
(c) All contributions to, and payments from, the Pension Plans which are
required to have been made in accordance with the Pension Plans have been timely
made, except where the failure to make such contributions or payments on a
timely basis would not, individually or in the aggregate, either impair AXENT's
ability to consummate the Merger and the other transactions contemplated hereby
or reasonably be expected to have an AXENT Material Adverse Effect.
(d) All of AXENT's Pension Plans intended to qualify under Section 401 of
the Code so qualify and no event has occurred and no condition exists with
respect to the form or operation of such Pension Plans which would cause the
loss of such qualification or the imposition of any material liability, penalty
or tax under ERISA or the Code.
(e) There are no (i) investigations pending or, to the knowledge of AXENT,
threatened by any governmental entity involving the Pension Plans or Welfare
Plans, nor (ii) pending or, to the knowledge of AXENT, threatened claims (other
than routine claims for benefits), suits or proceedings against any Pension
Benefit or Welfare Plan, against the assets of any of the trusts under any
Pension Benefit or Welfare Plan or against any fiduciary of any Pension Benefit
or Welfare Plan with respect to the operation of such plan or asserting any
rights or claims to benefits under any Pension Benefit Plan or against the
assets of any trust under such plan, except for those which would not,
individually or in the aggregate, give rise to any liability which would
reasonably be expected to have an AXENT Material Adverse Effect. To the
knowledge of AXENT, there are no facts which would give rise to any liability
under this Section 3.19(e) except for those which would not, individually or in
the aggregate, either impair AXENT's ability to consummate the Merger and the
other transactions contemplated hereby or reasonably be expected to have an
AXENT Material Adverse Effect in the event of any such investigation, claim,
suit or proceeding.
(f) None of AXENT, any of its Subsidiaries or any employee of the
foregoing, nor any trustee, administrator, other fiduciary or any other "party
in interest" or "disqualified person" with respect to the Pension Plans or
Welfare Plans, has engaged in a "prohibited transaction" (as such term is
defined in Section 4975 of the Code or Section 406 of ERISA) other than such
transactions that would not, individually or in the aggregate, either impair
AXENT's ability to consummate the Merger and the other transactions contemplated
hereby or reasonably be expected to have an AXENT Material Adverse Effect.
(g) None of AXENT, any of its Subsidiaries, or any of their ERISA
Affiliates currently maintain or contribute to any pension plan subject to Title
IV of ERISA or Section 412 of the Code or Section 302 of ERISA.
(h) Neither AXENT nor any Subsidiary of AXENT nor any of their ERISA
Affiliates has any material liability under Title IV of ERISA that has not been
satisfied in full.
(i) Neither AXENT, any of its Subsidiaries nor any of their ERISA
Affiliates has any material liability (including any contingent liability under
Section 4204 of ERISA) with respect to any
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multiemployer plan, within the meaning of Section 3(37) of ERISA, covering
employees (or former employees) employed in the United States.
(j) With respect to each of the Employee Benefit Plans, true, correct and
complete copies of the following documents have been made available to Symantec:
(i) the plan document and any related trust agreement, including amendments
thereto, (ii) any current summary plan descriptions and other material
communications to participants relating to the Employee Benefit Plans, (iii) the
three most recent Forms 5500, if applicable, and (iv) the most recent IRS
determination letter, if applicable.
(k) None of the Welfare Plans maintained by AXENT or any of its
Subsidiaries provides for continuing benefits or coverage for any participant or
any beneficiary of a participant following termination of employment, except as
may be required under COBRA, or except at the expense of the participant or the
participant's beneficiary. AXENT and each of its Subsidiaries which maintain a
"group health plan" within the meaning of Section 5000(b)(1) of the Code have
complied with the notice and continuation requirements of Section 4980B of the
Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the regulations
thereunder except where the failure to comply would not, individually or in the
aggregate, either impair AXENT's ability to consummate the Merger and the other
transactions contemplated hereby or reasonably be expected to have an AXENT
Material Adverse Effect.
(l) No liability under any Pension Benefit Plan or Welfare Plan has been
funded nor has any such obligation been satisfied with the purchase of a
contract from an insurance company as to which AXENT or any of its Subsidiaries
has received notice that such insurance company is in rehabilitation or a
comparable proceeding.
(m) Except as set forth in Schedule 3.19(m), the consummation of the
transactions contemplated by this Agreement will not result in an increase in
the amount of compensation or benefits or accelerate the vesting or timing of
payment of any benefits or compensation payable to or in respect of any employee
of AXENT or any of its Subsidiaries.
(n) AXENT and each of its Subsidiaries and each of the Foreign Plans are in
compliance with applicable laws, and all required contributions have been made
to the Foreign Plans, except where the failure to comply or make contributions
would not, individually or in the aggregate, either impair AXENT's ability to
consummate the Merger and the other transactions contemplated hereby or have an
AXENT Material Adverse Effect. Except to the extent that such underfunding would
be reasonably expected to have an AXENT Material Adverse Effect, each of the
Foreign Plans that is a funded defined benefit pension plan has a fair market
value of plan assets that is greater than the plan's liabilities, as determined
in accordance with applicable laws. For purposes hereof, the term "Foreign Plan"
shall mean any plan, program, policy, arrangement or agreement maintained or
contributed to by, or entered into with, AXENT or any Subsidiary with respect to
employees (or former employees) employed outside the United States to the extent
the benefits provided thereunder are not mandated by the laws of the applicable
foreign jurisdiction.
(o) Except in any such case if such, payment, acceleration would not,
individually or in the aggregate, have an AXENT Material Adverse Effect, each of
the Employee Benefit Plans and the Foreign Plans can be terminated by AXENT
within a reasonable period following the Effective Time in accordance with the
terms of such Plan (and the provisions of ERISA and the Code), without any
additional contribution to such Employee Benefit Plan or Foreign Plan or the
payment of any additional compensation or amount or the additional vesting or
acceleration of any vesting provided under the Employee Benefit Plan or Foreign
Plan.
3.20 Environmental Matters.
(a) For purposes of this Agreement:
(i) "Contractor" shall mean any person or entity, including but not
limited to partners, licensors, and licensees, with which AXENT formerly or
presently has any agreement or arrangement (whether oral or written) under
which such person or entity has or had physical possession of, and was or
is
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obligated to develop, test, process, manufacture or produce any product or
substance on behalf of AXENT.
(ii) "Environment" shall mean any land including, without limitation,
surface land and sub-surface strata, seabed or river bed and any water
(including, without limitation, coastal and inland waters, surface waters
and ground waters and water in drains and sewers) and air (including,
without limitation, air within buildings) and other natural or manmade
structures above or below ground.
(iii) "Environmental Law" means any law or regulation, now or
hereafter in effect and as amended, and any judicial or administrative
interpretation thereof, in each case relating to the Environment or harm to
or the protection of human health or animals or plants, including, without
limitation, laws relating to public and workers health and safety,
emissions, discharges or releases of chemicals or any other pollutants or
contaminants or industrial, radioactive, dangerous, toxic or hazardous
substances or wastes (whether in solid or liquid form or in the form of a
gas or vapor and including noise and genetically modified organisms) into
the Environment or otherwise relating to the manufacture processing use,
treatment, storage, distribution, disposal transport or handling of
substances or wastes. Environmental Laws include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended ("CERCLA"), the Resource Conservation and Recovery Act 42 USC, 6901
et seq., the Hazardous Materials Transportation Act 49 USC, 6901 et seq.,
the Clean Water Act 33, 1251 et seq., the Toxic Substances Control Act 15
USC, 2601 et seq., the Clean Air Act 42 USC, 7401 et seq., the Safe
Drinking Water Act 42 USC, 300f et seq., the Atomic Energy Act 42 USC, 2201
et seq., the Federal Food Drug and Cosmetic Act 21 USC, 136 et seq., and
the Federal Food Drug and Cosmetic Act 21 USC, 301 et seq., and equivalent
statutes in countries other than the United States of America.
(iv) "Environmental Permit" shall mean any permit, license, consent,
approval, certificate, qualification, specification, registration and other
authorization, and the filing of all notifications, reports and
assessments, required by any federal, state, local or foreign government or
regulatory entity pursuant to any Environmental Law.
(v) "Hazardous Material" shall mean any pollutant, contaminant, or
hazardous, toxic, medical, biohazardous, infectious or dangerous waste,
substance, gas, constituent or material, defined or regulated as such in,
or for purposes of, any Environmental Law, including, without limitation,
any asbestos, any petroleum, oil (including crude oil or any fraction
thereof), any radioactive substance, any polychlorinated biphenyls, any
toxin, chemical, virus, infectious disease or disease causing agent, and
any other substance that can give rise to liability under any Environmental
Law.
(b) Except for such cases that, individually or in the aggregate, have not
and would not reasonably be expected to have an AXENT Material Adverse Effect:
(i) Each of AXENT and its Subsidiaries possesses all Environmental
Permits required under applicable Environmental Laws to conduct its current
business and to use and occupy the Real Property for its current business.
All Environmental Permits are in full force and effect and AXENT and each
of its Subsidiaries are, and to AXENT's knowledge have at all times been,
in compliance with the terms and conditions of such Environmental Permits.
(ii) There are no facts or circumstances indicating that any
Environmental Permits possessed by AXENT or any of its Subsidiaries would
or might be revoked, suspended, canceled or not renewed, and all
appropriate necessary action in connection with the renewal or extension of
any Environmental Permits possessed by AXENT or any its Subsidiaries
relating to the current business and the Real Property has been taken.
(iii) The execution and delivery of this Agreement and the
consummation by AXENT of the Merger and other transactions contemplated
hereby and the exercise by Symantec and the Surviving Corporation of rights
to own and operate the business of AXENT and its Subsidiaries and use and
occupy the Real Property and carry on its business substantially as
presently conducted will not affect the validity or require the transfer of
any Environmental Permits held by AXENT or any of its
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Subsidiaries and will not require any notification, disclosure,
registration, reporting, filing, investigation or remediation under any
Environmental Law.
(iv) AXENT and each of its Subsidiaries and, to the knowledge of
AXENT, all previous owners, lessees and occupants of the real property now
or previously owned, leased or occupied by AXENT and its Subsidiaries (the
"Real Property"), are in compliance with, and within the period of all
applicable statutes of limitation, have complied with all applicable
Environmental Laws and have not received notice of any liability under any
Environmental Law; and neither AXENT or any of its Subsidiaries nor any
portion of the Real Property is in violation of any Environmental Law.
(v) There is no civil, criminal or administrative action, suit,
demand, claim, complaint, hearing, notice of violation, investigation,
notice or demand letter, proceeding or request for information pending or
any liability (whether actual or contingent) to make good, repair,
reinstate or clean up any of the Real Property or any real property
previously owned, leased, occupied or used by AXENT or any of its
Subsidiaries. There is no act, omission, event or circumstance giving rise
or likely to give rise in the future to any such action, suit, demand,
claim, complaint, hearing, notice of violation, investigation, notice or
demand letter, proceeding, or request or any such liability or other
liabilities (A) against AXENT or any of its Subsidiaries, or (B) against
any person or entity, including but not limited to any Contractor, in
connection with which liability could reasonably be imputed or attributed
by law or contract to AXENT or any of its Subsidiaries.
(vi) No property or facility presently or formerly owned operated or
leased by AXENT or any of its present or former Subsidiaries or by any
respective predecessor in interest is listed or proposed for listing, nor
are there are any facts or circumstances which would or might give rise to
such an entry in any such register whether such register is now in
existence or is required to be established in the future on the National
Liability Information System both promulgated under the CERCLA or on any
comparable list established under any Environmental Law of a country other
than the United States of America nor has AXENT or any of its Subsidiaries
received any notification of potential or actual liability or any request
for information under CERCLA or any comparable foreign state or local law.
(vii) There has not been any disposal, spill, discharge, or release of
any Hazardous Material generated, used, owned, stored, or controlled by
AXENT, any of its Subsidiaries, or respective predecessors in interest, on,
at, or under any property presently or formerly owned, leased, or operated
by AXENT, its Subsidiaries, any predecessor in interest, or any Contractor,
and there are no Hazardous Materials located in, at, on, or under, or in
the vicinity of, any such facility or property, or at any other location,
in either case that could reasonably be expected to require investigation,
removal, remedial, or corrective action by AXENT or any of its Subsidiaries
or that would reasonably likely result in liability of, or costs in excess
of, $250,000, individually or in the aggregate, to AXENT or any of its
Subsidiaries under any Environmental Law.
(viii) (A) Other than cleaning and office supplies normally used in
the operation of an office, Hazardous Materials have not been generated,
used, treated, handled or stored on, or transported to or from, or released
on any Real Property or, any property adjoining any Real Property; (B)
AXENT and its Subsidiaries have disposed of all wastes, including those
wastes containing Hazardous Materials, in compliance with all applicable
Environmental Law and Environmental Permits; and (C) neither AXENT nor any
of its Subsidiaries has transported or arranged for the transportation of
any Hazardous materials to any location that is listed or proposed for
listing on the National Priorities List under CERCLA or on the CERCLIS or
any analogous state or country list or which is the subject of any
environmental claim.
(ix) There has not been any underground or aboveground storage tank or
other underground storage receptacle or related piping, or any impoundment
or other disposal area containing Hazardous Materials located on any Real
Property owned, leased or operated by AXENT, any of its Subsidiaries, or
respective predecessors in interest during the period of such ownership,
lease or operation, and no asbestos or polychlorinated biphenyls have been
used or disposed of, or have been located at, on, or under any such
facility or property during the period of such ownership lease or
operation;
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(x) AXENT and its Subsidiaries have taken all actions necessary under
applicable requirements of Environmental Law to register any products or
materials required to be registered by AXENT or any of its Subsidiaries (or
any of their respective agents) thereunder.
(c) After a reasonable investigation made by AXENT, AXENT has made
available to Symantec all records and files, including, but not limited to, all
assessments, reports, studies, audits, analyses, tests and data in possession of
AXENT and its Subsidiaries concerning the existence of Hazardous Materials at
facilities or properties currently or formerly owned, operated, or leased by
AXENT or any present or former Subsidiary or predecessor in interest, or
concerning compliance by AXENT and its Subsidiaries with, or liability under,
any Environmental Law.
3.21 Officer's Certificate as to Tax Matters. AXENT knows of no reason why
it will be unable to deliver to Heller Ehrman White & McAuliffe LLP and Shaw
Pittman LLP at the Closing an Officer's Certificate in form sufficient to enable
each such counsel to render the opinions required by Section 6.6.
3.22 Affiliates. AXENT has delivered to Symantec in accordance with
Section 5.9 a list identifying all persons who to AXENT's knowledge may be
deemed to be "affiliates" of AXENT for purposes of Rule 145 under the Securities
Act ("Affiliates").
3.23 Finders or Brokers. Except for Updata Capital Inc. and Chase
Securities Inc., whose fees have been disclosed to Symantec, neither AXENT nor
any of its Subsidiaries has employed any investment banker, broker, finder or
intermediary in connection with the transactions contemplated hereby who might
be entitled to a fee or any commission the receipt of which is conditioned upon
consummation of the Merger.
3.24 Registration Statement; Joint Proxy Statement/Prospectus. The
information supplied by AXENT for inclusion or incorporation by reference in the
Registration Statement on Form S-4 registering the Symantec Common Stock to be
issued in the Merger (the "Registration Statement") as it relates to AXENT, at
the time the Registration Statement is declared effective by the SEC, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. The information supplied by AXENT for inclusion in the
joint proxy statement/prospectus to be sent to the stockholders of AXENT in
connection with the AXENT Special Meeting (such joint proxy
statement/prospectus, as amended and supplemented is referred to herein as the
"Joint Proxy Statement/Prospectus"), at the date the Joint Proxy
Statement/Prospectus is first mailed to stockholders, at the time of the AXENT
Special Meeting and at the Effective Time shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If at any time prior
to the Effective Time any event with respect to AXENT or any of its Subsidiaries
shall occur which is required to be described in the Joint Proxy
Statement/Prospectus, such event shall be so described, and an amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of AXENT. Notwithstanding the foregoing, AXENT
makes no representation or warranty with respect to any information supplied by
Symantec or Merger sub which is contained in the Registration Statement or Joint
Proxy Statement/Prospectus.
3.25 [Intentionally Omitted].
3.26 Title to Property. Except where the failure to have such title or
leasehold would not, individually or in the aggregate, reasonably be expected to
have an AXENT Material Adverse Effect, AXENT and its Subsidiaries have good and
valid title to all of their respective properties, interests in properties and
assets, real and personal, reflected in the AXENT Balance Sheet or acquired
after the Reference Date, and have valid leasehold interests in all leased
properties and assets, in each case free and clear of all mortgages, liens,
pledges, charges or encumbrances of any kind or character, except (i) liens for
current taxes not yet due and payable, (ii) such imperfections of title, liens
and easements as do not and will not detract from or interfere with the use of
the properties subject thereto or affected thereby, or otherwise impair business
operations involving such properties, (iii) liens securing debt reflected on the
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AXENT Balance Sheet, or (iv) liens recorded pursuant to any Environmental Law.
Schedule 3.26 of the AXENT Disclosure Statement identifies each material parcel
of real property owned or leased by AXENT or any of its Subsidiaries.
3.27 Year 2000 Compliance. All of AXENT's products currently being sold,
both individually and when operating in conjunction with all other systems or
products with which they are designed to interface, are Year 2000 Compliant.
"Year 2000 Compliant" means that such products will maintain functionality with
respect to the introduction, processing, or output of records containing dates
falling on or after January 1, 2000 equivalent to such functionality with
respect to dates falling before January 1, 2000, assuming that the other
software and hardware that deliver records to, receive records from, or interact
with such AXENT products are also Year 2000 Compliant.
3.28 No Existing Discussions. As of the date hereof, neither AXENT nor any
of its representatives is engaged, directly or indirectly, in any discussions or
negotiations with any other Person relating to any Acquisition Proposal (as
defined in Section 5.2(a)).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SYMANTEC AND MERGER SUB
Symantec and Merger Sub make to AXENT the representations and warranties
contained in this Article IV, in each case subject to the exceptions set forth
in the disclosure statement (the "Symantec Disclosure Statement"). The Symantec
Disclosure Statement shall be arranged in schedules corresponding to the
numbered and lettered Sections of this Article IV, and the disclosure in any
Schedule of the Symantec Disclosure Statement shall only qualify the
corresponding Section of this Article IV, unless the disclosure contained in
such Section contains such information so as to enable a reasonable person to
determine that such disclosure qualifies or otherwise applies to other Sections
of this Article IV.
4.1 Organization, Etc.
(a) Each of Symantec, its subsidiaries listed on Section 4.1(a) of the
Symantec Disclosure Statement (the "Symantec Subsidiaries") and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Symantec and each Symantec Subsidiary are duly qualified
as a foreign Person to do business, and are each in good standing, in each
jurisdiction where the character of its owned or leased properties or the nature
of its activities makes such qualification necessary, except where the failure
to be so qualified or in good standing would not, individually and in the
aggregate, be reasonably expected to have a Symantec Material Adverse Effect.
None of Symantec nor any Symantec Subsidiary is in violation of any provision of
its certificate of incorporation, bylaws or any other charter document. For the
purposes of this Agreement, "Symantec Material Adverse Effect" means any change,
event or effect that is materially adverse to the consolidated business or
results of operations or financial condition of Symantec and the Symantec
Subsidiaries taken as a whole; provided, however, that: (i) any adverse change,
event or effect arising from or relating to general business or economic
conditions which does not affect Symantec in a materially disproportionate
manner, shall not be deemed to constitute, and shall not be taken into account
in determining whether there has been, a "Symantec Material Adverse Effect";
(ii) any adverse change, event or effect relating to or affecting the software
industry generally or the security software industry generally, which does not
affect Symantec in a materially disproportionate manner, shall not be deemed to
constitute, and shall not be taken into account in determining whether there has
been, a "Symantec Material Adverse Effect"; and (iii) any adverse change, event
or effect arising from or relating to the announcement or pendency of the
Merger, including, but not limited to, changes or effects which result from the
loss of customers or delay, cancellation or cessation of orders for Symantec
products, shall not be deemed to constitute, and shall not be taken into account
in determining whether there has been, a "Symantec Material Adverse Effect".
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(b) Neither Symantec, the Symantec Subsidiaries or Merger Sub is in
violation of any provision of its certificate of incorporation, bylaws or other
charter documents.
4.2 Authority Relative to This Agreement. Each of Symantec and Merger Sub
has full corporate power and authority to execute and deliver this Agreement and
consummate the Merger and the other transactions contemplated hereby. The
execution and delivery of this Agreement, and the consummation of the Merger and
the other transactions contemplated hereby, have been duly and validly
authorized by the unanimous vote of the board of directors of each of Symantec
and Merger Sub, and no other corporate proceedings on the part of Symantec or
Merger Sub are necessary to authorize this Agreement or to consummate the Merger
and the other transactions contemplated hereby (other than, with respect to the
Merger, the approval of the issuance of Symantec Common Stock in the Merger by a
majority of the shares of Symantec Common Stock represented at the Symantec
Special Meeting or any adjournment or postponement thereof to the extent
required by applicable law or the Nasdaq Marketplace Rules and the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware).
This Agreement has been duly and validly executed and delivered by Symantec and
Merger Sub and, assuming due authorization, execution and delivery by AXENT,
constitutes a valid and binding agreement of Symantec and Merger Sub,
enforceable against Symantec and Merger Sub in accordance with its terms, except
to the extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally or by general equitable principles.
4.3 No Violations, Etc. No filing with or notification to, and no permit,
authorization, consent or approval of, any Government Entity is necessary on the
part of either Symantec or Merger Sub for the consummation by Symantec or Merger
Sub of the Merger or the other transactions contemplated hereby, except for (i)
the filing of the Certificate of Merger as required by Delaware Law, (ii) the
filing with the SEC and the effectiveness of the Registration Statement, (iii)
the applicable requirements of the Exchange Act, state securities or "blue sky"
laws, state takeover laws and the listing requirements of Nasdaq, (iv) any
filings required under and in compliance with the HSR Act, (v) where the failure
to make such filing or notification or to obtain such permit, authorization,
consent or approval would not prevent or materially delay the Merger, or
otherwise prevent or materially delay AXENT from performing its obligations
under this Agreement or, individually or in the aggregate, be reasonably
expected to have a Symantec Material Adverse Effect. Neither the execution and
delivery of this Agreement, nor the consummation of the Merger or the other
transactions contemplated hereby, nor compliance by Symantec and Merger Sub with
all of the provisions hereof will (i) conflict with or result in any breach of
any provision of the certificate of incorporation, bylaws or other charter
documents of Symantec or any Symantec Subsidiary, (ii) violate any material
order, writ, injunction, decree, statute, rule or regulation applicable to
Symantec or any Symantec Subsidiary, or by which any of their properties or
assets may be bound, or (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default, or give rise to
any right of termination, cancellation, acceleration, redemption or repurchase
under, any of the terms, conditions or provisions of any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Symantec or any Symantec Subsidiary is a party
or by which any of them or any of their properties or assets may be bound,
except in the case of clauses (ii) or (iii) above, for any such conflicts,
breaches, violations, defaults or other occurrences that would not (x)
individually or in the aggregate, reasonably be expected to have a Symantec
Material Adverse Effect, or (y) prevent or materially impair or delay the
consummation of the transactions contemplated by this Agreement.
4.4 Capitalization. The authorized capital stock of Symantec consists of
100,000,000 shares of Common Stock, $0.01 par value, of which there were
60,993,287 shares issued and outstanding as of July 25, 2000, and 1,000,000
shares of Preferred Stock, $0.01 par value, of which no shares are issued or
outstanding as of July 25, 2000, there are no warrants, options, convertible
securities, calls, rights, stock appreciation rights, preemptive rights, rights
of first refusal, or agreements or commitments of any nature obligating Symantec
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity interests of Symantec, or obligating
Symantec to grant, issue, extend,
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accelerate the vesting of, or enter into, any such warrant, option, convertible
security, call, right, stock appreciation right, preemptive right, right of
first refusal, agreement or commitment. The authorized capital stock of Merger
Sub consists of 1,000 shares of Common Stock, $0.001 par value, 100 of which, as
of the date hereof, are issued and outstanding and are held by Symantec. Merger
Sub was formed for the purpose of consummating the Merger and has no material
assets or liabilities except as necessary for such purpose. All outstanding
shares of Symantec Common Stock are duly authorized, validly issued, fully paid
and nonassessable and are not subject to preemptive rights created by statute,
the certificate of incorporation or bylaws of Symantec or any agreement to which
Symantec is a party or by which it is bound.
4.5 Registration Statement; Joint Proxy Statement/Prospectus. The
information supplied by Symantec for inclusion or incorporation by reference in
the Registration Statement or Joint Proxy Statement/Prospectus as it relates to
Symantec or Merger Sub, at the time the Registration Statement is declared
effective or at the date the Joint Proxy Statement/Prospectus is first mailed to
stockholders, respectively, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. If at any time
prior to the Effective Time any event with respect to Symantec or any Symantec
Subsidiary shall occur which is required to be described in the Registration
Statement or Joint Proxy Statement/ Prospectus, such event shall be so
described, and an amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the stockholders of AXENT.
Notwithstanding the foregoing, Symantec makes no representation or warranty with
respect to any information supplied by AXENT which is contained in the
Registration Statement or Joint Proxy Statement/Prospectus.
4.6 SEC Filings. Symantec has filed with the SEC all required forms,
reports, registration statements and documents required to be filed by it with
the SEC (collectively, all such forms, reports, registration statements and
documents filed after January 1, 1997 are referred to herein as the "Symantec
SEC Reports"), all of which complied as to form when filed in all material
respects with the applicable provisions of the Securities Act and the Exchange
Act, as the case may be. Accurate and complete copies of the Symantec SEC
reports have been made available to AXENT. The Symantec SEC Reports (including
all exhibits and schedules thereto and documents incorporated by reference
therein) did not, at the time they were filed (or, if amended or superseded by
filing prior to the date hereof, then on the date of such filing), contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except as disclosed in
the Symantec SEC Reports, to the knowledge of Symantec, each of Symantec's
officers and directors has complied with all filing requirements under Section
13 and Section 16(a) of the Exchange Act. For purposes of this Agreement, the
"knowledge of Symantec" shall mean the actual knowledge of Symantec's directors
and executive officers.
4.7 Compliance with Laws. Neither Symantec nor any Symantec Subsidiary has
violated or failed to comply with any statute, law, ordinance, rule or
regulation (including, without limitation, relating to the export or import of
goods or technology) of any foreign, federal, state or local government or any
other governmental department or agency, except where any such violations or
failures to comply would not, individually or in the aggregate, be reasonably
expected to have a Symantec Material Adverse Effect. Symantec and Merger Sub
have all permits, licenses and franchises from governmental agencies required to
conduct their businesses as now being conducted and as proposed to be conducted,
except for those the absence of which would not, individually or in the
aggregate, be reasonably expected to have a Symantec Material Adverse Effect.
4.8 Financial Statements. Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Symantec
SEC Reports (the "Symantec Financial Statements"), (x) was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act) and (y) fairly presented the consolidated financial
position of Symantec and its Subsidiaries as at the respective dates thereof and
the consolidated results of its operations and cash flows for the periods
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indicated, consistent with the books and records of Symantec, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not, or are not expected to be,
material in amount. The balance sheet of Symantec contained in Symantec's Form
10-K for the fiscal year ended March 31, 2000 is hereinafter referred to as the
"Symantec Balance Sheet."
4.9 Absence of Undisclosed Liabilities. Neither Symantec nor any of its
Subsidiaries has any liabilities (absolute, accrued, contingent or otherwise)
other than liabilities or obligations: (i) included in the Symantec Balance
Sheet and the related notes to the financial statements; (ii) reflected in the
Symantec SEC Reports through the date of the filing of Symantec's Annual Report
on Form 10-K in respect of the fiscal year ending March 31, 2000; (iii)
liabilities incurred since the Reference Date in the ordinary course of business
consistent with past practice which, individually or in the aggregate, would not
reasonably be expected to have an Symantec Material Adverse Effect; (iv) which
are not and will not have, individually or in the aggregate, an Symantec
Material Adverse Effect; and (v) under this Agreement.
4.10 Absence of Changes or Events. Except as contemplated by this
Agreement, between March 31, 2000 and the date of this Agreement, Symantec has
not incurred, suffered or made: (i) any Symantec Material Adverse Effect as of
the date of this Agreement; (ii) any declaration, setting aside or payment of
any dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of Symantec's or any of its Subsidiaries' capital stock, or any
purchase, redemption or other acquisition by Symantec of any of Symantec's
capital stock or any other securities of Symantec or its Subsidiaries or any
options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases which are not, individually or in the
aggregate, material in amount from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase agreements;
(iii) any material change by Symantec in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP; (iv) any material
revaluation by Symantec of any of its material assets, including writing off
notes or accounts receivable other than in the ordinary course of business; or
(v) any amendment to the Symantec certificate of incorporation, bylaws, or any
other charter document, or execution of any merger, consolidation, share
exchange, business combination or recapitalization.
4.11 Litigation.
(a) Except as set forth in Symantec's Form 10-K for the year ended March
31, 2000, there is no Action pending or, to the knowledge of Symantec,
threatened against Symantec or any of its Subsidiaries, or any of their
respective officers and directors (in their capacities as such), or involving
any of their assets, before any court, or governmental or regulatory authority
or body, or arbitration tribunal, except for those Actions which, individually
or in the aggregate, would not reasonably be expected to have a Symantec
Material Adverse Effect. There is no Action pending or, to the knowledge of
Symantec, threatened which in any manner challenges, seeks to, or is reasonably
likely to prevent, enjoin, alter or delay the transactions anticipated by this
Agreement.
(b) There is no outstanding judgment, order, writ, injunction or decree of
any court, governmental or regulatory authority or body, or arbitration tribunal
in a proceeding to which Symantec, any Subsidiary of Symantec, or any of their
assets is or was a party or by which Symantec, any Subsidiary of Symantec, or
any of their assets is bound, except for those judgments, orders, writs,
injunctions or decrees which, individually or in the aggregate, would not
reasonably be expected to have an Symantec Material Adverse Effect.
4.12 Fairness Opinion. Symantec has received the opinion of Donaldson
Lufkin & Jenrette Securities Corporation dated the date of this Agreement to the
effect that, as of the date hereof, the consideration paid by Symantec in the
Merger is fair to Symantec from a financial point of view.
4.13 [Intentionally Omitted].
4.14 [Intentionally Omitted].
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4.15 Officer's Certificate as to Tax Matters. Symantec knows of no reason
why it will be unable to deliver to Heller Ehrman White & McAuliffe LLP and Shaw
Pittman LLP at the Closing an Officer's Certificate in form sufficient to enable
each such counsel to render the opinions required by Section 6.6.
4.16 Taxes. Symantec and each of its Subsidiaries have filed all Tax
Returns required to be filed by them, and have paid (or Symantec has paid on
behalf of its Subsidiaries), all Taxes required to be paid as shown on such Tax
Returns. The most recent financial statements contained in the Symantec SEC
Reports reflect an adequate accrual (which accruals were established in
accordance with GAAP) for the payment of all Taxes payable by Symantec and its
Subsidiaries, as of the date of such financial statements. Except as reasonably
would not be expected to have a Symantec Material Adverse Effect, no
deficiencies for any Taxes have been proposed, asserted or assessed against
Symantec or any of its Subsidiaries. Neither Symantec nor any of its
Subsidiaries has filed for any extension of time to file any Tax Return. None of
Symantec and its Subsidiaries is aware of any reason why the Merger will fail to
qualify as a reorganization under the provisions of Section 368(a) of the Code.
4.17 Intellectual Property. Except where the failure of any of the
following representations to be true would not be reasonably expected to have a
Symantec Material Adverse Effect:
(a) Symantec and its Subsidiaries own or have the right to use all
intellectual property used to conduct their respective businesses (such
intellectual property and the rights thereto are collectively referred to
herein as the "Symantec IP Rights").
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
material breach of any instrument or agreement governing any Symantec IP
Rights, will not (i) cause the modification of any terms of any licenses or
agreements relating to any Symantec IP Rights including but not limited to
the modification of the effective rate of any royalties or other payments
provided for in any such license or agreement, (ii) cause the forfeiture or
termination of any Symantec IP Rights, (iii) give rise to a right of
forfeiture or termination of any Symantec IP Rights or (iv) materially
impair the right of Symantec to use, sell or license any Symantec IP Rights
or portion thereof.
(c) Neither the manufacture, marketing, license, sale or intended use
of any product or technology currently licensed or sold or under
development by Symantec or any of its Subsidiaries (i) violates in any
material respect any license or agreement between Symantec or any of its
Subsidiaries and any third party or (ii) infringes in any material respect
any patents or other intellectual property rights of any other party; and
there is no pending or, to the knowledge of Symantec, threatened claim or
litigation contesting the validity, ownership or right to use, sell,
license or dispose of any Symantec IP Rights, or asserting that any
Symantec IP Rights or the proposed use, sale, license or disposition
thereof, or the manufacture, use or sale of any Symantec products,
conflicts or will conflict with the rights of any other party.
(d) Neither Symantec nor any of its Subsidiaries is aware or has
reason to believe that any of its employees or consultants is obligated
under any contract, covenant or other agreement or commitment of any
nature, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's
or consultant's best efforts to promote the interests of Symantec and its
Subsidiaries or that would conflict with the business of Symantec as
presently conducted or proposed to be conducted. Neither Symantec nor any
of its Subsidiaries has entered into any agreement to indemnify any other
person, including but not limited to any employee or consultant of Symantec
or any of its Subsidiaries, against any charge of infringement,
misappropriation or misuse of any intellectual property, other than
indemnification provisions contained in purchase orders, license
agreements, distribution agreements or other agreements arising in the
ordinary course of business. To the knowledge of Symantec, all current and
former employees and consultants of any of Symantec or any of its
Subsidiaries have signed valid and enforceable written assignments to
Symantec or its Subsidiaries of any and all rights or claims in any
intellectual property that any such employee or consultant has or may have
by reason of any contribution, participation or other role in the
development, conception, creation, reduction to practice or authorship of
any invention, innovation,
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development or work of authorship or any other intellectual property that
is used in the business of Symantec, and Symantec and its Subsidiaries
possess signed copies of all such written assignments by such employees and
consultants.
4.18 Year 2000 Compliance. All of Symantec's products currently being
sold, both individually and when operating in conjunction with all other systems
or products with which they are designed to interface, are Year 2000 Compliant.
ARTICLE V
COVENANTS
5.1 Conduct of Business During Interim Period. Except as contemplated or
required by this Agreement or as expressly consented to in writing by Symantec,
which consent shall not be unreasonably withheld, during the period from the
date of this Agreement to the earlier of the termination of this Agreement or
the Effective Time, each of AXENT and its Subsidiaries will (i) conduct its
operations according to its ordinary and usual course of business consistent
with past practice, (ii) use commercially reasonable efforts to preserve intact
its business organization, to keep available the services of its officers and
employees in each business function and to maintain satisfactory relationships
with suppliers, distributors, customers and others having business relationships
with it, and (iii) not take any action which would adversely affect its ability
to consummate the Merger or the other transactions contemplated hereby. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the earlier of the termination of this
Agreement or Effective Time neither AXENT nor any of its Subsidiaries will,
without the prior written consent of Symantec (which consent shall not be
unreasonably withheld), directly or indirectly, do any of the following:
(a) enter into, violate, extend, amend or otherwise modify or waive
any of the terms of (i) any material joint venture, license (other than end
user licenses), or agreement relating to the joint development or transfer
of technology or AXENT IP Rights or (ii) except in the ordinary course of
business and consistent with past practice, any other material agreements,
commitments or contracts (including end user licenses);
(b) split, combine or reclassify any shares of its capital stock;
(c) except as permitted in Section 5.4(e) of this Agreement authorize,
solicit, propose or announce an intention to authorize, recommend or
propose, or enter into any agreement in principle or an agreement with any
other person with respect to, any plan of liquidation or dissolution, any
acquisition of a material amount of assets or securities, any disposition
of a material amount of assets or securities, any material change in
capitalization, or any material partnership, association, joint venture,
joint development, technology transfer, or other material business
alliance;
(d) fail to renew any insurance policy naming it as a beneficiary or a
loss payee, or take any steps or fail to take any steps that would permit
any insurance policy naming it as a beneficiary or a loss payee to be
canceled, terminated or materially altered, except in the ordinary course
of business and consistent with past practice and following written notice
to Symantec;
(e) maintain its books and records in a manner other than in the
ordinary course of business and consistent with past practice;
(f) enter into any hedging, option, derivative or other similar
transaction or any foreign exchange position or contract for the exchange
of currency other than in the ordinary course of business and consistent
with past practice;
(g) institute any change in its accounting methods, principles or
practices other than as required by GAAP, or the rules and regulations
promulgated by the SEC, or revalue any assets, including without
limitation, writing down the value of inventory or writing off notes or
accounts receivables;
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(h) in respect of any Taxes, make or change any material election,
change any accounting method, enter into any closing agreement, settle any
material claim or assessment, or consent to any extension or waiver of the
limitation period applicable to any material claim or assessment except as
required by applicable law;
(i) suspend, terminate or otherwise discontinue any planned or ongoing
material research and development activities, programs or other such
activities;
(j) issue any capital stock or other options, warrants or other rights
to purchase or acquire capital stock, other than: (i) the grant or exercise
of purchase rights pursuant to the AXENT Purchase Plan as contemplated by
Section 2.2(b); (ii) the exercise of AXENT Options outstanding as of the
date of this Agreement; or (iii) AXENT Options granted in the ordinary
course of business consistent with past practice under the AXENT Stock
Plans to newly-hired employees of AXENT; provided that AXENT shall not
grant in any calendar month between the date of this Agreement and the
Effective Time, AXENT Options to purchase, in the aggregate, a number of
shares of AXENT Common Stock in excess of 110% of the monthly average of
the number of shares of AXENT Common Stock subject to AXENT Options granted
in the six calendar months prior to the date of this Agreement; or
(k) take or agree to take, any of the actions described in Section
3.10, or any action which would make any of its representations or
warranties contained in this Agreement untrue or incorrect or prevent it
from performing or cause it not to perform its covenants hereunder.
5.2 No Solicitation.
(a) From and after the date of this Agreement until the Effective Time or
termination of this Agreement pursuant to Article VIII, AXENT and its
Subsidiaries will not, nor will they authorize or permit any of their respective
officers, directors, affiliates or employees or any investment banker, attorney
or other advisor or representative retained by any of them to, directly or
indirectly, (i) solicit, initiate, encourage or induce the making, submission or
announcement of any Acquisition Proposal (as hereinafter defined), (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal, (iii) engage in
discussions with any person with respect to any Acquisition Proposal, except as
to the existence of these provisions, (iv) approve, endorse or recommend any
Acquisition Proposal or (v) enter into any letter of intent or similar document
or any contract agreement or commitment contemplating or otherwise relating to
any Acquisition Transaction. Notwithstanding anything to the contrary contained
in this Section 5.2 or in any other provision of this Agreement, AXENT and its
board of directors: (i) may furnish information to, or participate in
discussions with, any third party that has made an unsolicited Acquisition
Proposal (a "Potential Acquiror") that the board reasonably concludes may lead
to a Superior Offer (as defined in Section 5.4(e) hereof); and (ii) may
participate in discussions or negotiations with any Potential Acquiror or
approve an unsolicited Acquisition Proposal if the board is advised by its
financial advisor that the Potential Acquiror submitting such Acquisition
Proposal has the financial wherewithal to be reasonably capable of consummating
such an Acquisition Proposal, and the board determines in good faith, (A) after
receiving advice from its financial advisor, that such Acquisition Proposal is a
Superior Offer (as defined in Section 5.4(e) hereof), and (B) after consultation
with its legal counsel, that the failure to participate in such discussions or
negotiations or to furnish such information or approve an Acquisition Proposal
would be inconsistent with the board's fiduciary duties under applicable law.
AXENT agrees that any non-public information furnished to a Potential Acquiror
will be pursuant to a confidentiality, standstill and nonsolicitation agreement
containing provisions at least as favorable to AXENT as the confidentiality,
standstill and nonsolicitation provisions of the Confidentiality Agreement (as
defined in Section 5.3). In the event that AXENT shall determine to provide any
information as described above, or shall receive any Acquisition Proposal (or
any material amendment to an Acquisition Proposal previously received), it shall
promptly, and in any event within 24 hours, inform Symantec in writing as to
that fact and shall furnish to
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Symantec the identity of the recipient of such information to be provided and/or
the Potential Acquiror and the terms of such Acquisition Proposal (or material
amendment).
For purposes of this Agreement, "Acquisition Proposal" shall mean any offer
or proposal (other than an offer or proposal by Symantec) relating to any
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean any transaction or series of related transactions
involving: (A) any purchase from AXENT or acquisition by any person or "group"
(as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 30% interest in the total outstanding
voting securities of AXENT or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 30% or more of the total outstanding voting
securities of AXENT or any of its subsidiaries or any merger, consolidation,
business combination or similar transaction involving AXENT; (B) any sale, lease
(other than in the ordinary course of business), exchange, transfer, license
(other than in the ordinary course of business), acquisition or disposition of
more than 30% of the assets of AXENT; or (C) any liquidation or dissolution of
AXENT.
(b) In addition to the obligations of AXENT set forth in Section 5.2(a),
AXENT as promptly as practicable shall advise Symantec orally and in writing of
any Acquisition Proposal or any request for non-public information or inquiry
which AXENT reasonably believes would lead to an Acquisition Proposal or to any
Acquisition Transaction, the material terms and conditions of such Acquisition
Proposal, request or inquiry, and the identity of the person or group making any
such Acquisition Proposal, request or inquiry. AXENT will keep Symantec informed
as promptly as practicable in all material respects of the status and details
(including material amendments or proposed material amendments) of any such
Acquisition Proposal, request or inquiry.
5.3 Access to Information. From the date of this Agreement until the
Effective Time, AXENT and Symantec will each afford to the other and their
authorized representatives (including counsel, environmental and other
consultants, accountants, auditors and agents) reasonable access during normal
business hours and upon reasonable notice to all of its facilities, personnel
and operations and to all of its and its Subsidiaries books and records, will
permit the other and its authorized representatives to conduct inspections as
they may reasonably request and will instruct its officers and those of its
Subsidiaries to furnish such persons with such financial and operating data and
other information with respect to its business and properties as they may from
time to time reasonably request, subject to the restrictions set forth in the
Confidentiality Agreement, dated as of June 19, 2000 between Symantec and AXENT
(the "Confidentiality Agreement"). Symantec and Merger Sub agree that each of
them will treat any such information in accordance with the Confidentiality
Agreement, which shall remain in full force and effect in accordance with its
terms.
5.4 Special Meetings; Registration Statement; Board Recommendations.
(a) AXENT Special Meeting. Promptly after the date hereof, subject to
Section 5.4(e), AXENT will take all action necessary in accordance with Delaware
Law and its certificate of incorporation and bylaws to convene a meeting of
AXENT's stockholders to consider adoption of this Agreement and approval of the
Merger (the "AXENT Special Meeting") to be held as promptly as practicable, and
in any event (to the extent permissible under applicable law) within 45 days
after the declaration of effectiveness of the Registration Statement. Subject to
Section 5.4(e), AXENT will use its commercially reasonable efforts to solicit
from its stockholders proxies in favor of the adoption of this Agreement and the
approval of the Merger and will take all other action necessary or advisable to
secure the vote or consent of its stockholders required by the rules of Nasdaq
or Delaware Law to obtain such approvals. Notwithstanding anything to the
contrary contained in this Agreement, AXENT may adjourn or postpone the AXENT
Special Meeting to the extent necessary to ensure that any necessary supplement
or amendment to the Joint Proxy Statement/Prospectus is provided to AXENT's
stockholders in advance of a vote on the Merger and this Agreement or, if as of
the time for which the AXENT Special Meeting is originally scheduled (as set
forth in the Joint Proxy Statement/Prospectus) there are insufficient shares of
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AXENT Common Stock represented (either in person or by proxy) to constitute a
quorum necessary to conduct the business of the AXENT Special Meeting. AXENT
shall ensure that the AXENT Special Meeting is called, noticed, convened, held
and conducted, and that all proxies solicited by AXENT in connection with the
AXENT Special Meeting are solicited, in compliance with the Delaware Law,
AXENT's certificate of incorporation and bylaws, the rules of Nasdaq and all
other applicable legal requirements.
(b) Symantec Special Meeting. Promptly after the date hereof, Symantec will
take all action necessary in accordance with Delaware Law and its certificate of
incorporation and bylaws to convene a meeting of Symantec's stockholders to
consider the issuance of Symantec Common Stock in the Merger (the "Symantec
Special Meeting") to be held as promptly as practicable, and in any event (to
the extent permissible under applicable law) within 45 days after the
declaration of effectiveness of the Registration Statement. Symantec will use
its commercially reasonable efforts to solicit from its stockholders proxies in
favor of the issuance of Symantec Common Stock in the Merger and will take all
other action necessary or advisable to secure the vote or consent of its
stockholders required by the rules of Nasdaq or Delaware Law to obtain such
approval. Notwithstanding anything to the contrary contained in this Agreement,
Symantec may adjourn or postpone the Symantec Special Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the Joint
Proxy Statement/Prospectus is provided to Symantec's stockholders in advance of
a vote on the issuance of Symantec Common Stock in the Merger and this Agreement
or, if as of the time for which the Symantec Special Meeting is originally
scheduled (as set forth in the Joint Proxy Statement/Prospectus) there are
insufficient shares of Symantec Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of the Symantec
Special Meeting. Symantec shall ensure that the Symantec Special Meeting is
called, noticed, convened, held and conducted, and that all proxies solicited by
Symantec in connection with the Symantec Special Meeting are solicited, in
compliance with the Delaware Law, Symantec's certificate of incorporation and
bylaws, the rules of Nasdaq and all other applicable legal requirements.
(c) Subject to Section 5.4(e): (i) the board of directors of AXENT shall
unanimously recommend that AXENT's stockholders vote in favor of and adopt and
approve this Agreement and approve the Merger at the AXENT Special Meeting; (ii)
the Joint Proxy Statement/Prospectus shall include a statement to the effect
that the board of directors of AXENT has unanimously recommended that AXENT's
stockholders vote in favor of and adopt and approve this Agreement and the
Merger at the AXENT Special Meeting; and (iii) neither the board of directors of
AXENT nor any committee thereof shall withdraw, amend or modify, or propose or
resolve to withdraw, amend or modify in a manner adverse to Symantec, the
unanimous recommendation of the board of directors of AXENT that AXENT's
stockholders vote in favor of and adopt and approve this Agreement and the
Merger. For purposes of this Agreement, said recommendation of the board of
directors shall be deemed to have been modified in a manner adverse to Symantec
if said recommendation shall no longer be unanimous, provided that, for all
purposes of this Agreement, an action by any board of directors or committee
thereof shall be unanimous if each member of such board of directors or
committee has approved such action other than (i) any such member who has
appropriately abstained from voting on such matter because of an actual or
potential conflict of interest and (ii) any such member who is unable to vote in
connection with such action as a result of death or disability.
(d) (i) the board of directors of Symantec shall unanimously recommend that
Symantec's stockholders vote in favor of the issuance of Symantec Common Stock
in the Merger at the Symantec Special Meeting; (ii) the Joint Proxy
Statement/Prospectus shall include a statement to the effect that the board of
directors of Symantec has unanimously recommended that Symantec's stockholders
vote in favor of the issuance of Symantec Common Stock in the Merger at the
Symantec Special Meeting; and (iii) neither the board of directors of Symantec
nor any committee thereof shall withdraw, amend or modify, or propose or resolve
to withdraw, amend or modify in a manner adverse to AXENT, the unanimous
recommendation of the board of directors of Symantec that Symantec's
stockholders vote in favor of the issuance of Symantec Common Stock in the
Merger. For purposes of this Agreement, said recommendation of the board of
directors shall be deemed to have been modified in a manner adverse to
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AXENT if said recommendation shall no longer be unanimous, provided that, for
all purposes of this Agreement, an action by any board of directors or committee
thereof shall be unanimous if each member of such board of directors or
committee has approved such action other than (i) any such member who has
appropriately abstained from voting on such matter because of an actual or
potential conflict of interest and (ii) any such member who is unable to vote in
connection with such action as a result of death or disability.
(e) Nothing in this Agreement shall prevent the board of directors of AXENT
from withholding, withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger if (i) a Superior Offer (as defined below)
is made to AXENT and is not withdrawn, (ii) AXENT shall have provided written
notice to Symantec (a "Notice of Superior Offer") advising Symantec that AXENT
has received a Superior Offer, specifying the material terms and conditions of
such Superior Offer and identifying the person or entity making such Superior
Offer, (iii) Symantec shall not have, within five (5) business days of
Symantec's receipt of the Notice of Superior Proposal, made an offer that AXENT
Board by a majority vote determines in its good faith judgment (based on the
written advice of its financial advisor) to be at least as favorable to AXENT's
stockholders as such Superior Proposal (it being agreed that AXENT Board shall
convene a meeting to consider any such offer by Symantec promptly following the
receipt thereof), (iv) the board of directors of AXENT concludes in good faith,
after consultation with its outside counsel, that, in light of such Superior
Offer, the failure to withhold, withdraw, amend or modify such recommendation
would be inconsistent with the fiduciary obligations of the board of directors
of AXENT to AXENT's stockholders under applicable law and (v) AXENT shall not
have violated any of the restrictions set forth in Section 5.2 or this Section
5.4(e). AXENT shall provide Symantec with at least three business days prior
notice (or such lesser prior notice as provided to the members of AXENT's board
of directors but in no event less than twenty-four hours) of any meeting of
AXENT's board of directors at which AXENT's board of directors is reasonably
expected to consider any Acquisition Transaction. For purposes of this Agreement
"Superior Offer" shall mean an unsolicited, bona fide written offer made by a
third party to consummate any of the following transactions: (i) a merger or
consolidation involving AXENT pursuant to which the stockholders of AXENT
immediately preceding such transaction hold less than a majority of the equity
interest in the surviving or resulting entity of such transaction or (ii) the
acquisition by any person or group (including by way of a tender offer or an
exchange offer or a two step transaction involving a tender offer followed with
reasonable promptness by a cash-out merger involving AXENT), directly or
indirectly, of ownership of 90% of the then outstanding shares of capital stock
of AXENT, on terms that the board of directors of AXENT determines, in its
reasonable judgment (based on the written advice of its financial advisor) to be
more favorable to AXENT stockholders than the terms of the Merger; provided,
however, that any such offer shall not be deemed to be a "Superior Offer" if any
financing required to consummate the transaction contemplated by such offer is
not committed and is not likely in the reasonable judgment of AXENT's board of
directors (based on the advice of its financial advisor) to be obtained by such
third party on a timely basis.
(f) Nothing contained in this Agreement shall prohibit AXENT or its board
of directors from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act.
(g) As promptly as practicable after the execution of this Agreement, AXENT
and Symantec shall mutually prepare, and AXENT shall file with the SEC, a
preliminary form of the Joint Proxy Statement/ Prospectus. As promptly as
practicable following receipt of SEC comments on such preliminary Joint Proxy
Statement/Prospectus, Symantec and AXENT shall mutually prepare a response to
such comments. Upon resolution of all comments, Symantec shall file the
Registration Statement with the SEC. Symantec and AXENT shall use all
commercially reasonable efforts to have the preliminary Joint Proxy Statement/
Prospectus cleared by the SEC and the Registration Statement declared effective
by the SEC as promptly as practicable. Symantec shall also take any action
required to be taken under applicable state blue sky or securities laws in
connection with Symantec Common Stock to be issued in exchange for the shares of
AXENT Common Stock. Symantec and AXENT shall promptly furnish to each other all
information, and
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take such other actions (including without limitation using all commercially
reasonable efforts to provide any required consents of their respective
independent auditors), as may reasonably be requested in connection with any
action by any of them in connection with the preceding sentences of this Section
5.4(g). Whenever any party learns of the occurrence of any event which is
required to be set forth in an amendment or supplement to the Joint Proxy
Statement/Prospectus, the Registration Statement or any other filing made
pursuant to this Section 5.4(g), Symantec or AXENT, as the case may be, shall
promptly inform the other of such occurrence and cooperate in filing with the
SEC or its staff and/or mailing to stockholders of AXENT such amendment or
supplement.
(h) Subject to Section 5.4(e), the Joint Proxy Statement/Prospectus shall
contain the unanimous recommendation of the board of directors of AXENT in favor
of the approval and adoption of this Agreement.
(i) The Joint Proxy Statement/Prospectus shall contain the unanimous
recommendation of the board of directors of Symantec in favor of the issuance of
Symantec Common Stock in the Merger.
5.5 Commercially Reasonable Efforts.
(a) Subject to the terms and conditions herein provided, Symantec, Merger
Sub and AXENT shall use commercially reasonable efforts to take, or cause to be
taken, all actions and do, or cause to be done, all things necessary, proper or
appropriate under this Agreement, applicable laws and regulations to consummate
and make effective the transactions contemplated by this Agreement, including,
without limitation, (i) promptly filing Notification and Report Forms under the
HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust Division
of the Department of Justice (the "Antitrust Division") and responding as
promptly as practicable to any inquiries received from the FTC or the Antitrust
Division for additional information or documentation, (ii) using commercially
reasonable efforts to obtain all necessary governmental and private party
consents, approvals or waivers, and (iii) using commercially reasonable efforts
to lift any legal bar to the Merger. Symantec shall cause Merger Sub to perform
all of its obligations under this Agreement.
(b) Notwithstanding anything to the contrary in this Agreement, neither
Symantec, nor the Surviving Corporation, nor any of their Subsidiaries shall be
required to (i) divest, hold separate or license any business(es), product
line(s) or asset(s), (ii) take any action or accept any limitation that would
reasonably be expected to have a Symantec Material Adverse Effect or an AXENT
Material Adverse Effect, or (iii) agree to any of the foregoing.
5.6 Public Announcements. Before issuing any press release or otherwise
making any public statement with respect to the Merger or any of the other
transactions contemplated hereby, Symantec, Merger Sub and AXENT agree to
consult with each other as to its form and substance, and agree not to issue any
such press release or general communication to employees or make any public
statement prior to obtaining the consent of the other (which shall not be
unreasonably withheld or delayed), except as may be required by applicable law
or by the rules and regulations of or listing agreement with Nasdaq or as may
otherwise be required by Nasdaq or the SEC.
5.7 Notification of Certain Matters. Each of AXENT and Symantec shall
promptly notify the other party of the occurrence or non-occurrence of any event
the respective occurrence or non-occurrence of which would be reasonably likely
to cause any condition to the obligations of the notifying party to effect the
Merger not to be fulfilled. Each of AXENT and Symantec shall also give prompt
notice to the other of any communication from any Person alleging that the
consent of such Person is or may be required in connection with the Merger or
other transactions contemplated hereby.
5.8 Indemnification.
(a) The certificate of incorporation and bylaws of the Surviving
Corporation shall contain, and Symantec shall cause the Surviving Corporation to
fulfill and honor, the provisions with respect to indemnification, the
advancement of fees and expenses, and exculpation that are at least as favorable
with respect to AXENT, its Subsidiaries and the Indemnified Parties as those set
forth in the certificate of
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incorporation and bylaws of AXENT as of the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of any of the Indemnified Parties. In addition, Symantec shall
cause the Surviving Corporation to fulfill and honor the obligations of AXENT
pursuant to indemnification agreements and agreements for advancement of fees
and expenses between AXENT and any of the Indemnified Parties which are listed
in Section 3.14 of the AXENT Disclosure Statement and provisions for any
indemnification, advancement of fees and expenses and exculpation under the
certificate of incorporation or bylaws of AXENT as in effect on the date hereof.
"Indemnified Parties" shall include each person who is or was a director or
officer of AXENT or any Subsidiary of AXENT at any time before the Effective
Time, and each person who serves or has in the past served at the request of
AXENT or any subsidiary of AXENT as a director, officer, trustee, partner,
fiduciary, employee or agent of another corporation, partnership, joint venture,
trust, pension or other employee benefit plan or enterprise at any time before
the Effective Time.
(b) For a period of six years after the Effective Time, Symantec shall
indemnify and hold harmless the Indemnified Parties against and from any costs
or expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative (and whether arising before or after the
Effective Time), to the extent arising out of or pertaining to any action or
omission in his or her capacity as a director or officer of AXENT arising out of
or pertaining to the transactions contemplated by this Agreement. In the event
of the commencement or assertion of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time must be reasonably satisfactory to Symantec, (ii) after the Effective Time,
Symantec shall pay or cause to be paid the reasonable fees and expenses of such
counsel, promptly after statements therefor are received and (iii) Symantec
shall, and shall cause the Surviving Corporation to, cooperate in the defense of
any such matter; provided, however, that neither Symantec nor the Surviving
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld or delayed); and
provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims (and the matters giving
rise thereto) shall continue until the disposition of any and all such claims
(and the matters giving rise thereto). The Indemnified Parties as a group may
retain only one law firm (in addition to local counsel) to represent them with
respect to any single action unless any Indemnified Party determines in good
faith (after consultation with legal counsel) that there is, under applicable
standards of professional conduct, a conflict between the positions of any two
or more Indemnified Parties. In the event Symantec or the Surviving Corporation
or any of their respective successors or assigns (i) consolidates with or merges
into any other Person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary to effectuate the purposes of this Section
5.8, proper provision shall be made so that the successors and assigns of
Symantec and the Surviving Corporation assume the obligations set forth in this
Section 5.8, and none of the actions described in clause (i) or (ii) shall be
taken until such provision is made.
(c) Without limiting any of the obligations of Symantec or the Surviving
Corporation set forth elsewhere in this Section 5.8, for a period of six years
after the Effective Time, Symantec shall cause the Surviving Corporation to
maintain in effect, to the extent available, directors' and officers' liability
insurance covering those persons who are currently covered by AXENT's directors'
and officers' liability insurance policy on terms no less favorable to such
persons as those applicable under the policy of directors' and officers'
liability insurance currently maintained by AXENT; provided, however, that in no
event shall Symantec or the Surviving Corporation be required to expend for
coverage for any one year in excess of 200% of the annual premium currently paid
by AXENT for such coverage, and that if the annual premiums of such insurance
coverage exceed such amount, the Surviving Corporation shall be obligated
instead to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
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(d) Symantec shall cause the Surviving Corporation to perform its
obligations under this Section 5.8 and shall, in addition, guarantee, as
co-obligor with the Surviving Corporation, the performance of such obligations
by the Surviving Corporation.
(e) Each Indemnified Party shall comply with the reasonable requests of the
Surviving Corporation or Symantec in defending or settling any action hereunder;
provided, however, that no proposed settlement of any such action need be
considered by any Indemnified Party if (A) such settlement involves no finding
or admission of any liability by any Indemnified Party and (B) the sole relief
provided in connection with such settlement is monetary damages that are paid in
full by the Surviving Corporation or Symantec.
(f) This Section 5.8 shall survive the consummation of the Merger, is
intended to benefit AXENT, the Surviving Corporation and each Indemnified Party,
shall be binding on all successors and assigns of the Surviving Corporation and
Symantec, and shall be enforceable by the Indemnified Parties.
5.9 [Intentionally Omitted].
5.10 AXENT Affiliate Agreements. Concurrently with the execution and
delivery hereof, AXENT shall deliver to Symantec a list (reasonably satisfactory
to counsel for Symantec), setting forth the names of all persons who are
expected to be, at the Effective Time, in AXENT's reasonable judgment,
Affiliates of AXENT. AXENT shall furnish such information and documents as
Symantec may reasonably request for the purpose of reviewing such list. AXENT
shall deliver a written agreement in substantially the form of Exhibit C hereto
(an "AXENT Affiliate Agreement") executed by each person identified as an
Affiliate in the list furnished pursuant to this Section 5.10(a) within ten (10)
days after the execution of this Agreement.
5.11 Nasdaq Listing. Prior to the Effective Time, Symantec agrees to cause
the shares of Symantec Common Stock issuable, and those required to be reserved
for issuance, in connection with the Merger to be authorized for listing on
Nasdaq, subject to official notice of issuance.
5.12 Resignation of Directors and Officers. Prior to the Effective Time,
AXENT shall deliver to Symantec at no cost the resignations of such directors
and officers of AXENT and its Subsidiaries as Symantec shall specify at least
ten business days prior to the Closing, effective at the Effective Time.
5.13 Consents of Symantec's and AXENT's Accountants. Each of Symantec and
AXENT shall use commercially reasonable efforts to cause its independent
accountants to deliver to Symantec a consent, dated the date on which the
Registration Statement shall become effective, in form reasonably satisfactory
to Symantec and customary in scope and substance for consents delivered by
independent public accountants in connection with registration statements on
Form S-4 under the Securities Act.
5.14 Form S-8. No later than thirty (30) business days after the Effective
Time, Symantec shall file with the SEC a Registration Statement, on Form S-8 or
other appropriate form under the Securities Act, to register Symantec Common
Stock issuable upon exercise of the Symantec Exchange Options and shares of
Symantec Common Stock issuable pursuant to the AXENT Purchase Plan following the
Effective Time. Symantec shall use commercially reasonable efforts to cause such
Registration Statement to remain effective until the exercise or expiration of
such options.
5.15 Notification of Certain Matters. AXENT shall give prompt notice to
Symantec and Merger Sub, and Symantec and Merger Sub shall give prompt notice to
AXENT, of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Effective Time, (ii) any material failure of the AXENT,
Symantec or Merger Sub, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement, or (iv) any facts or
circumstances arise that could reasonably be expected to result in an AXENT
Material Adverse Effect or a Symantec Material Adverse Effect, as the case may
be.
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5.16 SEC Filings.
(a) AXENT will deliver promptly to Symantec true and complete copies of
each report, registration statement or statement mailed by it to its security
holders generally or filed by it with the SEC, in each case subsequent to the
date hereof and prior to the Effective Time. As of their respective dates, such
reports, including the consolidated financial statements included therein, and
statements (excluding any information therein provided by Symantec or Merger
Sub, as to which AXENT makes no representation) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading and will comply in all
material respects with all applicable requirements of law. Each of the
consolidated financial statements (including, in each case, any related notes
thereto) contained in such reports, (x) shall comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, (y) shall be prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act) and (z) shall fairly present the consolidated
financial position of AXENT and its Subsidiaries as at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not, or
are not expected to be, material in amount.
(b) Symantec will deliver promptly to AXENT true and complete copies of
each report filed by it with the SEC subsequent to the date hereof and prior to
the Effective Time. As of their respective dates, such reports, including the
consolidated financial statements included therein, and statements (excluding
any information therein provided by AXENT, as to which Symantec makes no
representation) will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading and will comply in all material respects with all applicable
requirements of law. Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in such reports (x) shall
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, (y) shall be prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q under the Exchange Act) and (z) shall
fairly present the consolidated financial position of Symantec and its
Subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not, or are not expected to be,
material in amount.
5.17 Employee Benefit Matters. Symantec agrees to cause employees of AXENT
who continue as employees of Symantec following the Effective Time to be
eligible to participate in the Symantec Purchase Plan and Symantec's 1996 Equity
Incentive Plan and health and welfare benefit plans, programs and practices of
Symantec generally applicable to other similarly-situated employees of Symantec
(the "Symantec Plans"). Symantec shall recognize, from and after the Effective
Time, each AXENT employee's service with AXENT for purposes of determining
eligibility to participate in and vesting, and, if applicable, eligibility to
commence participation in retirement plans (excluding benefit accruals), under
the Symantec Plans. Compensation provided to employees of AXENT who continue as
employees of Symantec following the Effective Time shall be determined by
Symantec in its sole discretion. After the Effective Time, AXENT will honor its
obligations under the AXENT Executive Severance General Guidelines.
5.18 Certain Matters. On or prior to the Closing Date, Symantec shall
obtain the approval of its board of directors in accordance with rule 16b-3
under the Exchange Act of the exchange of securities as contemplated by this
Agreement consistent with the SEC no-action letter issued to Skadden Arps Slater
Meagher & Flom dated January 12, 1999.
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ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF EACH PARTY
The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the fulfillment on or before the Effective Time of
each of the following conditions, any one or more of which may be waived in
writing by all the parties hereto:
6.1 Registration Statement. The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and remain in effect and no proceedings for such purpose shall
be pending before or threatened by the SEC.
6.2 AXENT Stockholder Approval. The approval of a majority of the
outstanding shares of AXENT Common Stock for adoption of the Merger Agreement
and approval of the Merger shall have been obtained at the AXENT Special Meeting
or any adjournment or postponement thereof.
6.3 Symantec Stockholder Approval. The approval of a majority of the
shares of Symantec Common Stock represented at the Symantec Special Meeting in
favor of the issuance of Symantec Common Stock in the Merger shall have been
obtained at the Symantec Special Meeting or any adjournment or postponement
thereof.
6.4 Listing of Additional Shares. The Symantec Common Stock issuable in
connection with the Merger shall have been authorized for listing on Nasdaq,
subject to official notice of issuance on Nasdaq.
6.5 Governmental Clearances. The waiting period applicable to consummation
of the Merger under the HSR Act shall have expired or been terminated. Other
than the filing of the Certificate of Merger which shall be accomplished as
provided in Section 1.2, all authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations of waiting periods imposed by,
any Government Entity the failure of which to obtain or comply with would be
reasonably likely to have an AXENT Material Adverse Effect or a Symantec
Material Adverse Effect shall have been obtained or filed.
6.6 Tax Matters. Each of Symantec and Merger Sub shall have received an
opinion of Heller Ehrman White & McAuliffe LLP, counsel to Symantec and Merger
Sub, and AXENT shall have received an opinion of Shaw Pittman LLP, counsel to
AXENT, each such opinion dated as of the Effective Time, substantially to the
effect that on the basis of the facts, representations and assumptions set forth
in such opinions, (i) the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code; (ii) each of Symantec, Merger Sub and
AXENT will be a party to such reorganization within the meaning of Section
368(b) of the Code; and (iii) except with respect to cash received in lieu of
fractional share interest in Symantec Common Stock, no gain or loss will be
recognized, for United States federal income tax purposes, by a stockholder of
AXENT as a result of the Merger with respect to the shares of AXENT Common Stock
converted into Symantec Common Stock. The opinions referred to in the preceding
sentence will be based in part on representations to be made by the parties, and
Symantec, Merger Sub and AXENT agree to deliver officer's certificates to
counsel, in form and substance satisfactory to counsel, on which counsel may
rely in rendering such opinions. If counsel to either Symantec or AXENT does not
render such opinion, this condition shall nonetheless be deemed to be satisfied
with respect to such party if counsel to the other party renders such opinion in
the required form to such party.
6.7 Statute or Decree. No writ, order, temporary restraining order,
preliminary injunction or injunction shall have been enacted, entered,
promulgated or enforced by any court or other tribunal or governmental body or
authority, which remains in effect, and prohibits the consummation of the Merger
or otherwise makes it illegal, nor shall any governmental agency have instituted
any action, suit or proceeding which remains pending and which seeks, and which
is reasonably likely, to enjoin, restrain or prohibit the consummation of the
Merger in accordance with the terms of this Agreement.
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ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF AXENT AND SYMANTEC
7.1 Additional Conditions To The Obligations Of AXENT. The obligations of
AXENT to effect the Merger shall be subject to the fulfillment of each of the
following additional conditions, any one or more of which may be waived in
writing by AXENT:
(a) The representations and warranties of Symantec and Merger Sub
contained in this Agreement (without regard to any materiality exceptions
or provisions therein) shall be true and correct, in all material respects,
as of the Effective Time, with the same force and effect as if made at the
Effective Time, except (i) for changes specifically permitted by the terms
of this Agreement, (ii) that the accuracy of the representations and
warranties that by their terms speak as of the date of this Agreement or
some other date will be determined as of such date and (iii) where the
failure of such representations and warranties to be so true and correct
does not have a Symantec Material Adverse Effect.
(b) Symantec and Merger Sub shall have performed and complied in all
material respects with all agreements and obligations required by this
Agreement to be performed or complied with by them on or prior to the
Closing Date.
(c) Symantec and Merger Sub shall have furnished a certificate or
certificates of Symantec and Merger Sub executed on behalf of one or more
of their respective officers to evidence compliance with the conditions set
forth in Sections 7.1(a) and (b) of this Agreement.
7.2 Additional Conditions To The Obligations Of Symantec And Merger
Sub. The obligations of Symantec and Merger Sub to effect the Merger shall be
subject to the fulfillment of each of the following additional conditions, any
one or more of which may be waived in writing by Symantec:
(a) The representations and warranties of AXENT contained in this
Agreement (without regard to any materiality exceptions or provisions
therein) shall be true and correct, in all material respects, as of the
Effective Time, with the same force and effect as if made at the Effective
Time, except (i) for changes specifically permitted by the terms of this
Agreement, (ii) that the accuracy of the representations and warranties
that by their terms speak as of the date of this Agreement or some other
date will be determined as of such date and (iii) where the failure of such
representations and warranties to be so true and correct does not have an
AXENT Material Adverse Effect.
(b) AXENT shall have performed and complied in all material respects
with all agreements and obligations required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
(c) AXENT shall have furnished a certificate of AXENT executed by one
of its officers to evidence compliance with the conditions set forth in
Sections 7.2(a) and (b) of this Agreement.
(d) Any consents, approvals, notifications, disclosures, and filings
and registrations listed in Schedule 3.3 of the AXENT Disclosure Statement
shall have been obtained or made.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the requisite approval of the
stockholders of AXENT:
(a) by mutual written consent duly authorized by the boards of
directors of Symantec and AXENT;
(b) by either AXENT or Symantec if the Merger shall not have been
consummated by January 31, 2001 (the "End Date") for any reason; provided,
however, that the right to terminate this
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Agreement under this Section 8.1(b) shall not be available to any party
whose action or failure to act has been a principal cause of or resulted in
the failure of the Merger to occur on or before such date and such action
or failure to act constitutes a material breach of this Agreement;
(c) by either AXENT or Symantec if a court of competent jurisdiction
or other Government Entity shall have issued an order, decree or ruling or
taken any other action, in any case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger, which order,
decree, ruling or other action is final and nonappealable;
(d) by AXENT or Symantec if the required approval of the stockholders
of AXENT contemplated by this Agreement shall not have been obtained by
reason of the failure to hold a meeting or the failure to obtain the
required vote at a meeting of AXENT stockholders duly convened therefore or
at any adjournment thereof; provided, however, that the right to terminate
this Agreement under this Section 8.1(d) shall not be available to AXENT
where the failure to hold a meeting or the failure to obtain AXENT
stockholder approval shall have been caused by the action or failure to act
of AXENT (other than in compliance with Section 5.4(e)) and such action or
failure to act constitutes a material breach by AXENT of this Agreement.
(e) by AXENT or Symantec if the required approval of the stockholders
of Symantec contemplated by this Agreement shall not have been obtained by
reason of the failure to obtain the required vote at a meeting of Symantec
stockholders duly convened therefore or at any adjournment thereof;
provided, however, that the right to terminate this Agreement under this
Section 8.1(e) shall not be available to Symantec where the failure to
obtain Symantec stockholder approval shall have been caused by the action
or failure to act of Symantec and such action or failure to act constitutes
a material breach by Symantec of this Agreement.
(f) by Symantec (at any time prior to the Effective Time) if an AXENT
Triggering Event (as defined below) shall have occurred;
(g) by AXENT, upon a breach of any representation, warranty, covenant
or agreement on the part of Symantec set forth in this Agreement, or if any
representation or warranty of Symantec shall have become untrue, in either
case such that the conditions set forth in Section 7.1(a) or Section 7.1(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided that such
inaccuracy in Symantec's representations and warranties or breach by
Symantec remains uncured on the date which is twenty (20) business days
following written notice of such breach or inaccuracy from AXENT to
Symantec (it being understood that AXENT may not terminate this Agreement
pursuant to this paragraph (g) if it shall have materially breached this
Agreement and remains in breach of this agreement as of the date of such
termination);
(h) by Symantec, upon a breach of any representation, warranty,
covenant or agreement on the part of AXENT set forth in this Agreement, or
if any representation or warranty of AXENT shall have become untrue, in
either case such that the conditions set forth in Section 7.2(a) or Section
7.2(b) would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become untrue, provided
that such inaccuracy in AXENT's representations and warranties or breach by
AXENT remains uncured on the date which is twenty (20) business days
following written notice of such breach or inaccuracy from Symantec to
AXENT (it being understood that Symantec may not terminate this Agreement
pursuant to this paragraph (h) if it shall have materially breached this
Agreement and remains in breach of this agreement as of the date of such
termination);
(i) For the purposes of this Agreement, an "AXENT Triggering Event"
shall be deemed to have occurred if: (i) the board of directors of AXENT or
any committee thereof shall for any reason have withdrawn or shall have
amended or modified in a manner adverse to Symantec its unanimous
recommendation in favor of, the adoption and approval of the Agreement or
the approval of the Merger; (ii) AXENT shall have failed to include in the
Joint Proxy Statement/Prospectus the
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unanimous recommendation of the board of directors of AXENT in favor of the
adoption and approval of the Agreement and the approval of the Merger;
(iii) the board of directors of AXENT fails to reaffirm its unanimous
recommendation in favor of the adoption and approval of the Agreement and
the approval of the Merger within ten (10) days after Symantec requests in
writing that such recommendation be reaffirmed at any time following the
public announcement of an Acquisition Proposal; (iv) the board of directors
of AXENT or any committee thereof shall have approved or recommended any
Acquisition Proposal; or (v) a tender or exchange offer relating to
securities of AXENT shall have been commenced by a Person unaffiliated with
Symantec and AXENT shall not have sent to its security holders pursuant to
Rule 14e-2 promulgated under the Securities Act, within ten (10) business
days after such tender or exchange offer is first published, sent or given,
a statement disclosing that AXENT recommends rejection of such tender or
exchange offer.
8.2 Notice of Termination; Effect of Termination. Any termination of this
Agreement under Section 8.1 will be effective immediately upon the delivery of a
valid written notice of the terminating party to the other parties hereto. In
the event of the termination of this Agreement as provided in Section 8.1, this
Agreement shall be of no further force or effect, except (i) as set forth in
Section 5.3, this Section 8.2, Section 8.3 and Article IX (miscellaneous), each
of which shall survive the termination of this Agreement, and (ii) nothing
herein shall relieve any party from liability for any willful breach of this
Agreement. No termination of this Agreement shall affect the obligations of the
parties contained in the Confidentiality Agreement, all of which obligations
shall survive termination of this Agreement in accordance with their terms.
8.3 Fees and Expenses.
(a) General. Except as set forth in this Section 8.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses whether or not the
Merger is consummated; provided, however, that Symantec and AXENT shall share
equally all fees and expenses, other than attorneys' and accountants fees and
expenses, incurred in relation to the printing and filing (with the SEC) of the
Joint Proxy Statement/Prospectus (including any preliminary materials related
thereto) and the Registration Statement (including financial statements and
exhibits) and any amendments or supplements thereto. Symantec shall pay all fees
and expenses in connection with any filings under the HSR Act.
(b) AXENT Payments. In the event that this Agreement is terminated by
Symantec or AXENT, as applicable, pursuant to Sections 8.1(b), (d) or (f), AXENT
shall promptly, but in no event later than two days after the date of such
termination, pay Symantec a fee equal to $28.0 million, plus all reasonable
documented expenses incurred by Symantec in connection with this Agreement and
the transactions contemplated hereby, in immediately available funds (the
"Termination Fee"); provided, that in the case of termination under Section
8.1(b) or 8.1(d): (i) such payment shall be made only if following the date
hereof and prior to the termination of this Agreement, a third party has
publicly announced an Acquisition Proposal and within nine (9) months following
the termination of this Agreement an AXENT Acquisition (as defined below) is
consummated or AXENT enters into an agreement providing for an AXENT Acquisition
and such AXENT Acquisition is later consummated with the person (or another
person controlling, controlled by, or under common control with, such person)
with whom such agreement was entered into (regardless of when such consummation
occurs if AXENT has entered into such an agreement within such nine-month
period), and (ii) such payment shall be made promptly, but in no event later
than two days after the consummation of such AXENT Acquisition (regardless of
when such consummation occurs if AXENT has entered into such an agreement within
such nine-month period) in immediately available funds. AXENT acknowledges that
the agreements contained in this Section 8.3(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Symantec would not enter into this Agreement; accordingly, if AXENT fails to pay
in a timely manner the amounts due pursuant to this Section 8.3(b) , and, in
order to obtain such payment, Symantec makes a claim that results in a judgment
against AXENT for the amounts set forth in this Section 8.3(b), AXENT shall pay
to Symantec its reasonable costs and expenses (including reasonable
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attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in this Section 8.3(b) at the prime rate of
The Chase Manhattan Bank in effect on the date such payment was required to be
made. Payment of the fees described in this Section 8.3(b) shall be credited
toward any damages payable by AXENT in the event of breach of this Agreement.
For the purposes of this Agreement "AXENT Acquisition" shall mean any of
the following transactions (other than the transactions contemplated by this
Agreement); (i) a merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving AXENT pursuant to
which the stockholders of AXENT immediately preceding such transaction hold less
than 50% of the aggregate equity interests in the surviving or resulting entity
of such transaction, (ii) a sale or other disposition by AXENT of assets
representing in excess of 50% of the aggregate fair market value of AXENT's
business immediately prior to such sale or (iii) the acquisition by any person
or group (including by way of a tender offer or an exchange offer or issuance by
AXENT), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of shares representing in excess of 50% of the voting power
of the then outstanding shares of capital stock of AXENT.
8.4 Amendment. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of Symantec and AXENT.
8.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE IX
MISCELLANEOUS
9.1 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of Symantec,
Merger Sub and AXENT at any time prior to the Effective Time; provided, however,
that after approval of this Agreement by the stockholders of AXENT, no such
amendment or modification shall change the amount or form of the consideration
to be received by AXENT's stockholders in the Merger.
9.2 Waiver of Compliance; Consents. Any failure of Symantec or Merger Sub,
on the one hand, or AXENT, on the other hand, to comply with any obligation,
covenant, agreement or condition herein may be waived by AXENT (with respect to
any failure by Symantec or Merger Sub) or Symantec or Merger Sub (with respect
to any failure by AXENT), respectively, only by a written instrument signed by
the party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
9.2.
9.3 Survival; Investigations. The respective representations and
warranties of Symantec, Merger Sub and AXENT contained herein or in any
certificates or other documents delivered prior to or at the Closing shall not
be deemed waived or otherwise affected by any investigation made by any party
hereto and shall not survive the Effective Time.
9.4 Notices. All notices and other communications hereunder shall be in
writing and shall be delivered personally by overnight courier or similar means
or sent by facsimile with written confirmation of receipt, to the parties at the
addresses specified below (or at such other address for a party as shall be
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specified by like notice. Any such notice shall be effective upon receipt, if
personally delivered or on the next business day following transmittal if sent
by confirmed facsimile. Notices, including oral notices, shall be delivered as
follows:
<TABLE>
<C> <S>
(a) if to AXENT, to: 2400 Research Boulevard
Suite 200
Rockville, Maryland 20850
Telephone: (301) 258-5043
Facsimile: (301) 670-3584
Attention: Chief Financial Officer
with a copy to: Shaw Pittman
1676 International Drive
McLean, Virginia 22102
Telephone: (703) 790-7900
Facsimile: (703) 790-7901
Attention: Craig E. Chason, Esq.
if to Symantec, or 20330 Stevens Creek Boulevard
Merger Sub, to: Cupertino, California 95014-2132
Telephone: (408) 253-9600
Facsimile: (408) 253-3968
Attention: Art Courville, General Counsel
with a copy to: Heller Ehrman White & McAuliffe LLP
525 University Avenue
Palo Alto, California 94301
Telephone: (650) 324-7000
Facsimile: (650) 324-0638
Attention: Richard A. Peers, Esq.
</TABLE>
9.5 Assignment; Third Party Beneficiaries. Neither this Agreement nor any
right, interest or obligation hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement is not intended to
confer any rights or remedies upon any Person other than the parties hereto and,
with respect only to Section 5.8, the Indemnified Parties.
9.6 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware without reference to principles of conflicts of laws. Courts
within the state of Delaware will have exclusive jurisdiction over any and all
disputes between the parties hereto, whether in law or equity, arising out of or
relating to this agreement and the agreements, instruments and documents
contemplated hereby. The parties consent to and agree to submit to the
jurisdiction of such courts. Each of the parties hereby waives, and agrees not
to assert in any such dispute, to the fullest extent permitted by applicable
law, any claim that (i) such party is not personally subject to the jurisdiction
of such courts, (ii) such party and such party's property is immune from any
legal process issued by such courts or (iii) any litigation commenced in such
courts is brought in an inconvenient forum.
9.7 Waiver Of Jury Trial. EACH OF SYMANTEC, MERGER SUB AND AXENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF SYMANTEC, MERGER SUB OR AXENT IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
9.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
A-38
<PAGE> 131
9.9 Severability. In case any one or more of the provisions contained in
this Agreement should be finally determined to be invalid, illegal or
unenforceable in any respect against a party hereto, it shall be adjusted if
possible to effect the intent of the parties. In any event, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby, and such invalidity, illegality
or unenforceability shall only apply as to such party in the specific
jurisdiction where such final determination shall have been made.
9.10 Interpretation. The Article and Section headings contained in this
Agreement are solely for the purpose of reference and shall not in any way
affect the meaning or interpretation of this Agreement. The word "including"
shall be deemed to mean "including without limitation."
9.11 Entire Agreement. This Agreement and the Confidentiality Agreement
including the exhibits hereto and the documents and instruments referred to
herein (including the AXENT Disclosure Statement and the Symantec Disclosure
Statement), embody the entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no representations,
promises, warranties, covenants, or undertakings, other than those expressly set
forth or referred to herein and therein.
9.12 Definition of "law". When used in this Agreement "law" refers to any
applicable law (whether civil, criminal or administrative) including, without
limitation, common law, statute, statutory instrument, treaty, regulation,
directive, decision, code, order, decree, injunction, resolution or judgment of
any government, quasi-government, supranational, federal, state or local
government, statutory or regulatory body, court, or agency.
9.13 Rules of Construction. Each party to this Agreement has been
represented by counsel during the preparation and execution of this Agreement,
and therefore waives any rule of construction that would construe ambiguities
against the party drafting the agreement.
[EXECUTION PAGE FOLLOWS]
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<PAGE> 132
IN WITNESS WHEREOF, Symantec, Merger Sub and AXENT have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
SYMANTEC CORPORATION
By: /s/ John W. Thompson
------------------------------------
Name: John W. Thompson
----------------------------------
Title: Chairman, President & CEO
-----------------------------------
APACHE ACQUISITION CORP.
By: /s/ John W. Thompson
------------------------------------
Name: John W. Thompson
----------------------------------
Title: President
-----------------------------------
AXENT TECHNOLOGIES, INC.
By: /s/ John Becker
------------------------------------
Name: John Becker
----------------------------------
Title: Chairman and Chief Executive
Officer
-----------------------------------
A-40
<PAGE> 133
EXHIBIT A
CERTIFICATE OF MERGER
MERGING
APACHE ACQUISITION CORP.
WITH AND INTO
AXENT TECHNOLOGIES, INC.
PURSUANT TO SECTION 251 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
AXENT Technologies, Inc., a Delaware corporation ("AXENT"), DOES HEREBY
CERTIFY AS FOLLOWS:
FIRST: That the constituent corporations to the merger certified here
are Apache Acquisition Corp., a Delaware corporation ("Merger Sub"), and
AXENT. Merger Sub was incorporated on July 25, 2000, pursuant to the
Delaware General Corporation Law (the "Delaware Law"), and AXENT was
incorporated on October 28, 1991 pursuant to the Delaware Law.
SECOND: That certain Agreement and Plan of Merger (the "Agreement")
dated as of July 26, 2000 by and among Symantec Corporation, a Delaware
corporation, Merger Sub and AXENT (the "Merger"), has been approved,
adopted, certified, executed, and acknowledged by each of the constituent
corporations in accordance with Section 251 of the Delaware Law.
THIRD: That AXENT shall be the surviving corporation in the merger
(the "Surviving Corporation") and the name of the Surviving Corporation
shall be AXENT Technologies, Inc.
FOURTH: That pursuant to the Agreement, the Restated Certificate of
Incorporation of the Surviving Corporation is restated to read in its
entirety as set forth in Exhibit A attached hereto.
FIFTH: That an executed copy of the Agreement is on file at the office
of the Surviving Corporation at the following address:
2400 Research Boulevard, Suite 2000
Rockville, Maryland 20850
SIXTH: That an executed copy of the Agreement will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder of
any constituent corporation.
SEVENTH: That the Merger shall become effective upon the filing of
this Certificate of Merger with the Secretary of State of the State of
Delaware.
IN WITNESS WHEREOF, AXENT has caused this Certificate of Merger to be
executed in its corporate name is as of this day of 2000.
AXENT TECHNOLOGIES, INC.
a Delaware corporation
By:
Name:
Title:
A-41
<PAGE> 134
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
AXENT TECHNOLOGIES, INC.
A-42
<PAGE> 135
EXHIBIT B
RESTATED CERTIFICATE OF INCORPORATION
OF
AXENT TECHNOLOGIES, INC.
AXENT Technologies, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation") does hereby
certify that:
1. The original Certificate of Incorporation was filed with the
Secretary of State of Delaware on October 28, 1991 under the name Raxco,
Inc.
2. The Restated Certificate of Incorporation in the form attached
hereto as Exhibit A has been duly adopted in accordance with the provisions
of Sections 245, 242 and 228 of the General Corporation Law of the State of
Delaware by the directors and stockholders of the Corporation.
3. The Restated Certificate of Incorporation so adopted reads in full
as set forth in Exhibit A attached hereto and is hereby incorporated herein
by this reference.
A-43
<PAGE> 136
RESTATED CERTIFICATE OF INCORPORATION
OF
AXENT TECHNOLOGIES, INC.
FIRST: The name of the corporation is AXENT Technologies, Inc.
SECOND: The address of the registered office of the corporation in the
State of Delaware is 615 South DuPont Highway, Dover, Delaware, County of Kent.
The name of the registered agent at such address is National Corporate Research,
Ltd.
THIRD: The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of capital stock which
the corporation shall have authority to issue is one thousand (1,000) shares of
Common Stock with a par value of $0.001 per share.
FIFTH: The Board of Directors of the corporation is expressly authorized to
adopt, amend or repeal the by-laws of the corporation, but the stockholders may
make additional by-laws and may alter or repeal any by-law whether adopted by
them or otherwise.
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Elections of directors need not be by written ballot except and to
the extent provided in the by-laws of the corporation.
EIGHTH: (a) To the fullest extent permitted by law, no director of the
corporation shall be personally liable for monetary damages for breach of
fiduciary duty as a director. Without limiting the effect of the preceding
sentence, if the Delaware General Corporation law is hereafter amended to
authorize the further elimination or limitation of the liability of a director,
then the liability of a director of the corporation shall be eliminated or
amended.
(b) To the extent permitted by law, the corporation shall fully indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) by reason of the fact that such
person is or was a director or officer of the corporation, or is or was serving
at the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
(c) To the extent permitted by law, the corporation may fully indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) by reason of the fact that such
person is or was an employee or agent of the corporation, or is or was serving
at the request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
(d) The corporation shall advance expenses (including attorneys' fees)
incurred by a director or officer in advance of the final disposition of such
action, suit proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it shall ultimately be determined
that such director or officer is not entitled to indemnification. The
corporation may advance expenses (including attorneys' fees) incurred by an
employee or agent in advance of the final disposition of such action, suit or
proceeding upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
(e) Neither any amendment nor repeal of this Article Eighth, nor the
adoption of any provision of this Certificate of Incorporation inconsistent with
this Article Eighth, shall eliminate, reduce or otherwise adversely affect any
limitation on the personal liability of a director of the corporation existing
at the time of such amendment, repeal or adoption of such an inconsistent
provision.
A-44
<PAGE> 137
EXHIBIT C
[FORM OF AXENT AFFILIATE AGREEMENT]
, 2000
Symantec Corporation
20330 Stevens Creek Boulevard
Cupertino, California 95014-2132
Attention: Art Courville, General Counsel
Ladies and Gentlemen:
The undersigned has been advised that as of the date hereof the undersigned
may be deemed to be an "affiliate" of AXENT Technologies, Inc., a Delaware
corporation ("AXENT"), as the term "affiliate" is defined for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"). Pursuant to the terms of the
Agreement and Plan of Merger, dated as of July , 2000 (the "Agreement"), among
Symantec Corporation, a Delaware corporation ("Symantec"), Apache Acquisition
Corp., a Delaware corporation, and AXENT, at the Effective Time (as defined in
the Agreement) AXENT will become a wholly-owned subsidiary of Symantec.
As a result of the Merger (as defined in the Agreement), the undersigned
may receive shares of Common Stock, par value $0.01 per share, of Symantec
("Symantec Common Stock"). The undersigned would receive such shares in exchange
for shares of Common Stock, par value $0.02 per share, of AXENT owned by the
undersigned.
The undersigned hereby represents and warrants to, and covenants with,
Symantec that in the event the undersigned receives any Symantec Common Stock in
the Merger:
(A) The undersigned shall not make any sale, transfer or other
disposition of the Symantec Common Stock in violation of the Act or the
Rules and Regulations.
(B) The undersigned has carefully read this letter and discussed its
requirements and other applicable limitations upon the undersigned's
ability to sell, transfer or otherwise dispose of the Symantec Common
Stock, to the extent the undersigned has felt it necessary, with the
undersigned's counsel.
(C) The undersigned has been advised that the issuance of shares of
Symantec Common Stock to the undersigned in the Merger is expected to be
registered under the Act by a Registration Statement on Form S-4. However,
the undersigned has also been advised that because (i) at the time of the
Merger's submission for a vote of the stockholders of AXENT the undersigned
may be deemed an affiliate of AXENT, and (ii) the distribution by the
undersigned of the Symantec Common Stock has not been registered under the
Act, the undersigned may not sell, transfer or otherwise dispose of
Symantec Common Stock issued to the undersigned in the Merger unless (a)
such sale, transfer or other disposition has been registered under the Act,
(b) such sale, transfer or other disposition is made in conformity with the
volume and other applicable limitations imposed by Rule 145 under the Act,
or (c) in the opinion of counsel reasonably acceptable to Symantec, such
sale, transfer or other disposition is otherwise exempt from registration
under the Act.
(D) The undersigned understands that Symantec will be under no
obligation to register the sale, transfer or other disposition of the
Symantec Common Stock by the undersigned or on the undersigned's behalf
under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
(E) The undersigned understands that stop transfer instructions will
be given to Symantec's transfer agent with respect to the Symantec Common
Stock owned by the undersigned and that there
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<PAGE> 138
may be placed on the certificates for the Symantec Common Stock issued to
the undersigned, or any substitutions therefor, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
It is understood and agreed that the legend set forth in paragraph E or F
above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to Symantec (i) a copy of a
letter from the staff of the Commission, or an opinion of counsel, in form and
substance reasonably satisfactory to Symantec to the effect that such legend is
not required for purposes of the Act or (ii) reasonably satisfactory evidence or
representations that the shares represented by such certificates are being or
have been transferred in a transaction made in conformity with the provisions of
Rule 145.
Symantec agrees that it will not unreasonably refuse to consent to, or
unreasonably delay, the removal of the foregoing legends.
By its execution hereof, Symantec agrees that it will, as long as the
undersigned owns any Symantec Common Stock to be received by the undersigned
pursuant to the Merger, take all reasonable efforts to make timely filings with
the Commission of all reports required to be filed by it pursuant to the
Exchange Act of 1934, as amended, and will promptly furnish upon written request
of the undersigned a written statement confirming that such reports have been so
timely filed.
Very truly yours,
[Print Name]
Acknowledged this day of , 2000
SYMANTEC CORPORATION
By:
Name:
Title:
A-46
<PAGE> 139
ANNEX B
July 26, 2000
Board of Directors
Symantec Corporation
20330 Stevens Creek Blvd.
Cupertino, CA 95014
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to Symantec Corporation (the "Company") of the consideration to be paid by
the Company pursuant to the terms of the Agreement and Plan of Merger (the
"Agreement"), by and among the Company, AXENT Technologies, Inc. ("Axent") and
Apache Acquisition Corp., a wholly owned subsidiary of the Company, pursuant to
which Apache Acquisition Corp. will be merged (the "Merger") with and into
Axent.
Pursuant to the Agreement, each share of common stock of Axent, $0.02 par
value per share (other than the shares of common stock of Axent to be canceled
pursuant to the Agreement) will be converted into the right to receive 0.50
shares (the "Exchange Ratio") of common stock, $0.01 par value per share of the
Company.
In arriving at our opinion, we have reviewed the draft dated July 25, 2000
of the Agreement. We also have reviewed financial and other information that was
publicly available or furnished to us by the Company and Axent including
information provided during discussions with their respective managements.
Included in the information provided during discussions with the Axent
management were certain financial projections of Axent for the period beginning
January 1, 2000 and ending December 31, 2002 prepared by the management of
Axent. Included in the information provided during discussions with the
Company's management were certain financial projections of the Company for the
period beginning July 1, 2000 and ending March 31, 2003 prepared by the
management of the Company, as well as certain financial projections of Axent for
the period beginning January 1, 2000 and ending March 31, 2003 prepared by the
management of the Company. In addition, we have compared certain financial and
securities data of Axent with various other companies whose securities are
traded in public markets, reviewed the historical stock prices and trading
volumes of the common stock of Axent, reviewed prices and premiums paid in
certain other business combinations and conducted such other financial studies,
analyses and investigations as we deemed appropriate for purposes of this
opinion.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company and Axent or
their respective representatives, or that was otherwise reviewed by us and have
assumed that the Company is not aware of any information prepared by it or its
other advisors that might be material to our opinion that has not been made
available to us. In particular, we have relied upon the estimates of the
management of the Company of the operating synergies achievable as a result of
the Merger and upon our discussion of such synergies with the management of
Symantec and Axent. With respect to the financial projections supplied to us, we
have relied on representations that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
management of the Company and Axent as to the future operating and financial
performance of the Company and Axent. We have not assumed any responsibility for
making any independent evaluation of any assets or liabilities or for making any
independent verification of any of the information reviewed by us. We have
relied as to certain legal matters on advice of counsel to the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect the conclusion reached in this opinion, we do not have
any obligation to update, revise or reaffirm this opinion. We are expressing no
opinion herein as to prices at which the Company's common stock will actually
trade at any time. Our opinion does not address the
B-1
<PAGE> 140
relative merits of the Merger and the other business strategies being considered
by the Company's Board of Directors, nor does it address the Board's decision to
proceed with the Merger. Our opinion does not constitute a recommendation to any
stockholder as to how such stockholder should vote on the proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. DLJ has performed investment
banking and other services for the Company in the past, including acting as
financial advisor to the Company in connection with the disposition of the
Company's ACT! product line, and received usual and customary compensation for
such services.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be paid by the Company pursuant to the
Agreement is fair to the Company from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ MICHAEL A. WILDISH
------------------------------------
Michael A. Wildish
Managing Director
B-2
<PAGE> 141
ANNEX C
CHASE H&Q
A DIVISION OF CHASE SECURITIES INC.
San Francisco, CA 94104
Tel 415-371-3000
July 26, 2000
Confidential
The Board of Directors
AXENT Technologies, Inc.
2400 Research Boulevard
Suite 200
Rockville, Maryland 20850
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of common stock (the "AXENT Common
Stock") of AXENT Technologies, Inc. ("AXENT") of the consideration receivable by
such stockholders in connection with the proposed merger of Apache Acquisition
Corp. ("Merger Sub"), a wholly owned subsidiary of Symantec Corporation
("Symantec"), with and into AXENT (the "Proposed Transaction") pursuant to any
Agreement and Plan of Merger among Symantec, Merger Sub, and AXENT (the
"Agreement").
We understand that the terms of the Agreement provide, among other things,
that each issued and outstanding share of AXENT Common Stock shall be converted
into 0.5 of a share of common stock of Symantec ("Symantec Common Stock"), as
more fully set forth in the Agreement. For the purposes of our opinion, we have
assumed with your permission that the Proposed Transaction will qualify as a
tax-free reorganization under the U.S. Internal Revenue Code of 1986, as
amended, and that the Proposed Transaction will be accounted for as a purchase
transaction.
Chase Securities Inc. ("Chase"), as part of its investment banking
services, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, strategic transactions,
corporate restructurings, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. We have acted as a financial advisor to you in connection
with the Proposed Transaction, and we will receive a fee for our services, which
include the rendering of this opinion.
In the ordinary course of business, Chase acts as a market maker and broker
in the publicly traded securities of AXENT and receives customary compensation
in connection therewith. Chase H&Q also provides research coverage of AXENT. In
the ordinary course of business, Chase may trade in the equity and derivative
securities of AXENT and Symantec for its own account and for the accounts of its
customers and, accordingly, may at any time hold a long or short position in
such securities. Chase may in the future provide additional investment banking
or other financial advisory services to AXENT or Symantec.
In connection with our review of the Proposed Transaction, and in arriving
at our opinion, we have, among other things:
(i) reviewed the publicly available financial statements of Symantec for
recent years and interim periods to date and certain other relevant
financial and operating data of Symantec (including its capital
structure) made available to us from published sources;
C-1
<PAGE> 142
The Board of Directors
AXENT Technologies, Inc.
Page 2
(ii) discussed the business, financial condition and prospects of Symantec
with certain members of its senior management;
(iii) reviewed the publicly available financial statements of AXENT for
recent years and interim periods to date and certain other relevant
financial and operating data of AXENT made available to us from
published sources and from the internal records of AXENT;
(iv) reviewed certain internal financial and operating information,
including certain projections, relating to AXENT prepared by the
senior management of AXENT;
(v) discussed the business, financial condition and prospects of AXENT
with certain members of senior management;
(vi) reviewed the recent reported prices and trading activity for the
common stocks of Symantec and AXENT and compared such information and
certain financial information for Symantec and AXENT with similar
information for certain other companies engaged in businesses we
consider comparable;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions;
(viii) reviewed a draft of the Agreement dated July 26, 2000;
(ix) discussed the tax and accounting treatment of the Proposed
Transaction with Symantec and Symantec's lawyers and accountants; and
(x) performed such other analyses and examinations and considered such
other information, financial studies, analyses and investigations and
financial, economic and market data as we deemed relevant.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of all of the information concerning Symantec or AXENT considered
in connection with our review of the Proposed Transaction, and we have not
assumed any responsibility for independent verification of, and did not
independently verify, such information. We have not undertaken any independent
valuation or appraisal of any of the assets or liabilities of Symantec or AXENT,
nor have we conducted a physical inspection of the properties, facilities or
other assets of either company. With respect to the financial forecasts and
projections made available to us and used in our analysis, we have assumed that
they reflect the best currently available estimates and judgments of the
management of AXENT of the expected future financial performance of AXENT. In
rendering our opinion, we express no view as to the reasonableness of such
forecasts and projections or the assumptions on which they are based. For
purposes of this opinion, we have assumed that neither Symantec nor AXENT is a
party to any pending transactions, including external financings,
recapitalizations or material merger discussions, other than the Proposed
Transaction and those activities undertaken in the ordinary course of conducting
their respective businesses. Our opinion is necessarily based upon market,
economic, financial and other conditions as they exist and can be evaluated as
of the date of this letter and any change in such conditions would require a
reevaluation of this opinion. We express no opinion as to the price at which
AXENT Common Stock or Symantec Common Stock will trade subsequent to the date
hereof. In rendering this opinion, we have assumed that the Proposed Transaction
will be consummated substantially on the terms discussed in the Agreement,
without any waiver of any material terms or conditions by any party thereto.
C-2
<PAGE> 143
The Board of Directors
AXENT Technologies, Inc.
Page 3
It is understood that this letter is for your information only and may not
be used for any other purpose without our prior written consent; provided,
however, that this letter may be reproduced in full in any proxy statement filed
by AXENT in connection with the Proposed Transaction. This letter does not
constitute a recommendation to any holder of AXENT Common Stock as to how such
stockholder should vote on the Proposed Transaction.
Based upon and subject to the foregoing and after considering such other
matters as we deem relevant, we are of the opinion that as of the date hereof
the consideration receivable by the holders of the AXENT Common Stock in the
Proposed Transaction is fair to such holders from a financial point of view.
Very truly yours,
CHASE SECURITIES INC.
By /s/ PAUL B. CLEVELAND
-----------------------------------
Paul B. Cleveland
Managing Director
C-3
<PAGE> 144
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933.
As permitted by the Delaware General Corporation Law, the Registrant's
Third Amended and Restated Certificate of Incorporation includes a provision
that eliminates the personal liability of its directors for monetary damages for
breach of fiduciary duty as a director, except for liability: (i) for any breach
of the director's duty of loyalty to the Registrant or its stockholders; (ii)
for acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law; (iii) under section 174 of the Delaware General
Corporation Law (regarding unlawful dividends and stock purchases); or (iv) for
any transaction from which the director derived an improper personal benefit.
As permitted by the Delaware General Corporation Law, the Registrant's
Amended and Restated Bylaws provide that: (i) the Registrant is required to
indemnify its directors and officers to the fullest extent permitted by the
Delaware General Corporation Law, subject to certain very limited exceptions;
(ii) the Registrant may indemnify its other employees and agents to the extent
that it indemnifies its officers and directors, unless otherwise required by
law, its Certificate of Incorporation, its Amended and Restated Bylaws, or
agreement; (iii) the Registrant is required to advance expenses, as incurred, to
its directors and executive officers in connection with a legal proceeding to
the fullest extent permitted by the Delaware General Corporation Law, subject to
certain very limited exceptions; and (iv) the rights conferred in the Amended
and Restated Bylaws are not exclusive.
The Registrant has entered into Indemnification Agreements with each of its
current directors and certain of its executive officers and intends to enter
into such Indemnification Agreements with each of its other executive officers
to give such directors and executive officers additional contractual assurances
regarding the scope of the indemnification set forth in the Registrant's
Certificate of Incorporation and to provide additional procedural protections.
At present, there is no pending litigation or proceeding involving a director,
officer or employee of the Registrant regarding which indemnification is sought,
nor is the Registrant aware of any threatened litigation that may result in
claims for indemnification.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
The following is a list of Exhibits filed as part of this Registration
Statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated as of July 26, 2000, by
and among Symantec, Apache Acquisition Corp. and AXENT
(attached as Annex A to the joint proxy statement/prospectus
included in this Registration Statement)
5.1 Opinion of Heller Ehrman regarding the legality of the
shares of Symantec Common Stock to be issued in the merger
8.1 Opinion of Heller Ehrman White & McAuliffe LLP regarding the
tax consequences of the merger
8.2 Opinion of Shaw Pittman regarding the tax consequences of
the merger
10.1 1996 Equity Incentive Plan
23.1 Consent of Ernst & Young LLP, Independent Auditors for
Symantec
23.2 Consent of Ernst & Young LLP, Independent Auditors for AXENT
</TABLE>
II-1
<PAGE> 145
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
23.3 Consent of PricewaterhouseCoopers LLP
23.4 Consent of Donaldson, Lufkin & Jenrette Securities
Corporation
23.5 Consent of Chase Securities Inc.
23.6 Consents of Heller Ehrman White & McAuliffe LLP (included in
their Opinions filed in Exhibits 5.1 and 8.1)
23.7 Consent of Shaw Pittman (included in their Opinion filed in
Exhibit 8.2)
+24.1 Power of Attorney
99.1 Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation (attached as Annex B to the joint proxy
statement/prospectus included in this Registration
Statement)
99.2 Opinion of Chase Securities Inc. (attached as Annex C to the
joint proxy statement/prospectus included in this
Registration Statement)
99.3 Symantec Form of Proxy for Common Stock
99.4 AXENT Form of Proxy for Common Stock
</TABLE>
-------------------------
+Previously filed.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
Securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(c) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (b) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such Securities at that time shall be deemed to be the initial
bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 146
(e) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the joint proxy
statement/prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
(g) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE> 147
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Cupertino,
California, on November 1, 2000.
SYMANTEC CORPORATION
By: /s/ GREGORY MYERS
------------------------------------
Gregory Myers
Chief Financial Officer and
Chief Accounting Officer
Pursuant to the requirements of the Securities Act, this Amendment No. 1 to
the Registration Statement has been signed by the following persons in the
capacities indicated on November 1, 2000.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
CHIEF EXECUTIVE OFFICER:
*
-----------------------------------------------------
John W. Thompson Chairman, President, Chief November 1, 2000
Executive Officer and
Director
CHIEF FINANCIAL OFFICER AND CHIEF ACCOUNTING OFFICER:
/s/ GREGORY MYERS
-----------------------------------------------------
Gregory Myers Chief Financial Officer November 1, 2000
DIRECTORS:
*
-----------------------------------------------------
Tania Amochaev Director November 1, 2000
*
-----------------------------------------------------
Charles M. Boesenberg Director November 1, 2000
*
-----------------------------------------------------
George Reyes Director November 1, 2000
*
-----------------------------------------------------
Per-Kristian Halvorsen Director November 1, 2000
*
-----------------------------------------------------
Robert S. Miller Director November 1, 2000
*
-----------------------------------------------------
Bill Owens Director November 1, 2000
*
-----------------------------------------------------
Daniel H. Schulman Director November 1, 2000
*By: /s/ GREGORY MYERS
------------------------------------------------
Gregory Myers
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 148
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated as of July 26, 2000, by
and among Symantec, Apache Acquisition Corp. and AXENT
(attached as Annex A to the joint proxy statement/prospectus
included in this Registration Statement)
5.1 Opinion of Heller Ehrman regarding the legality of the
shares of Symantec Common Stock to be issued in the merger
8.1 Opinion of Heller Ehrman White & McAuliffe LLP regarding the
tax consequences of the merger
8.2 Opinion of Shaw Pittman regarding the tax consequences of
the merger
10.1 1996 Equity Incentive Plan
23.1 Consent of Ernst & Young LLP, Independent Auditors for
Symantec
23.2 Consent of Ernst & Young LLP, Independent Auditors for AXENT
23.3 Consent of PricewaterhouseCoopers LLP
23.4 Consent of Donaldson, Lufkin & Jenrette Securities
Corporation
23.5 Consent of Chase Securities Inc.
23.6 Consents of Heller Ehrman White & McAuliffe LLP (included in
their Opinions filed in Exhibits 5.1 and 8.1)
23.7 Consent of Shaw Pittman (included in their Opinion filed in
Exhibit 8.2)
+24.1 Power of Attorney
99.1 Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation (attached as Annex B to the joint proxy
statement/prospectus included in this Registration
Statement)
99.2 Opinion of Chase Securities Inc. (attached as Annex C to the
joint proxy statement/prospectus included in this
Registration Statement)
99.3 Symantec Form of Proxy for Common Stock
99.4 AXENT Form of Proxy for Common Stock
</TABLE>
-------------------------
+Previously filed.
