EXHIBIT 10.37
SHARE EXCHANGE AGREEMENT
BY AND AMONG
AXENT TECHNOLOGIES, INC.
AND
THE EQUITYHOLDERS AND HOLDERS OF THE ENTIRE ISSUED SHARE
CAPITAL OF CKS LIMITED
March 29, 1999
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement (the "Agreement") is entered into as of this
----------- 29th day of March, 1999 (the "Closing Date"), by and among AXENT Technologies, Inc. a Delaware corporation ("AXENT"), and the undersigned holders (the
------- "Equityholders") of all of the shares of capital stock, issued share capital and - --------------- warrants of CKS Limited, a private company limited by shares incorporated in and under the laws of England with registered number 2822049 and whose registered office is at Horton Manor, Horton Cross, Ilminster, Somerset ("CKS"). AXENT and
--- the Equityholders are referred to collectively herein as the "Parties" and each
--------- individually as a "Party."
-----
RECITALS:
WHEREAS, the Equityholders are the sole record, legal and beneficial owners of all of the issued and outstanding shares of capital stock, issued share capital and warrants of CKS;
WHEREAS, CKS is a holding company that operates through its direct and indirect subsidiaries, PassGo (as defined below) and the PassGo Affiliates (as defined below);
WHEREAS, AXENT desires to purchase and the Equityholders desire to sell all of the outstanding shares of capital stock, issued share capital and warrants of CKS upon the terms and subject to the conditions set forth herein with the Parties intending that such transaction qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, following Closing the parties intend that an offer will be made to the Option Holders (as defined below) to convert all of the outstanding CKS Options (as defined below) into options to acquire AXENT Common Shares (as defined below).
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND THE MUTUAL PROMISES HEREIN MADE, AND IN CONSIDERATION OF THE REPRESENTATIONS, WARRANTIES, AND COVENANTS HEREIN CONTAINED, THE PARTIES AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS
1.1 Terms Defined in this Agreement. As used in this Agreement, the
------------------------------- following terms shall have the respective meanings set forth below:
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
----------- promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
------------------ Section 1504, or any similar group defined under a similar provision of state, local or foreign law.
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"Agreement" has the meaning set forth in the preface above.
-----------
"Articles" means the articles of association of CKS, PassGo and each PassGo
---------- Affiliate in the agreed form, including such changes to the existing articles of CKS, PassGo and each PassGo Affiliate as AXENT may have required prior to Closing.
"AXENT" has the meaning set forth in the preface above.
-------
"AXENT Common Shares" means the shares of common stock, par value $0.02 per
--------------------- share, of AXENT.
"AXENT Disclosure Schedule" has the meaning set forth in the first
--------------------------- paragraph of Article V below.
"AXENT Share Price" means the average daily closing price of an AXENT
------------------- Common Share as reported on NASDAQ over the twenty (20) day trading period ending five (5) trading days preceding the Closing Date.
"Business Day" means any day (other than Saturdays, Sundays and any other
-------------- day on which banks in London, England are authorized or obligated by law or executive order to close or are otherwise generally closed for the transaction of normal banking business.)
"Charter Documents" means, with respect to any Party, CKS, PassGo or the
------------------- PassGo Affiliates, such Person's organizational and formation documents including, without limitation, its memorandum and articles of association or its constitutional documents, as applicable.
"CAA" means the U.K. Capital Allowances Act 1990, as amended.
-----
"CKS" has the meaning set forth in the preface above.
-----
"CKS Group Shares" has the meaning set forth in Section 4.2(d) below.
------------------
"CKS Options" has the meaning set forth in Section 4.2(b) below.
-------------
"CKS Shares" means all of the 6,076,665 ordinary shares of 20p each,
------------ 3,126,338 `A' ordinary shares of 20p each, 6,272,500 preference shares of $1 each and 1,800,000 `A' preference shares of $1 each all being shares in the issued share capital of CKS.
"CKS Securities" means the issued and outstanding CKS Shares and warrants
---------------- to acquire shares of CKS including without limitation the equity warrants over 152,100 ordinary shares of 20p each and the 1,216,016 `A' ordinary shares of 20p each, all being shares in the authorized share capital of CKS and being set forth on Exhibit 2.1 hereto.
-----------
"Closing" has the meaning set forth in Section 2.1 below.
---------
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"Closing Date" has the meaning set forth in the preface above.
--------------
"Code" has the meaning set forth in the recitals above.
------
"Companies Acts" means the U.K. Companies Act 1985, the Companies Act 1989
---------------- and the Companies Consolidation (Consequential Provisions) Act 1985.
"Confidential Information" means any information concerning the businesses
-------------------------- and affairs of CKS, PassGo, PassGo Affiliates or AXENT, if any, that is not already generally available to the public.
"Customs" has the meaning set forth in Section 4.11(a)(i) below.
---------
"Developed Software" means Software Programs developed, authored, and/or
-------------------- relicensed by CKS, PassGo or any PassGo Affiliate.
"Defined Benefit Scheme" means any non-U.S. pension or retirement scheme,
------------------------ plan, program or arrangement, under which the amount of some or all of the benefits payable to or in respect of a member of the scheme, plan, program or arrangement is calculated in accordance with a formula which takes account of the service of the member during any particular period (whether to retirement, death, termination of employment, withdrawal or any other event or date), and the remuneration of the member averaged over any particular period or at any particular time (including without limitation) his service at or close to his retirement, death, termination of employment or withdrawal.
"Defined Contribution Scheme" means any non-U.S. pension or retirement
----------------------------- scheme, plan, program or arrangement that is not a Defined Benefit Scheme and is not a Personal Pension Scheme.
"Disclosed Group Life Assurance Plan" means the U.K. Life Assurance Plan
----------------------------------- details of which are set out in Section 4.26 of the Disclosure Schedule.
"Disclosed Pension Scheme" means the U.K. retirement benefit scheme details
------------------------ of which are set out in Section 4.26 of the Disclosure Schedule.
"Disclosed U.K. Disability Plan" means the U.K. group permanent health
------------------------------ insurance policy details of which are set out in Section 4.26 of the Disclosure Schedule.
"Disclosed U.K. Healthcare Plan" means the Western Provident Association
------------------------------ corporate healthcare scheme details of which are set out in Section 4.26 of the Disclosure Schedule.
"Disclosed U.S. Disability Plan" means the U.S. group disability insurance
------------------------------ plan details of which are set out in Section 4.26 of the Disclosure Schedule.
"Disclosed U.S. Healthcare Plan" means the BlueCard PPO Program details of
------------------------------ which are
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set out in Section 4.26 of the Disclosure Schedule.
"Disclosed Schemes" means the Disclosed Group Life Assurance Plan, the
----------------- Disclosed Pension Scheme, the Disclosed U.K. Disability Plan and the Disclosed U.K. Healthcare Plan.
"Documentation" has the meaning set forth in Section 4.13(h) below.
--------------
"Embedded Software" means third party Software Programs integrated,
----------------- embedded or otherwise incorporated into Developed Software.
"Employee" means any officer, director, self-employed consultant or
---------- employee of CKS, PassGo or any PassGo Affiliate.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
----------------------- retirement plan or arrangement which is an Employee Pension Benefit Plan, (b) tax-qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (c) tax-qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan (including any Multiemployer Plan), (d) Employee Welfare Benefit Plan or (e) any other written or unwritten material fringe benefit plan or program (for current or former employees).
"Employee Pension Benefit Plan" has the meaning set forth in ERISA (S)3(2).
-------------------------------
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA (S)3(1).
-------------------------------
"Environmental, Health, and Safety Laws" means the Comprehensive
---------------------------------------- Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, and the Occupational Safety and Health Act of 1970, the U.K. Health and Safety at Work etc, Act 1974, the U.K. Control of Pollution Act 1971, the U.K. Environmental Protection Act 1990 and, the U.K. Environment Act 1995, each as amended, together with all other laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments and supranational bodies (including with limitation the European Union) (and all agencies of any of the foregoing) concerning pollution or protection of the environment, public health and safety, or employee health and safety, including laws relating to emissions, discharges, releases, or threatened releases of pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials or wastes into ambient air, surface water, ground water, or lands or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
------- amended.
"ERISA Affiliate" means any entity which is (or at any relevant time was) a
----------------- member of a "controlled group of corporations" with, under "common control" with, a member of an
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"affiliated service group" with, or otherwise required to be aggregated with, CKS, PassGo or any PassGo Affiliate as set forth in Code Sections 414(b), (c), (m) or (o).
"Escrow Deposit" has the meaning set forth in Section 7.7 below.
----------------
"Equityholders" has the meaning set forth in the preface above.
---------------
"Equityholders' Disclosure Schedule" has the meaning set forth in the first
------------------------------------ paragraph of Article IV below.
"Extremely Hazardous Substance" has the meaning set forth in Section 302
------------------------------- of the U.S. Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
-----------
"Financial Statements" has the meaning set forth in Section 4.7 below.
----------------------
"French Employee" means any Employee who ordinarily works, or is resident
----------------- in, France.
"GAAP" means, with respect to CKS, U.K. Financial Reporting Standards,
------ statements of standard accounting practice and generally accepted accounting principles in the U.K. as in effect from time to time and with respect to AXENT, generally accepted accounting principles as in effect from time to time in the U.S.
"German Employee" means any Employee who ordinarily works, or is resident
----------------- in, Germany.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
----------------------- Act of 1976, as amended.
"ICTA" means the U.K. Income and Corporation Taxes Act 1988, as amended.
------
"IHTA" means the U.K. Inheritance Tax Act 1984, as amended.
----
"Intellectual Property" means (a) all inventions (whether patentable or
----------------------- unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, domain names and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, applications and renewals in connection therewith, (c) all copyrightable and copyright works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions,
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manufacturing and production processes and techniques, technical data, designs, drawings, specifications, technical data, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including data, databases and related documentation), (g) all moral rights, (h) all database rights, (i) all design rights and registered designs, (j) all topography rights, (k) all other proprietary rights, and (l) all copies and tangible embodiments thereof (in whatever form or medium and whether or not any of the foregoing is registered and including all applications for registration of any such thing) and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of those which may subsist anywhere in the world.
"Knowledge" means, (a) with respect to CKS, the knowledge, after reasonable
----------- investigation of Jeffrey Carr, Philip Cook, John Rainford, Ann Palermo, and Artur Heil, and (b) with respect to AXENT, the knowledge of the executive officers of AXENT.
"Leased Properties" means the premises identified as Leased Properties on
------------------- Section 4.12(a) of the Equityholders' Disclosure Schedule.
"Liability" means any liability, debt or obligation (whether known or
----------- unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.
"Licensed Property" means the Property identified as Building 1 Westcombe
------------------- Trading Estate, Station Road, Ilminster on Section 4.12(a) of the Equityholders' Disclosure Schedule.
"Material Adverse Effect" means, (a) as to any of CKS, PassGo or the PassGo
------------------------- Affiliates as that term is used in Article III and IV hereof, a material adverse effect on the business, properties, operations, condition or future prospects (financial or otherwise) of any of such Persons in excess of $25,000, and (b) as to AXENT as that term is used in Article V hereof, a material adverse effect on the business, properties, operations, condition or future prospects, (financial or otherwise) in excess of $250,000.
"Most Recent Balance Sheet" means the consolidated balance sheet contained
--------------------------- within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section 4.7
---------------------------------- below.
"Most Recent Fiscal Month End" has the meaning set forth in Section 4.7
------------------------------ below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4.7
----------------------------- below.
"Multiemployer Plan" has the meaning set forth in ERISA (S)3(37).
--------------------
"NASDAQ" means the Nasdaq National Market.
--------
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"Offer" means an offer addressed to each of the Option Holders of substitute options to acquire AXENT Common Shares in the amounts set forth opposite each Option Holder's name in Section 4.2(b) of the Disclosure Schedule hereto in return for the transfer of all CKS Options and on the basis that:
(a) Other than the grant of the substitute AXENT options, no consideration in respect of the transfer is due or will become due by AXENT, CKS, PassGo or any PassGo Affiliate;
(b) each of the Option Holders will release and discharge CKS, PassGo and each PassGo Affiliate from all and any rights that the Option Holder (or any of them) may have to compensation, damages or otherwise in respect of the CKS Options or their transfer;
(c) each of the Option Holders will waive and release any rights he may have under or by reference to the Plan or any letter of grant issued in respect of the Plan or otherwise (whether now or hereafter arising) to have any of the CKS Options offered to him for purchase prior to or simultaneously with the transfer of the CKS Options as contemplated by the Offer; and
(d) the substitute option agreements shall be governed by an AXENT stock option plan and each of the Option Holders will enter into an option agreement with AXENT. The substitute options will contain the same vesting schedules as the CKS Options and shall be vested in respect of each Option Holder to the extent of the CKS Options held by the Option Holder.
"Ordinary Course of Business" means the ordinary course of business
----------------------------- consistent with past custom and practice (including with respect to quantity and frequency).
"Option Holders" has the meaning set forth in Section 4.2(b) below.
----------------
"Owned Freehold Property" means the Property identified as Horton Manor and
------------------------- adjoining land on Section 4.12(a) of the Equityholders' Disclosure Schedule.
"Party" or "Parties has the meaning set forth in the preface above.
------- --------
"PassGo" means CKS's wholly-owned operating subsidiary, PassGo
-------- Technologies, Ltd., a private company limited by shares incorporated in and under the laws of England, with registered number 1764030 and whose registered office is at Horton Manor, Horton Cross, Ilminster, Somerset, TA19 9PY, including its operating divisions, PassGo German Branch, PassGo NA Branch, PassGo UK Branch.
"PassGo (France)" means CKS's wholly-owned subsidiary, PassGo Technologies
----------------- SARL, a limited liability company, incorporated under the laws of France.
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"PassGo Affiliates" means PassGo (France), and PassGo Group Ltd.,
------------------- (individually, a "PassGo Affiliate").
"PassGo German Branch" means PassGo's operating division, referred to as
---------------------- PassGo Technologies Germany, operating in the Republic of Germany.
"PassGo Group Ltd" means CKS's wholly-owned subsidiary, PassGo Group Ltd.,
------------------ a private company limited by shares incorporated in and under the laws of England, with registered number 2822051 and whose registered office is at Horton Manor, Horton Cross, Ilminster, Somerset, TA19 9PY.
"PassGo NA Branch" means PassGo's operating division, referred to as PassGo
------------------ Technologies NA, qualified to transact business in the Commonwealth of Pennsylvania and the Commonwealth of Massachusetts.
"PassGo UK Branch" means PassGo's operating division, referred to as
------------------ PassGo Technologies UK, operating in the U.K.
"PBGC" means the Pension Benefit Guaranty Corporation.
------
"Person" means an individual, a partnership, a limited liability company, a
-------- corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof).
"Personal Pension Scheme" means any personal pension scheme approved or
------------------------- provisionally approved for the purposes of Chapter IV of Part XIV of ICTA to which contributions have been made or are intended to be made pursuant to any agreement, arrangement, custom, or practice referred to in Section 4.27(a) of the Equityholders' Disclosure Schedule.
"Plan" has the meaning set forth in Section 4.2(b) below.
------
"Prohibited Transaction" has the meaning set forth in ERISA (S)406 and Code
------------------------ (S)4975.
"Properties" means the Owned Freehold Property, the Leased Properties and
------------ the Licensed Property.
"Purchase Price" has the meaning set forth in Section 2.1 below.
----------------
"Reportable Event" has the meaning set forth in ERISA Section 4043.
------------------
"SEC" means the Securities and Exchange Commission.
-----
"Securities Act" means the Securities Act of 1933, as amended.
----------------
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"Securities Exchange Act" means the Securities Exchange Act of 1934, as
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