Exhibit 8.2
March 14, 1997
AssureNet Pathways, Inc.
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▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the
Agreement and Plan of Merger (the "Agreement") among AXENT Technologies, Inc., a
Delaware corporation ("AXENT"), its wholly owned subsidiary, Axquisition, Inc.,
a Delaware corporation (the "Subsidiary") and AssureNet Pathways, Inc., a
California corporation ("AssureNet"), dated January 6, 1997 and amended February
26, 1997. Pursuant to the Agreement, AssureNet will merge with and into the
Subsidiary (the "Merger"), and the Subsidiary will remain a wholly owned
subsidiary of AXENT.
Except as otherwise provided, capitalized terms referred to herein
have the meanings set forth in the Agreement. All section references, unless
otherwise indicated, are to the Internal Revenue Code of 1986, as amended (the
"Code").
For the purpose of rendering this opinion, we have examined and are
relying upon the truth and accuracy, at all relevant times, of the statements,
covenants, representations and warranties contained in the following documents
(including all schedules and exhibits thereto) (the "Documents"):
1. The Agreement;
2. Representations made to us by AXENT and the Subsidiary in a
letter reproduced as Exhibit A hereto;
3. Representations made to us by AssureNet in a letter reproduced
as Exhibit B hereto;
4. Representations made by certain shareholders of AssureNet in
"Continuity of Interest and Lock Up Agreements";
5. The Prospectus/Proxy Statement;
6. An opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. substantially identical in
form to this opinion (the "P&M Tax Opinion"); and
7. Such other instruments and documents related to the formation,
organization and operation of AXENT, AssureNet and the Subsidiary or to the
consummation of
AssureNet Pathways, Inc. March 14, 1997
Page 2
the Merger and the transactions contemplated thereby as we have deemed necessary
or appropriate.
In connection with rendering this opinion, we have assumed or
obtained representations (and are relying thereon, without any independent
investigation or review thereof) that:
1. Original documents (including signatures) are authentic,
documents submitted to us as copies conform to the original documents, and there
has been due execution and delivery of all documents where due execution and
delivery are prerequisites to effectiveness thereof;
2. The Merger will be consummated in accordance with the
Agreement;
3. Taking into account cash payments to dissenters, cash payments
in lieu of fractional shares and cash payments as a result of a change in the
AXENT share value and any planned dispositions by AssureNet shareholders of (i)
AssureNet stock in anticipation of the Merger and (ii) AXENT Common Stock to be
received in the Merger, the AssureNet shareholders, as a group, will own AXENT
Common Stock, which was issued to such shareholders in the Merger, that has an
aggregate fair market value, as of the effective date of the Merger, in excess
of 50% of the aggregate fair market value, immediately prior to the Merger of
all outstanding AssureNet shares;
4. To the extent any expenses relating to the Merger are funded
indirectly by a party other than the incurring party, such expenses will
constitute bona fide reorganization expenses; and
5. The P&M Tax Opinion has been delivered and not withdrawn.
Based on our examination of the Documents and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we are
of the opinion that, for federal income tax purposes:
1. The Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code.
AssureNet Pathways, Inc. March 14, 1997
Page 3
2. No material gain or loss will be recognized by AXENT, the
Subsidiary or AssureNet solely as a result of the Merger.
3. No gain or loss will be recognized by the holders of AssureNet
Stock upon the exchange of AssureNet Stock solely for shares of AXENT Common
Stock as a result of the Merger (except to the extent of cash received in lieu
of a fractional share thereof). This opinion is subject to the qualification
discussed below with respect to the possible taxability of holders of AssureNet
Preferred Stock in the event cash is paid to the holders of Common Stock as a
result of a change in the AXENT share value.
4. Gain but not loss will be recognized by a holder of AssureNet
Stock upon the exchange of AssureNet Stock for shares of AXENT Common Stock and
cash as a result of the Merger to the extent of the lesser of (a) the gain
realized by the holder on the exchange or (b) the amount of cash received. We
express no opinion as to whether any gain will constitute capital gain or
ordinary income.
5. Cash received by the holders of AssureNet Stock in lieu of
fractional shares of AXENT Common Stock will be treated as received as a
distribution in redemption of such fractional shares, subject to the provisions
of Section 302 of the Code, as if such fractional shares had been issued in the
Merger and then redeemed by AXENT.
6. The tax basis of the shares of AXENT Common Stock received by
a holder of AssureNet Stock in the Merger will be equal to the tax basis of the
shares of AssureNet Stock exchanged therefor in the Merger, reduced by (a) any
basis allocable to any fractional share of AXENT Common Stock treated as sold or
exchanged under Section 302 of the Code and (b) the amount of any cash (other
than cash in lieu of a fractional share) received by the shareholder, and
increased by the amount of gain, if any, recognized by the shareholder.
7. The holding period for the shares of AXENT Common Stock
received by the holders of AssureNet Stock will include the holding period for
the shares of AssureNet Stock exchanged therefor in the Merger, provided that
the shares of AssureNet Stock are held as capital assets at the Effective Time.
8. An AssureNet shareholder who exercises dissenters' rights with
respect to all of such holder's shares of AssureNet Stock will generally
recognize gain or loss for federal income tax purposes, measured by the
difference between the holder's basis in such shares and the amount of cash
received, provided that the payment is neither essentially equivalent to a
dividend within the meaning of Section 302 of the Code nor has the effect of a
distribution of a dividend within the meaning of Section 356(a)(2) of the Code
(collectively, a "Dividend Equivalent Transaction"). Such gain or loss will be
capital gain or loss, provided that the
AssureNet Pathways, Inc. March 14, 1997
Page 4
AssureNet Stock is held as a capital asset at the time of the Merger. A sale of
AssureNet Stock pursuant to an exercise of dissenters' rights will generally not
be a Dividend Equivalent Transaction if, as a result of such exercise, the
shareholder exercising dissenters' rights owns no shares of AXENT Common Stock
or AssureNet Stock (either actually or constructively within the meaning of
Section 318 of the Code). If, however, a shareholder's sale for cash of
AssureNet Stock pursuant to an exercise of dissenters' rights is a Dividend
Equivalent Transaction, then such shareholder will generally recognize ordinary
income for federal income tax purposes in an amount up to the entire amount of
cash so received.
In addition to the assumptions set forth above, this opinion is
subject to the exceptions, limitations and qualifications set forth below.
1. This opinion represents and is based upon our best judgment
regarding the application of federal income tax laws under the Code, existing
judicial decisions, administrative regulations and published rulings and
procedures. Our opinion is not binding upon the Internal Revenue Service or the
courts, and there is no assurance that the Internal Revenue Service will not
successfully assert a contrary position. Furthermore, no assurance can be given
that future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, would not adversely affect the accuracy of the
conclusions stated herein. Nevertheless, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
federal income tax laws.
2. This opinion addresses only the matters specifically discussed
above and does not address any other federal, state, local or foreign tax
consequences that may result from the Merger or any other transaction (including
any transaction undertaken in connection with the Merger). In particular, we
express no opinion regarding (i) whether and the extent to which any AssureNet
shareholder who has provided or will provide services to AssureNet, AXENT or the
Subsidiary will have compensation income under any provision of the Code; (ii)
the effects of such compensation income, including but not limited to the effect
upon the basis and holding period of AXENT Common Stock received by any such
shareholder in the Merger; (iii) the potential application of the "golden
parachute" provisions (Sections 280G, 3121(v)(2) and 4999) of the Code, the
alternative minimum tax provisions (Sections 55, 56 and 57) of the Code or
Sections 305, 306, 357, 424, and 708 of the Code, or the regulations promulgated
thereunder; (iv) other than that the Merger will be a reorganization within the
meaning of Code Section 368 and the consequences that follow directly and solely
from such characterization, the corporate level tax consequences of the Merger
to AXENT, the Subsidiary or AssureNet, including without limitation the survival
and/or availability, after the Merger, of any of the federal income tax
attributes or elections of AssureNet; (v) the basis of any assets in AssureNet
acquired by the Subsidiary in the Merger; (vi) the tax consequences of any
transaction in which AssureNet shares or a right to acquire AssureNet shares was
received; (vii) the tax consequences that may be
AssureNet Pathways, Inc. March 14, 1997
Page 5
relevant to particular classes of AssureNet shareholders such as dealers in
securities, corporate shareholders subject to the alternative minimum tax,
foreign persons, and holders of shares acquired upon exercise of stock options
or in other compensatory transactions; (viii) the tax consequences of the
assumption by AXENT of the options and warrants of AssureNet; or (ix) the tax
consequences to any AssureNet shareholder arising from any difference between
(A) the sum of (I) the fair market value of AXENT Common Stock and (II) the
amount of cash, if any, received by an AssureNet shareholder and (B) the fair
market value of the shareholder's AssureNet shares (determined without regard to
the amendment of the AssureNet Articles in connection with the Merger)
surrendered in exchange therefor. With regard to Item (ix) in the preceding
sentence, and notwithstanding anything to the contrary in this letter, we advise
you that, in the event cash is paid to the holders of AssureNet Common Stock as
a result of a change in the AXENT share value, the Internal Revenue Service may
contend that the holders of AssureNet Preferred Stock are deemed to have
received cash upon the Merger and to have transferred such cash to the holders
of AssureNet Common Stock. This could result in taxable income to the holders of
AssureNet Preferred Stock upon the deemed receipt of cash and in the recognition
of ordinary income instead of capital gain by the holders of AssureNet Common
Stock. We provide no opinion as to whether or not the Internal Revenue Service
would be able to sustain such a position.
3. No opinion is expressed as to any transaction other than the
Merger as described in the Agreement or to any transaction whatsoever, including
the Merger, if all the transactions described in the Agreement are not
consummated in accordance with the terms of such Agreement and without waiver or
breach of any material provision thereof or if all of the representations,
warranties, statements and assumptions upon which we relied are not true and
accurate at all relevant times. In the event any one of the statements,
representations, warranties or assumptions upon which we have relied to issue
this opinion is incorrect, our opinion might be adversely affected and may not
be relied upon.
4. This opinion has been delivered to you for the purpose of
inclusion as an exhibit to the Registration Statement being filed with respect
to the Merger and is intended solely for your benefit; it may not be relied upon
for any other purpose or by any other person or entity, and may not be made
available to any other person or entity without our prior written consent.
Very truly yours,
/s/ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Enclosures
March 5, 1997
EXHIBIT A
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Two Embarcadero Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Washington, D.C. 20036-2430
Re: Merger pursuant to the Agreement and Plan of Merger (the
"Agreement") dated January 6, 1997, as amended February 26, 1997,
among AXENT Technologies, Inc., a Delaware corporation ("AXENT"),
Axquisition, Inc., a Delaware corporation (the "Subsidiary") and
AssureNet Pathways, Inc., a California corporation ("AssureNet")
Gentlemen:
This letter is supplied to you in connection with your rendering of
opinions pursuant to Section 5.1(e) of the Agreement regarding certain federal
income tax consequences of the Merger. Unless otherwise indicated, capitalized
terms not defined herein have the meanings set forth in the Agreement.
A. Representations
After consulting with their counsel and auditors regarding the meaning of
and factual support for the following representations, the undersigned hereby
certify and represent that the following facts are now true and will continue to
be true through the Effective Time:
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▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
March 5, 1997
Page 2
1. Pursuant to the Merger, AssureNet will merge with and into the
Subsidiary, and the Subsidiary will acquire all of the assets and liabilities of
AssureNet. At least ninety percent (90%) of the fair market value of the net
assets and at least seventy percent (70%) of the fair market value of the gross
assets held by AssureNet immediately prior to the Merger will be held by the
Subsidiary immediately after the Merger. For the purpose of determining the
percentage of AssureNet's net and gross assets held by the Subsidiary
immediately following the Merger, the following assets will be treated as
property held by AssureNet immediately prior to the Merger but not held by the
Subsidiary immediately subsequent to the Merger: (i) assets disposed of by
AssureNet prior to the Merger and in contemplation thereof (including without
limitation any asset disposed of by AssureNet, other than in the ordinary course
of business, pursuant to a plan or intent existing during the period ending at
the Effective Time and beginning with the commencement of negotiations (whether
formal or informal) with AXENT regarding the Merger (the "Pre-Merger Period")),
(ii) assets used by AssureNet to pay expenses or liabilities incurred in
connection with the Merger, and (iii) assets used to make payments to AssureNet
shareholders exercising dissenter's rights or to make distribution, redemption
or other payments in respect of AssureNet shares or rights to acquire such
shares (including payments treated as such for tax purposes) that are made in
contemplation of the Merger or related thereto.
2. AXENT and the Subsidiary are participating in the Merger for good and
valid business reasons and not for tax purposes.
3. Prior to the Merger, AXENT will be in "Control" of the Subsidiary. As
used herein, "Control" of a corporation shall consist of ownership of stock
processing at least eighty percent (80%) of the total combined voting power of
all classes of stock entitled to vote and at least eighty percent (80%) of the
total number of shares of all other classes of stock of the corporation. For
purposes of determining Control, a person shall not be considered to own voting
stock if rights to vote such stock (or to restrict or otherwise control the
voting of such stock) are held by a third party (including a voting trust) other
than an agent of such person.
4. In the Merger, all AssureNet shares will be exchanged solely for AXENT
common stock, except to the extent of cash paid to dissenters and cash paid in
lieu of fractional shares and cash paid as a result of a change in the AXENT
share value in accordance with the terms of the Merger Agreement.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
March 5, 1997
Page 3
5. AXENT has no plan or intention to cause the Subsidiary to issue
additional shares of stock after the Merger that would result in AXENT losing
Control of the Subsidiary.
6. Except with respect to fractional share interests as set forth in
Section 1.5(e) of the Agreement, AXENT has no plan or intention to reacquire any
of its stock issued pursuant to the Merger.
7. Except for transfers described in Section 368(a)(2)(C) of the Internal
Revenue Code of 1986, as amended (the "Code"), AXENT has no current plan or
intention to (i) liquidate the Subsidiary; (ii) merge the Subsidiary with or
into another corporation; (iii) sell, distribute or otherwise dispose of the
capital stock of the Subsidiary; or (iv) cause the Subsidiary to sell or
otherwise dispose of any of its assets (or any assets acquired from AssureNet)
except for dispositions made in the ordinary course of business or payment of
expenses incurred by the Subsidiary pursuant to the Merger (including payments
to dissenting shareholders and payments made with respect to fractional shares).
8. AXENT intends that, following the Merger, the Subsidiary will continue
as a wholly owned subsidiary of AXENT with substantially the same business as is
presently being conducted by AssureNet.
9. Neither AXENT nor any current or former subsidiary of AXENT owns, or
has owned during the past five (5) years, directly or indirectly, any AssureNet
shares, or the right to acquire or vote any such shares (except such rights as
are granted in the Agreement).
10. Neither AXENT nor the Subsidiary is an investment company within the
meaning of Sections 368(a)(2)(F)(iii) and (iv) of the Code.
11. Neither AXENT nor the Subsidiary is under the jurisdiction of a court
in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
12. AXENT has no knowledge of any plan or intention on the part of the
AssureNet's shareholders (a "Plan") to engage in a sale, exchange, transfer,
distribution, pledge, disposition or any other transaction which results in a
reduction in the risk of ownership or a direct or indirect disposition (a
"Sale") of AXENT common stock to be issued to such shareholders in the Merger,
which shares would have an aggregate fair
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
March 5, 1997
Page 4
market value, as of the Effective Date of the Merger, in excess of fifty percent
(50%) of the aggregate fair market value, immediately prior to the Merger, of
all outstanding AssureNet shares. For purposes of this paragraph, AssureNet
shares (or the portion thereof) (i) with respect to which an AssureNet
shareholder receives consideration in the Merger other than AXENT common stock
(including, without limitation, cash received by dissenting AssureNet
shareholders, cash in lieu of fractional shares of AXENT common stock and cash
received as a result of a change in the AXENT share value) and/or (ii) with
respect to which a Sale occurs prior to and in contemplation of the Merger shall
be considered outstanding AssureNet shares exchanged for AXENT common stock in
the Merger and then disposed of pursuant to a Plan.
13. The payment of cash in lieu of fractional shares of AXENT common stock
is solely for the purpose of avoiding the expense and inconvenience to AXENT of
issuing fractional shares and does not represent separately bargained-for
consideration. The total cash consideration that will be paid in the Merger to
AssureNet shareholders in lieu of fractional shares of AXENT common stock will
not exceed one percent (1%) of the total consideration that will be issued in
the Merger to AssureNet shareholders in exchange for their AssureNet shares.
The fractional share interests of each AssureNet shareholder will be aggregated
and no AssureNet shareholder will receive cash in an amount greater than the
value of one full share of AXENT common stock.
14. [Intentionally left blank.]
15. No shares of the Subsidiary have been or will be used as consideration
or issued to shareholders of AssureNet pursuant to the Merger.
16. AXENT will pay the expenses of the Parties (as defined in the Merger
Agreement) in connection with the Merger to the extent provided in Section 8.11
of the Merger Agreement. The shareholders of AssureNet will pay their own
expenses, if any, in connection with the Merger.
17. There is no intercorporate indebtedness existing between AXENT and
AssureNet or between the Subsidiary and AssureNet that was issued, acquired or
will be
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▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
March 5, 1997
Page 5
settled at a discount as a result of the Merger, and AXENT will assume no
liabilities of AssureNet or any AssureNet shareholder in connection with the
Merger.
18. The terms of the Agreement and all other agreements entered into in
connection therewith are the product of arm's-length negotiations.
19. None of the compensation received by any shareholder-employees of
AssureNet will be separate consideration for, or allocable to, any of their
AssureNet shares; none of AXENT common stock received by any shareholder-
employees of AssureNet will be separate consideration for, or allocable to, any
employment agreement or any covenants not to compete; and the compensation paid
to any shareholder-employees of AssureNet will be for services actually rendered
and will be commensurate with amounts paid to third parties bargaining at arm's-
length for similar services.
20. No "poison pill" or similar rights will be associated with AXENT
common stock on or prior to the date of the Merger.
21. With respect to each instance, if any, in which AssureNet shares have
been purchased by a shareholder of AXENT (a "Shareholder") during the Pre-Merger
Period (a "Stock Purchase"): (i) the Stock Purchase was made by such Shareholder
on its own behalf and with its own funds and not as a representative, or for the
benefit, of AXENT; (ii) the purchase price paid by such Shareholder pursuant to
the Stock Purchase was the product of arm's-length negotiations, was funded by
such Shareholder's own assets, and was not advanced, and will not be reimbursed,
either directly or indirectly, by AXENT; (iii) at no time was such Shareholder
or any other party required or obligated to surrender to AXENT the AssureNet
shares acquired in the Stock Purchase, and neither such Shareholder nor any
other party will be required to surrender to AXENT the AXENT common stock for
which such AssureNet shares will be exchanged in the Merger; and (iv) the Stock
Purchase was not a formal or informal condition to consummation of the Merger
and was entered into solely to satisfy the separate interests of such
Shareholder and the seller.
22. Each of the representations made by AXENT and the Subsidiary in the
Agreement and any other documents associated therewith is true and accurate.
23. AXENT and the Subsidiary are authorized to make all of the
representations set forth herein.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
March 5, 1997
Page 6
B. Reliance by You in Rendering Opinions; Limitations on Your Opinions
1. The undersigned recognize that (i) your opinions will be based on the
representations set forth herein and on the statements contained in the
Agreement and the documents related thereto and (ii) your opinions will be
subject to certain limitations and qualifications including that it may not be
relied upon if any such representations are not accurate in all material
respects.
2. The undersigned recognize that your opinions will not address any tax
consequences of the Merger or any action taken in connection therewith except as
expressly set forth in such opinions.
Very truly yours,
AXENT TECHNOLOGIES, INC., a
Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Title: Vice President and General Counsel
-----------------------------------
AXQUISITION, INC., a Delaware
corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Title: Secretary
-----------------------------------
EXHIBIT B
March 5, 1997
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Two Embarcadero Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Washington, DC 20036-2430
Re: Merger pursuant to the Agreement and Plan of Merger (the "Agreement")
dated January 6, 1997, among AXENT Technologies, Inc., a Delaware
corporation ("AXENT"), Axquisition, Inc., a Delaware corporation (the
"Subsidiary") and AssureNet Pathways, Inc., a California corporation
("AssureNet")
Gentlemen:
This letter is supplied to you in connection with your rendering of
opinions pursuant to Section 5.1(e) of the Agreement regarding certain federal
income tax consequences of the Merger. Unless otherwise indicated, capitalized
terms not defined herein have the meanings set forth in the Agreement.
A. Representations
After consulting with its counsel and auditors regarding the meaning
of and factual support for the following representations, the undersigned hereby
certifies and represents that the following facts are now true and will continue
to be true through the Effective Time:
1. Pursuant to the Merger, AssureNet will merge with and into the
Subsidiary, and the Subsidiary will acquire all of the assets and liabilities of
AssureNet. At least ninety percent (90%) of the fair market value of the net
assets and at least seventy percent (70%) of the fair market value of the gross
assets held by AssureNet immediately prior to the Merger will be held by the
Subsidiary immediately after the Merger. For the purpose of determining the
percentage of AssureNet's net and gross assets held by the Subsidiary
immediately following the Merger, the following assets will be treated as
property held by AssureNet immediately prior to the Merger but not held by the
Subsidiary immediately subsequent to the Merger: (i) assets disposed of by
AssureNet prior to the Merger and in contemplation thereof (including, without
limitation, any asset disposed of by AssureNet other than in the ordinary course
of business, pursuant to a plan or intent existing during the period ending at
the Effective Time and beginning with the commencement of negotiations (whether
formal or informal) with AXENT regarding the Merger (the "Pre-Merger Period")),
(ii) assets used by AssureNet to pay expenses or
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP March 5, 1997
Piper & ▇▇▇▇▇▇▇ L.L.P. Page 2
liabilities incurred in connection with the Merger and (iii) assets used to make
payments to AssureNet shareholders exercising dissenters' rights or to make
distribution, redemption or other payments in respect of AssureNet shares or
rights to acquire such shares (including payments treated as such for tax
purposes) that are made in contemplation of the Merger or related thereto;
2. AssureNet has made no transfer of any of its assets (including
any distribution of assets with respect to, or in redemption of, stock) in
contemplation of the Merger or during the Pre-Merger Period other than (i) in
the ordinary course of business and (ii) payments for expenses incurred in
connection with the Merger;
3. AssureNet is participating in the Merger for good and valid
business reasons and not for tax purposes;
4. At the time of the Merger, except as specified in, or disclosed
in the Agreement or in a schedule or exhibit to the Agreement, AssureNet will
have no outstanding warrants, options or convertible securities nor any other
type of right outstanding pursuant to which any person could acquire AssureNet
shares or any other equity interest in AssureNet;
5. In the Merger, all AssureNet shares will be exchanged solely for
AXENT common stock, except to the extent of cash paid to dissenters, cash paid
in lieu of fractional shares and cash paid as a result of a change in the AXENT
share value in accordance with the terms of the Merger Agreement;
6. The liabilities of AssureNet have been incurred by AssureNet in
the ordinary course of its business;
7. The fair market value of AssureNet's assets will, at the
Effective Time, exceed the aggregate liabilities of AssureNet;
8. No issuances of AssureNet shares or rights to acquire AssureNet
shares have occurred or will occur during the Pre-Merger Period other than
pursuant to options, warrants or agreements outstanding prior to the Pre-Merger
Period or as otherwise specifically identified in the Agreement;
9. Cash or other property paid to employees of AssureNet during the
Pre-Merger Period has been or will be in the ordinary course of business or
pursuant to agreements entered into prior to the Pre-Merger Period;
10. AssureNet is not and will not be at the Effective Time an
"investment company" within the meaning of Sections 368(a)(2)(F)(iii) and (iv)
of the Internal Revenue Code of 1986, as amended (the "Code");
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11. AssureNet is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code;
12. AssureNet has no knowledge of any plan or intention on the part
of AssureNet's shareholders (a "Plan") to engage in a sale, exchange, transfer,
distribution, pledge, disposition or any other transaction which results in a
reduction in the risk of ownership or a direct or indirect disposition (a
"Sale") of AXENT common stock to be issued to such shareholders in the Merger,
which shares would have an aggregate fair market value, as of the Effective
Time, in excess of fifty percent (50%) of the aggregate fair market value,
immediately prior to the Merger, of all outstanding AssureNet shares. For
purposes of this paragraph, AssureNet shares (or the portion thereof) (i) with
respect to which an AssureNet shareholder receives consideration in the Merger
other than the AXENT common stock (including, without limitation, cash received
by dissenting AssureNet shareholders and cash in lieu of fractional shares of
AXENT common stock) and/or (ii) with respect to which a Sale occurs prior to and
in contemplation of the Merger shall be considered shares of outstanding
AssureNet shares exchanged for AXENT common stock in the Merger and then
disposed of pursuant to a Plan;
13. The payment of cash in lieu of fractional shares of AXENT common
stock is solely for the purpose of avoiding the expense and inconvenience to
AXENT of issuing fractional shares and does not represent separately bargained-
for consideration. The total cash consideration that will be paid in the Merger
to AssureNet shareholders in lieu of fractional shares of AXENT common stock
will not exceed one percent (1%) of the total consideration that will be issued
in the Merger to AssureNet shareholders in exchange for their AssureNet shares.
The fractional share interests of each AssureNet shareholder will be aggregated,
and no AssureNet shareholder will receive cash in an amount greater than the
value of one full share of AXENT common stock;
14. At the Effective Time, the fair market value of the AXENT common
stock and any cash received by each AssureNet shareholder will be approximately
equal to the fair market value of the AssureNet shares surrendered in exchange
therefor, and the aggregate consideration received by AssureNet shareholders in
exchange for their AssureNet shares will be approximately equal to the fair
market value of all of the outstanding AssureNet shares immediately prior to the
Merger;
15. No shares of the Subsidiary have been or will be used as
consideration or issued to shareholders of AssureNet pursuant to the Merger;
16. AXENT will pay the expenses of the Parties (as defined in the
Merger Agreement) in connection with the Merger to the extent provided in
Section 8.11 of the Merger Agreement. The shareholders of AssureNet will pay
their own expenses, if any, in connection with the Merger.
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17. There is no intercorporate indebtedness existing between AXENT
and AssureNet or between the Subsidiary and AssureNet that was issued, acquired
or will be settled at a discount as a result of the Merger, and AXENT will
assume no liabilities of AssureNet or any AssureNet shareholder in connection
with the Merger;
18. The terms of the Agreement and all other agreements entered into
in connection therewith are the product of arm's-length negotiations;
19. None of the compensation received by any shareholder-employees of
AssureNet will be separate consideration for, or allocable to, any of their
AssureNet shares; none of the AXENT common stock received by any shareholder-
employees of AssureNet will be separate consideration for, or allocable to, any
employment agreement or any covenants not to compete; and the compensation paid
to any shareholder-employees of AssureNet will be for services actually rendered
and will be commensurate with amounts paid to third parties bargaining at arm's
length for similar services;
20. No direct or indirect subsidiary of AssureNet owns any AssureNet
shares;
21. No "poison pill" or similar rights will be associated with
AssureNet shares on or prior to the date of the Merger;
22. With respect to each instance, if any, in which AssureNet shares
have been purchased by a shareholder of AXENT (a "Shareholder") during the Pre-
Merger Period (a "Stock Purchase"): (i) to the best knowledge of AssureNet, (A)
the Stock Purchase was made by such Shareholder on its own behalf and with its
own funds, rather than as a representative, or for the benefit, of AXENT, (B)
the Stock Purchase was entered into solely to satisfy the separate interests of
such Shareholder and the seller and (C) the purchase price paid by such
Shareholder pursuant to the Stock Purchase was the product of arm's-length
negotiations and (ii) the Stock Purchase was not a formal or informal condition
to consummation of the Merger;
23. Each of the representations made by AssureNet in the Agreement
and any other documents associated therewith is true and accurate; and
24. AssureNet is authorized to make all of the representations set
forth herein.
B. Reliance by You in Rendering Opinions;
Limitations on Your Opinions
1. The undersigned recognizes that (i) your opinions will be based
on the representations set forth herein and on the statements contained in the
Agreement and documents related thereto and (ii) your opinions will be subject
to certain limitations and qualifications
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including that it may not be relied upon if any such representations are not
accurate in all material respects.
2. Notwithstanding anything herein to the contrary, the undersigned
makes no representations regarding any actions or conduct of AXENT or the
Subsidiary after the Merger.
3. The undersigned recognizes that your opinions will not address
any tax consequences of the Merger or any action taken in connection therewith
except as expressly set forth in such opinions.
Very truly yours,
ASSURENET PATHWAYS, INC., a California
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Acting President & CEO
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