SECURE COMPUTING CORP, DEFS14A, 1996-08-07

SECURE COMPUTING CORP
DEFS14A, 1996-08-07
COMPUTER PROGRAMMING SERVICES

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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-13

Secure Computing Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:

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2) Aggregate number of securities to which transaction applies:

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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
$
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4) Proposed maximum aggregate value of transaction:
$
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5) Total fee paid:
$
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/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:
$
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2 Form, Schedule or Registration Statement No.:

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3) Filing Party:

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4) Date Filed:

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<PAGE>

Dear Stockholder:

You are cordially invited to attend a Special Meeting of Stockholders to be
held at the offices of Faegre & Benson LLP, Norwest Center, 23rd Floor, 90 South
Seventh Street, Minneapolis, Minnesota, at 10:00 a.m., Central Daylight Time, on
Wednesday, August 28, 1996.

As most of you are aware, the Company has entered into agreements which
will lead to the acquisitions of Border Network Technologies Inc. ("Border") and
Enigma Logic, Inc. ("Enigma"). In connection with these acquisitions, at the
Special Meeting, the stockholders of the Company will be asked to: (i) authorize
for issuance shares of Secure Common Stock pursuant to the terms and conditions
of a new class of exchangeable shares of a subsidiary of the Company to be
issued to the shareholders of Border, (ii) authorize for issuance shares of
Secure Common Stock to the stockholders of Enigma pursuant to the terms of an
agreement and plan of merger, (iii) elect five directors, two of whom are
presently directors of Border, one of whom is presently an officer of Border and
one of whom is presently a director of Enigma, and (iv) approve amendments to
the terms of the Company's stock option plan. The Secretary's Notice of Special
Meeting and the Proxy Statement which follow describe the matters to come before
the Special Meeting.

THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MATTERS TO COME BEFORE
THE SPECIAL MEETING AND RECOMMENDS THAT YOU VOTE FOR THEIR APPROVAL.

The acquisitions of Border and Enigma are each subject to a number of
conditions, including obtaining the approval of the stockholders of the Company.
The stockholders' approval is required by Nasdaq since the number of shares
proposed to be issued in each transaction will exceed 20% of the currently
outstanding shares of Secure Common Stock. A summary of the basic terms and
conditions of each transaction, a description of the business of Border, Enigma
and Secure, certain financial and other information and a copy of each
acquisition agreement are set forth in the accompanying Proxy Statement. In
view of the importance of these matters please read carefully the enclosed
materials.

We hope that you will be able to attend the Special Meeting in person and
we look forward to seeing you. Please mark, date and sign the enclosed proxy
and return it in the accompanying envelope as quickly as possible, even if you
plan to attend the Special Meeting. You may revoke the proxy and vote in person
at the Special Meeting if you so desire.

Sincerely,

/s/ Kermit M. Beseke

Kermit M. Beseke
PRESIDENT AND CHIEF EXECUTIVE OFFICER

August 5, 1996

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SECURE COMPUTING CORPORATION

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 28, 1996

A Special Meeting of Stockholders of Secure Computing Corporation (the
"Company" or "Secure") will be held at the offices of Faegre & Benson LLP,
Norwest Center, 23rd Floor, 90 South Seventh Street, Minneapolis, Minnesota, at
10:00 a.m., Central Daylight Time, on Wednesday, August 28, 1996, for the
following purposes:

1. To authorize for issuance, in accordance with the terms of certain
exchangeable nonvoting shares, shares of Common Stock, par value $.01
per share, of the Company ("Secure Common Stock"). Such exchangeable
nonvoting shares are to be issued pursuant to the provisions of an
Acquisition and Pre-Amalgamation Agreement (the "Border Acquisition
Agreement"), dated as of May 28, 1996, as amended, by and among
Secure, Edge Acquisition Inc., an Ontario corporation and a wholly-
owned subsidiary of Secure ("Amalgamation Sub"), and Border Network
Technologies Inc., an Ontario corporation ("Border"). As set forth
in the Border Acquisition Agreement (as supplemented by an Amalgamation
Agreement between Secure, Amalgamation Sub and Border), (a)
Amalgamation Sub and Border will be amalgamated under Ontario law,
and the continuing corporation ("New Border") will be a wholly-owned
subsidiary of Secure, (b) each outstanding share of Border Common
Stock, without par value, and each outstanding share of Border Class A
nonvoting stock, without par value, will be exchanged for a share of
Class B stock of New Border, and (c) pursuant to a reorganization of
capital of New Border, such shares of Class B stock will be exchanged
for exchangeable nonvoting shares of New Border, which shares are in
turn exchangeable for Secure Common Stock.

2. To authorize for issuance shares of Secure Common Stock in connection
with the acquisition of Enigma Logic, Inc., a California corporation
("Enigma"). Such shares of Secure Common Stock are issuable pursuant
to the terms of an Agreement and Plan of Merger (the "Enigma
Acquisition Agreement"), dated as of June 24, 1996, as amended, by and
among Secure, Owl Acquisition, Inc., a California corporation and
wholly-owned subsidiary of Secure ("Merger Sub"), and Enigma.
Pursuant to the terms of the Enigma Acquisition Agreement, Merger Sub
will be merged with and into Enigma, and each Enigma shareholder will
receive .112715 share of Secure Common Stock for each outstanding
share of Enigma Common Stock.

3. To elect five directors for terms of one to three years.

4. To approve amendments to the Secure Computing Corporation Amended and
Restated 1995 Omnibus Stock Plan, which will reserve additional shares
of Secure Common Stock for future awards and make other changes.

5. To transact such other business as may properly be brought before the
Special Meeting.

The Board of Directors has fixed July 26, 1996 as the record date for the
Special Meeting, and only stockholders of record at the close of business on
that date are entitled to receive notice of and vote at the Special Meeting.

<PAGE>

YOUR PROXY IS IMPORTANT TO ENSURE A QUORUM AT THE SPECIAL MEETING. EVEN IF
YOU OWN ONLY A FEW SHARES, AND WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
SPECIAL MEETING, PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ACCOMPANYING POSTAGE-PAID REPLY ENVELOPE AS QUICKLY AS POSSIBLE. YOU MAY
REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS EXERCISE, AND RETURNING YOUR PROXY
WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON, IF YOU ATTEND THE SPECIAL MEETING
AND REVOKE THE PROXY.

By Order of The Board of Directors,

/s/ James E. Nicholson

James E. Nicholson
SECRETARY

Roseville, Minnesota
August 5, 1996

<PAGE>

________________________________

PROXY STATEMENT
________________________________

GENERAL INFORMATION

GENERAL

The enclosed proxy is being solicited by the Board of Directors of Secure
Computing Corporation, a Delaware corporation, for use in connection with a
Special Meeting of Stockholders to be held on Wednesday, August 28, 1996 at the
offices of Faegre & Benson LLP, Norwest Center, 23rd Floor, 90 South Seventh
Street, Minneapolis, Minnesota, at 10:00 a.m. Central Daylight Time, and at any
adjournments thereof.

Only stockholders of record at the close of business on July 26, 1996 will
be entitled to vote at the Special Meeting or any adjournment thereof. Proxies
in the accompanying form which are properly signed, duly returned to the Company
and not revoked will be voted in the manner specified. A stockholder executing
a proxy retains the right to revoke it at any time before it is exercised by
notice in writing to the Secretary of the Company of termination of the proxy's
authority or a properly signed and duly returned proxy bearing a later date.

The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by the use of the mails, certain directors,
officers and employees of the Company may solicit proxies by telephone, telegram
or personal contact, and have requested brokerage firms and custodians, nominees
and other record holders to forward soliciting materials to the beneficial
owners of Secure Common Stock and will reimburse them for their reasonable
out-of-pocket expenses in so forwarding such materials.

The address of the principal executive office of the Company is 2675 Long
Lake Road, Roseville, Minnesota 55113 and the telephone number is (612)
628-2700. The mailing of this Proxy Statement and the Board of Directors' form
of proxy to stockholders will commence on or about August 7, 1996.

MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING

Secure has agreed to acquire Border Network Technologies Inc., an Ontario
corporation ("Border"). In the Border Acquisition, Border will be amalgamated
under Ontario law with a wholly-owned subsidiary of Secure. The continuing
corporation ("New Border") will be an Ontario corporation and a wholly-owned
subsidiary of Secure. In accordance with the terms of the Border Acquisition
Agreement, each holder of Border capital stock will receive exchangeable
nonvoting shares of New Border ("New Border Exchangeable Shares"). Each New
Border Exchangeable Share: (i) may be exchanged for one share of Secure Common
Stock, (ii) will entitle its holder to receive dividends functionally equivalent
to any dividends paid on one share of Secure Common Stock and (iii) will,
pursuant to an agreement with Secure to be entered into contemporaneously with
the issuance of the New Border Exchangeable Shares, have the right to direct the
number of votes at meetings of the stockholders of Secure equal to that number
of votes to which such New Border Exchangeable Share would be entitled if
exchanged for Secure Common Stock.

In a separate transaction, Secure has agreed to acquire Enigma Logic, Inc.,
a California corporation ("Enigma"). In the Enigma Acquisition, a wholly-owned
subsidiary of Secure will merge with and into Enigma. In accordance with the
terms of the Enigma Acquisition Agreement, each holder of Enigma capital stock
will receive .112715 share of Secure Common Stock.

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At the Special Meeting, the stockholders of Secure will be asked to:

PROPOSAL ONE Authorize shares of Secure Common Stock for issuance
pursuant to the terms of the New Border Exchangeable
Shares.

PROPOSAL TWO Authorize shares of Secure Common Stock for issuance in
connection with the Enigma Acquisition.

PROPOSAL THREE Elect Ervin F. Kamm, Jr., Adam Adamou, Robert Forbes,
Glenn G. Mackintosh, and Eric P. Rundquist to the Board
of Directors of Secure for specified terms from one to
three years. The election of Messrs. Adamou, Forbes and
Mackintosh is effective on the Border Effective Date.
The election of Mr. Rundquist is effective as of the
Enigma Effective Time.

PROPOSAL FOUR Amend the Amended and Restated 1995 Omnibus Stock Plan to
reserve additional shares of Secure Common Stock for
future awards and permit the Board of Directors maximum
flexibility to grant holders of options in companies
Secure may acquire options of equal value to acquire
Secure Common Stock.

REQUIRED VOTE TO APPROVE THE PROPOSALS AND VOTING INTENTIONS OF CERTAIN
STOCKHOLDERS.

With the exception of the election of directors, the affirmative vote of
the holders of a majority of the outstanding shares of Secure Common Stock
present in person or represented by proxy at the Special Meeting and entitled to
vote is required for approval of each proposal presented in this Proxy
Statement. A plurality of the votes of outstanding shares of Secure Common
Stock present in person or represented by proxy at the Special Meeting and
entitled to vote on the election of directors is required for the election of
directors. Each share of Secure Common Stock is entitled to one vote.
Abstentions, proxies withholding authority and broker non-votes will be counted
as present for purposes of determining the existence of a quorum at the Special
Meeting. However, shares of Secure Common Stock of a stockholder who either
abstains or withholds authority to vote for each of the proposals or the
election of directors will be counted as a vote against approval of a proposal
and will have no effect on the election of directors. Broker non-votes will not
be counted for or against approval of a proposal and will have no effect on the
election of directors.

Approval of these issuances of shares of Secure Common Stock by the
stockholders of Secure is required by the rules of the National Association of
Securities Dealers, Inc. because shares of Secure Common Stock are traded on the
Nasdaq National Market and the number of shares proposed to be issued in each of
the Acquisitions will exceed 20% of the issued and outstanding shares of Secure
Common Stock.

The Secure Common Stock, par value $.01 per share, is the only authorized
and issued voting security of the Company. At the close of business on July 26,
1996 there were 6,772,158 shares of Secure Common Stock issued and outstanding,
each of which is entitled to one vote.

In connection with the Border Acquisition Agreement, Secure Affiliates
(including all directors and executive officers) owning in aggregate 50.7% of
the outstanding shares of Secure Common Stock (as of July 26, 1996) executed
Secure Affiliate Agreements whereby each agreed to vote for the approval of
PROPOSAL ONE and PROPOSAL FOUR. Assuming the shares of Secure Common Stock
covered by the Secure Affiliate Agreements are voted in accordance with such
agreements, the shares covered by such agreements will be sufficient to ensure
approval of such proposals. In addition, under the terms of the Border
Acquisition Agreement, the election of Adam Adamou, Robert Forbes and Glenn G.
Mackintosh to the Board of Directors of Secure is a condition to the obligation
of Border to consummate the Border Acquisition.

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<PAGE>

In connection with the Enigma Acquisition Agreement, certain Secure
Affiliates owning in aggregate 50.6% of the outstanding shares of Secure Common
Stock (as of July 26, 1996) executed Secure Affiliate Agreements whereby each
agreed to vote for the approval of PROPOSAL TWO and PROPOSAL FOUR. Assuming the
shares of Secure Common Stock covered by the Secure Affiliate Agreements are
voted in accordance with such agreements, the shares covered by such agreements
will be sufficient to ensure approval of such proposals. In addition, under the
terms of the Enigma Acquisition Agreement, the election of Eric P. Rundquist to
the Board of Directors of Secure is a condition to the obligation of Enigma to
consummate the Enigma Acquisition.

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<PAGE>

TABLE OF CONTENTS

PAGE

GENERAL INFORMATION............................................................1
General....................................................................1
Matters to Be Considered at the Special Meeting............................1
Required Vote to Approve the Proposals and Voting Intentions of Certain
Stockholders...............................................................2
GLOSSARY OF TERMS..............................................................7
REPORTING CURRENCIES AND ACCOUNTING PRINCIPLES................................10
CANADIAN/U.S. EXCHANGE RATE...................................................10
SUMMARY OF PROXY STATEMENT....................................................11
Business of Secure........................................................11
Business of Border........................................................11
Business of Enigma........................................................11
Recent Financial Results..................................................11
Date and Place of the Special Meeting.....................................11
Purposes of the Special Meeting...........................................12
Stockholders Entitled to Vote.............................................12
Quorum; Votes Required....................................................12
Dissenters' Rights........................................................12
Recommendations...........................................................12
Opinions of Secure's Financial Advisor....................................12
The Border Acquisition....................................................13
The Enigma Acquisition....................................................13
Accounting Treatment......................................................14
Certain United States Federal Income Tax Considerations...................14
MARKET PRICE AND DIVIDEND INFORMATION.........................................15
SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA.....................16
Secure....................................................................17
Border....................................................................18
Enigma....................................................................19
Pro Forma.................................................................20
RECENT FINANCIAL RESULTS......................................................23
Secure....................................................................23
Border....................................................................24
Enigma....................................................................24
COMPARATIVE PER SHARE DATA....................................................25

PROPOSAL ONE
THE BORDER ACQUISITION........................................................27
Background................................................................27
Reasons for the Border Acquisition and Recommendation of the Board of
Directors.................................................................28
Opinion of Secure's Financial Advisor.....................................30
Description of New Border Exchangeable Shares.............................33
Transaction Mechanics.....................................................36
THE BORDER ACQUISITION AGREEMENT AND RELATED AGREEMENTS.......................38
Border Effective Date of the Amalgamation.................................38
Exchange of Border Stock..................................................38

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Conversion of Border Stock Options and Border Warrants....................38
Business of Border Pending the Amalgamation...............................38
Solicitation of Alternative Transactions..................................39
Certain Agreements of Secure..............................................39
Indemnification of Secure.................................................39
Indemnification by Secure.................................................39
Conditions to the Amalgamation and Reorganization.........................40
Termination and Amendment.................................................40
Fees and Expenses.........................................................40
Confidentiality Agreement.................................................40
Agreements of Border Affiliates...........................................41
Agreements of Secure Affiliates...........................................41
Support Agreement.........................................................41

PROPOSAL TWO
THE ENIGMA ACQUISITION........................................................42
Background................................................................42
Reasons for the Enigma Acquisition and Recommendation of the Board of
Directors.................................................................43
Opinion Of Secure's Financial Advisor.....................................44
Transaction Mechanics.....................................................48
THE ENIGMA ACQUISITION AGREEMENT AND RELATED AGREEMENTS.......................49
Effective Date of the Enigma Merger.......................................49
Merger Consideration, Exchange of Enigma Stock............................49
Conversion of Enigma Options..............................................49
Business of Enigma Pending the Enigma Merger..............................49
Solicitation of Alternative Transactions..................................50
Certain Agreements of Secure..............................................50
Indemnification of Secure.................................................50
Indemnification by Secure.................................................50
Conditions to the Enigma Merger...........................................51
Termination and Amendment.................................................51
Fees and Expenses.........................................................52
Confidentiality Agreement.................................................52
Agreements of Border Affiliates...........................................52
Agreements of Secure Affiliates...........................................52
THE ACQUISITIONS..............................................................52
Operations Following the Acquisitions.....................................52
Interests of Certain Persons in the Acquisitions..........................53
No Dissenters' Appraisal Rights...........................................53
Accounting Treatment......................................................53
Certain United States Federal Income Tax Considerations...................53
Comparison of Stockholders' Rights........................................54
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION............................55
INFORMATION CONCERNING SECURE.................................................73
Management's Discussion and Analysis of Financial Condition and
Results of Operations.....................................................73
Business..................................................................78
Description of Property...................................................92
Directors and Management..................................................92
Principal Holders of Voting Securities....................................96
Section 16(a) Reporting...................................................97
Executive Compensation....................................................98
Employment Contracts; Severance, Termination Of Employment And
Change-In-Control Arrangements...........................................100

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Certain Transactions.....................................................103
Description of Capital Stock.............................................104
Legal Proceedings........................................................106
INFORMATION CONCERNING BORDER................................................107
Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................107
Business.................................................................110
INFORMATION CONCERNING ENIGMA................................................115
Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................115
Business.................................................................118

PROPOSAL THREE
ELECTION OF DIRECTORS........................................................126

PROPOSAL FOUR

APPROVAL OF AMENDMENT TO AMENDED AND RESTATED 1995 OMNIBUS STOCK PLAN.......127
Proposed Amendments Requiring Stockholder Approval.......................127
Summary of the Provisions of the Amended and Restated 1995 Omnibus
Stock Plan...............................................................127
Summary of Federal Income Tax Consequences...............................131
Board of Directors' Recommendation.......................................133
ACCOUNTANTS..................................................................134
ADDITIONAL MATTERS...........................................................134
INDEX TO FINANCIAL STATEMENTS..................................................1

APPENDIX A - BORDER ACQUISITION AGREEMENT..............................A-1
APPENDIX B - ENIGMA ACQUISITION AGREEMENT..............................B-1
APPENDIX C - OPINIONS OF ROBERTSON STEPHENS............................C-1
APPENDIX D - AMENDMENT TO AMENDED AND RESTATED 1995
OMNIBUS STOCK PLAN........................................D-1

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<PAGE>

GLOSSARY OF TERMS

THE FOLLOWING TERMS HAVE THE FOLLOWING MEANINGS WHEN USED IN THIS PROXY
STATEMENT (INCLUDING THE SUMMARY). THESE DEFINED TERMS ARE NOT USED IN THE
FINANCIAL STATEMENTS CONTAINED HEREIN.

"ACQUISITIONS" mean the Border Acquisition and the Enigma Acquisition.

"ACQUISITION AGREEMENTS" mean the Border Acquisition Agreement and the
Enigma Acquisition Agreement.

"AMALGAMATION" means the proposed amalgamation between Border and
Amalgamation Sub, pursuant to the terms of an amalgamation agreement.

"AMALGAMATION SUB" means Edge Acquisition Inc., an Ontario corporation and
wholly-owned subsidiary of Secure.

"AMENDED AND RESTATED 1995 OMNIBUS STOCK PLAN" means the Secure Computing
Corporation Amended and Restated 1995 Omnibus Stock Plan.

"BENEFICIARIES" mean holders of New Border Exchangeable Shares.

"BORDER" means Border Network Technologies Inc., an Ontario corporation.

"BORDER ACQUISITION" means the series of transactions among Secure,
Amalgamation Sub and Border whereby New Border becomes a wholly-owned subsidiary
of Secure.

"BORDER ACQUISITION AGREEMENT" means the Acquisition and Pre-Amalgamation
Agreement among Secure, Amalgamation Sub and Border dated as of May 28, 1996, as
amended by Amendment No. 1 thereto, dated as of July 31, 1996.

"BORDER AFFILIATE" means a holder of Border Stock who is or may be deemed
to be an "affiliate" of Border as such term is defined under the Securities Act.

"BORDER AFFILIATE AGREEMENTS" mean the agreements entered into by Border
Affiliates for the benefit of Secure.

"BORDER COMMON STOCK" means the authorized common shares, without par
value, in the capital of Border.

"BORDER EFFECTIVE DATE" means the date the Articles of Amendment are filed
with the Ministry of Consumer and Commercial Relations of the Province of
Ontario in respect of the Reorganization.

"BORDER EXCHANGE RATIO" means 0.50 or the such other rate of exchange of
shares of Border Class B Stock into New Border Exchangeable Shares as determined
in accordance with the terms of the Border Acquisition Agreement.

"BORDER NON-DISCLOSURE AGREEMENT" means the Bilateral Limited
Non-Disclosure Agreement between Secure and Border dated April 17, 1996.

"BORDER SHAREHOLDERS" means holders of Border Stock.

"BORDER STOCK" means Border Common Stock and authorized Class A nonvoting
shares, without par value, in the capital of Border.

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<PAGE>

"BORDER STOCK OPTIONS" mean options to purchase Border Common Stock.

"BORDER WARRANTS" mean special warrants to acquire Border Common Stock and
warrants to acquire options to acquire Border Common Stock.

"CGCL" means the California General Corporation Law.

"CANADIAN GAAP" means accounting principals generally accepted in Canada.

"CALIFORNIA COMMISSIONER" means the California Commissioner of
Corporations.

"CODE" means the United States Internal Revenue Code of 1986, as amended.

"THE COMMISSION" means the United States Securities and Exchange
Commission.

"THE COMPANY" means Secure Computing Corporation, a Delaware corporation.

"DGCL" means the General Corporation Law of the State of Delaware.

"ENIGMA" means Enigma Logic, Inc., a California corporation.

"ENIGMA ACQUISITION" means the transaction among Secure, Merger Sub and
Enigma whereby Enigma will become a wholly-owned subsidiary of Secure.

"ENIGMA ACQUISITION AGREEMENT" means the Agreement and Plan of Merger among
Secure, Merger Sub and Enigma dated as of June 24, 1996, as amended by Amendment
No. 1 thereto, dated as of July 31, 1996.

"ENIGMA AFFILIATE"' means a holder of Enigma Stock who is or may be deemed
to be an "affiliate" of Enigma as such term is defined under the Securities Act.

"ENIGMA AFFILIATE AGREEMENTS" mean the agreements entered into by Enigma
Affiliates for the benefit of Secure.

"ENIGMA EFFECTIVE TIME" means the date the Agreement of Merger shall have
been filed with and accepted by the Secretary of State of California.

"ENIGMA EXCHANGE RATIO" means .112715 or such other rate of exchange for
shares of Enigma Stock into shares of Secure Common Stock as determined in
accordance with the terms of the Enigma Acquisition Agreement.

"ENIGMA MERGER" means the merger of Merger Sub with and into Enigma.

"ENIGMA OPTIONS" means options to purchase Enigma Stock.

"ENIGMA SHAREHOLDERS" means holders of Enigma Stock.

"ENIGMA STOCK" means the authorized Common Stock, par value $.01 per share,
of Enigma.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

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<PAGE>

"MERGER SUB" means Owl Acquisition, Inc., a California corporation and a
wholly-owned subsidiary of Secure.

"NEW BORDER" means the corporation continuing from the amalgamation of
Border and Amalgamation Sub.

"NEW BORDER CLASS A SHARES" means the Class A shares, without par value, in
the capital of New Border.

"NEW BORDER CLASS B SHARES" means the Class B shares, without par value, in
the capital of New Border.

"NEW BORDER EXCHANGEABLE SHARES" mean the exchangeable shares of New Border
having the rights, privileges, restrictions and conditions set forth in an
appendix to the Border Acquisition Agreement.

"OBCA" means the Business Corporation Act (Ontario), R.S.O. 1990, c.B.16,
as amended, and the regulations promulgated thereunder.

"REORGANIZATION" means the reorganization of the capital of New Border
immediately following the Amalgamation.

"ROBERTSON STEPHENS" means Robertson, Stephens & Company LLC, financial
advisor to Secure.

"SECURE" means Secure Computing Corporation, a Delaware corporation.

"SECURE AFFILIATE" means a holder of Secure Common Stock who is or may be
deemed to be an "affiliate" of Secure as such term is defined under the
Securities Act.

"SECURE AFFILIATE AGREEMENTS" mean the agreements entered into by Secure
Affiliates.

"SECURE COMMON STOCK" means the Common Stock, par value $.01 per share, of
Secure.

"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

"SPECIAL MEETING" means the special meeting of the stockholders of Secure
to be held on August 28, 1996.

"SPECIAL VOTING SHARE" means the one share of Series A Preferred Stock of
Secure to be issued to the Trustee by Secure in connection with the Border
Acquisition and to be held by the Trustee pursuant to the terms of the Voting
and Exchange Trust Agreement.

"SUPPORT AGREEMENT" means the agreement to be entered into as of the Border
Effective Date between Secure and New Border in connection with the Border
Acquisition.

"U.S. GAAP" means generally accepted accounting principles in the United
States.

"VOTING AND EXCHANGE TRUST AGREEMENT" means the agreement to be entered
into as of the Border Effective Date between Secure, New Border and the Trustee
in connection with the Border Acquisition.

"WEBSTER" means Webster Network Strategies, Inc., a wholly-owned subsidiary
of Secure.

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<PAGE>

REPORTING CURRENCIES AND ACCOUNTING PRINCIPLES

The financial statements and the pro forma financial statements of Secure,
and the selected historical and pro forma financial data concerning Secure
contained in this Proxy Statement are reported in U.S. Dollars ("$") and have
been prepared in accordance with U.S. GAAP.

The financial statements of Border contained in this Proxy Statement are
reported in Canadian dollars ("$Cdn") and have been prepared in accordance with
Canadian GAAP, which differs in certain material respects from U.S. GAAP. The
selected historical and pro forma financial data concerning Border contained in
this Proxy Statement are reported in U.S. Dollars. In the case of Border, there
are no significant items for which Canadian GAAP and U.S. GAAP have different
treatment, except for the proportionate consolidation of Border Network
Technologies Europe Limited and the accounting for excess of share repurchase
price over carrying value. See Notes 4 and 7 to the Consolidated Financial
Statements of Border.

The financial statements and the selected historical and pro forma
financial data concerning Enigma contained in this Proxy Statement are reported
in U.S. Dollars and have been prepared in accordance with U.S. GAAP.

CANADIAN/U.S. EXCHANGE RATE

For purposes of translating the financial information of Border contained
in this Proxy Statement, including the selected historical and pro forma
financial data, an exchange rate of $1.00 to 1.36 $Cdn was used.

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<PAGE>

SUMMARY OF PROXY STATEMENT

THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT. CERTAIN CAPITALIZED TERMS USED IN THIS SUMMARY ARE
DEFINED ELSEWHERE IN THIS PROXY STATEMENT. REFERENCE IS MADE TO, AND THIS
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THIS PROXY STATEMENT AND THE APPENDICES ATTACHED HERETO. EACH
STOCKHOLDER SHOULD READ CAREFULLY THIS PROXY STATEMENT AND THE APPENDICES
ATTACHED HERETO IN THEIR ENTIRETY.

BUSINESS OF SECURE

Secure produces and markets products designed to protect an organization's
computer network and its computers from access by unauthorized users. Secure's
security products include its Sidewinder-TM- Internet firewall and
LOCKout-TM- remote access identification and authentication server and
software products. Secure's products have been developed utilizing the
technology and experience gained in developing, manufacturing and selling a
line of Secure Network Server products to U.S. government agencies. The
Company continues to conduct research and development under contracts with
government agencies. In May 1996, Secure acquired Webster Network
Strategies, Inc. Webster's Internet monitoring and filtering software is
used by corporations and other organizations. See "Information Concerning
Secure -- Business".

BUSINESS OF BORDER

Border develops, produces, markets and licenses products which protect
networked computers from unauthorized users. The BorderWare Firewall Server
provides security for organizations connecting to external networks such as the
Internet as well as between administrative divisions within a company (i.e.,
intranet security). See "Information Concerning Border -- Business".

BUSINESS OF ENIGMA

Enigma designs, develops, markets and supports network security products
for a wide variety of computer environments. Enigma's products are designed to
provide a network authentication system which can be scaled across heterogeneous
enterprise networks. Enigma offers dynamic password authentication servers that
work with most popular third party tokens, and software-only solutions which can
be electronically distributed. Enigma's SAFEWORD family of products permits
network access by use of a "dynamic password," a password that once
authenticated for a single use becomes invalid for subsequent entries. Enigma
sells its products in North America and overseas through its direct sales
personnel, through systems integrators and consultants and through distributors
based in Europe, Japan and Australia. Enigma also utilizes co-marketing and
joint packaging relationships with major suppliers of products for remote LAN
access, Internet access, Internet services and firewalls. See "Information
Concerning Enigma -- Business".

RECENT FINANCIAL RESULTS

For a discussion of the financial results of Secure, Border and Enigma for
the six months ended June 30, 1996 see "Recent Financial Results".

DATE AND PLACE OF THE SPECIAL MEETING

The Special Meeting will be held on Wednesday, August 28, 1996 at the
offices of Faegre & Benson LLP, Norwest Center, 23rd Floor, 90 South Seventh
Street, Minneapolis, Minnesota at 10:00 a.m. Central Daylight Time. See
"General Information".

11
<PAGE>

PURPOSES OF THE SPECIAL MEETING

To (1) authorize shares of Secure Common Stock for issuance pursuant to the
terms of New Border Exchangeable Shares; (2) authorize shares of Secure Common
Stock for issuance pursuant to the terms of the Enigma Acquisition Agreement;
(3) to elect five directors for terms of one to three years; (4) to amend the
Amended and Restated 1995 Omnibus Stock Plan; and (5) to transact such other
business as may properly be brought before the Special Meeting. See "General
Information -- Matters to be Considered at the Special Meeting".

STOCKHOLDERS ENTITLED TO VOTE

Only stockholders of record at the close of business on July 26, 1996 will
be entitled to vote at the Special Meeting. See "General Information".

QUORUM; VOTES REQUIRED

The presence either in person or by properly executed proxy of the holders
of a majority of the outstanding shares of Secure Common Stock entitled to vote
at the Special Meeting is necessary to constitute a quorum at the Special
Meeting.

DISSENTERS' RIGHTS

Holders of Secure Common Stock are not entitled to dissenters' appraisal
rights in connection with the Border Acquisition or the Enigma Acquisition
because the Company is not a constituent corporation in either transaction. See
"The Acquisitions -- No Dissenters' Appraisal Rights".

RECOMMENDATIONS OF THE BOARD OF DIRECTORS

The Board of Directors has determined that the Border Acquisition and the
Enigma Acquisition are each advisable and in the best interests of the Company
and its stockholders and has unanimously recommended that the stockholders vote
for PROPOSAL ONE and PROPOSAL TWO. See "The Border Acquisition -- Reasons for
the Border Acquisition and Recommendation of the Board of Directors" and "The
Enigma Acquisition -- Reasons for the Enigma Acquisition and Recommendation of
the Board of Directors".

The Board of Directors has also unanimously approved and recommended to the
stockholders the election of the persons nominated as directors and the
amendments to the Amended and Restated 1995 Omnibus Stock Plan, each as
described in this Proxy Statement. See "PROPOSAL THREE" and "PROPOSAL FOUR".

OPINIONS OF SECURE'S FINANCIAL ADVISOR

Robertson Stephens has delivered to the Board of Directors its written
opinion dated May 28, 1996 that, based upon and subject to the various
considerations set forth in such opinion and as of the date thereof, the Border
Exchange Ratio is fair to Secure and its stockholders from a financial point of
view. Robertson Stephens also has delivered to the Board of Directors its
written opinion dated June 25, 1996 that, based upon and subject to the various
considerations set forth in such opinion and as of the date thereof, the Enigma
Exchange Ratio is fair to Secure and its stockholders from a financial point of
view. Copies of the opinions of Robertson Stephens, which set forth the
assumptions made, procedures followed, matters considered and scope of review,
are attached to this

12
<PAGE>

Proxy Statement as Appendix C and each should be read carefully in its entirety.
Certain portions of the fees to be paid to Robertson Stephens are contingent
upon consummation of the Acquisitions. See "The Border Acquisition -- Opinion
of Secure's Financial Advisor" and "The Enigma Acquisition -- Opinion of
Secure's Financial Advisor".

THE BORDER ACQUISITION

CONDITIONS TO THE BORDER ACQUISITION. The obligations of Secure and Border
to effect the transactions set forth in the Border Acquisition Agreement are
subject to certain conditions, including, among other things, that (i) the
Amalgamation shall have been approved by the affirmative requisite vote of
Border Shareholders, (ii) the authorization of shares of Secure Common Stock for
issuance pursuant to the terms of the New Border Exchangeable Shares and the
increase in the shares of Secure Common Stock reserved for future awards under
the Amended and Restated 1995 Omnibus Stock Plan shall have been approved by the
affirmative requisite vote of the stockholders of Secure, and (iii) Adam Adamou
and Robert Forbes, two current directors of Border, and Glenn G. Mackintosh, a
current officer of Border, be elected to the Board of Directors of Secure. See
"The Border Acquisition Agreement and Related Agreements -- Conditions to the
Amalgamation and Reorganization" for a discussion of other conditions to the
transactions contemplated by the Border Acquisition Agreement. See also
"PROPOSAL THREE". Assuming that the shares of Border Stock covered by the
Border Affiliate Agreements and the shares of Secure Common Stock covered by the
Secure Affiliate Agreements are voted in accordance with such agreements, the
shares of stock covered by such agreements will be sufficient to ensure the
approval of the matters which require stockholder approval.

BORDER STOCK OPTIONS. Pursuant to the Border Acquisition Agreement, Secure
has agreed to issue options to acquire shares of Secure Common Stock in
substitution for the Border Stock Options. Such Secure stock options will be
exercisable upon the same terms and conditions as under any existing agreement,
except that each such option will be exercisable for such number of shares of
Secure Common Stock as would have been received pursuant to the Border
Acquisition Agreement for the Border Stock subject to the option had the option
been exercisable and exercised immediately prior to the Border Effective Date,
and the exercise price of such option will be correspondingly adjusted. See
"The Border Acquisition -- Transaction Mechanics" and "The Border Acquisition
Agreement and Related Agreements -- Conversion of Border Stock Options and
Border Warrants".

TERMINATION. The Border Acquisition Agreement may be terminated by mutual
consent of the Boards of Directors of Secure and Border or by either Secure or
Border if the Amalgamation has not been consummated on or before September 30,
1996. See "The Border Acquisition Agreement and Related Agreements --
Termination and Amendment".

THE ENIGMA ACQUISITION

CONDITIONS TO THE ENIGMA ACQUISITION. The obligations of Secure and Enigma
to effect the transactions set forth in the Enigma Acquisition Agreement are
subject to certain conditions, including, among other things, that (i) the
Enigma Merger shall have been approved by affirmative requisite vote of Enigma
Shareholders, provided no more than 3% of such holders have exercised
dissenters' rights provided by California law, (ii) the authorization of shares
of Secure Common Stock for issuance pursuant to the terms of the Enigma Merger
and the increase in the shares of Secure Common Stock reserved for future awards
under the Amended and Restated 1995 Omnibus Stock Plan shall have been approved
by the affirmative requisite vote of the stockholders of Secure, (iii)
permission of the California Commissioner for the issuance of the Secure Common
Stock in the Enigma Merger, and (iv) Eric P. Rundquist, a current director of
Enigma, be elected to the Board of Directors of Secure. See "The Enigma
Acquisition Agreement and Related Agreements -- Conditions to the Enigma Merger"
for a discussion of other conditions to the transactions contemplated by the
Enigma Acquisition Agreement. See also "PROPOSAL THREE". Assuming that the
shares of Enigma Stock covered by the Enigma Affiliate Agreements and the shares
of Secure Common Stock covered by the Secure Affiliate Agreements are voted in
accordance with such agreements, the shares of stock covered by such agreements
will be sufficient to ensure the approval of the matters which require
stockholder approval.

13
<PAGE>

ENIGMA OPTIONS. Pursuant to the Enigma Acquisition Agreement, Secure has
agreed to issue options to acquire shares of Secure Common Stock in substitution
for the Enigma Options. Such Secure stock options will be exercisable upon the
same terms and conditions as under any existing agreement, except that each such
option will be exercisable for such number of shares of Secure Common Stock as
would have been received pursuant to the Enigma Acquisition Agreement for the
Enigma Stock subject to the option had the option been exercisable and exercised
immediately prior to the Enigma Effective Time, and the exercise price of such
option will be correspondingly adjusted. See "The Enigma Acquisition --
Transaction Mechanics" and "The Enigma Acquisition Agreement and Related
Agreements -- Conversion of Enigma Options".

TERMINATION. The Enigma Acquisition Agreement may be terminated by mutual
consent of the Boards of Directors of Secure and Enigma or by either Secure or
Enigma if the Enigma Merger has not been consummated on or before October 31,
1996. See "The Enigma Acquisition Agreement and Related Agreements --
Termination and Amendment".

ACCOUNTING TREATMENT

The Acquisitions will be accounted for as a pooling of interests under U.S.
GAAP. See "The Acquisitions -- Accounting Treatment".

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The Acquisitions will have no effect upon the current holders of Secure
Common Stock for federal income tax purposes. See "The Acquisitions -- Certain
United States Federal Income Tax Considerations".

14
<PAGE>

MARKET PRICE AND DIVIDEND INFORMATION

Shares of Secure Common Stock have been traded on the Nasdaq National
Market under the symbol "SCUR" since Secure's initial public offering on
November 17, 1995. The following table sets forth the range of high and low
closing sale prices reported on the Nasdaq National Market for a share of Secure
Common Stock for the periods indicated. The closing price for a share of Secure
Common Stock on the Nasdaq National Market on May 28, 1996, the last trading day
prior to the public announcement of the Border Acquisition, was $30.25 and on
August 2, 1996, the latest practicable trading day before the printing of this
Proxy Statement, was $14.25.

TWELVE MONTHS ENDED DECEMBER 31, HIGH LOW
- ----------------------------------------- ---------- ----------
1995
Fourth Quarter (from November 17, 1995). . . . . $60.50 $47.25

1996
First Quarter. . . . . . . . . . . . . . . . . . $52.00 $21.00
Second Quarter . . . . . . . . . . . . . . . . . $35.25 $20.50
Third Quarter (through August 2, 1996) . . . . . $25.00 $13.50

As of July 26, 1996, Secure had approximately 137 holders of record of
Secure Common Stock and approximately 2,868 beneficial owners, who hold shares
through banks, brokers and other nominees.

Secure has never paid any dividends on its capital stock. Secure currently
intends to retain earnings for use in its business and therefore does not
anticipate paying cash dividends on shares of Secure Common Stock in the
foreseeable future. Future cash dividends, if any, will be determined by the
Board of Directors of Secure.

There is no public market for shares of capital stock of Border or Enigma.
As of July 26, 1996, Border's capital stock was held by 22 holders of record,
and Enigma had 75 stockholders of record. Neither Border nor Enigma has
previously declared a cash dividend.

15
<PAGE>

SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA
(in thousands, except per share data)

The selected historical financial data of Secure, Border and Enigma set
forth on the following pages have been derived from their respective
historical financial statements, and should be read in conjunction with such
financial statements and the notes thereto included elsewhere in this Proxy
Statement. See "Index to Financial Statements". The historical financial
information for the years ended December 31, 1991, 1992, 1993, 1994 and 1995
for Secure have been audited by Ernst & Young LLP. The historical financial
information for the year ended December 31, 1995 for Border has been audited
by Price Waterhouse (Canada). The historical financial information for the
year ended December 31, 1994 for Border has been audited by McClurkin Ahier
Dick & Company. Border was incorporated in January 1994. See "Reporting
Currencies and Accounting Principles" and "Canadian/U.S. Exchange Rate" for a
discussion regarding the selected historical information for Border presented
herein. The historical statements of operations for the years ended December
31, 1993, 1994 and 1995 and the balance sheets as of December 31, 1994 and
1995 for Enigma have been audited by Price Waterhouse LLP. The historical
financial information for the three months ended March 31, 1995 and 1996 for
all three companies and the statements of operations for the years ended
December 31, 1991 and 1992 and the balance sheets as of December 31, 1991,
1992 and 1993 for Enigma have been derived from the unaudited financial
statements that include all adjustments (consisting only of normal recurring
adjustments and accruals) that Secure, Border or Enigma, as the case may be,
consider necessary for a fair presentation of the financial information set
forth therein, in accordance with U.S. GAAP or Canadian GAAP, as the case may
be. The results of the three months ended March 31, 1996 for each company
are not necessarily indicative of the results for the entire year. For a
discussion of results for the six months ended June 30, 1996, see "Recent
Financial Results".

The selected pro forma combined financial information of Secure and Border
Combined, Secure and Enigma Combined and Secure, Border and Enigma Combined are
derived from the unaudited pro forma combined condensed financial statements of
Secure and Border Combined, Secure and Enigma Combined and Secure, Border and
Enigma Combined, respectively, and should be read in conjunction with such pro
forma statements and notes thereto which are included elsewhere in this Proxy
Statement. See "Pro Forma Combined Condensed Financial Information". The pro
forma information is presented for illustrative purposes only and is not
necessarily indicative of the operating results or financial position that would
have occurred if only the Border Acquisition had been consummated (in the case
of the Secure and Border Combined), or the Enigma Acquisition had been
consummated (in the case of the Secure and Enigma Combined) or if both the
Acquisitions had been consummated (in the case of the Secure, Border and Enigma
Combined), nor is it necessarily indicative of future operating results or
financial position.

<PAGE>

SECURE
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
MARCH 31,
----------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Products and services . . . $--- $--- $8 $1,486 $5,863 $1,097 $2,002
Government contracts. . . . 3,982 5,265 9,389 13,744 14,849 3,450 5,351
------ ------ ------ ------ ------ ------ ------
Total revenue. . . . . . 3,982 5,265 9,397 15,230 20,712 4,547 7,353
Cost of revenue. . . . . . . . 2,286 3,264 6,271 9,828 13,529 2,918 4,513
------ ------ ------ ------ ------ ------ ------
Gross profit . . . . . . . . . 1,696 2,001 3,126 5,402 7,183 1,629 2,840
Operating expenses:
Selling and marketing . . . 107 328 545 1,221 2,691 411 1,308
Research and development. . 778 498 521 1,403 3,691 859 1,460
General and administrative. 1,816 1,581 1,649 1,749 1,936 279 631
------ ------ ------ ------ ------ ------ ------
Total operating expenses 2,701 2,407 2,715 4,373 8,318 1,549 3,399
------ ------ ------ ------ ------ ------ ------
Operating income (loss). . . . (1,005) (406) 411 1,029 (1,135) 80 (559)
Interest and other expense . . (374) (681) (218) (164) (100) (29) ---
Interest and other income. . . 6 9 17 126 261 16 385
------ ------ ------ ------ ------ ------ ------
Income (loss) before income
taxes and cumulative effect
of accounting change. . . . (1,373) (1,078) 210 991 (974) 67 (174)
Income tax benefit . . . . . . --- --- 502 502 --- --- ---
Cumulative effect of accounting
change. . . . . . . . . . . --- --- 350 --- --- --- ---
------ ------ ------ ------ ------ ------ ------
Net income (loss). . . . . . . $(1,373) $(1,078) $1,062 $1,493 $(974) $67 $(174)
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Net income (loss) per share(1) . $(.91) $(.49) $.32 $.40 $(.22) $.02 $(.03)
Weighted average shares
outstanding . . . . . . . . 1,098 1,590 3,288 3,750 4,383 4,030 6,557

DECEMBER 31, MARCH 31,
----------------------------------------------- -------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
(unaudited)

BALANCE SHEET DATA:
Working capital (deficit). . . $(1,817) $124 $(480) $1,924 $33,999 $33,125
Total assets . . . . . . . . . 3,398 2,778 4,076 6,590 41,350 40,983
Long term debt, less current
portion and redeemable
convertible preferred
stock . . . . . . . . . . . 4,230 7,229 7,186 8,952 --- ---
Stockholders' equity (deficit) (4,664) (6,053) (5,444) (4,435) 37,368 37,332

</TABLE>

- ------------------------------
(1) "See Pro Forma Combined Condensed Financial Information".

<PAGE>

BORDER(1)
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
--------------------------- -------------------------------
1994 1995 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue. . . . . . . . . . . . . . . . $139 $3,317 $278 $2,341
Cost of revenue. . . . . . . . . . . . 9 340 15 271
---- ----- ---- -----
Gross profit . . . . . . . . . . . . 130 2,977 263 2,070
Operating expenses:
Selling and marketing . . . . . . 59 1,596 113 1,115
Research and development. . . . . . 62 593 61 217
General and administrative. . . . . 18 717 42 338
---- ----- ---- -----
Total operating expenses . . . 139 2,906 216 1,670
---- ----- ---- -----
Operating income (loss). . . . . . . . (9) 71 47 400
Interest and other income. . . . . . . --- --- --- 45
---- ----- ---- -----
Income (loss) before income
taxes . . . . . . . . . . . . . . (9) 71 47 445
Income tax expense . . . . . . . . . --- 21 --- 169
---- ----- ---- -----
Net income (loss). . . . . . . . . . . $(9) $50 $47 $276
---- ----- ---- -----
---- ----- ---- -----
Net income (loss) per share. . . . . . $.00 $.01 $.01 $.03
Weighted average shares
outstanding. . . . . . . . . . . . . . 8,000 8,000 8,000 10,484

DECEMBER 31, MARCH 31,
------------------------------------- ----------------------
1994 1995 1996
---- ---- ----
(unaudited)
BALANCE SHEET DATA:
Working capital (deficit). . . . . . . $23 $(107) $10,282
Total assets . . . . . . . . . . . . 156 1,298 12,059
Long term debt, less current
portion . . . . . . . . . . . . . 7 34 31
Stockholders' equity . . . . . . . . 19 69 10,694

</TABLE>

- ------------------------------
(1) See "Reporting Currencies and Accounting Principles" and "Canadian/U.S.
Exchange Rate."

<PAGE>

ENIGMA
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
March 31,
----------------------------------------------- ------------------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
(unaudited) (unaudited)

<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue. . . . . . . . . . . . $1,985 $1,454 $1,590 $2,426 $3,901 $1,499 $1,395
Cost of revenue. . . . . . . . 400 522 472 838 982 335 266
----- ----- ----- ----- ----- ----- -----
Gross profit . . . . . . . . . 1,585 932 1,118 1,588 2,919 1,164 1,129
Operating expenses:
Selling and marketing . . . . 729 696 612 576 1,089 295 345
Research and development. . . 486 451 357 393 585 101 270
General and administrative. . 319 301 345 419 814 195 407
----- ----- ----- ----- ----- ----- -----
Total operating expenses. 1,534 1,448 1,314 1,388 2,488 591 1,022
----- ----- ----- ----- ----- ----- -----
Operating income (loss). . . . 51 (516) (196) 200 431 573 107
Interest expense . . . . . . . (248) (249) (135) (143) (139) (35) (38)
----- ----- ----- ----- ----- ----- -----
Income (loss) before income
taxes . . . . . . . . . . . . (197) (765) (331) 57 292 538 69
Income tax expense . . . . . . --- --- --- --- --- --- ---
----- ----- ----- ----- ----- ----- -----
Net income (loss). . . . . . . $(197) $(765) $(331) $57 $292 $538 $69
----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- -----
Net income (loss) per share. . $(.11) $(.43) $(.02) $.00 $.01 $.03 $.00
Weighted average shares
outstanding. . . . . . . . . . 1,725 1,789 18,135 18,335 19,517 18,692 20,515

DECEMBER 31, MARCH 31,
----------------------------------------------- --------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
(unaudited) (unaudited)
BALANCE SHEET DATA:
Working capital (deficit). . . $(108) $(274) $(251) $44 $400 $(1,422)
Total assets . . . . . . . . . 576 422 419 981 1,613 2,059
Long term debt, less current
portion . . . . . . . . . . 2,824 3,337 1,434 1,700 1,845 ---
Preferred stock. . . . . . . . 4,569 4,569 --- --- --- ---
Stockholders' equity (deficit) (2,756) (3,521) (1,637) (1,580) (1,229) (1,160)

</TABLE>

<PAGE>

PRO FORMA (UNAUDITED)

SECURE AND BORDER COMBINED

THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------- -----------------------------------
1994 1995 1995 1996
---- ---- ---- ----

STATEMENT OF OPERATIONS DATA:
Revenue:
Products and services. . . . . $1,625 $9,180 $1,375 $4,343
Government contracts . . . . . 13,744 4,849 3,450 5,351
------ ------ ------ ------
Total revenue . . . . . . . 15,369 24,029 4,825 9,694
Cost of revenue. . . . . . . . 9,837 13,869 2,933 4,784
------ ------ ------ ------
Gross profit . . . . . . . . . 5,532 10,160 1,892 4,910
Operating expenses:
Selling and marketing . . . 1,280 4,287 524 2,423
Research and development. . 1,465 4,284 929 1,677
General and administrative. 1,767 2,653 319 969
------ ------ ------ ------
Total operating expenses 4,512 11,224 1,763 5,069
------ ------ ------ ------
Operating income (loss). . . . 1,020 (1,064) 129 (159)
Interest and other income. . . 126 261 16 430
Interest expense . . . . . . . (164) (100) (31) ---
------ ------ ------ ------
Income (loss) before income
taxes . . . . . . . . . . . 982 (903) 114 271
Income tax expense (benefit) . (502) 21 --- 169
------ ------ ------ ------
Net income (loss). . . . . . . $ 1,484 $ (924) $ 114 $ 102
------ ------ ------ ------
------ ------ ------ ------
Net income (loss) per share(1) $.19 $(.11) $.01 $.01
Weighted average shares
outstanding . . . . . . . . 7,750 8,383 8,030 11,657

MARCH 31, 1996
---------------------------

BALANCE SHEET DATA:
Working capital. . . . . . . . . . . . $43,407
Total assets . . . . . . . . . . . . 53,042
Long term debt, less current
portion . . . . . . . . . . . . . 31
Stockholders' equity (deficit) . . . 48,026

</TABLE>
20

- ------------------------------
(1) See Pro Forma Combined Condensed Financial Information.

<PAGE>

SECURE AND ENIGMA COMBINED
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31, THREE MONTHS
ENDED
MARCH 31,
-------------------------------------------------- -------------------

1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Products and services . . . $1,598 $3,912 $9,742 $2,596 $3,397
Government contracts. . . . 9,389 13,744 14,849 3,450 5,351
------ ------- ------ ------ ------
Total revenue. . . . . . 10,987 17,656 24,613 6,046 8,748
Cost of revenue. . . . . . . . 6,743 10,666 14,511 3,253 4,779
------ ------- ------ ------ ------
Gross profit . . . . . . . . . 4,244 6,990 10,102 2,793 3,964
Operating expenses:
Selling and marketing . . . 1,157 1,797 3,780 706 1,653
Research and development. . 878 1,796 4,276 960 1,730
General and administrative. 1,994 2,168 2,750 474 1,038
------ ------- ------ ------ ------
Total operating expenses 4,029 5,761 10,806 2,140 4,421
Operating income (loss). . . . 215 1,229 (704) 653 (452)
Interest expense . . . . . . . (353) (307) (239) (64) (38)
Interest and other income. . . 17 126 261 16 385
------ ------- ------ ------ ------
Income (loss) before income
taxes and cumulative effect
of accounting change. . . . (121) 1,048 (682) 605 (105)
Income tax expense (benefit) . (502) (502) --- --- ---
Cumulative effect of accounting
change. . . . . . . . . . . 350 --- --- --- ---
------ ------- ------ ------ ------
Net income (loss). . . . . . . $731 $1,550 $(682) $ 605 $(105)
------ ------- ------ ------ ------
------ ------- ------ ------ ------
Net income (loss) per share(1) $.14 $.27 $(.11) $.10 $(.01)
Weighted average shares
outstanding . . . . . . . . 5,330 5,792 6,425 6,112 8,617

MARCH 31, 1996
---------------------------

BALANCE SHEET DATA:
Working capital. . . . . . . . $31,703
Total assets . . . . . . . . . 43,042
Long term debt, less current
portion . . . . . . . . . . ---
Stockholders' equity (deficit) 36,172
- -----------------------

</TABLE>

(1) See Pro Forma Combined Condensed Financial Information.

<PAGE>

SECURE, BORDER AND ENIGMA COMBINED

YEAR ENDED DECEMBER 31, THREE MONTHS
ENDED
MARCH 31,
-------------------------------------------------- -------------------

1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue:
Products and services . . . $1,598 $4,051 $13,081 $2,874 $5,738
Government contracts. . . . 9,389 13,744 14,849 3,450 5,351
------ ------- ------ ------ ------
Total revenue. . . . . . 10,987 17,795 27,930 6,324 11,089
Cost of revenue. . . . . . . . 6,743 10,675 14,851 3,268 5,050
------ ------- ------ ------ ------
Gross profit . . . . . . . . . 4,244 7,120 13,079 3,056 6,039
Operating expenses:
Selling and marketing . . . 1,157 1,856 5,376 819 2,768
Research and development. . 878 1,858 4,869 1,021 1,947
General and administrative. 1,994 2,186 3,467 516 1,376
------ ------- ------ ------ ------
Total operating expenses 4,029 5,900 13,712 2,356 6,091
------ ------- ------ ------ ------
Operating income (loss). . . . 215 1,220 (633) 700 (52)
Interest expense . . . . . . . (353) (307) (239) (64) (38)
Interest and other income. . . 17 126 261 16 430
------ ------- ------ ------ ------
Income (loss) before income
taxes and cumulative effect
of accounting change. . . . (121) 1,039 (611) 652 340
Income tax expense (benefit) (502) (502) 21 --- 169
Cumulative effect of accounting
change. . . . . . . . . . . 350 --- --- --- ---
------ ------- ------ ------ ------
Net income (loss). . . . . . . $731 $1,541 $(632) $652 $171
------ ------- ------ ------ ------
------ ------- ------ ------ ------
Net income (loss) per share(1) $.14 $.16 $(.06) $.06 $.01
Weighted average shares
outstanding. . . . . . . 5,330 9,792 10,425 10,112 13,965

MARCH 31, 1996
---------------------------

BALANCE SHEET DATA:
Working capital. . . . . . . . $41,985
Total assets . . . . . . . . . 55,101
Long term debt, less current
portion . . . . . . . . . . 31
Stockholders' equity (deficit) 46,866

</TABLE>

- ----------------------
(1) Pro Forma Combined Condensed Financial Information.

22
<PAGE>

RECENT FINANCIAL RESULTS

The following financial information for the six month periods ended June
30, 1995 and 1996 for Secure, Border and Enigma is unaudited but in the opinion
of management of Secure reflects all adjustments, consisting of normal recurring
adjustments and accruals, considered necessary for a fair presentation. The
results for the six months ended June 30, 1996 for each company are not
necessarily indicative of the results for the entire year.

SECURE

Statements of Operations (in thousands, except per share data)

Six Months Ended
June 30,
----------------------------------
1995 1996
---------------- ----------------

Revenue:
Products and services $1,900 $4,039
Government contracts 6,647 9,399
---------------- ----------------
8,547 13,438
Cost of revenue 5,705 8,302
Gross profit 2,842 5,136
---------------- ----------------
Operating expenses:
Selling and marketing 1,014 3,334
Research and development 1,987 3,464
General and administrative 851 1,564
Acquisition costs --- (6,728)
---------------- ----------------
3,852 15,090
---------------- ----------------
Operating income (loss) (1,010) (9,954)

Net interest income (expense) (15) 765
Income (loss) before income taxes (1,025) (9,189)

Income taxes --- ---
---------------- ----------------
Net loss $(1,025) $(9,189)
---------------- ----------------
---------------- ----------------

Net loss per share $(.27) $(1.39)
---------------- ----------------
---------------- ----------------

Weighted average shares outstanding 3,729 6,615
---------------- ----------------
---------------- ----------------

For the six months ended June 30, 1996, revenue increased 57.2 percent to
$13,438,000 from $8,547,000 in the same period of 1995. The increase resulted
from higher revenue in both products and services and government contracts
revenue. Products and services revenue was $4,039,000 for the six months ended
June 30, 1996, an increase of 112.6 percent over the same period in 1995, and
was attributable to sales of the Sidewinder product and related services which
more than offset lower sales of products to the U.S. government. Government
contracts revenue was $9,399,000 for the six months ended June 30, 1996, an
increase of 41.4 percent over the same period in 1995, and reflects the
Company's increased efforts on the Secure Network Server program for the NSA.

Gross profit as a percentage of revenue increased in the six month period
ended June 30, 1996 to 38.2 percent from 33.3 percent in the same period of
1995. The increase resulted mainly from products and services revenue, which
carry higher margins than government contracts, gaining as a percentage of the
revenue mix.

<PAGE>

Selling and marketing expenses increased in the six month period ended June
30, 1996 to $3,334,000 up from $1,014,000 in the same period of 1995. As a
percentage of revenue, such expenses were 24.8 percent for the six month period
ended June 30, 1996 compared to 11.9 percent in the same period of 1995. The
increase resulted primarily from expenses associated with the Company's
increased order activity, a stronger marketing presence and personnel additions
made to position the Company for future growth.

Research and development expenses increased in the first half of 1996 to
$3,464,000 up from $1,987,000 in the same period of 1995. As a percentage of
revenue, research and development expenses were 25.8 percent for the six month
period ended June 30, 1996 compared to 23.2 percent for the same period of 1995.
The increase resulted primarily from the Company's continued development
investments in new and existing products, including Sidewinder version 3.0 and
LOCKout remote access control.

Acquisition costs totaled $6.7 million, including $3.4 million for
investment banking, legal and accounting charges for the Border and Enigma
Acquisitions, which were expensed immediately in accordance with applicable
pooling rules. The remaining $3.3 million was purchased research and
development in progress, expensed in connection with the acquisition of Webster
in accordance with applicable purchase accounting rules.

BORDER

Condensed Statements of Operations (in thousands)

Six Months Ended
June 30,
----------------------------------
1995 1996
---------------- ----------------

Total revenue $961 $4,506
Acquisition expenses --- (4,231)
Net income (loss) 213 (4,474)

Revenue for the six months ended June 30, 1996 increased to $4,506,000 from
$961,000 for the same period of 1995 due to the increased market acceptance of
the BorderWare firewall product. The net loss of $4,474,000 in the 1996 period
vs. income of $213,000 in the same period of 1995 reflects $4,231,000 of
expenses related to Border being acquired by Secure and increased research and
development and marketing expenses in the first six months of 1996.

ENIGMA

Condensed Statements of Operations (in thousands)

Six Months Ended
June 30,
----------------------------------
1995 1996
---------------- ----------------

Total revenue $2,302 $2,478
Acquisition expenses --- (2,110)
Net income (loss) 535 (2,857)

Revenue for the six months ended June 30, 1996 increased to $2,478,000 from
$2,302,000 in the same period of 1995. The net loss of $2,857,000 in the first
half of 1996 vs. income of $535,000 in the same period of 1995 is a result of
expenses of $2,110,000 related to Enigma being acquired by Secure and
significant investments made in 1996 in product development, selling and
marketing, and administrative areas needed to position Enigma for future growth.

<PAGE>
COMPARATIVE PER SHARE DATA

The following table sets forth (i) the historical net income per common
share and the historical book value per common share for Secure, Border and
Enigma and the historical market value per common share data for Secure; and
(ii) the unaudited pro forma combined income per common share and the unaudited
pro forma combined book value per common share data after giving effect to the
proposed Acquisitions. None of Secure, Border or Enigma have ever paid a
dividend on their respective shares of capital stock. The information presented
in the table should be read in conjunction with the Pro Forma Combined Condensed
Financial Information and the notes thereto and the separate historical
financial statements and the notes thereto of Secure, Border and Enigma included
elsewhere in this Proxy Statement.

Year Ended Three Months Ended
December 31, March 31,
-------------------------- ------------------
1993 1994 1995 1996
---- ---- ---- ----

Historical Secure:
Net income (loss) per share - primary $.58 $.78 $(.60) $(.03)
Net income (loss) per share -
fully diluted $.32 $.40 $(.22) $(.03)

Book value per share $5.66

Historical Border:
Net income (loss) per share N/A $.00 $.01 $.03
Book value per share $1.07

Historical Enigma:
Net income (loss) per share $(.02) $.00 $.01 $.00
Book value per share $(.06)

Pro Forma Combined per Secure
share (1):
Secure/Border:
Net income (loss) per share
Book value per share $.32 $.19 $(.11) $.01
$4.13

Secure/Enigma
Net income (loss) per share
Book value per share $.14 $.27 $(.11) $(.01)
$4.18

Secure/Border/Enigma:
Net income (loss) per share
Book value per share $.14 $.16 $(.06) $.01
$3.43

- ---------------
(1) See "Pro Forma Combined Condensed Financial Information".

<PAGE>

Year Ended Three Months Ended
December 31, March 31,
-------------------------- ------------------
1993 1994 1995 1996
---- ---- ---- ----

Equivalent Pro Forma Combined per
Border share (2)
Secure/Border:
Net income (loss) per share
Book value per share N/A $.11 $(.07) $.01
$3.65

Secure/Border/Enigma:
Net income (loss) per share
Book value per share N/A $.12 $(.05) $.01
$3.56

Equivalent Pro Forma Combined per
Enigma share (3)
Secure/Enigma:
Net income (loss) per share
Book value per share $.03 $.06 $(.03) $(.00)
$1.52

Secure/Border/Enigma:
Net income (loss) per share
Book value per share $.03 $.06 $(.03) $.01
$1.97

- ---------------

(2) The equivalent Pro Forma Combined per Border share amounts are based upon
the per Secure share amounts multiplied by the Border Exchange Ratio of 0.5
Secure share per Border share. Border shares are as follows:

Common Shares 10,081,818
Special Warrants 1,820,000
Broker Warrants 91,000
Stock Options 1,175,000
----------
13,167,818
----------
----------

(3) The equivalent Pro Forma Combined per Enigma share amounts are based
on the per Secure share amounts multiplied by the Enigma Exchange
Ratio of .112715 Secure share per Enigma share. The Enigma shares are
as follows:

Common Stock 18,298,462
Stock Options 5,567,009
----------
23,865,471
----------
----------

<PAGE>

--------------------

PROPOSAL ONE

--------------------

THE BORDER ACQUISITION

BACKGROUND

On February 14, 1996, Robertson Stephens made a presentation to the Board
of Directors of Secure concerning a possible course of action involving a
limited number of companies, which included Border, identified by Robertson
Stephens as possessing the desired complementary product and market
characteristics. At this meeting, the Board of Directors authorized Robertson
Stephens to contact these companies on Secure's behalf, expressing Secure's
interest in discussing a possible acquisition or strategic combination. The
Board of Directors of Secure also approved the retention of Robertson Stephens
to advise the Company on one or more potential acquisitions or strategic
combinations.

Following preliminary correspondence in February 1996 and telephone
conversations with representatives of Robertson Stephens throughout March 1996,
Steven Lamb, Chairman and Chief Executive Officer of Border, agreed to discuss
the possible benefits of a business combination with Kermit M. Beseke, Chairman
of the Board of Directors, President and Chief Executive Officer of Secure and
representatives of Robertson Stephens in Las Vegas, Nevada, during the week of
April 1, 1996, at an industry convention. After an initial afternoon meeting on
April 2, 1996, between Mr. Beseke and Mr. Lamb, they met again during the
evening of April 3, 1996, accompanied by representatives of Robertson Stephens,
to identify and discuss potential benefits of a combination of the companies.
As a result of these meetings, Mr. Lamb invited Mr. Beseke to visit Border's
headquarters in Toronto, Ontario, Canada.

On April 12, 1996, a special telephonic meeting of the Board of Directors
of Secure was held, during which Mr. Beseke reviewed the status of discussions
with Border.

On April 15, 1996, a representative of Broadview Associates, L.P.,
financial advisor to Border, contacted Robertson Stephens by telephone to
discuss a possible transaction. Based on this and subsequent conversations with
Mr. Beseke and Mr. Lamb, preliminary requests for financial and operational data
were exchanged. Such data was exchanged over the following week.

On April 17, 1996, Mr. Beseke and representatives of Robertson Stephens met
in Border's Toronto headquarters with Mr. Lamb, other executive officers of
Border and a representative of Broadview Associates to conduct preliminary
financial and business due diligence.

On April 18, 1996, Secure filed a complaint against Border alleging patent
infringement.

On April 25, 1996, Mr. Beseke, Stephen Puricelli, a general partner of
Costine Associates, L.P. the Corporate General Partner of Corporate Venture
Partners, L.P., and a member of the Board of Directors of Secure, and
representatives of Robertson Stephens held a telephone conference call to
discuss the financial and operational data received from Border, the
implications of such data for valuation, and the preliminary terms of an
acquisition proposal.

On April 30, 1996, representatives of Broadview Associates and Robertson
Stephens held a telephone conference call to discuss issues related to due
diligence and valuation.

On May 1, 1996, at a regularly scheduled meeting of the Board of Directors
of Secure, Mr. Beseke and representatives of Robertson Stephens and Faegre &
Benson LLP, outside counsel to Secure, discussed the status of negotiations with
Border, preliminary views on valuation and transaction structure, and what would
be the appropriate next steps.

<PAGE>

On May 3, 1996, after telephone conference calls between Mr. Beseke, Mr.
Lamb and representatives of Robertson Stephens and Broadview Associates, the two
companies scheduled a second due diligence trip to the headquarters of Border in
Toronto.

On May 7 and 8, 1996, Mr. Beseke, accompanied by members of management of
Secure, representatives of Ernst & Young LLP, independent auditor of Secure, and
representatives of Robertson Stephens, conducted financial, business and legal
due diligence examinations with respect to Border at the Toronto offices of
Osler, Hoskin & Harcourt, outside counsel to Border. On May 9 and 10, 1996, Mr.
Lamb, accompanied by members of management of Border and representatives of
Broadview Associates, conducted financial, business and legal due diligence
examinations with respect to Secure at the Roseville, Minnesota, headquarters of
Secure. During the week of May 6, 1996, negotiations continued between the
parties concerning the terms of a proposed transaction.

On May 12, 1996, a special telephonic meeting of the Board of Directors of
Secure was held, during which Mr. Beseke, and representatives of Robertson
Stephens, Ernst & Young and Faegre & Benson reviewed the findings of due
diligence and the status of the proposed transaction.

On May 13 and 14, 1996, representatives of Robertson Stephens and Ernst &
Young conducted additional financial due diligence on Border at the company's
headquarters in Toronto.

On the evening of May 14, 1996, at a special meeting of the Board of
Directors of Secure, representatives of Robertson Stephens, Ernst & Young and
Faegre & Benson presented the findings of the more recent due diligence on
Border and such parties reviewed the status of negotiations with Border.

On May 22, 1996, at a special meeting of the Board of Directors of Secure,
Mr. Beseke, along with members of management of Secure and representatives of
Robertson Stephens and Faegre & Benson: (i) discussed the results of financial,
business and legal due diligence; (ii) reviewed the possible benefits and risks
relating to the proposed Border Acquisition; and (iii) reviewed the principal
terms of the proposed Border Acquisition Agreement. Representatives of Robertson
Stephens indicated that, provided the proposed exchange ratio did not change in
final negotiations, Robertson Stephens would be in a position to deliver its
written opinion that, based on matters described therein and as of the date of
the executed Border Acquisition Agreement, the Border Exchange Ratio was fair,
from a financial point of view, to Secure and its stockholders. See "The Border
Acquisition--Opinion of Secure's Financial Advisor." At the meeting, the Board
of Directors of Secure unanimously approved the proposed Border Acquisition and
the proposed Border Acquisition Agreement, subject to receipt of letters from
Ernst & Young and Price Waterhouse, independent auditor for Border, confirming
the status of the proposed Border Acquisition as a "pooling of interests" for
financial reporting purposes. On the afternoon of May 24, 1996, such letters
were delivered to Secure and Border.

On May 28, 1996, the Board of Directors unanimously nominated Steven Lamb,
Robert Forbes and Adam Adamou, directors of Border, to serve as directors of
Secure and unanimously authorized amendments to the Amended and Restated 1996
Omnibus Stock Plan. On the same date, Secure and Border executed the Border
Acquisition Agreement, and Secure issued a press release announcing the Border
Acquisition.

On July 31, 1996, the Board of Directors of Secure unanimously nominated
Glenn G. Mackintosh to serve as a director of Secure in lieu of Steven Lamb and
unanimously approved a proposed conforming amendment to the Border Acquisition
Agreement. The Board of Directors of Secure also unanimously approved
amendments to employment agreements with Messrs. Lamb and Mackintosh. On the
same date, Secure and Border executed Amendment No. 1 to the Border Acquisition
Agreement.

REASONS FOR THE BORDER ACQUISITION AND RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board of Directors has unanimously approved the Border Acquisition and
determined that the transaction is fair and in the best interests of Secure and
its stockholders. The Board of Directors unanimously recommends to the
stockholders that they vote "FOR" the authorization of the shares of Secure
Common Stock

<PAGE>

issuable pursuant to the terms of the New Border Exchangeable Shares. The Board
of Directors based its approval of the Border Acquisition on its determination
that the Border Exchange Ratio is fair to Secure and to its stockholders and
upon a number of other factors, including its belief that the Border Acquisition
will benefit Secure in several important ways:

(i) The proposed transaction is intended to create a leading network
security vendor possessing both superior technology and global
distribution. It is anticipated that the combined company will have the
resources and competitive position necessary to compete over the long-term
with other, currently better-positioned vendors.

(ii) A merger with Border, and the subsequent combination of Secure's
patented "type enforcement" technology and Webster's Internet blocking and
monitoring functionality with Border's ease of installation and ease of use
in a moderately priced firewall possessing superior performance, should
reduce competitive risks and provide the combined company the opportunity
to establish the price/performance standard for firewalls.

(iii) Combining its patented technology products with Border's
two-tiered indirect sales model should enable Secure to realize meaningful
long-term strategic and operational benefits that should allow for higher,
more sustainable revenue and profit growth than if both companies were to
remain independent.

(iv) The transaction allows Secure to lead the consolidation of the
network security segment of the computer networking industry that numerous
industry sources (and both companies' managements) predict will affect the
approximately 50 firewall vendors now serving the market. Consolidation
will occur as (a) unit and sales volume rapidly increases with the growth
in commercial usage of the Internet and intranets, and (b) price points
fall as users demand the flexibility of highly functional, software-only
solutions on lower-cost platforms.

The Board of Directors also considered a number of risks associated with
the Border Acquisition prior to its approval thereof, including integration of
corporate cultures and organizational models, retention of key employees of both
companies, combining Border's two-tiered distribution sales model with Secure's
technically oriented direct sales model, integration of Secure's type
enforcement technology into Border's BorderWare products, and retention of
Secure's security clearance for its government contracts business.

On balance, however, the Board of Directors determined that the benefits of
the Border Acquisition outweighed the potential risks and unanimously approved
the transaction.

The Board of Directors also considered the following information in
concluding that the Border Acquisition Agreement and the Border Exchange Ratio
are fair to Secure and its stockholders: (i) its knowledge of the business,
operations, property, assets, financial condition, operating results and
prospects of Secure and Border; (ii) current industry, economic and market
conditions and trends and its informed expectations of the future of the
industry in which Secure operates; (iii) the opinion of Robertson Stephens dated
May 28, 1996 as to the fairness, from a financial point of view and as of such
date, of the Border Exchange Ratio to Secure and its stockholders; (iv) the
terms of the Border Acquisition Agreement; (v) the structure and accounting and
tax treatment of the Border Acquisition; and (vi) the respective corporate
strategies of Border and Secure.

In view of the variety of factors considered in connection with its
evaluation of the Border Acquisition, the Board of Directors did not find it
practicable to and did not quantify or otherwise assign relative strengths to
the specific factors considered in reaching its determination.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF AUTHORIZATION OF
SHARES OF SECURE COMMON STOCK FOR ISSUANCE PURSUANT TO THE TERMS OF THE NEW
BORDER EXCHANGEABLE SHARES.

<PAGE>

OPINION OF SECURE'S FINANCIAL ADVISOR

Secure retained Robertson Stephens to act as its financial advisor in
connection with the Border Acquisition and to render an opinion as to the
fairness, from a financial point of view, to Secure and its stockholders of the
Border Exchange Ratio. At the May 22, 1996, meeting of the Board of Directors
of Secure, Robertson Stephens indicated that, provided the proposed exchange
ratio did not change in final negotiations, Robertson Stephens would be in a
position to deliver its written opinion (the "Border Opinion") that, based on
matters described therein and as of the date of the Border Acquisition
Agreement, the Border Exchange Ratio is fair, from a financial point of view, to
Secure and its stockholders. The complete text of the Border Opinion, dated May
28, 1996, setting forth the assumptions made, procedures followed, matters
considered and scope of the review undertaken by Robertson Stephens in rendering
the Border Opinion, is attached hereto as Appendix C. Stockholders are urged to
read the Border Opinion in its entirety.

Robertson Stephens did not recommend to the Board of Directors of Secure
that any specific amount of consideration constituted the appropriate
consideration for the Border Acquisition. No limitations were imposed by the
Board of Directors of Secure on Robertson Stephens with respect to the
investigations made or procedures followed by Robertson Stephens in rendering
the Border Opinion. The Border Opinion addresses only the fairness from a
financial point of view of the Border Exchange Ratio to Secure and its
stockholders and does not constitute a recommendation to any Secure stockholder
as to how such stockholder should vote at the Special Meeting. Robertson
Stephens expressed no opinion as to the tax consequences of the Border
Acquisition, and the Border Opinion does not take into account the particular
tax status or position of any holder of Secure Common Stock. In rendering the
Border Opinion, Robertson Stephens was not engaged as an agent or fiduciary of
Secure stockholders or any other third party. The summary of the Border Opinion
of Robertson Stephens set forth in this Proxy Statement is qualified in its
entirety by reference to the full text of such opinion.

In connection with the preparation of the Border Opinion, Robertson
Stephens: (i) reviewed financial information of Secure and Border furnished to
Robertson Stephens by both companies, including certain internal financial
forecasts prepared by the managements of Secure and Border; (ii) reviewed
publicly available information; (iii) held discussions with the managements of
Secure and Border concerning the businesses, past and current business
operations, financial condition and future prospects of the companies; (iv)
reviewed a final draft of the Border Acquisition Agreement; (v) reviewed the
stock price and trading history of Secure Common Stock; (vi) reviewed the
contribution by each company to pro forma combined revenue, gross profit,
operating income, pre-tax income and net income; (vii) reviewed the valuations
of publicly traded companies deemed by Robertson Stephens to be comparable to
both Secure and Border in the computer networking industry (the "Comparable
Companies"); (viii) compared the financial terms of the Border Acquisition with
other transactions deemed relevant by Robertson Stephens (the "Precedent
Transactions"); (ix) analyzed the pro forma earnings per share of the combined
company; (x) prepared a discounted cash flow analysis of Border; and (xi) made
such other studies and inquiries, and reviewed such other data, as deemed
relevant by Robertson Stephens.

The following paragraphs summarize the material analyses performed by
Robertson Stephens in arriving at the Border Opinion and reviewed with the Board
of Directors of Secure in connection therewith but do not purport to be a
complete description of the analyses performed by Robertson Stephens.

STOCK PRICE ANALYSIS. Robertson Stephens reviewed the trading activity,
including share price and trading volume, of Secure Common Stock for the period
November 17, 1995 (the date of Secure's initial public offering) to May 20,
1996. Robertson Stephens noted that, since November 17, 1995, the daily closing
prices of Secure Common Stock ranged from a high of $60.50 on December 13, 1995
to a low of $20.50 on April 2, 1996. Robertson Stephens also noted that the
average closing price for the 20 trading days, 50 trading days and 100 trading
days up to and including May 20, 1996 was $25.631, $24.793 and $30.921,
respectively. In addition, Robertson Stephens compared the indexed performance
of Secure Common Shares for the period November 17, 1995 to May 20, 1996 to both
a composite index made up of the Comparable Companies and the NASDAQ Composite
Index. The Comparable Companies were: Citrix Systems, Inc.; Cylink Corporation;
Netscape Communications Corporation; Raptor Systems, Inc.; Security Dynamics
Technologies, Inc.; Spyglass, Inc.; and

30
<PAGE>

Verity, Inc. Robertson Stephens noted that the price of Secure Common Stock had
underperformed the indexed performance of the both the Comparable Companies and
the NASDAQ Composite for the period.

CONTRIBUTION ANALYSIS. Robertson Stephens compared the contribution of
Secure and Border to historical and projected pro forma combined total revenue,
commercial revenue (i.e., total revenue excluding revenue from U.S. government
contracts), gross profit, operating income, pre-tax income, and net income for
fiscal 1995, 1996 and 1997, based on actual results for Secure and Border for
fiscal 1995, a financial forecast for Secure prepared by Secure management, a
financial forecast for Border prepared by Border's management and estimates for
calendar 1996 and 1997 financial performance of Secure by Robertson Stephens
Institutional Research. For such periods, Robertson Stephens noted that Border
would contribute 13.2% to 52.9% of total revenue, 34.9% to 61.2% of pro forma
combined commercial revenue, 27.8% to 64.5% of pro forma combined gross profit,
62.7% to 67.5% of pro forma combined operating income, 52.5% to 59.7% of pro
forma combined pre-tax income and 50.7% to 57.5% of pro forma combined net
income. Robertson Stephens compared these historical and projected contribution
percentages to 46.8%, the pro forma ownership (implied by the Border Exchange
Ratio) of the combined company by holders of Border Stock.

COMPARABLE COMPANIES ANALYSIS. Robertson Stephens analyzed, as of May 20,
1996, financial performance for the last twelve months ("LTM"), the last quarter
annualized ("LQA") (i.e., the most recent quarter's financial performance
multiplied by four), and the 1996 and 1997 calendar years for Secure and
compared ratios and multiples derived from this data and selected stock market
data to similar ratios and multiples for the Comparable Companies. Because of
the relatively limited period of time in which Secure, Border, and the
Comparable Companies have been operating and the resulting lack of consistent
historical financial performance and stock market data, Robertson Stephens
emphasized ratios and multiples derived from performance estimates for calendar
1996 and 1997. Financial performance data compared included equity value
(public market value of the common and common equivalent shares outstanding),
aggregate value (equity value, less cash and cash equivalents, plus debt),
revenue, operating income and margin, net income and margin, historical earnings
per share, estimated earnings per share and estimated earnings per share growth
rate as published by Robertson Stephens Institutional Research or third parties.
Multiples compared included aggregate value to revenue and equity value to net
income before non-recurring and extraordinary charges (i.e., the price to
earnings multiple).

Based on these comparisons of multiples for the Comparable Companies and
Secure, Robertson Stephens estimated the following ranges, adjusted as necessary
for Border's net cash and cash equivalents of approximately $9.7 million, for
Border's public market implied equity value: based on aggregate value to revenue
multiples for the LQA period, Border's public market implied equity value ranged
from approximately $93 million to approximately $124 million, with an average of
approximately $109 million; based on aggregate value to revenue multiples for
projected calendar 1996, Border's public market implied equity value ranged from
approximately $241 million to approximately $328 million, with an average of
approximately $284 million; based on aggregate value to revenue multiples for
projected calendar 1997, Border's public market implied equity value ranged from
approximately $414 million to $532 million, with an average of $473 million;
based on price to earnings multiples for projected calendar 1996, Border's
public market implied equity value ranged from approximately $114 million to
approximately $147 million, with an average of $130 million; based on equity
value to net income multiples for projected calendar 1997, Border's public
market implied equity value ranged from approximately $280 million to
approximately $420 million, with an average of $350 million.

PRECEDENT TRANSACTIONS ANALYSIS. Robertson Stephens analyzed publicly
available information for selected pending or completed transactions (i.e.,
acquisitions and mergers) within the network security and Internet tools
segments of the computer networking industry. The transactions reviewed were, in
order of date announced: (i) Security Dynamics Technologies, Inc. / RSA Data
Security Inc.; (ii) Ascend Communications, Inc. / Morning Star Technologies,
Inc.; (iii) IBM Corporation / Tivoli Systems Inc.; (iv) Informix Software, Inc.
/ Illustra Information Technologies, Inc.; (v) Fore Systems, Inc. / ALANTEC
Corporation; (vi) Cisco Systems, Inc. / Grand Junction Systems, Inc.; and (vi)
Netscape Communications Corporation / Collabra Software, Inc. In examining
these transactions, Robertson Stephens assessed certain financial
characteristics of the acquired company relative to the consideration offered.
Because Border had an operating loss and net loss for the LTM period, Robertson
Stephens emphasized the multiple of aggregate consideration (total value of the
consideration paid to the equity

<PAGE>

owners of the acquired company, plus net debt assumed) to LTM revenue. Based on
this analysis of multiples of aggregate consideration to LTM revenue for the
Precedent Transactions, Robertson Stephens estimated Border's implied equity
value to range from approximately $70 million to approximately $118 million,
with an average of approximately $94 million.

DISCOUNTED CASH FLOW ANALYSIS RELATED TO BORDER. Robertson Stephens
performed a discounted cash flow analysis to estimate the present value of the
stand-alone unlevered (before interest expense) after-tax cash flows of Border,
based on a financial forecast for Border prepared by Border management, and
discussions by Secure management with Border management). Robertson Stephens
first discounted the projected, unlevered after-tax cash flows through 2000
using a range of discount rates of 20% to 40%. Border's unlevered after-tax
cash-flows were calculated as the after-tax operating earnings of Border
adjusted for the add-back of non-cash expenses and the deduction of uses of cash
not reflected in the income statement. Robertson Stephens then added to the
present value of the cash flows the terminal value of Border in the fiscal year
2000, discounted back at the same discount rate. The terminal value was computed
by multiplying Border's projected operating income in the fiscal year 2000 by
terminal multiples ranging from 20.0 to 30.0x. The discounted cash flow
valuation indicated implied equity valuations from $140 million to $394 million
with an average of $267 million.

PRO FORMA ACQUISITION ANALYSIS. Robertson Stephens analyzed the pro forma
annual earnings per share of the combined company based on the Border Exchange
Ratio, forecasts of Border's financial performance received from Border, and
estimates of Secure's financial performance published by Robertson Stephens
Institutional Research. Such analysis indicated that, in the absence of
synergies, pro forma earnings per share of the combined company, compared to
Secure as a stand-alone entity, would be increased by 4.1% and 24.6% for
calendar years ending 1996 and 1997, respectively.

The preparation of fairness opinions involves various determinations as to
the most appropriate and relevant quantitative and qualitative methods of
financial analyses and the application of those methods to the particular
circumstances. Accordingly, such opinions are not readily susceptible to
summary description. In arriving at the Border Opinion, Robertson Stephens did
not attribute any particular weight to any analysis or factor considered by it,
but rather made qualitative judgments as to the significance and relevance of
each analysis and factor. Accordingly, Robertson Stephens believes its analyses
must be considered as a whole and that considering any portion of such analyses
and current factors could create a misleading or incomplete view of the process
underlying the preparation of fairness opinions. In its analyses, Robertson
Stephens made numerous assumptions with respect to industry performance, general
business and other conditions and matters, many of which are beyond the control
of Secure and Border. Any estimates contained in these analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth
therein. In addition, analyses relating to the value of businesses do not
purport to be appraisals or to reflect the prices at which businesses actually
may be sold.

Based on past activities, Robertson Stephens has a substantial degree of
familiarity with Secure. In addition, in the course of its engagement,
Robertson Stephens conducted further investigation of Secure and Border. In
arriving at the Border Opinion, however, Robertson Stephens did not
independently verify any of the foregoing information and relied on all such
information being complete and accurate in all material respects. Furthermore,
Robertson Stephens did not obtain nor make any independent evaluation or
appraisal of the properties, assets, or liabilities of Secure or Border, nor
was Robertson Stephens furnished any such evaluation or appraisal. With respect
to the financial and operating forecasts (and the assumptions and bases
therefor) that Robertson Stephens reviewed, Robertson Stephens assumed that such
forecasts were reasonably prepared in good faith on the basis of reasonable
assumptions and represent the best available estimates and judgments of Secure
and Border management as to the likely future financial performance of such
companies. Robertson Stephens noted, among other things, that the Border
Opinion is necessarily based upon market, economic and other conditions existing
as of the date of the Border Opinion, and information available to Robertson
Stephens as of the date thereof.

Robertson Stephens was retained in connection with the Border Acquisition
based on Robertson Stephens' experience as a financial advisor in connection
with mergers and acquisitions and in securities valuations

<PAGE>

generally, as well as Robertson Stephens' investment banking relationship and
familiarity with Secure. Robertson Stephens has provided financial advisory and
investment banking services to Secure from time to time, including acting as an
underwriter for the initial public offering of shares of shares of Secure Common
Stock in November 1995. In addition, Robertson Stephens maintains a market in
shares of Secure Common Stock.

Secure engaged Robertson Stephens in connection with the Border Acquisition
by means of an engagement letter, dated February 8, 1996. Such letter provides
that, for its services in connection with the Border Acquisition, including the
rendering of the Border Opinion, Robertson Stephens is to be paid a transaction
fee equal to $450,000 plus 1.0% of the Aggregate Transaction Value in excess of
$10,000,000. "Aggregate Transaction Value" is defined as the sum of: (i) all
cash, cash equivalents, notes, and other securities paid to Border and its
stock, option, warrant and debt holders, including, payments for stock or assets
sold; (ii) funds lent to Border; (iii) prepaid royalties, advances against
sales, licensing agreements, and any and all other payments which may be
construed as advance payments for products or services to be delivered in the
future; and (vi) any debt assumed. The fee due to Robertson Stephens in
connection with the Border Acquisition is payable upon consummation of the
Border Acquisition. Secure has also agreed to indemnify Robertson Stephens for
certain liabilities relating to or arising out of services provided by Robertson
Stephens as financial advisor to Secure.

DESCRIPTION OF NEW BORDER EXCHANGEABLE SHARES

VOTING RIGHTS. Holders of New Border Exchangeable Shares will generally
not be permitted to vote at meetings of the shareholders of New Border (except
where required by law). Secure will be the only voting shareholder of New
Border.

As of the Border Effective Date, Secure, New Border and the Trustee will
enter into the Voting and Exchange Trust Agreement under which Secure will issue
the Special Voting Share to a trustee (the "Trustee") for the benefit of the
Beneficiaries. The Special Voting Share will carry the number of votes,
exercisable at any meeting at which stockholders of Secure are entitled to vote,
equal to the number of votes to which the outstanding New Border Exchangeable
Shares not owned by Secure or any entity controlled by Secure would be entitled
if exchanged for Secure Common Stock. The Special Voting Share will be
similarly exercisable with respect to any written consent sought from the
stockholders of Secure.

Each Beneficiary on the record date for any meeting at which stockholders
are entitled to vote will be entitled to instruct the Trustee to exercise that
number of the votes attached to the Special Voting Share for each New Border
Exchangeable Share held by such Beneficiary equal to the number of votes that
such New Border Exchangeable Share would be entitled to if exchanged for Secure
Common Stock. The Trustee will exercise each vote attached to the Special
Voting Share only as directed by the relevant Beneficiary and, in the absence of
instructions from a Beneficiary as to voting, will not exercise such votes.
Each Beneficiary may, upon instructing the Trustee, obtain a proxy from the
Trustee entitling the Beneficiary to vote directly at the relevant meeting the
votes attached to the Special Voting Share to which the Beneficiary is entitled.

The Trustee will send to the Beneficiaries the notice of each meeting at
which Secure Stockholders are entitled to vote, together with the related
meeting materials and a statement as to the manner in which the Beneficiary may
instruct the Trustee to exercise the votes attaching to the Special Voting
Share, at the same time as Secure sends such notice and materials to its
stockholders. The Trustee will also send to the Beneficiaries copies of all
information statements, interim and annual financial statements, reports and
other materials sent by Secure to its stockholders at the same time as such
materials are sent to its stockholders. To the extent such materials are
provided to the Trustee by Secure, the Trustee will also send to the
Beneficiaries all materials sent by third parties to stockholders of Secure,
including dissident proxy circulars and tender and exchange offer circulars, as
soon as possible after such materials are first sent to stockholders of Secure.

All rights of a Beneficiary to exercise votes attached to the Special
Voting Share will cease upon the exchange, redemption or other cancellation of
such Beneficiary's New Border Exchangeable Shares for Secure Common Stock.

<PAGE>

DIVIDEND RIGHTS. Under the share provisions of the New Border Exchangeable
Shares, holders of New Border Exchangeable Shares will be entitled to receive
dividends which are intended, so far as possible, to be functionally and
economically equivalent to those declared on Secure Common Stock as follows:

(i) in the case of a cash dividend declared on Secure Common Stock,
holders of each New Border Exchangeable Share will be entitled to receive
the Canadian dollar equivalent of the dividend declared on each share of
Secure Common Stock;

(ii) in the case of a stock dividend declared on Secure Common Stock
which is payable in Secure Common Stock, holders of each New Border
Exchangeable Share will be entitled to receive such number of New Border
Exchangeable Shares as is equal to the number of shares of Secure Common
Stock to be paid as a dividend on each share of Secure Common Stock; and

(iii) in the case of a dividend declared on Secure Common Stock in
property other than in cash or Secure Common Stock, holders of each New
Border Exchangeable Share will be entitled to receive such type and amount
of property as is the same or economically equivalent to (as determined by
the board of directors of New Border) the type and amount of property
declared as a dividend on each share of Secure Common Stock.

The record date for the determination of the holders of New Border
Exchangeable Shares entitled to receive payment of, and the payment date for,
any dividend declared on New Border Exchangeable Shares shall be the same dates
as the record date and payment date, respectively, for the corresponding
dividend on Secure Common Stock.

RETRACTION RIGHTS OF HOLDER AND SECURE RETRACTION CALL RIGHTS. Pursuant to
the share provisions of the New Border Exchangeable Shares, subject to
applicable law and the overriding retraction call right of Secure described
below, holders of New Border Exchangeable Shares shall be entitled at any time
to require New Border to redeem any or all such New Border Exchangeable Shares
and to receive, for each New Border Exchangeable Share, an amount equal to the
market price of a share of Secure Common Stock plus an additional amount equal
to the full amount (the "Dividend Amount") of all dividends declared and unpaid
thereon and all dividends on Secure Common Stock which have not been declared on
such New Border Exchangeable Shares, which shall be satisfied by New Border
causing to be delivered to such holder one share of Secure Common Stock and
paying to such holder the Dividend Amount.

Holders of New Border Exchangeable Shares may effect such retraction by
presenting a certificate or certificates to New Border or its transfer agent
representing the number of New Border Exchangeable Shares the holder desires to
retract, together with a written request (a "Retraction Request") specifying the
number of New Border Exchangeable Shares the holder wishes to retract and the
date upon which the holder desires to receive shares of Secure Common Stock
(which date shall be not less than five business days nor more than ten business
days after the date on which such Retraction Request is received by New Border)
(the "Retraction Date") and acknowledging the overriding retraction call right
of Secure described below, and such other documents as may be required to effect
the retraction of the New Border Exchangeable Shares.

Upon receipt of a Retraction Request, New Border shall immediately notify
Secure of such request. Secure shall thereafter have two business days in which
to notify New Border that Secure intends to exercise its overriding redemption
call right to purchase all, but not less than all, of the New Border
Exchangeable Shares submitted by the holder thereof for retraction. The
purchase price for each such New Border Exchangeable Share purchased by Secure
shall be the amount equal to the market price of a share of Secure Common Stock
plus an additional amount equal to the Dividend Amount, and shall be satisfied
by Secure causing to be delivered to such holder one share of Secure Common
Stock and paying to such holder the Dividend Amount.

If, as a result of solvency provisions of applicable law, New Border is
unable to redeem all New Border Exchangeable Shares tendered for retraction by a
Beneficiary in accordance with the provisions attaching to the New Border
Exchangeable Shares and provided that Secure has not exercised its retraction
call right with respect

<PAGE>

to such shares and the Beneficiary has not revoked the Retraction Request, the
Beneficiary will be deemed to have exercised its right to instruct the Trustee
to require Secure to purchase the unredeemed New Border Exchangeable Shares and
Secure will be required to purchase such shares from the Beneficiary in the
manner set forth above.

REDEMPTION RIGHTS OF NEW BORDER AND SECURE REDEMPTION CALL RIGHTS.
Pursuant to the share provisions of the New Border Exchangeable Shares, subject
to applicable law and the redemption call right of Secure described below, on
the tenth anniversary of the Border Effective Date (the "Automatic Redemption
Date") New Border shall redeem all, but not less than all, of the then
outstanding New Border Exchangeable Shares by payment of, for each New Border
Exchangeable Share, an amount equal to the market price of a share of Secure
Common Stock plus an additional amount equal to the Dividend Amount, which shall
be satisfied by New Border causing to be delivered to such holder one share of
Secure Common Stock and paying to such holder the Dividend Amount.

Secure shall have the overriding redemption call right, notwithstanding any
proposed redemption of the New Border Exchangeable Shares by New Border as
outlined above, to unilaterally purchase on the Automatic Redemption Date all,
but not less than all, of the outstanding New Border Exchangeable Shares by
payment of, for each New Border Exchangeable Share, the amount equal to the
market price of a share of Secure Common Stock plus an additional amount equal
to the Dividend Amount, which shall be satisfied by Secure causing to be
delivered to such holder one share of Secure Common Stock and paying to such
holder the Dividend Amount.

New Border shall, at least 120 days before the Automatic Redemption Date,
provide Secure and each holder of New Border Exchangeable Shares with written
notice of New Border's intended redemption of the New Border Exchangeable Shares
and/or Secure's exercise of Secure's overriding call right, as the case may be.

LIQUIDATION EXCHANGE RIGHTS OF HOLDERS AND SECURE LIQUIDATION CALL RIGHTS.
In the event of the liquidation, dissolution or winding up of New Border or any
other distribution of the assets of New Border among its shareholders for the
purpose of winding up its affairs, a holder of New Border Exchangeable Shares
will be entitled, subject to applicable law and the liquidation call right of
Secure described below, to receive on the effective date of such liquidation,
dissolution or winding-up, before any distribution of any part of the assets of
New Border among the holders of the New Border Class A Shares or any other
shares ranking junior to the New Border Exchangeable Shares, an amount per share
equal to the market price of a share of Secure Common Stock plus an additional
amount equal to the Dividend Amount, which shall be satisfied by New Border
causing to be delivered to such holder one share of Secure Common Stock and
paying to such holder the Dividend Amount.

Pursuant to the Border Acquisition Agreement, Secure has been granted the
overriding right, in the event of and notwithstanding the proposed liquidation,
dissolution or winding-up of New Border, to purchase all, but not less than all,
of the New Border Exchangeable Shares then outstanding and, upon the exercise by
Secure of such right, the holders of New Border Exchangeable Shares will be
obligated to sell such shares to Secure. The purchase by Secure of all the
outstanding New Border Exchangeable Shares upon the exercise of such right will
occur on the effective date of the liquidation, dissolution or winding-up of New
Border. The purchase price payable by Secure for each New Border Exchangeable
Share will be equal to the market price of a share of Secure Common Stock plus
an additional amount equal to the Dividend Amount, and shall be satisfied by
Secure causing to be delivered to such holder one share of Secure Common Stock
and paying to such holder the Dividend Amount.

Pursuant to the Voting and Exchange Trust Agreement, upon the occurrence
and during the continuance of any voluntary liquidation, dissolution or
winding-up proceedings with respect to New Border or any threatened or
instituted claim, suit or other proceeding with respect to the involuntary
liquidation, dissolution or winding-up of New Border or the admission in writing
by New Border of its inability to pay its debts generally as they become due or
New Border not being permitted, pursuant to solvency requirements of applicable
law, to redeem any New Border Exchangeable Shares in respect of which a holder
has exercised its right of retraction (each a "Liquidation Event"), a
Beneficiary may instruct the Trustee to require Secure to purchase any or all of
the New Border Exchangeable Shares held by the Beneficiary. Immediately upon
the occurrence of a Liquidation Event or any event which may, with the passage
of time or the giving of notice, become a Liquidation Event, Secure and New
Border will give written notice thereof to the Trustee. As soon as practicable
thereafter, the Trustee will then

<PAGE>

notify each Beneficiary of such event or potential event and will advise the
Beneficiary of its rights as described above.

AUTOMATIC EXCHANGE RIGHTS IN THE EVENT OF THE INSOLVENCY OF SECURE. Under
the Voting and Exchange Trust Agreement, in the event of the voluntary or
involuntary institution of any proceeding against Secure to be adjudicated a
bankrupt or insolvent or to be dissolved or wound-up under any bankruptcy,
insolvency or analogous laws, Secure will be required to purchase each
outstanding New Border Exchangeable Share for a purchase price equal to the
market price of a share of Secure Common Stock plus an additional amount equal
to the Dividend Amount, which shall be satisfied by Secure causing to be
delivered to such holder one share of Secure Common Stock and paying to such
holder the Dividend Amount.

DELIVERY OF SECURE COMMON STOCK. Secure will take all actions necessary or
desirable to cause all shares of Secure Common Stock to be issued and delivered
pursuant to the terms of the New Border Exchangeable Shares and in accordance
with applicable law. In addition, Secure will take all such actions necessary
to cause all such Secure Common Stock to be issued, to be listed, quoted or
posted for trading on all stock exchanges or quotation systems on which
outstanding shares of Secure Common Stock are then listed, quoted or posted for
trading.

TRANSACTION MECHANICS

AMALGAMATION AND REORGANIZATION. Under the Amalgamation, Border and
Amalgamation Sub will amalgamate to form New Border and the shares of Border and
Amalgamation Sub will be exchanged as follows:

(a) Border Stockholders (other than Border Stockholders who dissent
in respect of the Amalgamation) will receive New Border Class B Shares.

(b) Secure will receive one New Border Class A Share for each
outstanding common share of Amalgamation Sub it holds prior to the
Amalgamation. Such New Border Class A Shares will not be further converted
or exchanged after the amalgamation of Border and Amalgamation Sub.

Immediately following the Amalgamation, each New Border Class B Share shall
be exchanged into the Border Exchange Ratio of a New Border Exchangeable Share,
without any action required on the part of the holder thereof, by means of the
Reorganization. New Border Class A Shares will not be affected by the capital
reorganization.

Former Border Stockholders will not receive separate share certificates in
respect of the New Border Class B Shares. Share certificates receivable by
former Border Stockholders will be for New Border Exchangeable Shares.

The Border Exchange Ratio will be proportionally adjusted to reflect fully
the effect of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Secure Common Stock or
Border Stock), reorganization, recapitalization or other change with respect to
Secure Common Stock or Border Stock prior to the Border Effective Date.
Following the Border Effective Date, the rate at which New Border Exchangeable
Shares may be exchanged for Secure Common Stock is subject to adjustment or
modification in the event of stock splits or other changes to the capital
structure of Secure so as to maintain the initial relationship between the New
Border Exchangeable Shares and the Secure Common Stock.

In addition, contemporaneously with the Reorganization, Secure and New
Border will enter into the Support Agreement. See "The Border Acquisition
Agreement and Related Agreements -- Support Agreement".

TREATMENT OF BORDER STOCK OPTIONS. Pursuant to the Amalgamation, each
outstanding Border Stock Option, whether vested or unvested, shall become an
option to acquire a New Border Class B Share (a "New Border Class B Option").
Each outstanding New Border Class B Option shall, at the option of the holder
thereof, either (i) be surrendered for cancellation upon the issuance of an
option to acquire a share of Secure Common Stock (a "Secure Stock Option") in
substitution therefor or (ii) become an option to acquire a New Border

<PAGE>

Exchangeable Share (a "New Border Exchangeable Option") pursuant to the
Reorganization, in each case, pursuant to the terms summarized below.

Each holder of a New Border Class B Option shall have the opportunity to
enter into an agreement with Secure and New Border whereby Secure shall issue a
Secure Stock Option in substitution for such option on the Border Effective
Date. These Secure Stock Options will be covered by the Amended and Restated
1995 Omnibus Stock Plan pursuant to a new provision, as proposed herein, which
will amend such plan to provide the Board of Directors flexibility to issue
Secure Stock Options to holders of options in companies acquired by Secure in
substitution for options in such acquired company. See "PROPOSAL FOUR". Each
Secure Stock Option will continue to have, and be subject to, the same terms and
conditions set forth in the original Border Stock Option immediately prior to
the Border Effective Date, except for the number of shares of Secure Common
Stock to be purchased under such original Border Stock Option and the exercise
price thereof. Each Secure Stock Option will be exercisable for that number of
shares of Secure Common Stock rounded down to the nearest whole number of shares
of Secure Common Stock that the holder of the original Border Stock Option would
have been entitled to receive pursuant to the Amalgamation had such holder
exercised such Border Stock Option in full immediately prior to the Border
Effective Date. The per share exercise price for the shares of Secure Common
Stock issuable upon exercise of such Secure Stock Option will be equal to the
quotient of the per share exercise price at which such option was exercisable
immediately prior to the Border Effective Date divided by the Border Exchange
Ratio rounded up to the nearest whole cent.

In the event any holder of a New Border Class B Option declines to enter
into an agreement with Secure and New Border as described above, each such
option held shall become a New Border Exchangeable Option. Each New Border
Exchangeable Option will continue to have, and be subject to, the same terms and
conditions set forth in the New Border Class B Option immediately prior to the
Border Effective Date, except for the number of New Border Exchangeable Shares
to be purchased and the exercise price thereof. Each New Border Exchangeable
Option will be exercisable for that number of New Border Exchangeable Shares
rounded down to the nearest whole number of New Border Exchangeable Shares that
the holder of the original Border Stock Option would have been entitled to
receive pursuant to the Amalgamation had such holder exercised such Border Stock
Option in full immediately prior to the Border Effective Date. The per share
exercise price for the New Border Exchangeable Shares issuable upon exercise of
such New Border Exchangeable Option will be equal to the quotient of the per
share exercise price at which the New Border Class B Option was exercisable
immediately prior to the Border Effective Date divided by the Border Exchange
Ratio rounded up to the nearest whole cent.

TREATMENT OF BORDER WARRANTS. Pursuant to the Amalgamation, the Border
Warrants will become warrants to acquire New Border Class B Shares or options to
acquire New Border Class B Shares, as the case may be. Following the
Reorganization, each Border Warrant will entitle the holder to acquire 0.5 of a
New Border Exchangeable Share, or an option to acquire 0.5 of a New Border
Exchangeable Share, as the case may be, in respect of each New Border Class B
Share subject to the Border Warrant.

POST-AMALGAMATION AND REORGANIZATION SHARE OWNERSHIP. Upon completion of
the Amalgamation, Secure will be the beneficial owner of all of the outstanding
New Border Class A Shares. This class of shares of New Border will be the only
class of voting securities of New Border. As a result of the Amalgamation and
Reorganization, the former Border Shareholders will have the right to acquire
(through ownership of New Border Exchangeable Shares) approximately 47.2% of
the shares of Secure Common Stock (including shares issuable to holders of the
New Border Exchangeable Shares), and the present Secure Stockholders will own
approximately 52.8% of the shares of Secure Common Stock (including shares
issuable to holders of the New Border Exchangeable Shares), taking into account
in each case shares issuable pursuant to outstanding options to purchase shares
of Secure Common Stock. Upon completion of the Enigma Merger, the former Border
shareholders will have the rights to acquire approximately 39.6% of the shares
of Secure Common Stock, the present Secure stockholders will own approximately
44.2% of the shares of Secure Common Stock and the former Enigma shareholders
will own approximately 16.2% of the shares of Secure Common Stock, taking into
account in each case shares issuable pursuant to outstanding options to purchase
shares of Secure Common Stock.

37
<PAGE>

THE BORDER ACQUISITION AGREEMENT AND RELATED AGREEMENTS

The following paragraphs summarize, among other things, the material terms
of the Border Acquisition Agreement. The complete text of the Border
Acquisition Agreement is attached hereto as Appendix A. Stockholders are urged
to read the Border Acquisition Agreement in its entirety for a more complete
description of the Border Acquisition.

BORDER EFFECTIVE DATE OF THE AMALGAMATION

As promptly as practicable after the satisfaction or waiver of the
conditions set forth in the Border Acquisition Agreement, Amalgamation Sub and
Border will file articles of amalgamation as provided by Section 178 of the
OBCA, together with any required related certificates, with the Ministry of
Consumer and Commercial Relations of the Province of Ontario. The Amalgamation
will become effective upon such filing. Immediately following the time at which
the Amalgamation becomes effective, New Border will file articles of amendment,
as provided by Section 171 of the OBCA, with the Ministry of Consumer and
Commercial Relations of the Province of Ontario to give effect to the
Reorganization.

EXCHANGE OF BORDER STOCK

Upon consummation of the Amalgamation, Border Shareholders (other than
Border Shareholders who dissent in respect of the Amalgamation) will receive one
New Border Class B Share in exchange for each share of their Border Stock.
Pursuant to the Reorganization, each New Border Class B Share will be exchanged
for that number of New Border Exchangeable Shares equal to the product of the
number of shares of New Border Class B Shares to be exchanged and the Border
Exchange Ratio.

CONVERSION OF BORDER STOCK OPTIONS AND BORDER WARRANTS

On and after the Border Effective Date, each former holder of a Border
Stock Option shall have either (i) an option to acquire New Border Exchangeable
Shares, or (ii) an option to acquire Secure Common Stock, in each case
substantially on the same terms and conditions as under the original option to
purchase Border Stock related thereto. See "The Border Acquisition --
Transaction Mechanics -- Treatment of Border Stock Options." In addition, each
Border Warrant shall become a warrant to acquire New Border Exchangeable Shares
or an option to acquire New Border Exchangeable Shares, as the case may be, in
each case substantially on the same terms and conditions as under the original
warrant related thereto. See "The Border Acquisition --Transaction Mechanics --
Treatment of Border Warrants."

BUSINESS OF BORDER PENDING THE AMALGAMATION

Pending consummation of the Amalgamation and Reorganization, and except as
otherwise consented to or approved by Secure in writing, Border has agreed that
it will, among other things, operate its business substantially as presently
planned or operated and only in the ordinary, usual and customary manner and,
consistent with such operation, use reasonable efforts to preserve intact its
business organization and its relationships with customers and suppliers and
other persons with whom it has significant business relations.

In addition, Border has agreed, among other things, not to take any of the
following actions without the prior written consent of Secure: (i) amend or
otherwise change Border's articles of incorporation; (ii) grant, authorize for
issuance or issue any warrants, options, convertible securities or any other
right to acquire any shares of its capital stock; (iii) declare or pay any
dividend or other distribution with respect to any of its capital stock;
(iv) materially amend or renew or waive or release any rights of material value
under certain material agreements other than in the ordinary course of business;
(v) increase the compensation payable to its officers or employees, except for
increases in the ordinary course of business and in accordance with past
practice or enter into any employment contract or consulting agreement or make
any offer of employment to any person or offer to engage any person as a
consultant or; (vi) take any action that would adversely affect the ability of
Secure to account for the Amalgamation as a pooling of interests for accounting
purposes under U.S. GAAP.

38
<PAGE>

SOLICITATION OF ALTERNATIVE TRANSACTIONS

The Border Acquisition Agreement provides that Border will not take any
action to solicit or encourage any inquiries, proposals or offers from, or
furnish any information to any corporation, partnership, person, or other entity
or group (other than Secure) regarding any acquisition of Border, or a merger,
amalgamation, or consolidation with or involving Border, or any sale of stock or
any material portion of the assets of Border. Border must inform Secure of any
such inquiries or proposals.

CERTAIN AGREEMENTS OF SECURE

Pending consummation of the Amalgamation and Reorganization, Secure has
agreed that it will not offer, sell, contract to sell or otherwise dispose of
any equity securities of Secure other than (i) Secure Common Stock not exceeding
5% of the Secure Common Stock outstanding as of May 28, 1996 or (ii) pursuant to
the Amended and Restated 1995 Omnibus Stock Plan.

Subject to the consummation of the Amalgamation and Reorganization, Secure
has also agreed that (i) it will enter into an employment agreement with each of
Steven Lamb, Glenn G. Mackintosh and Donald Whitbeck (see "Information
Concerning Secure -- Directors and Management -- Employment Agreement Following
the Border Acquisition"), (ii) it will provide holders of Border Stock Options
issued to Border employees and directors with the opportunity to enter into an
agreement with Secure and New Border the effect of which shall be that such
Border Stock Options become options to acquire Secure Common Stock and
(iii) holders of Secure Common Stock or the right to receive Secure Common Stock
issued or issuable in exchange for New Border Exchangeable Shares shall have
certain registration rights, including the right to require registration upon
written request therefor from holders of an aggregate of 20% of Secure Common
Stock issued or issuable in exchange for New Border Exchangeable Shares.

INDEMNIFICATION OF SECURE

Each Border Affiliate has agreed to indemnify Secure against and with
respect to (i) any and all loss, injury, damage or deficiency resulting from any
breach of warranty or misrepresentation on the part of Border under the Border
Acquisition Agreement and (ii) any and all demands, claims, actions, suits or
proceedings, assessments, judgments, costs and legal and other expenses incident
to the foregoing.

Secure shall only be entitled to exercise the indemnification rights
described herein in the event that any claim or claims for indemnification
aggregate not less than $1,000,000, and then only with respect to claims for
indemnification in excess of such amount. Such indemnification is exercisable
by Secure until March 1, 1997. As security for such indemnification
obligations, each Border Affiliate has granted Secure a security interest in 10%
of its respective New Border Exchangeable Shares. Such New Border Exchangeable
Shares constitute the sole source of recovery for any indemnity claims made by
Secure against such Border Affiliates.

INDEMNIFICATION BY SECURE

Holders of Border Stock ("Indemnified Border Parties") are third party
beneficiaries of the covenants and representations and warranties of Secure
pursuant to the Border Acquisition Agreement; provided however that such
Indemnified Border Parties shall be third party beneficiaries thereof only to
the extent that any claim or claims aggregate not less than $1,000,000 (the
"Indemnification Basket"), and then only with respect to claims in excess of
such amount. This Indemnification Basket shall not apply to any claim or claims
based upon (i) the representations and warranties of Secure relating to the
authorization of Secure Common Stock to be issued pursuant to the terms and
conditions of the New Border Exchangeable Shares and (ii) all of the covenants
of Secure contained in such Agreement.

39
<PAGE>

CONDITIONS TO THE AMALGAMATION AND REORGANIZATION

Consummation of the Amalgamation and Reorganization is subject to the
satisfaction of various conditions, including (i) the approval and adoption of
the Amalgamation and the Border Acquisition Agreement by the affirmative
requisite vote of each of the Border Shareholders and the Secure Stockholders,
provided that no more than 3% of Border Shareholders shall have exercised
dissenters' rights provided by the OBCA in respect of the Amalgamation and
Reorganization; (ii) the absence of any order restraining, enjoining or
otherwise prohibiting consummation of the transactions contemplated by the
Border Acquisition Agreement, and of any actions or proceedings brought by any
governmental agency seeking to restrain, enjoin or prohibit the consummation of
the transactions contemplated by the Border Acquisition Agreement; (iii) the
receipt of an officers' certificate by each of Secure and Border from the other
party to the effect that certain representations and warranties made by the
respective party are true and correct in all material respects on and as of the
date of the Border Acquisition Agreement, and to the effect that the respective
party has performed or complied in all material respects with all agreements and
covenants required by the Border Acquisition Agreement on or prior to the Border
Effective Date; (iv) the obtaining by Secure and Border of all material
consents, waivers, approvals, authorizations or orders required to be obtained
and material filings required to be made for the authorization, execution and
delivery of the Border Acquisition Agreement and the consummation of the
transactions contemplated thereby; (v) the approval for listing of the New
Border Exchangeable Shares on a prescribed Canadian stock exchange for purposes
of the Income Tax Act (Canada); (vi) the receipt by Secure of an opinion of
Ernst & Young LLP, as independent public accountants, to the effect that pooling
of interests accounting treatment is appropriate for the Amalgamation under U.S.
GAAP and the receipt by Border of a report from Price Waterhouse providing
negative assurance as to whether or not the Border Acquisition would qualify as
a pooling of interests under U.S. GAAP; (vii) the receipt by Secure and Border
of the written opinions of the respective legal counsel for the other party; and
(viii) receipt by Secure of a "comfort letter" from Border's independent
auditors.

TERMINATION AND AMENDMENT

The Border Acquisition Agreement may be terminated and the Amalgamation and
Reorganization may be abandoned prior to the time at which the Amalgamation
becomes effective notwithstanding approval by the Border Shareholders or the
Secure Stockholders, (i) by mutual written agreement of the Boards of Directors
of Secure and Border, or (ii) by either Secure or Border, if the conditions to
their respective obligations have not been satisfied or waived or the
Amalgamation shall not have been consummated by September 30, 1996, provided the
party seeking to terminate the Border Acquisition Agreement has not caused the
failure of the condition to be satisfied or the Amalgamation to be consummated
by such date through its own failure to fulfill any of its obligations under the
Border Acquisition Agreement.

The Border Acquisition Agreement may be amended by an agreement in writing
among the parties thereto at any time; provided, however, that, after approval
of the Amalgamation by the Border Shareholders or the Secure Stockholders, no
amendment may be made which by law requires further approval of such
shareholders or stockholders, without such further approval.

FEES AND EXPENSES

All fees and expenses incurred in connection with the Border Acquisition
Agreement and the transactions contemplated thereby will be paid by the party
incurring such expenses, whether or not the Amalgamation and the Reorganization
are consummated. If the Amalgamation and the Reorganization are consummated,
fees and expenses incurred by Border will be the obligations of New Border.

CONFIDENTIALITY AGREEMENT

Each of Secure and Border has agreed to keep confidential, pursuant to the
Border Acquisition Agreement and the Border Non-Disclosure Agreement,
information provided to the other party with respect to the business, properties
and personnel of the party furnishing such information.

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AGREEMENTS OF BORDER AFFILIATES

Each Border Affiliate has delivered a written agreement (a "Border
Affiliate Agreement") to Secure. Under such Border Affiliate Agreements, each
Border Affiliate represents that he or she has been advised that the Border
Affiliate may not sell, transfer or otherwise dispose of Secure Common Stock or
New Border Exchangeable Shares issued to the Border Affiliate unless the sale or
disposition in the United States or to a U.S. Person of the shares of Secure
Common Stock issuable pursuant to the terms of the New Border Exchangeable
Shares (i) has been registered under the Securities Act, (ii) is made in
compliance with the requirements of Rule 145 under the Securities Act, or
(iii) in the opinion of counsel reasonably acceptable to Secure, is otherwise
exempt from registration under the Securities Act. Every Border Affiliate has
also agreed not to sell, contract to sell or otherwise dispose of any Secure
Common Stock during the period beginning 30 days before the Border Effective
Date and ending at such time after the Border Effective Date as Secure has
published financial results covering at least 30 days of combined operations of
Secure and Border.

In addition, all Border Affiliates have agreed to vote their respective
shares of Border Stock in favor of the Amalgamation.

AGREEMENTS OF SECURE AFFILIATES

Each Secure Affiliate has delivered a written agreement (a "Secure
Affiliate Agreement") to Border. Under such Secure Affiliate Agreement, each
Secure Affiliate has agreed not to sell, contract to sell or otherwise dispose
of any Secure Common Stock during the period beginning 30 days before the Border
Effective Date and ending at such time after the Border Effective Date as Secure
has published financial results covering at least 30 days of combined operations
of Secure and Border. In addition, Secure Affiliates have agreed to vote their
respective shares of Secure Common Stock in favor of the Amalgamation and the
amendment to the Amended and Restated 1995 Omnibus Stock Plan.

SUPPORT AGREEMENT

The Support Agreement provides, among other things, that no dividends will
be declared or paid on the Secure Common Stock unless New Border simultaneously
declares and pays an economically equivalent dividend (after appropriate
adjustments for currency translations) on the New Border Exchangeable Shares.

Further, the Support Agreement provides that Secure will do all things
necessary to ensure that New Border will make all payments on the New Border
Exchangeable Shares required in the event of (a) the liquidation, dissolution or
winding-up of New Border, (b) the retraction of New Border Exchangeable Shares
by a holder or (c) the redemption of the New Border Exchangeable Shares by New
Border.

The Support Agreement also provides that Secure will take all actions
necessary or desirable to cause all Secure Common Stock issued and delivered
pursuant to the Border Acquisition Agreement and related agreements to be
listed, quoted or posted for trading on all stock exchanges or quotation systems
on which outstanding shares of Secure Common Stock are then listed, quoted or
posted for trading.

The Support Agreement also provides that, without the prior approval of New
Border and the holders of the New Border Exchangeable Shares, Secure will not
distribute additional Secure Common Stock or rights to subscribe therefor or
other assets or evidences of indebtedness to all or substantially all holders of
Secure Common Stock or change the Secure Common Stock nor effect any
reorganization or other transaction affecting the Secure Common Stock, unless
the same or an economically equivalent distribution on, or change to, the New
Border Exchangeable Shares (or in the rights of the holders thereof) is made
simultaneously. The board of directors of New Border is conclusively empowered
to determine in good faith and in its sole discretion whether any corresponding
distribution on or change to the New Border Exchangeable Shares is the same as
or economically equivalent to any proposed distribution on or change to the
Secure Common Stock.

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The Support Agreement also provides that so long as there remain
outstanding any New Border Exchangeable Shares not owned by Secure or any of its
affiliates, Secure will remain the beneficial owner, directly or indirectly, of
all outstanding shares of New Border other than New Border Exchangeable Shares.

The Support Agreement may not be amended without the approval of the
holders of the New Border Exchangeable Shares.

Secure has agreed that it will not, and it will cause its subsidiaries and
affiliates not to, exercise any voting rights attached to the New Border
Exchangeable Shares owned by it or any of its subsidiaries or affiliates on any
matter considered at meetings of holders of the New Border Exchangeable Shares
(including any approval sought from such holders in respect of matters arising
under the Support Agreement).

_________________________

PROPOSAL TWO
_________________________

THE ENIGMA ACQUISITION

BACKGROUND

During April and May 1996, representatives of the product development and
sales and marketing organizations of Enigma and Secure had discussed the
possible integration of Enigma's identification and authentication technology
into Secure's network security products. These discussions were unrelated to
any possible acquisition of Enigma by Secure. On May 15, 1996, Enigma employees
made technical presentations to Secure employees, at the headquarters of Secure
in Roseville, Minnesota, regarding Enigma's products, marketing strategy and
customer base.

As a result of a several conversations concerning the potential strategic
merit of an acquisition of Enigma by Secure between Kermit M. Beseke, Chairman
of the Board of Directors, President and Chief Executive Officer of Secure, and
Stephen Puricelli, general partner of Corporate Venture Partners, L.P., and a
member of the Board of Directors of Secure, Mr. Puricelli scheduled a meeting
for May 20, 1996, in the Minneapolis, Minnesota, offices of Piper Jaffray Inc.,
financial advisor to Enigma, at which Mr. Beseke and Mr. Puricelli would meet
with representatives of Piper Jaffray to discuss the possibility of an
acquisition of Enigma by Secure.

At their May 20, 1996, meeting, Mr. Beseke, Mr. Puricelli and
representatives of Piper Jaffray discussed the benefits of a possible
acquisition. At this meeting, the representatives of Piper Jaffray disclosed
that they were in the process of a private offering of Enigma common stock, that
one or more potential purchasers of the common stock being offered had been
identified, and that Enigma intended to complete the private placement of such
common stock by May 24, 1996. Based on this information, Mr. Beseke indicated
his desire to undertake preliminary due diligence in order to determine, as
quickly as possible, whether an acquisition was feasible and, if so, a
preliminary range of value for Enigma. Mr. Beseke and Mr. Puricelli,
accompanied by a representative of Piper Jaffray, traveled that evening to the
headquarters of Enigma in Concord, California, and on the next day, May 21,
1996, met with Clifford W. Swenson, Chairman of the Board of Enigma, Gerald L.
Hilton, President and Chief Executive Officer of Enigma, and various senior
executives of Enigma to discuss issues relating to a business combination and
valuation.

On May 22, 1996, Mr. Beseke informed Mr. Hilton and representatives of
Piper Jaffray of his desire to begin formal negotiations concerning the
acquisition of Enigma by Secure and indicated a preliminary range of value for
Enigma.

On June 4 and 5, 1996, Timothy P. McGurran, Vice President of Finance,
Treasurer and Chief Financial Officer of Secure, accompanied by representatives
of Robertson Stephens, financial advisor to Secure, and

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Faegre & Benson LLP, outside counsel to Secure, conducted financial and business
due diligence examination with respect to Enigma at that company's headquarters
in Concord, California.

On June 11, 1996, Secure formally retained Robertson Stephens as its
financial advisor with regard to the proposed acquisition of Enigma.

On June 12, 1996, in the Minneapolis, Minnesota, offices of Faegre &
Benson, Mr. Beseke and Mr. McGurran, accompanied by representatives of Robertson
Stephens and Faegre & Benson, negotiated terms of the proposed acquisition with
Mr. Hilton, a representative of Wilson Sonsini Goodrich & Rosati, P.C. outside
counsel to Enigma, and representatives of Piper Jaffray.

On June 19 and 20, 1996, members of management of Enigma conducted
financial and business due diligence examination with respect to Secure at the
company's Roseville, Minnesota, headquarters.

On June 21, 1996, at a special meeting of the Board of Directors of Secure,
Mr. Beseke, along with members of management of Secure and representatives of
Robertson Stephens and Faegre & Benson: (i) discussed the results of financial,
business and legal due diligence; (ii) reviewed the possible benefits and risks
relating to the proposed Enigma Acquisition; and (iii) reviewed the principal
terms of the proposed Enigma Acquisition Agreement. Representatives of
Robertson Stephens indicated that, provided the proposed exchange ratio did not
change in final negotiations, Robertson Stephens would be in a position to
deliver its written opinion that, based on matters described therein and as of
the date of the executed Enigma Acquisition Agreement, the Enigma Exchange Ratio
was fair, from a financial point of view, to Secure and its stockholders. See
"The Enigma Acquisition--Opinion of Secure's Financial Advisor." At the
meeting, the Board of Directors of Secure unanimously approved the proposed
Enigma Acquisition and the proposed Enigma Acquisition Agreement, subject to
receipt of letters from Ernst & Young and Price Waterhouse LLP, independent
auditor for Enigma, confirming the status of the proposed Enigma Acquisition as
a "pooling of interests" for financial reporting purposes. On June 24, 1996,
such letters were delivered to Secure and Enigma.

On June 25, 1996, Secure and Enigma executed the Enigma Acquisition
Agreement, and on June 26, 1996, Secure issued a press release announcing the
Enigma Acquisition.

On July 31, 1996, the Board of Directors of Secure unanimously nominated
Eric P. Rundquist to serve as a director of Secure in lieu of Gerald L. Hilton
and unanimously approved a proposed conforming amendment to the Enigma
Acquisition Agreement. The Board of Directors of Secure also unanimously
approved an amendment to the employment agreement with Gerald L. Hilton. On the
same date, Secure and Enigma executed Amendment No. 1 to the Enigma Acquisition
Agreement.

REASONS FOR THE ENIGMA ACQUISITION AND RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board of Directors has unanimously approved the Enigma Acquisition and
determined that the transaction is fair and in the best interests of Secure and
its stockholders. The Board of Directors unanimously recommends to the
stockholders that they vote "FOR" the issuance of shares of Secure Common Stock
to the shareholders of Enigma in connection with the Enigma Merger. The Board
of Directors based its approval of the Enigma Acquisition on its determination
that the Enigma Exchange Ratio is fair to Secure and to its stockholders and
upon a number of other factors, including its belief that the Enigma Acquisition
will benefit Secure in several important ways:

(i) The combination of Secure and Enigma creates a comprehensive
product line allowing for an open, integrated, sole-source security
solution. Further, the integration of Enigma's identification and
authentication solutions into the Secure product offering and distribution
model should contribute to further market acceptance of those products.

(ii) Given the ongoing consolidation of the security segment through
acquisitions (e.g., Security Dynamics' April 1996 announced acquisition of
RSA Data Security) or product bundling (e.g.,

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the bundling by Bay Networks, announced in June 1996, of a Check Point
Software firewall product with that company's router line), Secure's
management believes that rapid acquisition and integration of strong
competitors in specific, complementary niches within the network security
segment of the computer networking industry is the most effective means of
ensuring long-term competitive success.

(iii) Secure and Enigma believe an identification and
authentication standard has yet to be established. Enigma employs the
government-certified and industry-standard DES (data encryption standard)
algorithm, which allows for creation of sequenced passwords based on an
alphanumeric sequence. Further, Enigma supports the industry standard
TCP/IP authentication protocols TACACS, TACACS+, and RADIUS, thereby
allowing for compatibility with any hardware and software vendor that
similarly supports these protocols. Secure and Enigma believe that open,
interoperable solutions will prevail, as network security systems
increasingly employ identification and authentication technology.

(iv) The combination of Secure, Border and Enigma represents steps
toward the creation of a global vendor of comprehensive, integrated
enterprise-wide network security solutions. The combination of Secure's
patented "type enforcement" technology and Webster's Internet blocking and
monitoring functionality with Border's ease of installation and ease of use
in a moderately priced firewall possessing superior performance should
reduce competitive risks and provide the combined company the opportunity
to establish the price/performance standard for firewalls. Further, the
integration of Enigma's identification and authentication solutions into
the Secure-Webster-Border product offering should contribute to the further
market acceptance of those products. The combined three companies should
be able to realize meaningful long-term strategic and operational benefits
that should allow for higher, more sustainable revenue and profit growth
than if the companies were to remain independent.

The Board of Directors also considered a number of risks associated with
the Enigma Acquisition prior to its approval thereof, including integration of
corporate cultures and organizational models, retention of key employees of both
companies, combining Enigma's direct sales model with Secure and Border's sales
model, and integration of Enigma's technology into Secure's firewall products.

On balance, however the Board of Directors determined that the benefits of
the Enigma Acquisition outweighed the potential risks and unanimously approved
the transaction.

The Board of Directors also considered the following information in
concluding that the Enigma Acquisition Agreement and the Enigma Exchange Ratio
are fair to Secure and its stockholders: (i) its knowledge of the business,
operations, property, assets, financial condition, operating results and
prospects of Secure and Enigma; (ii) current industry, economic and market
conditions and trends and its informed expectations of the future of the
industry in which Secure operates; (iii) the opinion of Robertson Stephens dated
June 25, 1996 as to the fairness, from a financial point of view and as of such
date, of the Enigma Exchange Ratio to Secure and its stockholders; (iv) the
terms of the Enigma Acquisition Agreement; (v) the structure and accounting and
tax treatment of the Enigma Acquisition; and (vi) the respective corporate
strategies of Enigma and Secure.

In view of the variety of factors considered in connection with its
evaluation of the Enigma Acquisition, the Board of Directors did not find it
practicable to and did not quantify or otherwise assign relative strengths to
the specific factors considered in reaching its determination.

THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR APPROVAL OF AUTHORIZATION OF
SECURE COMMON STOCK FOR ISSUANCE IN CONNECTION WITH THE ENIGMA ACQUISITION.

OPINION OF SECURE'S FINANCIAL ADVISOR

Secure retained Robertson Stephens to act as its financial advisor in
connection with the Enigma Acquisition and to render an opinion as to the
fairness, from a financial point of view, to Secure and its stockholders of the
Enigma Exchange Ratio. At the June 21, 1996, meeting of the Board of Directors
of Secure, Robertson Stephens indicated that, provided the proposed exchange
ratio did not change in final negotiations,

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Robertson Stephens would be in a position to deliver its written opinion (the
"Enigma Opinion") that, based on matters described therein and as of the date of
the Enigma Acquisition Agreement, the Enigma Exchange Ratio is fair, from a
financial point of view, to Secure and its stockholders. The complete text of
the Enigma Opinion, dated June 25, 1996, setting forth the assumptions made,
procedures followed, matters considered and scope of the review undertaken by
Robertson Stephens in rendering the Enigma Opinion, is attached hereto as
Appendix C. Stockholders are urged to read the Enigma Opinion in its entirety.

Robertson Stephens did not recommend to the Board of Directors of Secure
that any specific amount of consideration constituted the appropriate
consideration for the Enigma Acquisition. No limitations were imposed by the
Board of Directors of Secure on Robertson Stephens with respect to the
investigations made or procedures followed by Robertson Stephens in rendering
the Enigma Opinion. The Enigma Opinion addresses only the fairness from a
financial point of view of the Enigma Exchange Ratio to Secure and its
stockholders and does not constitute a recommendation to any Secure stockholder
as to how such stockholder should vote at the Special Meeting. Robertson
Stephens expressed no opinion as to the tax consequences of the Enigma
Acquisition, and the Enigma Opinion does not take into account the particular
tax status or position of any holder of Secure Common Stock. In rendering the
Enigma Opinion, Robertson Stephens was not engaged as an agent or fiduciary of
Secure stockholders or any other third party. The summary of the Enigma Opinion
set forth in this Proxy Statement is qualified in its entirety by reference to
the full text of such opinion.

In connection with the preparation of the Enigma Opinion, Robertson
Stephens: (i) reviewed financial information of Secure, Border and Enigma
furnished to Robertson Stephens by Secure and Enigma, including certain internal
financial forecasts and a pro forma financial forecast for the combined company
resulting from the combination of Secure and Border ("New Secure") prepared by
the management of Secure; (ii) reviewed publicly available information; (iii)
held discussions with the managements of Secure and Enigma concerning the
businesses, past and current business operations, financial condition and future
prospects of the companies; (iv) reviewed the Border Acquisition Agreement and a
draft of the Enigma Acquisition Agreement dated June 10, 1996; (v) reviewed the
stock price and trading history of Secure Common Stock; (vi) reviewed the
contribution by Secure and Enigma, on the one hand, and New Secure and Enigma,
on the other hand, to pro forma combined revenue, gross profit, operating
income, pre-tax income and net income; (vii) reviewed the valuations of publicly
traded companies deemed by Robertson Stephens to be comparable to Secure, Border
and Enigma in the computer networking industry (the "Comparable Companies");
(viii) compared the financial terms of the Enigma Acquisition with other
transactions deemed relevant by Robertson Stephens (the "Precedent
Transactions"); (ix) analyzed the pro forma earnings per share of a combined
company comprised of Secure and Enigma and of New Secure and Enigma; (x)
prepared a discounted cash flow analysis of Enigma; and (xi) made such other
studies and inquiries, and reviewed such other data, as deemed relevant by
Robertson Stephens.

The following paragraphs summarize the material analyses performed by
Robertson Stephens in arriving at the Enigma Opinion and reviewed with the Board
of Directors of Secure in connection therewith but do not purport to be a
complete description of the analyses performed by Robertson Stephens.

STOCK PRICE ANALYSIS. Robertson Stephens reviewed the trading activity,
including share price and trading volume, of Secure Common Stock for the period
November 17, 1995 (the date of Secure's initial public offering) to June 20,
1996. Robertson Stephens noted that, since November 17, 1995, the daily closing
prices of Secure Common Stock ranged from a high of $60.50 on December 13, 1995
to a low of $20.50 on April 2, 1996. Robertson Stephens also noted that the
average closing price for the 20 trading days, 50 trading days and 100 trading
days up to and including June 20, 1996 was $31.344, $28.060, and $27.914,
respectively. In addition, Robertson Stephens compared the indexed performance
of Secure Common Shares for the period November 17, 1995 to June 20, 1996 to
both a composite index made up of the Comparable Companies and the NASDAQ
Composite Index. The Comparable Companies were: Citrix Systems, Inc.; Cylink
Corporation; Netscape Communications Corporation; Raptor Systems, Inc.; Security
Dynamics Technologies, Inc.; Spyglass, Inc.; and Verity, Inc. Robertson
Stephens noted that the price of Secure Common Stock had underperformed the
indexed performance of the both the Comparable Companies and the NASDAQ
Composite for the period.

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CONTRIBUTION ANALYSIS - SECURE AND ENIGMA. Robertson Stephens compared the
contribution of Secure and Enigma to historical and projected pro forma combined
total revenue, commercial revenue, gross profit, operating income, pre-tax
income, and net income for fiscal years 1995, 1996 and 1997, based on actual
results for Secure and Enigma for fiscal year 1995, financial forecasts for
Secure and Enigma prepared by the management of Secure and Enigma, respectively,
and estimates for calendar 1996 and 1997 financial performance of Secure by
Robertson Stephens Institutional Research. For such periods, Robertson Stephens
noted that Enigma would contribute 19.1% to 33.0% of pro forma combined total
revenue, 32.0% to 41.9% of pro forma combined commercial revenue, 27.6% to 42.5%
of pro forma combined gross profit, 39.1% to 40.3% of pro forma combined
operating income, 17.9% to 36.0% of pro forma combined pre-tax income and 17.9%
to 36.0% of pro forma combined net income. Robertson Stephens compared these
historical and projected contribution percentages to 26.6%, the pro forma
ownership (implied by the Enigma Exchange Ratio) of the combined company
resulting from the combination of Secure and Enigma by holders of Enigma Stock.

CONTRIBUTION ANALYSIS - NEW SECURE AND ENIGMA. Robertson Stephens compared
the contribution of New Secure and Enigma to pro forma combined historical and
projected total revenue, commercial revenue, gross profit, operating income,
pre-tax income, and net income, based on pro forma historical results for New
Secure for the fiscal year ended December 1995, historical results of Enigma for
the fiscal year ended December 1995, a pro forma financial forecast for New
Secure prepared by Secure management, and a financial forecast for Enigma
prepared by Enigma management. For such periods, Robertson Stephens noted that
Enigma would contribute 13.4% to 19.1% of pro forma combined total revenue,
18.6% to 21.8% of pro forma combined commercial revenue, 16.0% to 21.3% of pro
forma combined gross profit, 13.9% to 22.7% of pro forma combined operating
income, 8.5% to 19.7% of pro forma combined pre-tax income and 8.5% to 19.7% of
pro forma combined net income. Robertson Stephens compared these historical and
projected contribution percentages to 16.2%, the pro forma ownership (implied by
the Enigma Exchange Ratio) of the combined company resulting from the
combination of New Secure and Enigma by holders of Enigma Stock.

COMPARABLE COMPANIES ANALYSIS. Robertson Stephens analyzed, as of June 20,
1996, financial performance for the last twelve months ("LTM"), the last quarter
annualized ("LQA") (i.e., the most recent quarter's financial performance
multiplied by four), and the 1996 and 1997 calendar years for Secure and
compared ratios and multiples derived from this data and selected stock market
data to similar ratios and multiples for the Comparable Companies. Because of
the relatively limited period of time in which Secure, Enigma, and the
Comparable Companies have been operating and the resulting lack of consistent
historical financial performance and stock market data, Robertson Stephens
emphasized ratios and multiples derived from performance estimates for calendar
1996 and 1997. Financial performance data compared included equity value
(public market value of the common and common equivalent shares outstanding),
aggregate value (equity value, less cash and cash equivalents, plus debt),
revenue, operating income and margin, net income and margin, historical earnings
per share, estimated earnings per share and estimated earnings per share growth
rate as published by Robertson Stephens Institutional Research or third parties.
Multiples compared included aggregate value to revenue and equity value to net
income before non-recurring and extraordinary charges (i.e., the price to
earnings multiple).

Based on these comparisons of multiples for the Comparable Companies and
Secure, Robertson Stephens estimated the following ranges, adjusted as necessary
for Enigma's long-term debt of approximately $1.8 million, for Enigma's public
market implied equity value: based on aggregate value to revenue multiples for
the LTM period, Enigma's public market implied equity valuation ranged from
approximately $55 million to approximately $93 million, with an average of
approximately $75 million; based on aggregate value to revenue multiples for the
LQA period, Enigma's public market implied equity valuation ranged from
approximately $60 million to approximately $110 million, with an average of
approximately $85 million; based on aggregate value to revenue multiples for
projected calendar 1996, Enigma's public market implied equity valuation ranged
from approximately $84 million to approximately $136 million, with an average of
$110 million; based on aggregate value to revenue multiples for projected
calendar 1997, Enigma's public market implied equity valuation ranged from
approximately $148 million to $248 million, with an average of $198 million;
based on price to earnings multiples for projected calendar 1997 (such multiples
for projected calendar 1996 were excluded from the analysis), Enigma's public
market implied equity valuation ranged from approximately $164 million to
approximately $288 million, with an average of $226 million.

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PRECEDENT TRANSACTIONS ANALYSIS. Robertson Stephens analyzed publicly
available information for selected pending or completed acquisitions and mergers
within the network security and Internet tools segments of the computer
networking industry. The acquisitions reviewed were, in order of date announced:
(i) Security Dynamics Technologies, Inc. / RSA Data Security Inc.; (ii) Ascend
Communications, Inc. / Morning Star Technologies, Inc.; (iii) IBM Corporation /
Tivoli Systems Inc.; (iv) Informix Software, Inc. / Illustra Information
Technologies, Inc.; (v) Fore Systems, Inc. / ALANTEC Corporation; (vi) Cisco
Systems, Inc. / Grand Junction Systems, Inc.; and (vi) Netscape Communications
Corporation / Collabra Software, Inc. In examining these transactions, Robertson
Stephens assessed certain financial characteristics of the acquired company
relative to the consideration offered. Because Enigma had an operating loss and
net loss for the LTM period, Robertson Stephens emphasized the multiple of
aggregate consideration (total value of the consideration paid to the equity
owners of the acquired company, plus net debt assumed) to LTM revenue. Based on
this analysis of multiples of aggregate consideration to LTM revenue for the
Precedent Transactions, Robertson Stephens estimated Enigma's implied equity
value to range from approximately $55 million to approximately $112 million,
with an average of approximately $84 million.

DISCOUNTED CASH FLOW ANALYSIS RELATED TO ENIGMA. Robertson Stephens
performed a discounted cash flow analysis to estimate the present value of the
stand-alone unlevered (before interest expense) after-tax cash flows of Enigma,
based on financial projections for Enigma prepared by management of Enigma.
Robertson Stephens first discounted the projected, unlevered after-tax cash
flows through 2000 using a range of discount rates 20% to 40%. Enigma's
unlevered after-tax cash-flows were calculated as the after-tax operating
earnings of Enigma adjusted for the add-back of non-cash expenses and the
deduction of uses of cash not reflected in the income statement. Robertson
Stephens then added to the present value of the cash flows the terminal value of
Enigma in the fiscal year 2000, discounted back at the same discount rate. The
terminal value was computed by multiplying Enigma's projected operating income
in the fiscal year 2000 by terminal multiples ranging from 20.0 to 30.0x. The
discounted cash flow valuation indicated implied equity valuations from $107
million to $305 million with an average of $206 million.

PRO FORMA ACQUISITION ANALYSIS. Robertson Stephens analyzed the pro forma
annual earnings per share of the combined company resulting from the combination
of Secure and Enigma and of the combined company resulting from the combination
of New Secure and Enigma based on the Enigma Exchange Ratio, forecasts of
Enigma's financial performance prepared by management of Enigma, forecasts of
Secure's and New Secure's financial performance prepared by management of
Secure, and estimates of Secure's financial performance published by Robertson
Stephens Institutional Research. Such analysis indicated that, in the absence
of synergies, pro forma earnings per share of the combined company resulting
from the combination of Secure and Enigma, compared to Secure as a stand-alone
entity, would decline by 13.5% for calendar 1996 and increase by 12.0% for
calendar year 1997. Such analysis also indicated that, in the absence of
synergies, pro forma earnings per share of the combined company resulting from
the combination of New Secure and Enigma, compared to New Secure as a
stand-alone entity, would decline by 9.7% for calendar 1996 and increase by 3.8%
for calendar year 1997.

The preparation of fairness opinions involves various determinations as to
the most appropriate and relevant quantitative and qualitative methods of
financial analyses and the application of those methods to the particular
circumstances. Accordingly, such opinions are not readily susceptible to
summary description. In arriving at the Enigma Opinion, Robertson Stephens did
not attribute any particular weight to any analysis or factor considered by it,
but rather made qualitative judgments as to the significance and relevance of
each analysis and factor. Accordingly, Robertson Stephens believes its analyses
must be considered as a whole and that considering any portion of such analyses
and current factors could create a misleading or incomplete view of the process
underlying the preparation of fairness opinions. In its analyses, Robertson
Stephens made numerous assumptions with respect to industry performance, general
business and other conditions and matters, many of which are beyond the control
of Secure, Border and Enigma. Any estimates contained in these analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth
therein. In addition, analyses relating to the value of businesses do not
purport to be appraisals or to reflect the prices at which businesses actually
may be sold.

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Based on past activities, Robertson Stephens has a substantial degree of
familiarity with Secure. In addition, in the course of its engagement,
Robertson Stephens conducted further investigation of Secure and Enigma. In
arriving at the Enigma Opinion, however, Robertson Stephens did not
independently verify any of the foregoing information and relied on all such
information being complete and accurate in all material respects. Furthermore,
Robertson Stephens did not obtain nor make any independent evaluation or
appraisal of the properties, assets, or liabilities of Secure, Border or
Enigma, nor was Robertson Stephens furnished any such evaluation or appraisal.
With respect to the financial and operating forecasts (and the assumptions and
bases therefor) that Robertson Stephens reviewed, Robertson Stephens assumed
that such forecasts were reasonably prepared in good faith on the basis of
reasonable assumptions and represent the best available estimates and judgments
of Secure and Enigma management as to the likely future financial performance of
such company. Robertson Stephens noted, among other things, that the Enigma
Opinion is necessarily based upon market, economic and other conditions existing
as of the date of the Enigma Opinion, and information available to Robertson
Stephens as of the date thereof.

Robertson Stephens was retained in connection with the Enigma Acquisition
based on Robertson Stephens' experience as a financial advisor in connection
with mergers and acquisitions and in securities valuations generally, as well as
Robertson Stephens' investment banking relationship and familiarity with Secure.
Robertson Stephens has provided financial advisory and investment banking
services to Secure from time to time, including acting as an underwriter for the
initial public offering of shares of shares of Secure Common Stock in November
1995 and acting as financial adviser to Secure in connection with the Border
Acquisition. In addition, Robertson Stephens maintains a market in shares of
Secure Common Stock.

Secure engaged Robertson Stephens in connection with the Border Acquisition
by means of an engagement letter, dated June 11, 1996. Such letter provides
that, for its services in connection with the Enigma Acquisition, including the
rendering of the Enigma Opinion, Robertson Stephens is to be paid a transaction
fee equal to 1.0% of the Aggregate Transaction Value. "Aggregate Transaction
Value" is defined as the sum of: (i) all cash, cash equivalents, notes, and
other securities paid to Enigma and its stock, option, warrant and debt holders,
including, payments for stock or assets sold; (ii) funds lent to Enigma; (iii)
prepaid royalties, advances against sales, licensing agreements, and any and all
other payments which may be construed as advance payments for products or
services to be delivered in the future; and (vi) any debt assumed. The fee due
to Robertson Stephens in connection with the Enigma Acquisition is payable upon
consummation of the Enigma Acquisition. Secure has also agreed to indemnify
Robertson Stephens for certain liabilities relating to or arising out of
services provided by Robertson Stephens as financial advisor to Secure.

TRANSACTION MECHANICS

ENIGMA MERGER. Merger Sub will merge with and into Enigma. As a result of
the Merger, the separate corporate existence of Merger Sub will cease, and
Enigma will become a wholly-owned subsidiary of Secure. At the Enigma Effective
Time, each share of Enigma Stock will be converted into the Enigma Exchange
Ratio of a share of Secure Common Stock.

The Enigma Exchange Ratio will be proportionally adjusted to reflect fully
the effect of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Secure Common Stock or
Enigma Stock), reorganization, recapitalization or other like change with
respect to Secure Common Stock or Enigma Stock prior to the Enigma Effective
Time.

TREATMENT OF ENIGMA OPTIONS. Each outstanding Enigma Option, whether
vested or unvested, shall be exchanged for an option to acquire a share of
Secure Common Stock (a "Secure Stock Option"), which such Option will be covered
by the Amended and Restated 1995 Omnibus Stock Plan pursuant to a new provision,
as proposed herein, which will amend such plan to provide the Board of Directors
flexibility to grant to holders of options in companies acquired by Secure stock
options in substitution for options in such acquired company. See "PROPOSAL
FOUR". Each Secure Stock Option will continue to have, and be subject to, the
same terms and conditions set forth in the original Enigma Option plan pursuant
to which such Enigma Option was granted, immediately prior to the Enigma Merger,
except for the number of shares of Secure Common Stock to be

48
<PAGE>

purchased under such original Enigma Option and the exercise price thereof.
Each Enigma Option will be exercisable for that number of shares of Secure
Common Stock rounded down to the nearest whole number of shares of Secure Common
Stock that the holder of the original Enigma Option would have been entitled to
receive pursuant to the Enigma Merger had such holder exercised such Enigma
Option in full immediately prior to the Enigma Effective Time. The per share
exercise price for the shares of Secure Common Stock issuable upon exercise of
such assumed Enigma Option will be equal to the quotient of the per share
exercise price at which such option was exercisable immediately prior to the
Enigma Effective Time divided by the Enigma Exchange Ratio and rounding the
resulting exercise price up to the nearest whole cent.

THE ENIGMA ACQUISITION AGREEMENT AND RELATED AGREEMENTS

The following paragraphs summarize, among other things, the material terms
of the Enigma Acquisition Agreement. The complete text of the Enigma
Acquisition Agreement is attached hereto as Appendix B. Stockholders are urged
to read the Enigma Acquisition Agreement in its entirety for a more complete
description of the Enigma Merger.

EFFECTIVE DATE OF THE ENIGMA MERGER

As promptly as practicable after the satisfaction or waiver of the
conditions set forth in Enigma Acquisition Agreement, Secure, Merger Sub and
Enigma will file a properly executed agreement of merger with the Secretary of
State of the State of California in accordance with Section 1108(d)(2) of the
California General Corporation Law. The Enigma Merger shall become effective at
the time at which such agreement of merger shall have been filed with and
accepted by such Secretary of State, or such later time as Secure and Enigma may
agree and specify in the agreement of merger.

MERGER CONSIDERATION, EXCHANGE OF ENIGMA STOCK

At the Enigma Effective Time, each outstanding share of Enigma Stock (other
than Enigma Stock owned by Secure, Merger Sub or any direct or indirect
wholly-owned subsidiary of Enigma or any direct or indirect wholly-owned
subsidiary of Secure, and Enigma Stock as to which statutory dissenters'
appraisal rights have been exercised and not subsequently forfeited) shall, by
virtue of the Enigma Merger and without any action on the part of the holder
thereof, be converted into that number of shares of Secure Common Stock equal to
the product of the number of shares of Enigma Stock to be exchanged and the
Enigma Exchange Ratio.

Any shares of Enigma Stock owned by Secure, Merger Sub or any direct or
indirect wholly-owned subsidiary of Enigma or any direct or indirect
wholly-owned subsidiary of Secure will be canceled in the Enigma Merger and no
cash or other consideration will be paid in respect thereof.

CONVERSION OF ENIGMA OPTIONS

At the Enigma Effective Time, each former holder of an Enigma Option shall
have an option to acquire Secure Common Stock, substantially on the same terms
and conditions as under the original option plan to purchase Enigma Stock
related thereto. See "The Enigma Acquisition -- Transaction Mechanics -
Treatment of Enigma Stock Options".

BUSINESS OF ENIGMA PENDING THE ENIGMA MERGER

Pending consummation of the Enigma Merger, and except as otherwise
consented to or approved by Secure in writing, Enigma has agreed that it will,
among other things, operate its business substantially as presently planned or
operated and only in the ordinary, usual and customary manner and, consistent
with such operation, use reasonable efforts to preserve intact its business
organization and its relationships with customers and suppliers and other
persons with whom it has significant business relations.

49
<PAGE>

In addition, Enigma has agreed, among other things, not to take any of the
following actions without the prior written consent of Secure: (i) amend or
otherwise change Enigma's articles of incorporation; (ii) grant, authorize for
issuance or issue any shares or any warrants, options, convertible securities or
any other right to acquire any shares of its capital stock; (iii) declare or pay
any dividend or other distribution with respect to any of its capital stock;
(iv) materially amend or renew or waive or release any rights of material value
under certain material agreements other than in the ordinary course of business;
(v) increase the compensation payable to its officers or employees, except for
increases in the ordinary course of business and in accordance with past
practice or enter into any employment contract or consulting agreement or make
any offer of employment to any person or offer to engage any person as a
consultant; or (vi) take any action that would adversely affect the ability of
Secure to account for the Enigma Merger as a pooling of interests for accounting
purposes under U.S. GAAP.

SOLICITATION OF ALTERNATIVE TRANSACTIONS

The Enigma Acquisition Agreement provides that Enigma will not take any
action to solicit or encourage any inquiries, proposals or offers from, or
furnish any information to any corporation, partnership, person, or other entity
or group (other than Secure) regarding any acquisition of Enigma, or a merger,
amalgamation, or consolidation with or involving Enigma, or any sale of stock or
any material portion of the assets of Enigma. Enigma must inform Secure of any
such inquiries or proposals.

CERTAIN AGREEMENTS OF SECURE

Pending consummation of the Merger, Secure has agreed that it will not
offer, sell, contract to sell or otherwise dispose of any equity securities of
Secure other than pursuant to (i) the Border Acquisition Agreement or (ii) the
Amended and Restated 1995 Omnibus Stock Plan.

Subject to the consummation of the Merger, Secure has also agreed that it
will enter into an employment agreement with each of Gerald L. Hilton, John R.
Muir, William H. Bosen, Robert J. Bosen and Thomas J. Brady. See "Information
Concerning Secure -- Directors and Management -- Employment Agreements Following
the Enigma Acquisition".

INDEMNIFICATION OF SECURE

Pursuant to the Enigma Acquisition Agreement and an Escrow Agreement, in
the form attached to the Enigma Acquisition Agreement as Exhibit A, Secure shall
be indemnified against, and with respect to, among other things, (i) any and all
loss, injury, damage or deficiency resulting from any breach of warranty or
misrepresentation on the part of Enigma under the Enigma Acquisition Agreement,
(ii) any and all loss, injury, damage or deficiency resulting from any
non-fulfillment of any covenant or agreement on the part of Enigma under the
Enigma Acquisition Agreement, and (iii) any and all demands, claims, actions,
suits or proceedings, assessments, judgments, costs and legal and other expenses
incident to the foregoing.

Secure shall only be entitled to exercise such indemnification rights in
the event that any claim or claims for indemnification aggregate not less then
$1,000,000, and then only with respect to claims for indemnification in excess
of such amount. Such indemnification is exercisable by Secure until March 1,
1997. As security for the such indemnification, 10% of the Secure Common Stock
to be issued pursuant to the Enigma Merger will he held in escrow by Norwest
Bank Minnesota, N.A. The escrow fund shall constitute the sole recourse of
Secure with respect to the indemnification rights described herein.

INDEMNIFICATION BY SECURE

Holders of Enigma Stock ("Indemnified Enigma Parties") are third party
beneficiaries of the obligations, covenants and representations and warranties
of Secure pursuant to the Enigma Acquisition Agreement; provided however that
such Indemnified Enigma Parties shall be third party beneficiaries thereof only
to the extent that any claim or claims aggregate not less than $1,000,000 (the
"Indemnification Basket"), and then only with respect to claims in excess of
such amount. This Indemnification Basket shall not apply to any claim or claims
based upon (i) the obligations

50
<PAGE>

of Secure pursuant to Article IV, the operative provisions, of the Enigma
Acquisition Agreement, (ii) the representations and warranties of Secure
relating to the authorization of Secure Common Stock to be issued pursuant to
the Enigma Acquisition Agreement and (iii) all of the covenants of Secure
contained in Article VI of the Enigma Acquisition Agreement. Any claim
against Secure, other than with respect to certain limited obligations of
Secure, must be asserted in a written notice to Secure given on or prior to
March 1, 1997. Secure shall have no liability with respect to any such claim
unless it has been given such notice of such claim on or prior to March 1,
1997.

CONDITIONS TO THE ENIGMA MERGER

Consummation of the Enigma Merger is subject to the satisfaction of various
conditions, including (i) the approval and adoption of the Enigma Merger and the
Enigma Acquisition Agreement by the affirmative requisite vote of each of the
Enigma Shareholders and the Secure Stockholders, provided that no more than 3%
of Enigma Shareholders shall have exercised dissenters' rights provided by the
California General Corporation Law in respect of the Enigma Merger; (ii) the
absence of any order restraining, enjoining or otherwise prohibiting
consummation of the transactions contemplated by the Enigma Acquisition
Agreement, and of any actions or proceedings brought by any governmental agency
seeking to restrain, enjoin or prohibit the consummation of the transactions
contemplated by the Enigma Acquisition Agreement; (iii) the receipt of an
officers' certificate by each of Secure and Enigma from the other party to the
effect that certain representations and warranties made by the respective party
are true and correct in all material respects on and as of the date of the
closing of the Enigma Merger (the "Enigma Closing Date"), and to the effect that
the respective party has performed or complied in all material respects with all
agreements and covenants required by the Enigma Acquisition Agreement on or
prior to the Enigma Closing Date; (iv) the obtaining by Secure and Enigma of all
material consents, waivers, approvals, authorizations or orders required to be
obtained and material filings required to be made for the authorization,
execution and delivery of the Enigma Acquisition Agreement and the consummation
of the transactions contemplated thereby; (v) the approval for listing of the
Secure Common Stock to be issued pursuant to the Enigma Merger on the Nasdaq
National Market; (vi) the receipt by Secure of an opinion of Ernst & Young LLP,
as independent public accountants, to the effect that pooling of interests
accounting treatment is appropriate for the Enigma Merger under U.S. GAAP and
the receipt by Enigma of an opinion of Price Waterhouse LLP to the effect that
Enigma is an entity that would qualify as a part to a pooling of interests under
U.S. GAAP; (vii) the receipt by Secure and Enigma of the written opinions of the
respective legal counsel for the other party; (viii) receipt by Secure of a
"comfort letter" from Enigma's independent auditors, (ix) the receipt by Secure
of a tax opinion of legal counsel to the effect that the Enigma Merger will be
treated for federal income tax purposes as a tax-free reorganization, and (x)
the California Commissioner shall have issued a permit for the issuance of the
shares of Secure Common Stock to be issued in the Enigma Merger.

TERMINATION AND AMENDMENT

The Enigma Acquisition Agreement may be terminated and the Enigma Merger
may be abandoned prior to the time at which the Merger becomes effective
notwithstanding approval by the Enigma Shareholders or the Secure Stockholders,
(i) by mutual written agreement of the Boards of Directors of Secure and Enigma,
or (ii) by either Secure or Enigma, if the conditions to their respective
obligations have not been satisfied or waived or the Enigma Merger shall not
have been consummated by October 31, 1996, provided the party seeking to
terminate the Enigma Acquisition Agreement has not caused the failure of the
condition to be satisfied or the Enigma Merger to be consummated by such date
through its own failure to fulfill any of its obligations under the Enigma
Acquisition Agreement.

The Enigma Acquisition Agreement may be amended by an agreement in writing
among the parties thereto at any time; provided, however, that, after approval
of the Enigma Merger by the Enigma Shareholders or the issuance of the shares of
Secure Common Stock in the Enigma Merger by the Secure Stockholders, no
amendment may be made which by law requires further approval of such
shareholders or stockholders, without such further approval.

51
<PAGE>

FEES AND EXPENSES

All fees and expenses incurred in connection with the Enigma Acquisition
Agreement and the transactions contemplated thereby will be paid by the party
incurring such expenses, whether or not the Enigma Merger is consummated. If
the Enigma Merger is consummated, fees and expenses incurred by Enigma will be
the obligation of the surviving corporation.

CONFIDENTIALITY AGREEMENT

Each of Secure and Enigma has agreed to keep confidential, pursuant to the
Enigma Acquisition Agreement and a bilateral non-disclosure agreement, dated May
22, 1996, between Secure and Enigma, information provided to the other party
with respect to the business, properties and personnel of the party furnishing
such information.

AGREEMENTS OF ENIGMA AFFILIATES

Each Enigma Affiliate has delivered a written agreement (an "Enigma
Affiliate Agreement") to Secure. Under such Enigma Affiliate Agreements, each
Enigma Affiliate represents that he or she has been advised that the Enigma
Affiliate may not sell, transfer or otherwise dispose of Secure Common Stock
issued to the Enigma Affiliate unless the sale or disposition in the United
States or to a U.S. Person of the shares of Secure Common Stock issuable
pursuant the Enigma Merger (i) has been registered under the Securities Act,
(ii) is made in compliance with the requirements of Rule 145 under the
Securities Act, or (iii) in the opinion of counsel reasonably acceptable to
Secure, is otherwise exempt from registration under the Securities Act. Every
Enigma Affiliate has also agreed not to sell, contract to sell or otherwise
dispose of any Secure Common Stock during the period beginning 30 days before
the Enigma Effective Time and ending at such time after the Enigma Effective
Time as Secure has published financial results covering at least 30 days of
combined operations of Secure and Enigma.

In addition, all Enigma Affiliates have agreed to vote their respective
shares of Enigma Stock in favor of the Enigma Merger.

AGREEMENTS OF SECURE AFFILIATES

Each Secure Affiliate has delivered a written agreement (a "Secure
Affiliate Agreement") to Enigma. Under such Secure Affiliate Agreement, each
Secure Affiliate agrees not to sell, contract to sell or otherwise dispose of
any Secure Common Stock during the period beginning 30 days before the Enigma
Effective Time and ending at such time after the Enigma Effective Time as Secure
has published financial results covering at least 30 days of combined operations
of Secure and Enigma. In addition, certain Secure Affiliates have agreed in
their Secure Affiliate Agreement to vote their respective shares of Secure
Common Stock in favor of the Enigma Merger and the amendment to the Amended and
Restated 1995 Omnibus Stock Plan.

THE ACQUISITIONS

OPERATIONS FOLLOWING THE ACQUISITIONS

After the consummation of the Border Acquisition and the Enigma
Acquisition, the Board of Directors of Secure will continue as directors of
Secure. At the Special Meeting, the stockholders will be considering the
election of Messrs. Adam Adamou, Robert Forbes and Glenn G. Mackintosh, each a
Border Affiliate, to the Board of Directors and Eric P. Rundquist, an Enigma
Affiliate. In addition, on the Border Effective Date, Glenn G. Mackintosh and
Donald Whitbeck will be appointed to serve as Vice President and General Manager
- -- Firewall Division and Vice President of Marketing and Sales, respectively, of
the Company. At the Enigma Effective Time, John R. Muir will be appointed to
serve as Vice President and General Manager --Enigma Division. See "Information
Concerning Secure -- Directors and Management" for information concerning the
executive officers

52
<PAGE>

of Secure following the Acquisitions. The principal executive offices of Secure
will continue to be at 2675 Long Lake Road, Roseville, Minnesota 55113.

INTERESTS OF CERTAIN PERSONS IN THE ACQUISITIONS

In considering the recommendations of the Board of Directors of Secure with
respect to the Acquisitions, stockholders should be aware that certain officers
and the directors of Secure have executed Secure Affiliate Agreements. Under
such Secure Affiliate Agreements, each Secure Affiliate agrees not to sell,
contract to sell or otherwise dispose of any Secure Common Stock during the
period beginning 30 days before the consummation of the Acquisitions and ending
at such time after the consummation of the Acquisitions as Secure has published
financial results covering at least 30 days of combined operations. In
addition, certain Secure Affiliates (holding of record as of July 26, 1996,
3,434,695 shares of Secure Common Stock) have agreed in their Secure Affiliate
Agreement to vote their respective shares of Secure Common Stock in favor of
PROPOSAL ONE, PROPOSAL TWO and PROPOSAL FOUR.

NO DISSENTERS' APPRAISAL RIGHTS

Holders of Secure Common Stock are not entitled to dissenters' appraisal
rights under the Delaware General Corporation Law (the "DGCL") in connection
with the Acquisitions because the Company is not a constituent corporation in
the Amalgamation or the Enigma Merger.

ACCOUNTING TREATMENT

Each of the Acquisitions is expected to be treated by Secure as a "pooling
of interests" for accounting purposes under U.S. GAAP. This accounting method
permits the recorded assets and liabilities of Border and Enigma, as the case
may be, to be carried forward on a consolidated basis to Secure, after giving
effect to each Acquisition, at their respective recorded historical amounts. No
recognition of goodwill will be required as a result of the Acquisitions and
consequently, there will be no amortization of goodwill from the Acquisitions
reflected in Secure's future financial periods.

It is a condition to the consummation of the Border Acquisition that Secure
and Border receive reports from Ernst & Young LLP and Price Waterhouse (Canada),
the independent auditors of Secure and Border, respectively, that the Border
Acquisition will be accounted for as a pooling of interests under U.S. GAAP.
Secure does not intend to waive this requirement with respect to the Border
Acquisition.

It is also a condition to the consummation of the Enigma Acquisition that
Secure and Enigma receive letters from Ernst & Young LLP and Price Waterhouse
LLP, the independent auditors of Secure and Enigma, respectively, that the
Enigma Acquisition will be accounted for as a pooling of interests under U.S.
GAAP. Secure does not intend to waive this requirement with respect to the
Enigma Acquisition.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

Set forth below is a discussion of certain United States federal income tax
consequences to Secure under the Code. This discussion does not deal with all
aspects of United State federal taxation that may be relevant to a particular
stockholder of Secure, nor with the effects of state local or foreign income
taxation. This discussion also does not deal with aspects of taxation which may
be relevant to Border, Enigma or their respective stockholders.

Secure has not requested a ruling from the United State Internal Revenue
Service in connection with the Acquisitions. The Acquisitions will constitute
"tax free reorganizations" under the Code if carried out in the manner set forth
in each Acquisition Agreements. By reason of the Acquisitions constituting
reorganizations, no gain or loss will be recognized by Secure on account of the
Acquisitions. To the extent existing Secure stockholders hold their shares of
Secure Common Stock there will be no tax consequences to them as a result of the
Acquisitions. Sales or other transfers of existing Secure Stockholders may
affect Secure's ability to utilize its net

<PAGE>

operating loss carry forward. See "Information Concerning Secure --
Management's Discussion and Analysis of Financial Condition and Results of
Operations".

COMPARISON OF STOCKHOLDERS' RIGHTS

There will be no change in the rights and preferences of the Secure Common
Stock as a result of the Acquisitions.

<PAGE>

PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(in thousands, except per share data)

The following unaudited pro forma combined condensed financial information
assumes a business combination between (i) Secure and Border, (ii) Secure and
Enigma, and (iii) Secure, Border and Enigma accounted for on a pooling of
interests basis. This information is based on the respective historical
financial statements and the notes thereto of Secure, Border and Enigma, which
are included elsewhere in this Proxy Statement. The pro forma combined
condensed balance sheets combine (i) Secure's and Border's unaudited balance
sheets as of March 31, 1996, (ii) Secure's and Enigma's unaudited balance sheets
as of March 31, 1996, and (iii) Secure's, Border's and Enigma's unaudited
balance sheets as of March 31, 1996. The pro forma combined statements of
operations combine (i) Secure's and Border's audited results of operations for
each of the two years ended December 31, 1994 and 1995, and unaudited results of
operations for the three months ended March 31, 1995 and 1996, (ii) Secure's and
Enigma's audited results of operations for each of the three years ended
December 31, 1993, 1994 and 1995, and unaudited results of operations for the
three months ended March 31, 1995 and 1996, and (iii) Secure's, Border's and
Enigma's audited results of operations for each of the two years ended December
31, 1994 and 1995, and unaudited results of operations for the three months
ended March 31, 1995 and 1996.

Net income (loss) per share presented for Secure and combined pro forma
statements is computed using the weighted average number of shares of common
stock and common stock equivalents, if dilutive, outstanding during the periods
presented after giving effect to the application of Securities and Exchange
Commission Staff Accounting Bulletin No. 83, which requires that all common
shares issued and stock options and warrants granted by the Company at a price
less than the initial public offering price during the 12 months preceding the
offering date (using the treasury stock method until shares are issued) be
included in the calculation of common and common equivalent shares outstanding
for all periods up to the initial public offering date and after including the
effects of preferred stock using the "if converted" method which reflects the
impact of the conversion of the preferred stock to common stock at the beginning
of the earliest period presented or at the date of issuance, if later.

The pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the results of operations or financial position
that would have occurred if the (i) Border Acquisition, (ii) the Enigma
Acquisition, or (iii) the Acquisitions had been consummated at the beginning of
the earliest period presented, nor is it necessarily indicative of future
operating results or financial position. These pro forma financial statements
are based on, and should be read in conjunctions with, the historical financial
statements and notes thereto of Secure, Border and Enigma, included elsewhere in
this Proxy Statement.

For information concerning the results of operations for the six months
ended June 30, 1996 for Secure, Border and Enigma see "Recent Financial
Results".

<PAGE>

SECURE AND BORDER
COMBINED BALANCE SHEET
COMBINED AS OF MARCH 31, 1996

PRO FORMA PRO FORMA
SECURE BORDER ADJUSTMENTS COMBINED
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $30,867 $ 9,678 $40,545
Accounts receivable 4,102 1,587 5,689
Inventory 471 471
Deferred income taxes 936 936
Other current assets 400 351 751
--------------------------------------------------------------------
Total current assets 36,776 11,616 --- 48,392

Property and equipment-net 3,265 443 3,708

Deferred income taxes 437 437
Intangible assets, net 470 470
Other 35 35
--------------------------------------------------------------------
Long-term assets 942 --- 942
--------------------------------------------------------------------

Total assets $40,983 $12,059 --- $53,042
--------------------------------------------------------------------
--------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 835 $ 961 $1,796
Accrued payroll liability 1,303 1,303
Contract loss reserve 250 250
Other accrued liabilities 444 190 634
Deferred revenue 819 160 979
Current portion of long-term debt 23 23
--------------------------------------------------------------------
Total current liabilities 3,651 1,334 --- 4,985
--------------------------------------------------------------------

Long-term debt 31 31

Stockholders' equity:
Common stock 66 12,946 (12,896) 116
Additional paid-in-capital 42,960 10,327 53,287
Accumulated deficit (5,694) (2,252) 2,569 (5,377)
--------------------------------------------------------------------
Total stockholders' equity 37,332 10,694 --- 48,026
--------------------------------------------------------------------

Total liabilities and stockholders' equity $40,983 $12,059 --- $53,042
--------------------------------------------------------------------
--------------------------------------------------------------------

</TABLE>

<PAGE>

SECURE AND BORDER
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994

PRO FORMA PRO FORMA
SECURE BORDER ADJUSTMENTS COMBINED
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Products and services $1,486 $ 139 $ 1,625
Government contracts 13,744 13,744
--------------------------------------------------------------------
15,230 139 --- 15,369

Cost of revenue 9,828 9 9,837
--------------------------------------------------------------------
Gross profit 5,402 130 --- 5,532

Selling and marketing 1,221 59 1,280
Research and development 1,403 62 1,465
General and administrative 1,749 18 1,767
--------------------------------------------------------------------
4,373 139 --- 4,512
--------------------------------------------------------------------
Operating income (loss) 1,029 (9) --- 1,020

Interest income 126 126
Interest expense (164) (164)
--------------------------------------------------------------------
Income (loss) before income taxes 991 (9) --- 982

Income tax expense (benefit) (502) (502)
--------------------------------------------------------------------
Net income (loss) $ 1,493 $ (9) --- $ 1,484
--------------------------------------------------------------------
--------------------------------------------------------------------
Net income per share $ .40 $ .19
--------------------------------------------------------------------
--------------------------------------------------------------------

Weighted average shares outstanding 3,750 7,750
--------------------------------------------------------------------
--------------------------------------------------------------------

</TABLE>

<PAGE>

SECURE AND BORDER
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

PRO FORMA PRO FORMA
SECURE BORDER ADJUSTMENTS COMBINED
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Products and services $ 5,863 $ 3,317 $ 9,180
Government contracts 14,849 14,849
--------------------------------------------------------------------
20,712 3,317 --- 24,029

Cost of revenue 13,529 340 13,869
--------------------------------------------------------------------
Gross profit 7,183 2,977 --- 10,160

Selling and marketing 2,691 1,596 4,287
Research and development 3,691 593 4,284
General and administrative 1,936 717 2,653
--------------------------------------------------------------------
8,318 2,906 --- 11,224
--------------------------------------------------------------------
Operating income (loss) (1,135) 71 --- (1,064)

Interest income 261 261
Interest expense (100) (100)
--------------------------------------------------------------------
Income (loss) before income taxes (974) 71 --- (903)

Income tax expense 21 21
--------------------------------------------------------------------
Net income (loss) (974) 50 --- $(924)
--------------------------------------------------------------------
--------------------------------------------------------------------

Net income (loss) per share $(.22) $(.11)
--------------------------------------------------------------------
--------------------------------------------------------------------

Weighted average shares outstanding 4,383 8,383
--------------------------------------------------------------------
--------------------------------------------------------------------

</TABLE>

<PAGE>

SECURE AND BORDER
COMBINED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1995

PRO FORMA PRO FORMA
SECURE BORDER ADJUSTMENTS COMBINED
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Products and services $ 1,097 $ 278 $ 1,375
Government contracts 3,450 3,450
--------------------------------------------------------------------
4,547 278 --- 4,825

Cost of revenue 2,918 15 2,933
--------------------------------------------------------------------
Gross profit 1,629 263 --- 1,892

Selling and marketing 411 113 524
Research and development 859 61 920
General and administrative 279 42 321
--------------------------------------------------------------------
1,549 216 --- 1,765
--------------------------------------------------------------------
Operating income 80 47 --- 127

Interest income 16 16
Interest expense (29) (29)
--------------------------------------------------------------------
Income before income taxes 67 47 --- 114

Income tax expense
--------------------------------------------------------------------
Net income $67 $47 --- $114
--------------------------------------------------------------------
--------------------------------------------------------------------

Net income per share $.02 $.01
--------------------------------------------------------------------
--------------------------------------------------------------------
Weighted average shares outstanding 4,030 8,030
--------------------------------------------------------------------
--------------------------------------------------------------------

</TABLE>

<PAGE>

SECURE AND BORDER
COMBINED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1996

PRO FORMA PRO FORMA
SECURE BORDER ADJUSTMENTS COMBINED
----------------------------------------------
Revenue:
Products and services $ 2,002 $ 2,341 $4,343
Government contracts 5,351 5,351
----------------------------------------------
7,353 2,341 --- 9,694

Cost of revenue 4,513 271 4,784
----------------------------------------------
Gross profit 2,840 2,070 --- 4,910

Selling and marketing 1,308 1,115 2,423
Research and development 1,460 217 1,677
General and administrative 631 338 969
----------------------------------------------
3,399 1,670 --- 5,069
----------------------------------------------
Operating income (loss) (559) 400 --- (159)

Interest income 385 45 430
----------------------------------------------
Income (loss) before income taxes (174) 445 --- 271

Income tax expense 169 169
----------------------------------------------
Net income (loss) $(174) $276 --- $102
----------------------------------------------
----------------------------------------------

Net income (loss) per share $(.03) $.01
----------------------------------------------
----------------------------------------------
Weighted average shares
outstanding 6,557 11,657
----------------------------------------------
----------------------------------------------

<PAGE>

SECURE AND ENIGMA
COMBINED BALANCE SHEET
COMBINED AS OF MARCH 31, 1996

PRO FORMA PRO FORMA
SECURE ENIGMA ADJUSTMENTS COMBINED
----------------------------------------------
ASSETS
Current assets:
Cash and Cash equivalents $30,867 $ 6 $30,873
Accounts receivable 4,102 1,437 5,539
Inventory 471 272 743
Deferred income taxes 936 936
Other current assets 400 82 482
----------------------------------------------
Total current assets 36,776 1,797 --- 38,573

Property and equipment-net 3,265 232 3,497

Deferred income taxes 437 437
Intangible assets, net 470 470
Other 35 30 65
----------------------------------------------
Long-term assets 942 30 --- 972
----------------------------------------------

Total assets $40,983 $2,059 --- $43,042
----------------------------------------------
----------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 835 $379 $1,214
Accrued payroll liability 1,303 192 1,495
Contract loss reserve 250 250
Other accrued liabilities 444 30 474
Deferred Revenue 819 567 1,386
Current portion of long-term
debt 2,051 2,051
----------------------------------------------
Total current liabilities 3,651 3,219 --- 6,870
----------------------------------------------

Long-term debt

Stockholders' equity:
Common stock 66 183 (162) 87
Additional paid-in-capital 42,960 7,142 162 50,264
Accumulated deficit (5,694) (8,485) (14,179)
----------------------------------------------
Total stockholders' equity 37,332 (1,160) --- 36,172
----------------------------------------------

Total liabilities and
stockholders' equity $40,983 $2,059 --- $43,042
----------------------------------------------
----------------------------------------------

<PAGE>

SECURE AND ENIGMA
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993

PRO FORMA PRO FORMA
SECURE ENIGMA ADJUSTMENTS COMBINED
----------------------------------------------
Revenue:
Products and services $ 8 $1,590 $ 1,598
Government contracts 9,389 9,389
----------------------------------------------
9,397 1,590 --- 10,987

Cost of revenue 6,271 472 6,743
----------------------------------------------
Gross profit 3,126 1,118 --- 4,244

Selling and marketing 545 612 1,157
Research and development 521 357 878
General and administrative 1,649 345 1,994
----------------------------------------------
2,715 1,314 --- 4,029
----------------------------------------------
Operating income (loss) 411 (196) --- 215

Interest income 17 17
Interest expense (218) (135) (353)
----------------------------------------------
Income (loss) before income taxes 210 (331) --- (121)

Income tax expense (benefit) (502) (502)
----------------------------------------------
712 (331) --- 381

Cumulative effect of accounting
change 350 350
----------------------------------------------
Net income (loss) $1,062 $(331) --- $731
----------------------------------------------
----------------------------------------------

Net income per share $.32 $.14
----------------------------------------------
----------------------------------------------
Weighted average shares
outstanding 3,288 5,330
----------------------------------------------
----------------------------------------------

<PAGE>

SECURE AND ENIGMA
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994

PRO FORMA PRO FORMA
SECURE ENIGMA ADJUSTMENTS COMBINED
----------------------------------------------
Revenue:
Products and services $ 1,486 $ 2,426 $ 3,912
Government contracts 13,744 13,744
----------------------------------------------
15,230 2,426 --- 17,656

Cost of revenue 9,828 838 10,666
----------------------------------------------
Gross profit 5,402 1,588 --- 6,990

Selling and marketing 1,221 576 1,797
Research and development 1,403 393 1,796
General and administrative 1,749 419 2,168
----------------------------------------------
4,373 1,388 --- 5,761
----------------------------------------------
Operating income 1,029 200 --- 1,229

Interest income 126 126
Interest expense (164) (143) (307)
----------------------------------------------
Income before income taxes 991 57 --- 1,048

Income tax expense (benefit) (502) (502)
----------------------------------------------
Net income $ 1,493 $57 --- $1,550
----------------------------------------------
----------------------------------------------

Net income per share $.40 $.27
----------------------------------------------
----------------------------------------------
Weighted average shares
outstanding 3,750 5,792
----------------------------------------------
----------------------------------------------

<PAGE>

SECURE AND ENIGMA
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

PRO FORMA PRO FORMA
SECURE ENIGMA ADJUSTMENTS COMBINED
----------------------------------------------
Revenue:
Products and services $ 5,863 $3,901 $9,764
Government contracts 14,849 14,849
----------------------------------------------
20,712 3,901 --- 24,613

Cost of revenue 13,529 982 14,511
----------------------------------------------
Gross profit 7,183 2,919 --- 10,102

Selling and marketing 2,691 1,089 3,780
Research and development 3,691 585 4,276
General and administrative 1,936 814 2,750
----------------------------------------------
8,318 2,488 --- 10,806
----------------------------------------------
Operating income (loss) (1,135) 431 --- (704)

Interest income 261 261
Interest expense (100) (139) (239)
----------------------------------------------
Income (loss) before income taxes (974) 292 --- (682)

Income tax expense
----------------------------------------------
Net income (loss) $(974) $292 --- $(682)
----------------------------------------------
----------------------------------------------

Net income (loss) per share $(.22) $(.11)
----------------------------------------------
----------------------------------------------
Weighted average shares
outstanding 4,383 6,425
----------------------------------------------
----------------------------------------------

<PAGE>

SECURE AND ENIGMA
COMBINED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1995

PRO FORMA PRO FORMA
SECURE ENIGMA ADJUSTMENTS COMBINED
----------------------------------------------
Revenue:
Products and services $1,097 $1,499 $2,596
Government contracts 3,450 3,450
----------------------------------------------
4,547 1,499 --- 6,046

Cost of revenue 2,918 335 3,253
----------------------------------------------
Gross profit 1,629 1,164 --- 2,793

Selling and marketing 411 295 706
Research and development 859 101 960
General and administrative 279 195 474
----------------------------------------------
1,549 591 --- 2,140
Operating income 80 573 --- 653

Interest income 16 16
Interest expense (29) (35) (64)
----------------------------------------------
Income before income taxes 67 538 --- 605

Income tax expense
----------------------------------------------
Net income $67 $538 --- $605
----------------------------------------------
----------------------------------------------

Net income per share $.02 $.10
----------------------------------------------
----------------------------------------------
Weighted average shares
outstanding 4,030 6,112
----------------------------------------------
----------------------------------------------

65
<PAGE>

SECURE AND ENIGMA
COMBINED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1996

PRO FORMA PRO FORMA
SECURE ENIGMA ADJUSTMENTS COMBINED
--------------------------------------------
Revenue:
Products and services $2,002 $1,395 $3,397
Government contracts 5,351 5,351
--------------------------------------------
7,353 1,395 --- 8,748

Cost of revenue 4,513 266 4,779
--------------------------------------------
Gross profit 2,840 1,129 --- 3,969

Selling and marketing 1,308 345 1,653
Research and development 1,460 270 1,730
General and administrative 631 407 1,038
--------------------------------------------
3,399 1,022 --- 4,421
--------------------------------------------
Operating income (loss) (559) 107 --- (452)

Interest income 385 385
Interest expense (38) (38)
--------------------------------------------
Income (loss) before income taxes (174) 69 --- (105)

Income tax expense
--------------------------------------------
Net income (loss) $(174) $69 --- $(105)
--------------------------------------------
--------------------------------------------

Net income (loss) per share $(.03) $(.01)
--------------------------------------------
--------------------------------------------
Weighted average shares outstanding 6,557 8,617
--------------------------------------------
--------------------------------------------

<PAGE>

SECURE, BORDER AND ENIGMA
COMBINED BALANCE SHEET
COMBINED AS OF MARCH 31, 1996
<TABLE>
<CAPTION>

PRO FORMA PRO FORMA
SECURE BORDER ENIGMA ADJUSTMENTS COMBINED
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $30,867 $9,678 $6 $40,551
Accounts receivable 4,102 1,587 1,437 7,126
Inventory 471 272 743
Deferred income taxes 936 936
Other current assets 400 351 82 833
-------------------------------------------------------------
Total current assets 36,776 11,616 1,797 --- 50,189

Property and equipment-net 3,265 443 232 3,940

Deferred income taxes 437 437
Intangible assets, net 470 470
Other 35 30 65
-------------------------------------------------------------
Long-term assets 942 30 --- 972
-------------------------------------------------------------

Total assets $40,983 $12,059 $2,059 --- $55,101
-------------------------------------------------------------
-------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 835 $ 961 $379 $2,175
Accrued payroll liability 1,303 192 1,495
Contract loss reserve 250 250
Other accrued liabilities 444 190 30 664
Deferred revenue 819 160 567 1,546
Current portion of long-term
debt 23 2,051 2,074
-------------------------------------------------------------
Total current liabilities 3,651 1,334 3,219 --- 8,204
-------------------------------------------------------------

Long-term debt 31 31

Stockholders' equity:
Common stock 66 12,946 183 (13,058) 137
Additional paid-in-capital 42,960 7,142 10,489 60,591
Accumulated deficit (5,694) (2,252) (8,485) 2,569 (13,862)
-------------------------------------------------------------
Total stockholders' equity 37,332 10,694 (1,160) --- 46,866
-------------------------------------------------------------

Total liabilities and
stockholders' equity $40,983 $12,059 $2,059 --- $55,101
-------------------------------------------------------------
-------------------------------------------------------------

</TABLE>

<PAGE>

SECURE, BORDER AND ENIGMA
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>

PRO FORMA PRO FORMA
SECURE BORDER ENIGMA ADJUSTMENTS COMBINED
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue:
Products and services $1,486 $139 $2,426 $4,051
Government contracts 13,744 13,744
----------------------------------------------------------------
15,230 139 2,426 --- 17,795

Cost of revenue 9,828 9 838 10,675
----------------------------------------------------------------
Gross profit 5,402 130 1,588 --- 7,120

Selling and marketing 1,221 59 576 1,856
Research and development 1,403 62 393 1,858
General and administrative 1,749 18 419 2,186
----------------------------------------------------------------
4,373 139 1,388 --- 5,900
----------------------------------------------------------------
Operating income (loss) 1,029 (9) 200 --- 1,220

Interest income 126 126
Interest expense (164) (143) (307)
----------------------------------------------------------------
Income (loss) before income
taxes 991 (9) 57 --- 1,039

Income tax expense (benefit) (502) (502)
----------------------------------------------------------------
Net income (loss) $1,493 $(9) $57 --- $1,541
----------------------------------------------------------------
----------------------------------------------------------------

Net income per share $.40 $.16
----------------------------------------------------------------
----------------------------------------------------------------
Weighted average shares
outstanding 3,750 9,792
----------------------------------------------------------------
----------------------------------------------------------------

</TABLE>

<PAGE>

SECURE, BORDER AND ENIGMA
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>

PRO FORMA PRO FORMA
SECURE BORDER ENIGMA ADJUSTMENTS COMBINED
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue:
Products and services $5,863 $3,317 $3,901 $13,081
Government contracts 14,849 14,849
-------------------------------------------------------------
20,712 3,317 3,901 --- 27,930

Cost of revenue 13,529 340 982 14,851
-------------------------------------------------------------
Gross profit 7,183 2,977 2,919 --- 13,079

Selling and marketing 2,691 1,596 1,089 5,376
Research and development 3,691 593 585 4,869
General and administrative 1,936 717 814 3,467
-------------------------------------------------------------
8,318 2,906 2,488 --- 13,712
-------------------------------------------------------------
Operating income (loss) (1,135) 71 431 --- (633)

Interest income 261 261
Interest expense (100) (139) (239)
-------------------------------------------------------------
Income (loss) before income taxes (974) 71 292 --- (611)

Income tax expense 21 21
-------------------------------------------------------------
Net income (loss) $ (974) $ 50 $ 292 --- $ (632)
-------------------------------------------------------------
-------------------------------------------------------------

Net income (loss) per share $(.22) $(.06)
-------------------------------------------------------------
-------------------------------------------------------------
Weighted average shares
outstanding 4,383 10,425
-------------------------------------------------------------
-------------------------------------------------------------

</TABLE>

69
<PAGE>

SECURE, BORDER AND ENIGMA
COMBINED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1995
<TABLE>
<CAPTION>

PRO FORMA PRO FORMA
SECURE BORDER ENIGMA ADJUSTMENTS COMBINED
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue:
Products and services $1,097 $278 $1,499 $2,874
Government contracts 3,450 3,450
-------------------------------------------------------------
4,547 278 1,499 --- 6,324

Cost of revenue 2,918 15 335 3,268
-------------------------------------------------------------
Gross profit 1,629 263 1,164 --- 3,056

Selling and marketing 411 113 295 819
Research and development 859 61 101 1,021
General and administrative 279 42 195 516
-------------------------------------------------------------
1,549 216 591 --- 2,356
-------------------------------------------------------------
Operating income 80 47 573 --- 700

Interest income 16 16
Interest expense (29) (35) (64)
-------------------------------------------------------------
Income before income taxes 67 47 538 --- 652

Income tax expense
-------------------------------------------------------------
Net income $67 $47 $538 --- $652
-------------------------------------------------------------
-------------------------------------------------------------

Net income per share $.02 $.06
-------------------------------------------------------------
-------------------------------------------------------------
Weighted average shares
outstanding 4,030 10,112
-------------------------------------------------------------
-------------------------------------------------------------

</TABLE>

70
<PAGE>

SECURE, BORDER AND ENIGMA
COMBINED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1996

PRO FORMA PRO FORMA
SECURE BORDER ENIGMA ADJUSTMENTS COMBINED
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue:
Products and services $2,002 $2,341 $1,395 $5,738
Government contracts 5,351 5,351
------------------------------------------------------------
7,353 2,341 1,395 --- 11,089

Cost of revenue 4,513 271 266 5,050
------------------------------------------------------------
Gross profit 2,840 2,070 1,129 --- 6,039

Selling and marketing 1,308 1,115 345 2,768
Research and development 1,460 217 270 1,947
General and administrative 631 338 407 1,376
------------------------------------------------------------
3,399 1,670 1,022 --- 6,091
------------------------------------------------------------
Operating income (loss) (559) 400 107 --- (52)

Interest income 385 45 430
Interest expense (38) (38)
------------------------------------------------------------
Income (loss) before income taxes (174) 445 69 --- 340

Income tax expense 169 169
------------------------------------------------------------
Net income (loss) $(174) $276 $69 --- $171
------------------------------------------------------------
------------------------------------------------------------

Net income (loss) per share $(.03) $.01
------------------------------------------------------------
------------------------------------------------------------
Weighted average shares
outstanding 6,557 13,965
------------------------------------------------------------
------------------------------------------------------------

</TABLE>

<PAGE>

NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

SECURE AND BORDER COMBINED

Stockholders' Equity - Common stock and additional paid-in-capital
balances have been adjusted to reflect the
redemption of outstanding shares of Border Common
and Class A Stock and the issuance of 5,000,000
new shares of Secure Common Stock with a par value
of $.01 per share.

Common stock and accumulated deficit balances have
been adjusted to reflect the reclassification of
excess of share repurchase price over carrying
value related to Border's repurchase of common
stock in the first quarter of 1996.

SECURE AND ENIGMA COMBINED

Stockholders' Equity - Common stock and additional paid-in-capital
balances have been adjusted to reflect the
redemption of outstanding shares of Enigma Common
Stock and the issuance of approximately 2,060,000
new shares of Secure Common Stock with a par value
of $.01 per share.

SECURE, BORDER AND ENIGMA COMBINED

Stockholders' Equity - Common stock and additional paid-in-capital
balances have been adjusted to reflect the
redemption of all outstanding shares of Border and
Enigma and the related issuance of approximately
7,060,000 new shares of Secure Common Stock with a
par value of $.01 per share.

72
<PAGE>

INFORMATION CONCERNING SECURE

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Overview
- --------

The Company produces and has recently begun the commercial marketing of
products designed to enable electronic commerce by protecting an organization's
computer network from access by unauthorized users. Secure was organized in
July 1989 to acquire certain assets of a division of Honeywell, Inc., then
engaged in research and development of computer network security technology
under a U.S. government contract. The Company was reorganized in September 1995
as a Delaware corporation.

GOVERNMENT CONTRACTS. From the time of its organization, Secure has been
engaged in research and development of computer network security technology
under contracts with departments and agencies of the U.S. government. Billings
under these research and development contracts with U.S. government agencies
have accounted for substantially all of the Company's revenue since its
inception.

The Company's contract with the National Security Agency ("NSA") for the
development of the Company's Secure Network Server product accounted for
approximately 88 percent, 58 percent, 67 percent and 70 percent of the Company's
government contract revenue for the three months ended March 31, 1996 and the
years ended December 31, 1995, 1994 and 1993, respectively. The Company signed
a contract modification to convert the contract to a cost plus fixed fee type in
July 1996. The Company estimates that the aggregate fee to be received over the
course of the contract will be approximately 6 percent and is currently using a
rate of 5.5 percent in recognizing revenue in 1996 based on its current estimate
of the remaining fee to be earned under the contract. The NSA contract now
extends to September 1997 due to the above mentioned contract modification.

Most of the Company's government research and development contracts provide
for compensation to the Company in the form of reimbursement of costs plus a
fee. The Company typically bills government agencies, including the NSA,
monthly for a ratable portion of the fee expected to be received over the life
of the contract and current expenses. Under these government contracts, the
Company is entitled to recover direct labor costs, engineering overhead and
general and administrative expenses, including contract-related research and
development expenses. Selling, general and administrative expenses recoverable
under government contracts include salaries and benefits, sales commissions,
marketing, bid and proposal costs, product management, finance, legal and
contract administration, and certain other administrative expenses.

Under its government contracts, the Company bears the risk that increased
or unexpected costs required to perform specified services may reduce the amount
of the Company's fee. In addition, recoverable expenses billed by the Company
are subject to review and audit by the Defense Contract Audit Agency ("DCAA").
The DCAA has audited the Company's contracts through December 31, 1994, without
any material disallowances. Pursuant to their terms, these contracts are
generally also subject to termination for the convenience of the applicable
government agency. If the contract is terminated, the Company typically would
be reimbursed at its costs to the date of its termination, plus the costs of an
orderly termination, and paid a portion of the fee.

PRODUCTS AND SERVICES. The Company sells its Sidewinder and LOCKout
products to commercial and government customers, and sells its Secure Network
Server products to government customers. In November 1993, the Company
introduced its first product for the commercial market, LOCKout DES. During
1994 and 1995, the Company invested significant resources in the development of
Sidewinder, its network firewall product. Sidewinder was announced in October
1994 and first shipped in March 1995. The Company expects that the percentage
of its revenues derived from products and related services will increase in
future years, as the Company increasingly focuses on product sales.

Secure is dependent on greater market acceptance of Sidewinder to increase
revenues and profitability. The Company has committed significant research and
development resources to its Sidewinder product and other products and services.
During the remainder of 1996, the Company plans to continue to increase its
research and

73
<PAGE>

development efforts and also significantly increase its sales and marketing
efforts. The Company's planned levels of research and development, selling and
marketing, and general and administrative expenses are based in part on its
expectations of higher revenue from increased product sales, and as a result,
net income for a given period could be disproportionately affected by any
reduction in revenue. In addition, fluctuations in revenue from quarter to
quarter will likely have an increasingly significant impact on the Company's
results of operations. The Company also expects the sales of its Secure Network
Server may be seasonal because government purchases historically have tended to
increase near the end of the government's fiscal year. The Company has planned
for increased costs associated with selling and marketing in connection with the
release of new products.

In early 1996, the Company introduced a software-only version of
Sidewinder, consisting of base security software and feature upgrades that are
priced and sold separately. The Company plans to price its software to be
competitive with certain products offered by the Company's current and future
competitors. The Company believes that the cost of product revenues may
increase as a percentage of the related product revenues in future periods due
to increased amounts paid for licensed technology to be incorporated in future
products and increased costs associated with providing product support.

Results of Operations
- ---------------------

The following table sets forth, for the periods indicated, certain items
from the statements of operations of the Company expressed as a percentage of
revenue:

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------
1995 1994 1993 1996 1995
- --------------------------------------------------------------------------------
(unaudited)

Revenue:
Products and services 28.3% 9.8% - 27.2% 24.1%
Government contracts 71.7 90.2 100.0% 72.8 75.9
- --------------------------------------------------------------------------------
Total revenue 100.0 100.0 100.0 100.0 100.0
Cost of revenue 65.3 64.5 66.7 61.4 64.2
- --------------------------------------------------------------------------------
Gross profit 34.7 35.5 33.3 38.6 35.8
Operating expenses:
Selling and marketing 13.0 8.0 5.8 17.8 9.0
Research and development 17.8 9.2 5.5 19.9 18.9
General and administrative 9.4 11.5 17.5 8.6 6.1
- --------------------------------------------------------------------------------
Total operating
expenses 40.2 28.7 28.8 46.3 34.0
- --------------------------------------------------------------------------------
Operating income (loss) (5.5) 6.8 4.5 (7.6) 1.8

Interest and other income 1.3 0.8 0.2 5.2 .3
Interest expense (.5) (1.1) (2.3) - (.6)
- --------------------------------------------------------------------------------
Income (loss) before income
taxes and cumulative change (4.7) 6.5 2.4 (2.4) 1.5

Income tax benefit - 3.3 5.3 - -
Cumulative effect of
accounting change - - 3.7 - -
- --------------------------------------------------------------------------------
Net income (loss) (4.7)% 9.8% 11.4% (2.4)% 1.5%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

74
<PAGE>

COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996 AND 1995.

REVENUE. The Company's revenue increased by 61.7 percent to $7,353,000 for
the first quarter of 1996 up from $4,547,000 in the same period of 1995. The
increase resulted from higher revenue in both products and services and
government contracts revenue. Products and services revenue was $2,002,000, an
increase of 82.5 percent over 1995, and was attributable to sales of the
Sidewinder product and related services which more than offset lower sales of
products to the government. Government contracts revenue was $5,351,000, an
increase of 55.1 percent over 1995, and reflects the Company's increased efforts
on the Secure Network Server program for the NSA. In the second quarter of
1996, the Company expects government contracts revenue to return to 1995
averages and remain at that level for the remainder of the year. The Company
believes this will be at least partially offset by rising products and services
revenue.

GROSS PROFIT. Gross profit as a percentage of revenue increased from 35.8
percent in the first quarter of 1995 to 38.6 percent in 1996. The increase
resulted mainly from products and services revenue, which carries higher margins
than government contracts, increasing as a percentage of the revenue mix. The
Company believes, with the expected decrease in government contracts revenue and
gains in products and services revenue, that margins for the remainder of the
year should trend higher.

SELLING AND MARKETING. Selling and marketing expenses increased by 218.2
percent to $1,308,000 in the first quarter of 1996, up from $411,000 in the same
period of 1995. As a percentage of revenue, expenses were 17.8 percent for
1996 compared to 9.0 percent for the first quarter of 1995. The increase
resulted primarily from higher expenses associated with the Company's increased
order activity and personnel additions made to position the Company for future
growth. The Company expects the quarterly amount of selling and marketing
expenses to increase during the remainder of 1996 through the addition of a
number of direct sales and marketing personnel needed to deploy the Company's
products and services globally.

RESEARCH AND DEVELOPMENT. Research and development expenses increased by
70.0 percent to $1,460,000 in the first quarter of 1996 up from $859,000 in the
same period of 1995. As a percentage of revenue, research and development
expenses were 19.9 percent for 1996, compared to 18.9 percent for the first
quarter of 1995. The increase resulted primarily from the Company's continued
development investments in new and existing products, including Sidewinder
version 3.0 and LOCKout remote access control. The Company expects the quarterly
amount of research and development expenses to increase in the second and third
quarters of 1996 for enhancements on Sidewinder version 3.0 and LOCKout remote
access control, as well as development of a TCP/IP stack providing data
encryption and browsing capability and a Windows NT enterprise intrawall.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
by 126.2 percent to $631,000 in the first quarter of 1996 up from $279,000 in
the same period of 1995. As a percentage of revenue, expenses were 8.6 percent
for 1996 compared to 6.1 percent for the first quarter of 1995. The increase
resulted primarily from the expenses associated with being a public company and
personnel additions needed due to increased order activity. The Company expects
the quarterly amount of general and administrative expenses will stay relatively
constant during the remainder of 1996.

NET INTEREST INCOME (EXPENSE). The difference in net interest income
(expense) between the quarters reflects interest earned in 1996 by the Company
on cash and cash equivalents generated from its initial public offering in
November 1995 and a decrease in interest expenses due to the repayment of an
outstanding note by the Company in December 1995.

INCOME TAXES. The Company recognized no income tax expense for either of
the first quarters of 1996 or 1995. The 1995 period income was offset by net
operating loss carryforwards which eliminated any income tax. The 1996 period
was a loss. Management believes it is more likely than not that deferred tax
assets, which total $1,373,000 at March 31, 1996, will be realized. The
computation of the Company's deferred tax assets and valuation allowance are
based in part on taxable income expected to be earned on existing government
contracts and projected interest income. The amount of the deferred tax assets
considered realizable could be reduced in the near term if estimates of future
taxable income are reduced. The Company had total net operating loss

75
<PAGE>

carryforwards of approximately $8.1 million at December 31, 1995. Of these
carryforwards, $4.1 million relate to deductions for disqualifying dispositions
of stock options. As these deductions are realized, the benefit will not reduce
income tax expense, rather it will be recorded as additional paid-in-capital.
Of the remaining benefit associated with the carryforwards, approximately
$936,000 had yet to be recognized as a benefit in the statement of operations.

COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND 1994.

REVENUE. The Company's revenue increased by 36.0 percent to $20.7 million
in 1995 from $15.2 million in 1994. The increase resulted primarily from 1995
sales of Sidewinder and other products quadrupling over 1994 levels, with the
remainder of the increase due to a small increase in revenue associated with
additional development efforts under the Company's contract with the NSA and
other government contracts.

GROSS PROFIT. Gross profit as a percentage of revenue decreased slightly
from 35.5 percent in 1994 to 34.7 percent in 1995. In September 1994, the
Company received approximately $400,000 of revenue and gross profit as closeout
on a contract, increasing the margin by 2.6 percent. During 1995, higher
products and services gross profits resulting from Sidewinder sales were offset
by lower margins on government contracts.

SELLING AND MARKETING. Selling and marketing expenses increased by 120.4
percent to $2.7 million in 1995 from $1.2 million in 1994. The increase
reflects the Company's additional sales and marketing effort for its Sidewinder
product and other products and services.

RESEARCH AND DEVELOPMENT. Company-sponsored research and development
expenses increased substantially by 163.1 percent to $3.7 million in 1995
compared to $1.4 million in 1994. Research and development expenses as a
percentage of revenue also increased substantially to 17.8 percent, up from 9.2
percent. This increase is directly attributable to a significant commitment to
the development of Sidewinder. To date, the Company has expensed all
development costs as incurred.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
by 10.7 percent to $1.9 million compared to $1.7 million in 1994. Consistent
with 1994, such expenses have decreased as a percentage of revenue to 9.4
percent in 1995 from 11.5 percent in 1994. This was due to the Company
leveraging its higher revenue from product sales.

INTEREST AND OTHER INCOME. Interest income increased to $261,000 in 1995,
up from $18,000 in 1994, primarily due to higher cash balances resulting from
the proceeds of the Company's initial public offering. In 1994, other income of
$108,000 was recorded for costs recovered in connection with a 1992 financing
transaction which was not consummated.

INTEREST EXPENSE. Interest expense decreased from $164,000 in 1994 to
$100,000 in 1995, due to reductions in the Company's outstanding debt.

INCOME TAX BENEFIT. The Company recognized no income tax benefit for 1995
compared to $502,000 for 1994. The income tax benefit recognized in 1994
related to a reduction in the valuation allowance against the Company's deferred
tax assets, primarily the tax benefit associated with net operating loss
carryforwards. The allowance had been reduced based on the Company's estimate
of the amount of net operating loss carryforwards more likely than not to be
utilized to offset future taxable income. The net loss for 1995 is largely
attributable to the acceleration into 1995 of product development expenditures
related to the Company's Sidewinder product, and is not considered a negative
factor in determining the amount of the valuation allowance.

COMPARISON OF YEARS ENDED DECEMBER 31, 1994 AND 1993.

REVENUE. The Company's revenue increased 62.1 percent to $15.2 million in
1994, up from $9.4 million in 1993. The increase in revenue in 1994 was
primarily due to increased development efforts under the Company's contract with
the NSA and sales of the Company's Secure Network Server.

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COST OF REVENUE AND GROSS PROFIT. Gross profits as a percentage of revenue
rose to 35.5 percent in 1994 from 33.3 percent in 1993. The differences between
periods were the result of slight changes in the Company's rates used for
billing allowable costs under its government contracts.

SELLING AND MARKETING. Selling and marketing expenses increased by 124.0
percent in 1994 to $1.2 million from $545,000 in 1993. The increase was due
primarily to additions to the Company's sales and marketing staff and higher
expenditures for advertising, trade shows and product literature.

RESEARCH AND DEVELOPMENT. Research and development expenses increased
significantly by 169.3 percent to $1.4 million in 1994 from $521,000 in 1993.
The 1994 increase resulted primarily from increased development efforts on
Sidewinder.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
modestly by 6.1 percent to $1.7 million in 1994 from $1.6 million in 1993.
Despite the rise in the dollar amount of general and administrative expenses,
such expenses decreased significantly as a percentage of revenue to 11.5 percent
in 1994 from 17.5 percent in 1993. This decrease is attributable to leveraging
the revenue growth experienced over this period.

INTEREST AND OTHER INCOME. Interest income was insignificant in each year.
Other income of $108,000 was recorded in 1994 for recovered costs of a 1992
financing transaction which was not consummated.

INTEREST EXPENSE. Interest expense decreased from $218,000 in 1993 and
$164,000 in 1994, due primarily to an ongoing reduction in the Company's debt
levels.

INCOME TAX BENEFIT AND CHANGE IN ACCOUNTING METHOD. Prior to the fiscal
year ended December 31, 1993, the Company had incurred net operating losses.
The Company had cumulative net operating loss carryforwards of approximately
$5.0 million at December 31, 1992. Effective January 1, 1993, the Company
adopted Statement of Financial Accounting Standards No. 109 and recorded a
cumulative effect benefit of $350,000 upon adoption. The Company recognized
income tax benefits of $502,000 in each of the fiscal years 1993 and 1994,
respectively, relating to the reduction in the valuation allowance for deferred
tax assets. The reduction in the valuation allowance was based on management's
judgment that a portion of the net operating loss carryforwards would more
likely than not be realized as an offset to future taxable income generated by
the Company's long-term government contracts.

Liquidity and Capital Resources
- -------------------------------

Since its organization, the Company has financed its operations through the
issuance of equity securities and notes to stockholders, long-term debt,
short-term borrowings and cash generated from operations. In 1995, the Company
raised $32.7 million through its initial public offering of its Common Stock,
$1.7 million in net proceeds from the exercise of warrants to purchase
convertible redeemable preferred stock and $461,000 from the issuance of its
Common Stock upon the exercise of options and warrants. In 1994, the Company
raised $967,000 in net proceeds from the sale of convertible redeemable
preferred stock.

The Company's cash and cash equivalents decreased by approximately $1.7
million from December 31, 1995 to March 31, 1996. The decrease resulted
primarily from the use of cash to fund operations and purchase capital
equipment. As of March 31, 1996, the Company had working capital of $33.1
million. The Company has a line of credit of $500,000 for short-term working
capital needs. The line of credit, which had not been used in the first quarter
of 1996 or in 1995, is available through July 1996. The Company anticipates
using available cash to fund growth in operations, invest in capital equipment
and to acquire businesses or license technology or products related to the
Company's line of business.

Capital expenditures for property and equipment were approximately $1.1
million during the first three months of 1996, and $1.9 million, $900,000 and
$1.2 million for the years ended December 31, 1995, 1994 and

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1993, respectively. These expenditures have generally consisted of computer
workstations, office furniture and equipment, and leasehold additions and
improvements. The Company expects to invest another $3 million throughout the
remainder of 1996 mainly for computer equipment, facilities and business
systems upgrades.

At its current level of operations, the Company believes that its existing
cash and cash equivalents are sufficient to meet the Company's current working
capital and capital expenditure requirements through at least the next 12
months.

Inflation
- ---------

To date, the Company has not been significantly impacted by inflation.

Forward Looking Statements
- --------------------------

Except for the historical information contained herein, matters discussed
in this Management's Discussion and Analysis of Financial Condition and Results
of Operations under the caption "Comparison of Three Months Ended March 31, 1996
and 1995" with respect to revenues, expenses, taxes and profits for the
remainder of 1996 includes forward-looking statements that involve risks and
uncertainties, and actual results may be materially different. Factors that
could cause actual results to differ include: business conditions in the
computer security industry; competitive factors such as the entry of large, well
capitalized companies; price cutting pressures; and the possible introduction of
new technologies.

BUSINESS

Secure produces and has recently commenced the commercial marketing of
security products designed to enable electronic commerce by protecting an
organization's computer network from access by unauthorized users. Secure was
organized in July 1989 to acquire certain assets of a division of Honeywell,
Inc. then engaged in the research and development of network security
technologies under a U.S. government contract. Secure completed its initial
public offering in November 1995. The Company initially developed its core
security technologies, including its patented "type enforcement" technology
("Type Enforcement") under contracts with NSA and other agencies of the U.S.
government. These U.S. government agencies have also historically been the
primary customers for the Company's security products.

Secure's award-winning Sidewinder firewall product was developed in order
to capitalize on its security expertise in the emerging commercial market for
security products for computer networks and inter-connected computer networks
such as the Internet. Sidewinder is a computer software that uses Type
Enforcement technology to create an entry barrier, or firewall, to a computer
network. Secure sells Sidewinder as a "turnkey" system or as a software-only
version. Sidewinder has withstood over 3,500 attempts to breach its security
features, both at the Company's Internet challenge site and at the 1995 DefCon
III convention for computer "hackers." Sidewinder is compatible with a number of
standard Internet "protocols" and multi-protocol applications, as well as with
complementary security products offered by other vendors. Sidewinder operates
invisibly to authorized users, both within and outside of a secured network.
The Company also sells other commercial security products that are based on
technologies other than Type Enforcement and offers network security consulting
services. Based upon its understanding of the features in products and of the
services offered by the Company's competitors, the Company believes that its
products and services provide one of the most comprehensive network and
internetworking security solutions available in the market today.

Industry Background
- -------------------

THE INTERNET. The Internet, a publicly accessible global web of
inter-connected computer networks, allows any computer connected to it to
communicate with any other using an open, non-proprietary protocol known as
TCP/IP. The Internet is estimated currently to have approximately 30 million
users. The number of users of the World Wide Web, the graphical segment of the
Internet, is estimated currently to be growing at a rate of 120% to 150% per
year. Much of the recent growth of the Internet and the World Wide Web has been
attributed to an

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increase in commercial access providers and organizations seeking to advertise
or provide products or services to users. As commercial organizations have
connected to the Internet in increasing numbers, commercial uses of the Internet
such as business-to-business and business-to-consumer electronic mail, product
marketing and advertising, interactive customer feedback and remote customer
support have also increased.

While many commercial organizations have established a "home page" giving
them a presence on the Internet, many have not connected internal networks to
the Internet. As a result, these organizations' personnel do not have access to
the resources of Internet, and these organization's customers, suppliers and
other business partners do not have access to the organization's personnel and
data. The Company believes that, due to the sensitive nature of the information
involved, the growth of commercial organizations fully connected to the Internet
and broad introduction of significant additional commercial uses of the Internet
have to date been slowed by security concerns, and will continue to be slowed by
such concerns until access to the Internet can be made significantly more
secure. Many commercial uses, such as providing point-of-sale data to
manufacturers, often require at least limited access to an organization's
internal databases. Other uses, such as financial transaction processing,
require the transmission of highly sensitive data and will not be commercially
feasible until security concerns are satisfactorily addressed. Notwithstanding
these security concerns, the Company believes that businesses will continue to
be pressured to provide products and services on the Internet by the perceived
commercial opportunity presented by millions of Internet users.

PRIVATE NETWORKS. Enterprise computing has evolved over the past
twenty-five years from mainframe computers supporting a number of terminals
toward distributed networks of inter-connected personal computers. As the cost
of personal computers has decreased, organizations increasingly began to connect
personal computers into local-area networks ("LANs") in order to share data and
applications within work groups. As network technology has advanced,
organizations have connected together LANs, including geographically dispersed
networks, into wide-area networks ("WANs"). Many LANs initially operated using
proprietary communications software, such as Novell Corporation's IPX protocol
("IPX"). Today, an increasing number of businesses are using the
non-proprietary TCP/IP protocol for internal network communications rather than
a proprietary protocol. Based upon industry data, the Company believes that in
1996 nearly 60% of companies will use TCP/IP for their LANs, up from
approximately 28% of companies in 1994, and projects that the use of IPX will
decline from more than 40% to less than 30% over the same period.

TCP/IP presents several advantages to an organization. Because almost all
network environments support TCP/IP, organizations can use TCP/IP to combine
mainframes, UNIX servers and personal computers running on different operating
systems such as DOS, Windows and the Macintosh operating system into a single
network. Private networks running TCP/IP can support remote access from other
private networks to provide customer support bulletin board services, ordering
and acknowledgment using electronic data interface ("EDI") and database sharing.
TCP/IP also enables an organization to cost-effectively use the Internet to
implement a WAN, thereby extending its internal information systems and
enterprise applications to geographically dispersed facilities, remote offices
and mobile employees. Moreover, TCP/IP also permits private networks to host
discussion groups and facilitate corporate communications over the Internet in a
manner similar to proprietary "groupware" products such as Lotus Notes marketed
by IBM. For these functions, the Internet provides a lower cost, if insecure,
means to transmit company information between company networks.

NETWORK SECURITY. Networks and network transmissions are vulnerable to
unauthorized access. The National Institute of Standards and Technology
("NIST") has identified TCP/IP as particularly susceptible to unauthorized
access. These vulnerabilities are often accentuated by improper configuration
of internetwork connections or implementation of network security policies.
Individuals have been able to exploit weaknesses in TCP/IP and network
configuration to gain unauthorized access to network transmissions and
individual network computers, and have used such access to alter or steal data
or, in some cases, to launch destructive attacks on data and computers within a
compromised network. A number of recent attacks have garnered significant
publicity and have brought attention to the attackers' techniques (given
colorful names such as "packet spoofing," "password sniffing," "trojan horses"
and "session hijacking"). Many such attacks are aided by sophisticated software
designed to discover and exploit security gaps. In one notable example, the
Computer Emergency Response Team ("CERT") Coordination Center in February 1994
reported that intruders had broken into potentially thousands of systems on

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the Internet, including gateways between major networks, to install "sniffer"
programs to monitor traffic and to collect credit card numbers and reusable
security passwords.

Network security has historically been the focus of businesses in security
conscious industries such as financial services, insurance, healthcare,
telecommunications and defense. Increasing commercial uses of the Internet and
the use of TCP/IP as a network protocol suite, as well as increasing awareness
of the security risks of the Internet, have served to heighten awareness in many
other types of commercial organizations of the risks inherent in connecting to
the Internet or operating networks based on TCP/IP without advance security
planning. Once connected to the Internet, an organization's network is
potentially accessible by millions of users, including "hackers" whose intent is
often to gain unauthorized access to ostensibly secure networks. Even within
private networks, the increasing number of authorized users having direct access
to expanding networks and the data contained on such networks has increased the
need to provide protection for financial results, personnel files, research and
development projects and other sensitive data on such networks.

The Company believes that the combination of security concerns and the
relatively small number of businesses offering comprehensive security solutions
presents a significant commercial opportunity for providers of network security
products and services. A 1995 industry survey reports that approximately 50% of
commercial organizations surveyed indicated that they would install a network
firewall within the next two years. Based upon industry data, the Company
believes that the market for network firewall products will grow from $40
million in 1995 to $200 million in 1997. Because firewalls provide a key
component of network security, the Company believes that this data is reflective
of the opportunity generally for providers of network security products and
services. It is important to note, however, that a firewall, encryption
application or other security product, including the Company's products,
standing alone, will not provide a comprehensive security solution. For
example, a firewall would not prevent an attack by an employee or other "inside"
network user.

ELEMENTS OF NETWORK SECURITY. The Company has identified a number of key
elements of an effective network security solution, each of which should be
addressed by an organization in order for it to secure its computer networks
from unauthorized access. These elements are rules of electronic commerce,
identification and authentication, privilege control, confidentiality, secure
portals, administration and audit.

RULES OF ELECTRONIC COMMERCE, the first of these elements, is fundamental
to effective network security. Through its security policy, an organization
determines which users have access to its network and which actions users are
permitted to take. Products which provide identification and authentication,
privilege control and confidentiality together implement an organization's rules
of electronic commerce. Administration features in these products enable the
management of the rules of electronic commerce, while audit features permit
observation and review of the rules' effectiveness. The Company believes that,
in light of the fundamental importance of well-defined rules of electronic
commerce and the significant risk of unauthorized access, rules of electronic
commerce should be developed with the active participation of senior management
and the organization's independent auditors. Rules of electronic commerce,
however, are often not considered prior to the decision of a network
administrator to purchase a single product. As a consequence, the organization
may implement an incomplete security solution, providing only one or a few of
the features described below.

IDENTIFICATION AND AUTHENTICATION is the means by which the network
identifies a user attempting to gain access to a network and a network
application, and confirms the source of transmissions over the network. Until
fairly recently, this function was served by the use of static (non-changing)
passwords. The vulnerability of static passwords to "sniffing" and to attacks
using software designed to randomly generate and attempt thousands of short
passwords has exposed the security weakness of static passwords, leading to
greater use of one-time, dynamically changing passwords.

PRIVILEGE CONTROL is the means by which a user is prevented from taking
unauthorized actions, such as importing files from the Internet. A very basic
level of privilege control is often provided by routers or computers featuring
"packet filters." Packet filters, however, suffer from a number of weaknesses.
For example, because packet filters only block complete connections, or
specified applications, from specific host computers or networks, an attacker
can "spoof" a packet filter by routing access through a host which has access to
the network, and use a

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permitted application to gain access to other applications. A more refined
level of privilege control used by many vendors is provided by access control
lists that define which users can have access to applications or network
services. However, the access control list often is maintained on a host
computer running on an operating system which has not been secured. An attacker
can use access to the operating system to obtain super-user status, use such
status to change access control lists, and by this means effectively circumvent
the security intended to be provided by such list.

CONFIDENTIALITY is the means by which network data, whether in storage or
in transmission, is kept private even if access to such data is obtained.
Confidentiality is typically implemented through encryption. Commercially
available encryption solutions typically are cumbersome, significantly slowing
the applications used to send and receive encrypted data. Encryption is
frequently viewed as a comprehensive security solution by itself, which may lead
to a false sense of security. Encryption of a network transmission will not
necessarily prevent the transmission from being used to gain access to a network
where a malicious attacker can cause substantial damage.

SECURE PORTALS provide controlled access to applications and filter
information to "networked databases," "Internet commerce servers" and "network
information filters." Applications that lack secure portals are vulnerable to
attacks to gain control of the application or that seek to circumvent other
security features of a network using the application.

ADMINISTRATION refers to the ability of a network administrator to
configure the network's security features to implement the organization's
security policy. Although the burden of administering a security policy
primarily depends upon the level of detail of the policy itself, commercial
products often do not permit the administration of all of a network's security
features through a common interface. Many commercial products are not flexible
enough to permit implementation of an organization's security policy on a
per-user, per-application basis.

AUDIT describes a network administrator's ability to monitor attempts to
gain unauthorized access to the networks and to gather information about such
attempts. Unauthorized access goes undetected by the administrator in the
majority of instances, especially if data is not altered by the unauthorized
party. While some security products provide the ability to log actions taken in
connection with an attempt to gain unauthorized access, current products often
do not have the ability to notify a network administrator of pending attempts,
so attempts are not discovered until and unless the system's log files are
reviewed.

Secure Computing's Total Network Security Solution
- --------------------------------------------------

Based upon its understanding of the features in products and of the
services offered by the Company's competitors, the Company believes that its
current family of products and services addresses each of the key elements
outlined above and provides one of the most comprehensive network and
internetworking security solutions available in the market today. The Company
offers fee-based consulting services to assist potential clients in identifying
security threats and vulnerabilities and designing rules of electronic commerce.
In addition, the Company's Security Alert Service keeps network administrators
current as to matters of network security and suggests responses to evolving
attack techniques.

The Company's LOCKout products use one-time dynamically changing passwords
to provide identification and authentication. The Company's Sidewinder firewall
also currently supports third-party identification and authentication tokens.
Privilege control is implemented through the Company's patented Type Enforcement
technology used in the Sidewinder firewall and Secure Network Server. Type
Enforcement permits privilege to be determined by user, application or data file
and type of access to files (for example, read, write or execute) and ensures
that access to one set of applications and data files does not enable access to
system files or other types of files. The Company expects that its Secure
Network Server in the near future will provide confidentiality by encrypting
data for storage. Sidewinder is compatible with data encryption software and
hardware products currently available from third parties.

Type Enforcement enables comprehensive and flexible administration by
permitting privilege to be defined by function on a per-user basis. Type
Enforcement's audit capabilities facilitate configuration of a

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Sidewinder firewall with traps which trigger an alarm at the time of
unauthorized access and lure the unauthorized user into continuing the attack by
making it appear that the attack is succeeding, while at the same time
implementing software countermeasures which log the attack and trace the attack
to its source, or terminate the attack. The Company plans to provide additional
features to its existing products designed to make its products more
user-friendly, including the ability to manage multiple Sidewinders and other
security products using a common graphical interface.

Strategy
- --------

The Company's goal is to become the market leader in network security by
providing the most comprehensive network security solutions available. The
Company's strategy to realize its goal contains the following components:

- - EXPAND PRODUCT OFFERINGS. The Company's commercial Sidewinder and
government Secure Network Server products represent what the Company
believes to be the most secure network firewalls available in their
respective markets. The Company released a software-only version of
Sidewinder, consisting of base securing software and feature upgrades to be
priced and sold separately in early 1996. The Company also plans to
increase the functionality of these products by supporting emerging
security standards, additional host computer configurations and
complementary third party security products. The Company plans to add
security features to its products through internal product development,
strategic relationships, licenses and possible acquisition of complementary
product lines.

- - ACCELERATE MARKET PENETRATION. The Company intends to accelerate the
commercialization and market penetration of its products by aggressively
expanding its sales and marketing staff, sales and marketing programs and
domestic and international strategic distribution alliances.

- - FOCUS SERVICES. The Company will increasingly attempt to identify and
target sales of its security consulting services and its subscription
Security Alert Service into specific industries, such as financial
services, telecommunications and healthcare, where security concerns are
most acute.

- - ACHIEVE AND MAINTAIN TECHNOLOGY LEADERSHIP. The Company has assembled a
team of engineers and scientists that it believes represents the world's
largest commercial technical staff dedicated exclusively to network
security. The Company plans to achieve and maintain its technology
leadership through a combination of internal research and development
efforts, government research and development contracts, strategic
relationships, licenses and the possible acquisition of complementary
technologies.

Technology
- ----------

The key to the flexibility and effectiveness of the Company's products is
the Company's patented "Type Enforcement" technology. Type Enforcement allows
comprehensive control of a user's access to data by type of access (read, write
or execute). As implemented in the Company's Sidewinder product, Type
Enforcement serves two critical security design functions: domain separation and
network separation.

DOMAIN SEPARATION under Type Enforcement separates each such application
into a separate domain, and permits privilege within each domain to be defined
with a high degree of detail. Access to each application is controlled by a
domain definition table which maps out the various application functions and
data files that can be accessed and what type of access is allowed (for example,
read, write or execute). This feature is currently used by Sidewinder to host
read-only world Wide Web Pages and to receive anonymous FTP file transfers,
which Sidewinder protects from being defaced or otherwise altered by anyone
other than the system administrator. Because the operating system refers to
this table at every system call or request, the domain definition table cannot
be circumvented. By preventing a breach in one domain from allowing access to
any other domain, the separation of domains serves a function analogous to
watertight compartments used in a ship.

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An organization's administrator defines privilege within domains. System
administration functions are in a domain separate from application domains. In
addition, critical security functions, such as programs for changing the domain
definition table and user lists, can only be executed while network operations
are disabled. This prevents an unauthorized user from observing the domain
definition table, or gaining access to the system files while the system
administrator is performing administrative functions.

NETWORK SEPARATION under Type Enforcement effectively separates
Sidewinder's connection to the internal, secure network from its connection to
external, insecure networks such as the Internet. Type Enforcement permits the
control not only of access by authenticated users to either network, but also of
the transfer of network applications, such as electronic mail, telnet (host
access) and file transfer, between the separated networks. Each network
connection has its own Internet address. The external address enables an
organization's presence to be visible to the Internet community. The internal
address is not visible from the Internet, which prevents the disclosure of the
organization's network configuration information, which could be used to locate
unprotected points of access to the protected network, or otherwise to
facilitate unauthorized access.

With network separation, each type of network application, such as
electronic mail or FTP, runs in its own domain on both the external side and the
internal, secured network side. Transmissions are forced to take a specific
route when moving between the internal and external domains for each specific
application. As data is transferred between the external and internal network
domains, address information is removed and replaced. Special software filter
programs can also be executed at this time. Filters can be configured to
prevent passage of certain types of data, such as encrypted data, data marked
"proprietary" or "confidential," or files containing executable programs, which
can then be routed through a virus check program. Access to the external stack
cannot be used to gain access to the protected network, effectively stopping
most types of network attacks.

Type Enforcement also has "active defense" capabilities. For example, Type
Enforcement permits organizations to configure the Company's Sidewinder with
traps which trigger an alarm, alerting a network administrator (by paging the
administrator if desired) to the attack in progress. Moreover, Sidewinder can
be configured to lure the unauthorized user to continue the attack by making it
appear that the attack is succeeding, while implementing software
countermeasures which log the attack and trace the attack to its source. The
triggers can also be configured to immediately terminate access.

Because Type Enforcement operates at the operating system level, its
operation is transparent to authorized users. Type Enforcement allows users to
send and receive electronic mail, search network news or the World Wide Web
using standard web browsers, transfer files, and access other Internet services
without first logging onto a separate Internet server. Unlike many encryption
solutions, the use of Type Enforcement results in no noticeable performance
degradation in using network applications.

Products
- --------

The Company's security products are designed to protect an organization's
computer network from access by unauthorized users. Based upon its
understanding of the features in products and of the services offered by the
Company's competitors, the Company believes that its products, in combination
with its consulting services, provide one of the most comprehensive network and
internetworking security solutions available in the market today. The Company's
products and services currently are priced near the high-end of the network
security market. However, in early 1996, the Company introduced a software-only
version of Sidewinder, consisting of base security software and feature upgrades
that are priced and sold separately.

SIDEWINDER. Sidewinder uses Type Enforcement to prohibit an unauthorized
user's access to network resources. In this manner, Sidewinder serves as a
gateway, or "firewall," between an organization's network and other networks.
The Company sells its Sidewinder product to both government and commercial
customers. The customer may purchase the software-only version or a turnkey
system, including both hardware and software. Installation and training,
hardware maintenance and software support and upgrades are available for
additional fees.

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The Sidewinder firewall received the 1996 "Best Internet Firewall" and
"Best Security Management System" from INFOSECURITY NEWS, the 1995 "Security
Product of the Year" award from LAN MAGAZINE, the 1995 "Best New Security
Product" and "Best Internet Firewall" readers' choice awards from INFOSECURITY
NEWS and the 1995 Byte Magazine "Editors Choice Award". In November 1994, the
Company established a Sidewinder test site accessible from the global Internet
and issued a public challenge to the Internet community to attempt to breach
Sidewinder's Type-Enforcement security features. On November 7, 1994, the
Company posted an announcement on the Internet on several Usenet newsgroups
issuing the challenge and explaining how an attacker could access the Company's
challenge site. The Company also issued a press release on the same date
announcing the challenge. The Company has also described the challenge in
subsequent press releases. The Company's Internet challenge site may be
accessed at http://www.sidewinder.com. In August 1995, the Company established
a challenge site at DefCon III, an international convention for Internet
hackers, and issued the same challenge. To the Company's knowledge, no
competitor of the Company has issued a similar challenge. To date, the
Company's challenge sites have successfully repelled more than 3,500 attacks,
and have not permitted a single attacker to pass through the firewall
successfully.

Sidewinder provides privilege control at the level of user, application or
data file, and type of access to files (for example, read, write or execute).
Because it uses Type Enforcement, Sidewinder provides effective protection
against attacks which exploit weaknesses exhibited by packet filter and access
list products, such as packet spoofing or the alteration of access lists.
Because it operates on the UNIX operating system, Sidewinder is readily
integrated into existing networks, is compatible with third-party security
applications, such as hardware data encryption keys and filtering software, and
can be inter-networked with complementary packet-filtering devices such as
network routers. The Company plans to provide additional security capabilities,
such as identification and authentication, content filters and encryption
through internal product development, strategic relationships and licenses with
other security vendors, and possibly acquisition of complementary product lines.
Sidewinder currently supports the identification and authentication keys sold by
Digital Pathways, Inc. and FORTEZZA identification and authentication. The
Company intends that future releases of Sidewinder will provide support to the
Company's LOCKout software, as well as to hardware identification and
authorization "keys" provided by third-party vendors. The Company intends to
resell certain of these products as add-on options to Sidewinder.

The Company plans to enhance the compatibility of Sidewinder by offering
versions compatible with a variety of host computer configurations and
complementary third-party security products. The Company has introduced a
software-only version of Sidewinder, consisting of base security software and
feature upgrades to be priced and sold separately. The Company intends to
support emerging security standards, such as the secure socket layer and secure
http protocols currently being developed, and to keep Sidewinder responsive to
security threats as they develop.

LOCKOUT PRODUCTS. The Company's LOCKout products use one-time dynamically
changing passwords to provide identification and authentication of users
attempting to gain access to an organization's network. The Company's LOCKout
products use "two factor" security, which operates using a combination of
something the user knows (for example, a personal identification number, or PIN)
and something the user possesses (either a software or hardware encryption key).
The Company's LOCKout product line consists of the LOCKout server, configured as
a turn-key system or licensed as host software, and client and agent software
for LOCKout DES and LOCKout FORTEZZA. The Company sells its LOCKout products to
both government and commercial customers. Government customers account for a
substantial percentage of the Company's sales of its LOCKout FORTEZZA products.
Each of the Company's LOCKout products provides for central administration of
identification numbers and encryption keys.

The LOCKout DES server software can be purchased installed on a turn-key
computer based on Intel's 486 or Pentium microprocessor. LOCKout DES is also
presently available in a software-only version for installation on an
organization's existing network. The server software can be configured to
provide identification and authentication for users seeking remote access to a
network, or to a portion of a network such as a secure database, or both. The
Company also licenses LOCKout DES agent software for servers running on Windows,
Macintosh and DOS compatible operating systems, which enables access to be
managed throughout an entire

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network. These agents, which the Company currently licenses, without charge,
communicate with the LOCKout server software for authorization when an attempt
is made to access to a networked server. LOCKout DES client software, for use
on networked or remote personal computers accessing LOCKout DES protected
networks, is presently available for use with the Windows, Macintosh or DOS
operating systems.

LOCKout DES uses a software key which is currently based on the data
encryption standard ("DES") algorithm. FORTEZZA serves the same function as
LOCKout DES, but uses a digital signature algorithm embedded in a PCMCIA format
key, or "token." The NSA has endorsed FORTEZZA for use by government agencies on
networks containing sensitive but unclassified information. FORTEZZA is
supplied to the government by a third party and is incorporated into products
sold by the Company to the government.

An important security feature of LOCKout is the ability to effectively
generate a different password for each access attempt. To gain remote access to
a network, the remote user contacts the network which generates a random
"challenge" number. The remote user enters his or her PIN and each of the
remote computer and network server processes the challenge number using the PIN
and a software encryption "key" specific to that user. The remote computer's
response is sent to the networked computer and verified against the expected
response generated by the network. If the remote user's response matches the
expected response, the remote user is granted access. Only the response number,
and not the PIN or the key, is transmitted for authentication. This prevents
password-monitoring software from "sniffing" a number which may be used later to
gain access to the network computer. Because the response is a seven digit
number, it is also far more difficult for software designed to randomly generate
and attempt thousands of short passwords to gain access.

The Company's LOCKout products support remote access over existing switched
telephone networks, but do not currently support wireless remote, or mobile,
access independent of existing telephone networks.

SECURE NETWORK SERVERS. The Company sells its Secure Network Server
products to government customers. The Company's current Secure Network Server
product, LOCKguard, is a UNIX-based computer that uses dual protocol stacks,
Type Enforcement, filtering and message encryption to serve as a highly secure
electronic mail firewall. The Company plans that the initial release of its
next Secure Network Server product will be able to encrypt stored data. The
Company also has plans for a server that will provide encryption of all network
traffic, which, together with storage encryption, will enable organizations to
limit the use or destruction of data in the event network or building security
is breached. The Company also expects to develop a server running a secured
version of NFS, a standard network file system, and supporting network
electronic mail and directory services, all of which will enable it to serve as
a network file server. The Company plans to sell the Secure Network Server
developed for the NSA to several other government agencies, and will attempt to
make the Secure Network Server the standard for connecting government classified
portions of a network to commercial networks.

Services
- --------

The Company's services address the elements required for a secure network
that are not fully addressed by the Company's products. The Company's staff of
engineers are available to consult with organizations and their outside auditors
for threat and vulnerability analysis and for designing and implementing a
comprehensive security system. The Company also provides its Security Alert
Service to annual subscribers. The Company's Security Alert Service strengthens
an organization's administration capabilities by providing subscribers with
up-to-date notification of information security threats and describing
responsive countermeasures. Subscribers receive monthly security alert
bulletins that also contain information intended to build security awareness.
If a computer security threat is so severe that a monthly bulletin will not warn
sites quickly enough, the Company would promptly issue crisis alerts that
describe in detail how a subscriber should respond to a new threat.

The security information contained in the Company's bulletins and security
alerts is obtained through various means. The Company's engineers monitor
security related industry sources. The Company receives CERT advisories as well
as bulletins from the Departments of Energy and Defense. As a contractor for
the National Computer Security Center, the Company also has access to the latest
information provided on the Center's alert system. While the Company's
engineers also track and report viruses associated with attacks on Internet
services

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or service providers, virus detection and elimination require analysis of
individual computer with current anti-virus software and are best provided by
virus software vendors.

The Company believes that continuing to offer security policy development,
related security design consulting services and its Security Alert Service will
not only provide a source of recurring revenues, but also will help to keep it
supplied with current information regarding customer security needs.

Government Contracts
- --------------------

From its inception, the Company has been engaged in research and
development of security technology under contracts with departments and agencies
of the U.S. government, including the NSA. Government contracts have provided
substantially all of the Company's revenues in each year of its existence,
providing the Company with the financial resources to assemble what the Company
believes is the largest group of scientists and engineers dedicated to computer
system security employed by any commercial enterprise. Government agencies
under directives to comply with the NSA's standards represent a base of
potential customers.

Most of the Company's contracts require the Company to perform specified
services, for which the Company is reimbursed for actual costs plus a fee. The
Company's NSA Secure Network Server research and development contract accounts
for approximately 87% of the Company's government development contract business.
A contract modification was executed in early July 1996 that changed the
contract to a fixed-fee basis and increased the contract to $50 million from $35
million, of which $34 million has been recognized through March 31, 1996. The
revised scheduled completion date is September 1997. The Company estimates that
the aggregate fee to be received over the course of the contract will be
approximately 6%. The Company used a rate of 5.5% in recognizing revenue in the
first three months of 1996, based on its estimate of the remaining award fee to
be earned under the contract.

Under its cost-reimbursement contracts, the Company bears the risk that
increased or unexpected costs required to perform the specified services may
reduce the Company's fee. Pursuant to their terms, these contracts are
generally also subject to termination at the convenience of the applicable
government agency. If a contract is terminated, the Company typically would be
reimbursed for its costs to the date of its termination plus the cost of an
orderly termination and paid a portion of the fee. No terminations of the
Company's cost-reimbursement contracts have occurred.

The Company's U.S. government contracts are subject to audit by a
designated government audit agency, which currently is the DCAA. The DCAA has
periodically audited the Company's contracts without any material cost
disallowances.

Customer Support
- ----------------

In addition to the services described above, the Company provides on-site
installation assistance and training for its products. The Company also offers
specialized training at the Company's Roseville, Minnesota facility. The
Company has observed that the typical time interval over which a prospective
customer might engage in formulating a security policy varies according to the
value of assets protected, the number of users and geographical sites, and the
complexity of the network. Smaller organizations may request no or minimal
policy support (1-5 days). Larger organizations with very critical security
needs spread across complex networks and geographies may require several months
of security policy development. The Company has observed that such
organizations tend to build a "team" for developing and implementing security
solutions. The team may consist of network integrators, security policy
consultants, security product vendors and special application vendors. Customers
may purchase a software support and upgrade service for an annual fee. Product
feature upgrades released when new features or capabilities are made available
to software support subscribers. Basic hardware support is provided pursuant to
the Company's basic warranty terms. Extended warranties are available for an
annual fee. Enhanced hardware support may be purchased either to provide
service during normal working hours (9 a.m. to 5 p.m., weekdays) or at all times
(24 hours a day, 7 days a week) for up to three years. Through March 31, 1996,
the Company has sold comprehensive packages of training, installation and
software and hardware

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support to the majority of its customers. The Company currently provides
hardware support through contracts with third party support vendors and by using
Company employees. The Company intends to add additional customer support
capabilities as conditions warrant. Software updates and technical support are
provided through program fix releases to customers, when necessary to fix bugs
or to provide enhancements to existing software features.

The Company provides limited hardware and software warranties to users for
one year from acceptance of a product, and will provide contractual maintenance,
service of the hardware and upgrades of software for a fee after warranty
expiration. In many instances the Company's warranties are in turn supported by
warranties received by the Company from its manufacturers and suppliers.

Customers
- ---------

The Company's current commercial customers and prospects include Fortune
1000 companies that are likely to consider network security solutions a high
priority when purchasing a firewall because they routinely deal with proprietary
or highly sensitive information or have classified government contracts. In
addition, the Company intends to target selected industries with a high need for
security, including:

- - Banking, insurance and financial institutions, which are required to
protect accounts and transaction processing, customer information and
trading activity;

- - Telecommunications companies, which will have a need to preserve privacy of
communications, accurately charge customers and protect complex
telecommunication networks from system disruption; and

- - Hospital and other healthcare providers which are required to keep
confidential patient records and which have a need to monitor critical
patients.

Based upon its experience and understanding of the existing network
security market, the Company believes that the Company's customer base will
broaden as a result of the commercial introduction of the software-only version
of the Company's Sidewinder product and as a result of the continuing education
of purchasers through trade and other publications discussing the relative
merits and limitations of commercially available security products.

Customers within the U.S. government for the Company's products and
services include the Department of Defense (both directly and through the NSA),
which is the single largest government user of classified processing systems,
and the Department of Energy. The Company intends to target other agencies
within the U.S. government.

The Company considers foreign governments and major foreign businesses to
be prospective customers. Based upon its understanding of the international
market, the Company believes that its products will be sold primarily in North
America, Western Europe, the Middle East, Australia and the Pacific Rim.

Sales and Marketing
- -------------------

SALES. The Company currently sells its products in domestic markets
through a small direct sales force. Based upon its experience and understanding
of the existing network security market, the Company believes that the network
security market currently requires a high degree of direct interaction with and
education of potential customers. The Company believes that a direct sales force
is well suited to differentiate the Company's products from those of its
competitors, to work with customers to provide security solutions for the
protection of network resources and to obtain insights into customers' future
security requirements. The Company's direct sales staff solicits prospective
customers and provides technical advice and support with respect to the
Company's products. At March 31, 1996, the Company had a direct sales staff of
18 individuals, of whom 6 individuals sold solely to the U.S. government. In
addition to sales personnel, the Company's senior management has significant
experience in selling security products to the U.S. government. The Company
plans to continue to sell its products "direct" to the

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U.S. government utilizing its internal government sales force. From time to
time, the Company may enter into teaming relationships with third-party
government contractors.

The Company also believes, however, that as the range of security product
offerings and customer sophistication increase, internetwork security products
will increasingly be offered through a multi-channel network of distributors and
other resellers. The Company will seek relationships with additional
distributors and other resellers in order be in a position to sell through
alternate channels as these channels develop.

The Company currently does not sell its products outside of the United
States and has no international distribution or sales network at this time.
Notwithstanding the risks of international sales, the Company believes that
international markets present a potentially large market for network security
products, and plans to establish a number of international distribution
arrangements to enhance the Company's ability to sell into such markets. Export
controls on cryptographic products may place limits on the export of the
Company's products to certain countries identified from time to time by the U.S.
Department of State. In addition, certain of the Company's government products
are subject to U.S. government contracting regulations and to the International
Trade in Arms Regulation ("ITAR"), which restricts the exports of certain
products affecting national security. These regulations could restrict the
Company's ability to sell its products to foreign governments and businesses
identified from time to time by the U.S. Department of State, creating delays in
the introduction of the Company's products in international markets.

The Company attempts to limit its liability to customers, including
liability arising from a failure of the security features contained in the
Company's products, through contractual limitations of warranties and remedies.
However, some courts have held similar contractual limitations of liability, or
the "shrink-wrap licenses" in which they are often embodied, to be
unenforceable. Accordingly, there can be no assurance that such limitations
will be enforced.

MARKETING. At March 31, 1996 the Company had 9 marketing employees and had
retained a consulting firm for Company promotion. In support of its sales
efforts, the Company plans to expand its efforts to conduct sales training
courses, deploy comprehensive targeted marketing programs, including direct
mail, public relations, advertising, seminars, trade shows and telemarketing,
and ongoing customer and third-party communications programs. The Company has
entered into strategic marketing relationships with various vendors of
communications, security and network management products. Certain of these
vendors recommend Secure products along with their solutions to meet customers'
security needs. The potential increased revenues from such relationships may be
reduced by requirements to provide volume price discounts and other allowances,
and significant costs incurred in customizing the Company's products. Although
the Company does not intend that such relationships be exclusive, the Company
may be required to enter into an exclusive relationship or forego a significant
sales opportunity. To the extent the Company becomes dependent on actions by
such parties, the Company could be adversely affected if the parties fail to
perform as expected.

The Company also seeks to stimulate interest in network security through
its public relations program, speaking engagements, white papers, technical
notes and other publications, and through its Sidewinder Challenge Site. In
November 1994, the Company established a Sidewinder site accessible from the
global Internet and issued a public challenge to hackers in the Internet
community to attempt to breach Sidewinder's Type Enforcement security features.
In August 1995, the Company established a challenge site at DefCon III, an
international convention for Internet hackers. On November 7, 1994, the Company
posted an announcement on the Internet on several Usenet newsgroups issuing the
challenge and explaining how an attacker could access the Company's challenge
site. The Company also issued a press release on the same date announcing the
challenge. The Company has also described the challenge in subsequent press
releases. To date, the Company's challenge sites have successfully repelled
more than 3,500 attacks, and have not permitted a single attacker to pass
through the firewall successfully. Although the success of the challenge sites
has generated publicity for the Company and helped to establish a favorable
reputation for the Company's security products, the Company expects that, as
attack methods become increasingly sophisticated, the Sidewinder challenge could
eventually be met. The Company expects, however, that information gained from
attacks will help the Company to improve its products to prevent future
successful attacks.

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Competition
- -----------

The market for network security products is intensely competitive and
characterized by rapid technological change. The Company believes that
competition in this market is likely to persist and to intensify as a result of
increasing demand for network security products. The principal competitors for
the Company's existing products include Advanced Network & Services, Inc. (which
is owned by America Online, Inc.), Border, Check Point Technologies Ltd., Raptor
Systems, Inc., Sun Microsystems, Inc. and Trusted Information Systems Inc. The
Company may also face competition from these and other parties in the future
that develop computer and network security products based upon approaches
similar to or different from those employed by the Company. There can be no
assurance that the market for network security products will not ultimately be
dominated by approaches other than the approach marketed by the Company. While
the Company believes that it does not compete against manufacturers of other
classes of security products (such as encryption) due to the complementary
functions performed by such other classes, there can be no assurance that the
Company's customers will not perceive such other companies as competitors of the
Company.

The Company believes that the principal competitive factors affecting the
market for computer and network security products include level of security,
technical features, ease of use, capabilities, reliability, customer service and
support, distribution channels and price. Based upon its understanding of the
features in products and of the services offered by the Company's competitors,
the Company believes that its products currently compete favorably with respect
to such factors. Based upon its experience and understanding of the existing
network security market, the Company believes that potential purchasers of the
Company's security products who do not differentiate between the level of
security provided by competing security products are as likely to base their
purchasing decisions on price, the design of the user interface or other
considerations as they are to base such decisions on the level of security
provided. In circumstances where a potential purchaser's primary concern is the
level of security provided by products being considered, the Company, based upon
its understanding of the features in products and of the services offered by the
Company's competitors, believes that its products compete favorably. The
Company believes that the Company's customer base will broaden as a result of
the commercial introduction of the software-only version of the Company's
Sidewinder product and as a result of the continuing education of purchasers
through trade and other publications discussing the relative merits and
limitations of commercially available security products. However, there can be
no assurance that the Company can maintain its competitive position against
current and potential competitors, especially those with significantly greater
financial, marketing, service, support, technical and other competitive
resources.

Current and potential competitors have established or may in the future
establish cooperative relationships among themselves or with third parties to
increase the ability of their products to address the security needs of the
Company's prospective customers. Accordingly, it is possible that new
competitors or alliances may emerge and rapidly acquire significant market
share. If this were to occur, the financial condition or results of operations
of the Company could be materially adversely affected.

Backlog
- -------

The Company's backlog for commercial products as of March 31, 1996 was
approximately $1 million. The Company does not believe that its commercial
backlog at any particular point in time is indicative of future sales levels.
The Company's backlog relating to its government contracts as of March 31, 1996
was approximately $5 million. Backlog historically has represented firm
government orders for research and development services with performance and
delivery schedules extending out to 24 months. Funded backlog represents that
portion of backlog for which the Company's government customers have actually
obligated payment. At March 31, 1996, approximately $4 million of the Company's
government contract backlog was funded.

Manufacturing
- -------------

The Company's hardware manufacturing operations consist primarily of
purchasing of hardware components, final assembly and system testing. Hardware
components used in the Company's Sidewinder,

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LOCKout Server, and LOCKguard products consist of commercially available
computers, memory, displays, power supplies and third-party peripherals such as
hard drives and network interface cards. The Company also purchases software
media and user documentation for its software products and uses subcontractors
for its duplication services. The Company's manufacturing processes utilize
principles that conform to ISO 9001 standards for which the Company received
full certification in March 1996.

The Company generally obtains most parts and components from a single
vendor to maintain quality control and enhance its working relationship with
suppliers. The Company obtains its computers from Digital Equipment Corporation
and from Motorola, Inc. While the Company believes that alternate sources of
supply could be obtained, the Company's inability to develop alternative sources
if and as required in the future could result in delays or reductions in product
shipment which could have a material adverse effect on the Company's operations.

Research and Development
- ------------------------

Internal development of new products and features will be performed by the
Company's internal engineering staff. The Company's government contracts
support a far larger research and development program than the Company's own
independent research and development efforts. Of the Company's total of 173
engineering employees at March 31, 1996, 12 hold doctorate degrees, 33 hold
masters degrees and 128 hold bachelors degrees.

The Company plans to add features such as identification and
authentication, content filters and encryption to its Sidewinder product. The
Company also plans to introduce new products as market demand develops for such
products. The Company intends to keep its products broadly compatible with a
variety of host computer configurations and other network security products and
other network applications. The Company also plans to support emerging security
standards, such as the secure socket layer and secure http protocols.

The Company believes that critical to the success of Sidewinder and the
Company's other security products will be the Company's ability to keep such
products responsive to security threats as they develop. The Sidewinder
challenge presents the Company with a unique opportunity to stay abreast of
security threats. Although the success of the challenge site has generated
publicity for the Company and helped to establish a favorable reputation for the
Company's security products, the Company expects that, as attack methods become
increasingly sophisticated, the Sidewinder challenge could eventually be met.
The Company expects, however, that information gained from successful attacks
will help the Company to improve its products to prevent future successful
attacks. The security information gathered in connection with the Company's
Security Alert Service also provides a source of current information regarding
security threats.

The Company will continue to seek government research and development
contracts to maintain its high technology base and its reputation as a security
technology leader. Products developed under government contracts require that
the Company mathematically prove the integrity of system security at each
operating state. The Company believes that this rigorous methodology has
enabled it to develop very high quality products for both its government and
commercial customers. The Company currently has research and development
contracts with government agencies, including the NSA. These contracts address
information security for operating systems, secure applications for database
management systems and security policy research. The Company is pursuing
additional contracts with these organizations and is also working to expand its
base of research and development customers.

In addition to government-sponsored research and development contracts, the
Company expects to continue to fund its own research and development efforts
independently, through internally generated funds or the proceeds from its
initial public offering.

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Patents and Proprietary Technology
- ----------------------------------

The Company relies on patent, trademark, copyright and trade secret laws,
employee and third-party non-disclosure agreements and other methods to protect
its proprietary rights. The Company currently holds seven patents and has
additional patent applications pending in the United States relating to computer
security software and hardware products. The Company has also filed patent
applications in Western Europe, Japan, Israel and Australia. Type Enforcement is
described through three of the Company's issued patents. The Company believes
that its patents, and particularly its Type Enforcement patents, are broad and
fundamental to network security computer products. While the Company believes
that the pending applications relate to patentable devices or concepts, there
can be no assurance that any pending or future patent applications will be
granted or that any current or future patent, regardless of whether the Company
is an owner or a licensee of such patent, will not be challenged, invalidated or
circumvented or that the rights granted thereunder or under licensing agreements
will provide competitive advantages to the Company.

The Company's success is dependent in part upon its proprietary software
and security technology. The Company also relies on trade secrets and
proprietary know-how which it seeks to protect, in part, through confidentiality
agreements with employees, consultants and other parties. There can be no
assurance that these agreements will not be breached, that the Company will have
adequate remedies for any breach, or that the Company's trade secrets will not
otherwise become known to or independently developed by competitors. In
addition, under its contracts with the Company, U.S. government agencies have
the right to disclose certain technology developed with government funding to
competitors of the Company as part of the establishment by the U.S. government
of second-source manufacturing arrangements or competitive bidding.

The Company is not aware of any patent infringement charge or any violation
of other proprietary rights claimed by any third party relating to the Company
or the Company's products. The computer technology market is characterized by
frequent and substantial intellectual property litigation. Intellectual
property litigation is complex and expensive, and the outcome of such litigation
is difficult to predict.

The Company has received or applied for trademark protection in the United
States and Canada for its Sidewinder, LOCK, LOCKout, LOCKguard marks, and its
padlock and snake logos.

Regulation and Government Contracts
- -----------------------------------

Other than government contracting regulations described above under
"Government Contracts," the Company is not currently subject to direct
regulation by any government agency, other than regulations applicable to
businesses generally. There are currently few laws or regulations directly
applicable to access to or commerce on the Internet. However, due to the
increasing popularity and use of the Internet, it is possible that a number of
laws and regulations may be adopted with respect to the Internet, covering
issues such as user privacy, pricing and characteristics and quality of products
and services. The Company believes that some regulations could be addressed by
application of Type Enforcement or the development or incorporation of
additional products; therefore, certain types of regulation could be beneficial
to the Company. However, the adoption of laws or regulations may decrease the
growth of the Internet, which could in turn decrease the demand for the
Company's products and increase the Company's cost of doing business or
otherwise have an adverse effect on the Company's business, operating results or
financial condition.

Employees
- ---------

At March 31, 1996, the Company employed 278 full-time and 9 part-time
employees. No employee of the Company is represented by a labor union or is
subject to a collective bargaining agreement. All employees are covered by
agreements containing confidentiality and non-compete provisions. The Company
believes it maintains good relations with its employees.

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DESCRIPTION OF PROPERTY

The Company's principal administrative, sales and marketing, development,
engineering, production and support facilities consist of approximately 70,000
square feet of office space in Roseville, Minnesota. The Company occupies these
premises under leases expiring at various times through the year 2006. The
annual base rent for these facilities is approximately $690,000. In support of
its field sales and support organization, the Company also leases approximately
2,000 square feet of office space in Reston, Virginia. The annual rent for this
facility is approximately $40,000. The Company also has sales offices in
Atlanta, Baltimore, Boston, Chicago, Los Angeles, Miami, New York and San Jose
with annual rents ranging from $9,000 to $17,000 for each office. The Company's
recently expanded principal facilities are highly utilized but adequate for the
Company's immediate needs. The Company has an agreement for an additional
10,000 square feet of space beginning in 1999 and believes that suitable
additional space adjacent to current facilities will be available to meet its
needs, although the rent per square foot may exceed the rate it is currently
paying.

DIRECTORS AND MANAGEMENT

As of the date of this Proxy Statement, the directors and executive
officers of Secure are:

NAME AGE POSITION
--------------------------------------------------------------------------
Kermit M. Beseke 53 President, Chief Executive Officer
and Director
Timothy P. McGurran 33 Vice President of Finance,
Treasurer and Chief Financial
Officer
Joseph R. Anzures 44 Vice President of Sales and
Marketing
Gene C. Leonard 44 Vice President of Internetworked
Products
Stephen M. Puricelli 43 Director
Timothy H. Hanson 49 Director
Dennis J. Shaughnessy 48 Director
Ervin F. Kamm, Jr. 56 Director

KERMIT M. BESEKE has been Chief Executive Officer of the Company since
February 1992 and has been President and a director of the Company since
November 1990. Mr. Beseke was the Business Director of the Secure
Telecommunications Division of Motorola, Inc. from 1984 through October 1990, a
supplier of secure telephones to the U.S. government, various international
governments and commercial customers.

TIMOTHY P. MCGURRAN has been the Vice President of Finance, Treasurer and
Chief Financial Officer of the Company since May 1996. Mr. McGurran was with
Ernst & Young LLP from from December 1984 to May 1996, where he last held the
position of Senior Manager. Mr. McGurran is a licensed Certified Public
Accountant.

JOSEPH R. ANZURES has been Vice President of Sales and Marketing since
March 1996. From October 1995 to March 1996, Mr. Anzures was Vice President of
Sales. From July 1995 to October 1995, Mr. Anzures provided sales consulting
services to the Company pursuant to a consulting agreement. From December 1991
to October 1995, Mr. Anzures was the sole proprietor of Anzures & Associates, a
sales consulting company. From December 1990 to December 1991, Mr. Anzures was
National Sales Manager for the Secure Telecommunications Division of Motorola,
Inc. From 1976 to December 1990, Mr. Anzures was a Regional Sales Manager for
International Business Machines Corporation.

GENE C. LEONARD has been Vice President of Internetworked Products since
March 1996. From June 1995 to March 1996, Mr. Leonard was Vice President of
Advanced Research. From April 1993 through June 1995, Mr. Leonard has held the
positions of Operations Manager, Server Products Group Manager, and Program

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Manager. From May 1991 to April 1993, Mr. Leonard served as Program Manager of
the International Land Navigation Systems Program at Alliant Techsystems Inc.
From 1986 to 1991, Mr. Leonard was a Project Manager for Honeywell, Inc.

STEPHEN M. PURICELLI has been a director of the Company since February
1990. Mr. Puricelli has been a General Partner of Costine Associates, L.P.,
which is the corporate general partner of Corporate Venture Partners, since its
inception in April 1988. Corporate Venture Partners is a venture capital fund
headquartered in Ithaca, New York. He is currently a director of several small
businesses.

TIMOTHY H. HANSON has been a director of the Company since August 1994.
Mr. Hanson has been President and Chief Executive Officer of HealthEast, Inc., a
privately held, non-profit hospital holding company in St. Paul, Minnesota since
February 1989.

DENNIS J. SHAUGHNESSY has been a director of the Company since March 1993.
Since 1989, Mr. Shaughnessy has been a Managing Director of the Grotech Capital
Group of Baltimore, Maryland, a venture capital fund. Mr. Shaughnessy also is a
director of TESSCO Technologies, Inc.

ERVIN F. KAMM, JR. has been a member of the Board of Directors since May
1996. Mr. Kamm has been President and Chief Executive officer of Digi
International Inc. since December 1, 1994. From May 1988 to November 1994, he
served as President and Chief Operating Officer of Norstan Inc., a distributor
of telecommunications products. From February 1988 to May 1988, he was
President of Norstan Communications, Inc. Mr. Kamm is also a director of
Aequitron Medical Inc., a manufacturer of medical devices, Micromedics Inc., a
privately held corporation that manufactures specialty medical products, and the
Institute for Advanced Technology.

Directors and Management Following the Acquisitions
- ---------------------------------------------------

Subject to approval of PROPOSAL ONE and PROPOSAL TWO, the consummation of
the Acquisitions, a reorganization of Secure's management following the
Acquisitions, and the election of the nominees set forth under PROPOSAL THREE,
the directors and the executive officers of Secure following the Acquisitions
will be:

NAME AGE POSITION
---------------------------------------------------------------------------
Kermit M. Beseke 53 Chief Executive Officer and Director
Timothy P. McGurran 33 Vice President of Finance, Treasurer and
Chief Financial Officer
Donald Whitbeck 39 Vice President of Marketing and Sales
James Boyle 54 Vice President and General Manager--
Government Division
Glenn G. Mackintosh 34 Vice President and General
Manager--Firewall Division and
Director
John R. Muir 44 Vice President and General
Manager--Enigma Division
Adam Adamou 29 Director
Robert Forbes 47 Director
Timothy H. Hanson 49 Director
Ervin F. Kamm, Jr. 56 Director
Stephen M. Puricelli 43 Director
Eric P. Rundquist 48 Director
Dennis J. Shaughnessy 48 Director

DONALD WHITBECK has been Vice-President, Marketing and Sales of Border
since August 1995. Prior to joining Border, Mr. Whitbeck was a vice-president
of LanWorks Technologies, Inc., a developer of local area

93
<PAGE>

network management solutions, from February 1995 to August 1996. From January
1994 to October 1994, he was a director of marketing and sales at Kolvox
Communications Inc., a developer of voice recognition products based in Toronto.
Prior to January 1994, Mr. Whitbeck held various management positions at IBM
Canada Ltd., Hewlett Packard (Canada) Ltd. and Sun Life of Canada.

GLENN G. MACKINTOSH, a co-founder of Border in January 1994, has been
Executive Vice-President of Border since February, 1996, prior to which he was
Vice-President of Technology. Prior to co-founding Border, Mr. Mackintosh
served as Senior Network Specialist at the University of Toronto from 1991 to
1992 and then as Supervisor of External Networks and Facilities Management Group
from June 1992 to August 1994.

JAMES BOYLE has been Vice President of Advanced Research of Secure since
May 1996 and was Government Program Manager from October 1995 to May 1996. Mr.
Boyle was an independent consultant in the government contracting field from
January 1991 to September 1995. From 1989 to January 1991, Mr. Boyle was
Director of Government Marketing and Aerospace Marketing at Convex Computer
Corporation. From 1988 to 1989, he was a General Manager of Computer Design
Associates. From 1984 to 1988, he worked at Unisys Corporation, where the last
position he held was Director of Business Development for Space and Strategic
Systems.

JOHN R. MUIR, a co-founder of Enigma in July 1982, has been Executive
Vice President of Enigma since March 1996, and has been a member of the Board
of Directors since July 1982. From July 1982 to January 1992, Mr. Muir was
President of Enigma and from January 1991 to March 1996 Mr. Muir was
Secretary of Enigma.

ADAM ADAMOU has been an Investment Manager with Working Ventures Canadian
Fund Inc., a labour sponsored investment fund, since May 1991. Mr. Adamou is a
director of a number of portfolio companies, including Border, Softquad
International Inc. and Nextra Technologies Inc.

ROBERT FORBES has been Vice-President of BCE Capital Inc., an investment
and venture capital subsidiary of BCE Inc., since September 1995. From 1989 to
1995, Mr. Forbes was Vice President, Corporate Development of Derlan Industries
Limited, a publicly listed holding company. Mr. Forbes is also a director of
National Transaction Network and a number of private companies.

ERIC P. RUNDQUIST has served as a Director of Enigma since 1994. In 1991,
Mr. Rundquist founded and since that time has been President and Chief Executive
Officer of Eric Thomas, Inc., a firm that assists medium to large corporations
in managing their federal and state income, sales and property tax matters,
located in Los Gatos, California. From 1990 to 1991, Mr. Rundquist was Director
of Taxes at the San Jose, California office of BDO Seidman, an international
accounting firm, and from 1988 to 1990, Mr. Rundquist was Senior Manager at the
San Jose, California office of KPMG Peat Marwick, an international accounting
firm.

Committees of the Board of Directors and Meeting Attendance
- -----------------------------------------------------------

The Board of Directors met six times during 1995. All directors attended
at least 75% of the meetings of the Board and of the committees on which they
served. The Company has an Audit Committee, a Compensation Committee and a
Nominating Committee. Following is a description of the functions performed by
each of the Committees:

AUDIT COMMITTEE

The Company's Audit Committee presently consists of Messrs. Puricelli and
Shaughnessy. The Audit Committee makes recommendations concerning the selection
and appointment of independent auditors, reviews the scope and findings of the
completed audit, and reviews the adequacy and effectiveness of the Company's
accounting policies and system of internal accounting controls. The Audit
Committee met four times during 1995.

94
<PAGE>

COMPENSATION COMMITTEE

The Company's Compensation Committee presently consists of Messrs.
Puricelli (Chairman) and Shaughnessy. The Compensation Committee annually
reviews and acts upon the chief executive officer's compensation package and
sets compensation policy for the other employees of the Company, as well as
acting upon management recommendations concerning employee stock options,
bonuses and other compensation and benefit plans. The Compensation Committee
also administers the Secure Computing Corporation Amended and Restated 1995
Omnibus Stock Plan and the Secure Computing Corporation Employee Stock Purchase
Plan. The Compensation Committee met eight times during 1995.

NOMINATING COMMITTEE

In February 1996, the Board established the Nominating Committee to advise
and make recommendations to the Board on all matters concerning the selection of
candidates as nominees for election as directors. The Nominating Committee
presently consists of Messrs. Hanson (Chairman), Beseke and Puricelli.

The Nominating Committee will consider persons recommended by stockholders
in selecting nominees for election to the Board of Directors. Stockholders who
wish to suggest qualified candidates should write to: Secure Computing
Corporation, 2675 Long Lake Road, Roseville, Minnesota 55113, Attention:
Chairman, Nominating Committee. All recommendations should state in detail the
qualification of such persons for consideration by the Nominating Committee and
should be accompanied by an indication of the person's willingness to serve.

Director Compensation
- ---------------------

Effective May 1996, members of the Board of Directors who are not employees
of the Company and who beneficially own not more than 5% of the outstanding
shares of Secure Common Stock receive $1,000 for each meeting of the Board (or
any committee thereof) attended (a minimum of $10,000 per year); provided,
however, a meeting of the board (or any committee) that is held concurrently
with another meeting is considered to be only one meeting. In addition, on the
date of each Annual Meeting of Stockholders, each non-employee director of the
Company immediately following an Annual Meeting of Stockholders is granted, by
virtue of serving as a non-employee director of the Company, an option to
purchase 4,375 shares (subject to adjustment) of Secure Common Stock at an
exercise price equal to the fair market value of the Secure Common Stock on the
date of grant and with an expiration date ten years from the date of grant.
These stock options become fully exercisable on the date of the Annual Meeting
of Stockholders next following the grant of the option. Non-employee directors
of the Company who are elected between Annual Meetings of Stockholders of the
Company receive an option upon terms that are similar to those awarded at an
Annual Meeting, except that the number of shares covered by such option is
prorated to reflect the number of months that have expired from the date of the
prior Annual Meeting.

During 1995, the Compensation Committee of the Board of Directors granted
an option to purchase 8,750 shares of Secure Common Stock of the Company, at a
per share exercise price of $0.01, for one year of service as a director to each
of the then current outside directors of the Company.

95
<PAGE>

PRINCIPAL HOLDERS OF VOTING SECURITIES

The following table sets forth certain information regarding the beneficial
ownership of Secure Common Stock as of June 30, 1996 (unless otherwise noted
below) by each director of the Company, by each executive officer of the Company
named in the Summary Compensation Table herein, by all directors and executive
officers as a group, and by each stockholder who is known by the Company to own
beneficially more than five percent of the outstanding Secure Common Stock.

NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNERS BENEFICIAL OWNERSHIP (1) OUTSTANDING SHARES
- --------------------------------- ------------------------- ------------------
Directors and executive officers:
Kermit M. Beseke (2) 217,657 3.2%
Dean W. Nordahl (3) 6,125 *
Gene C. Leonard (4) 19,750 *

Stephen M. Puricelli (5)(6) 17,500 *
Dennis J. Shaughnessy (5)(7) 17,500 *
Ervin F. Kamm, Jr. --- *
Timothy H. Hanson (5) 17,500 *

All directors and executive officers
as a group (7 persons) (8) 296,032 4.3%

Other beneficial owners:

Grotech Capital Group (7)(9) 1,784,396 26.4%
9690 Deereco Road
Timonium, Maryland 21093

Corporate Venture Partners (6)(9) 1,465,017 21.7%
Suite 261
171 East State Street
Ithaca, New York 14850

American Express Company (10) 648,000 9.6%
American Express Tower
200 Vesey Street
New York, New York 10285
- -------------------------------
*Less than one percent

(1) Unless otherwise indicated in the footnotes to this table, the listed
beneficial owner has sole voting power and investment power with respect to
such shares of Secure Common Stock.
(2) Includes 41,875 shares of Secure Common Stock covered by options which are
exercisable within 60 days of June 30, 1996.
(3) Includes 2,500 shares of Secure Common Stock covered by options which are
exercisable within 60 days of June 30, 1996.
(4) Includes 10,250 shares of Secure Common Stock covered by options which are
exercisable within 60 days of June 30, 1996.
(5) Includes 17,500 shares of Secure Common Stock covered by options which are
exercisable within 60 days of June 30, 1996.
(6) Stephen M. Puricelli, a director of the Company, is a general partner of
Costine Associates, L.P., the Corporate General Partner of Corporate
Venture Partners. Mr. Puricelli disclaims beneficial ownership of shares
of Secure Common Stock owned by Corporate Venture Partners except for his
proportional interest therein.

96
<PAGE>

(7) Dennis J. Shaughnessy, a director of the Company, is a Managing Director of
Grotech Capital Group. Mr. Shaughnessy disclaims beneficial ownership of
shares of Secure Common Stock owned by Grotech Capital Group except for his
proportional interest therein.
(8) Includes 107,125 shares of Secure Common Stock covered by options which are
exercisable within 60 days of June 30, 1996.
(9) Based on information at December 31, 1995 contained in Form 13G filed by
the applicable stockholder with the Commission.
(10) Based on information at June 30, 1996 contained in a Form 13G filed by
the stockholder with the Commission. Dispositive power with respect to
the shares is shared by the stockholder with American Express Financial
Corporation, IDS Tower 10, Minneapolis, Minnesota 55440 and IDS Life
Capital Resource Fund, IDS Tower 10, Minneapolis, Minnesota 55440.
However, sole voting power over the shares is held by IDS Life Capital
Resource Fund.

SECTION 16(A) REPORTING

Section 16(a) of the Exchange Act requires that the Company's directors,
executive officers and persons who own more than ten percent of the outstanding
Secure Common Stock to file initial reports of ownership of Secure's Common
Stock and changes in such ownership with the Commission. To the Company's
knowledge based solely on a review of copies of forms submitted to the Company
during and with respect to 1995 and on written representations from the
Company's directors and executive officers, all required reports were filed on a
timely basis during 1995.

97
<PAGE>

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following Summary Compensation Table contains information concerning
annual and long-term compensation provided to the Chief Executive Officer and
the other two executive officers of the Company (collectively, the "1995 Named
Executive Officers") who received remuneration exceeding $100,000 for the years
ended December 31, 1995 or 1994.

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------- -------------
SECURITIES ALL OTHER
NAME AND FISCAL UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS (1) OPTIONS (#) SATION (2)
- ------------------------------- --------- -------- ----------- ------------- ----------
<S><C>
Kermit M. Beseke, 1995 $178,269 $103,502 31,250 8,505(3)
President, Chief Executive 1994 137,217 36,177 63,750 9,150(4)
Officer, Director

Dean W. Nordahl, Chief 1995 82,777 27,900 -- 4,750
Financial Officer and 1994 53,858 20,739(6) 40,625 2,811
Treasurer (5)

Gene C. Leonard, Vice 1995 93,005 28,165 3,125 5,280
President of Advanced 1994 82,269 6,454 33,500 4,391
Research

</TABLE>

- --------------------------

(1) Unless otherwise indicated, all amounts reflect compensation earned as
annual incentive bonus. Such compensation is actually paid to the
recipient in the year following the year earned.
(2) Unless otherwise indicated, all Other Compensation reported represents
contributions made under the Company's Profit Sharing and Retirement Plan.
In each of 1994 and 1995, the Company made matching contributions of $250
under the 401(k) component of the Profit Sharing and Retirement Plan to
each Named Executive Officer's Account. Such contributions are actually
made to the recipient's account in February of the following year.
(3) Represents payment by the Company of the annual premium of $1,459 for a
term life insurance policy in addition to contributions under the Company's
Profit Sharing and Retirement Plan.
(4) Represents payment by the Company of the annual premium of $1,340 for a
term life insurance policy in addition to contributions under the Company's
Profit Sharing and Retirement Plan.
(5) Effective May 1996, Mr. Nordahl assumed the position of Controller.
(6) Mr. Nordahl joined the Company on May 1, 1994. Mr. Nordahl's bonus
compensation for 1994 reflects $5,000 paid to Mr. Nordahl as a signing
bonus.

98
<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

The following table summarizes option grants made during the year ended
December 31, 1995 to the executive officers named in the Summary Compensation
Table.
<TABLE>
<CAPTION>

INDIVIDUAL GRANTS
- ----------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS AT ASSUMED ANNUAL RATES
UNDERLYING GRANTED TO EXERCISE OF STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES OR BASE FOR OPTION TERMS (1)
GRANTED IN FISCAL PRICE EXPIRATION ----------------------------
NAME (#)(2) YEAR $(/SH) DATE 5% $ 10% $
- ------------------ ----------- ----------- -------- ---------- ------ --------
<S><C>
Kermit M. Beseke 31,250 16.9% $6.84 8/22/05 $134,449 $340,718
Gene C. Leonard 3,125 1.7% 6.84 8/22/05 13,445 34,072

</TABLE>

- ------------------

(1) The potential realizable value is based on a 10-year term of each option at
the time of grant. Assumed stock price appreciation of 5% and 10% is
mandated by rules of the Commission and is not intended to forecast actual
future financial performance or possible future appreciation. The
potential realizable value is calculated by assuming that the deemed fair
value of the Secure Common Stock for financial statement presentation
purposes on the date of grant appreciates at the indicated rate for the
entire term of the option and that the option is exercised at the exercise
price and sold on the last day of its term at the appreciated price. Using
the Company's initial public offering price of $16.00, based on assumed
rates of stock appreciation of 5% and 10%, compounded annually from such
date, the Potential Realizable Value of the option grants at the end of the
option term for each of the 1995 Named Executive Officers listed above
would have been as follows: Kermit M. Beseke, $600,750 and $1,083,250
respectively; Gene C. Leonard, $60,075 and $108,325 respectively.

(2) Options granted pursuant to the Company's 1989 Incentive Stock Option Plan
(the "1989 Stock Option Plan") (which has been amended and restated as the
Secure Computing Corporation Amended and Restated 1995 Omnibus Stock Plan)
at an exercise price equal to the fair market value as determined by the
Board of Directors on the date of grant. Each option becomes exercisable
with respect to one-third of the shares of Secure Common Stock covered
thereby on each of the first through third anniversaries of the date of
grant, commencing on the first anniversary of such date. Each option has a
maximum term of 10 years, subject to earlier termination in the event of
the optionee's cessation of service with the Company. The fair market
value was approved by the Compensation Committee of the Board of Directors
based upon a blended average of the Company's earnings before adjustment
for interest and taxes.

99
<PAGE>

AGGREGATED OPTION
EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

The purpose of the following table is to report exercise of stock options
by the 1995 Named Executive Officers during 1995 and the value of their
unexercised stock options as of December 31, 1995.

VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
ON VALUE ----------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------- -------- ---------- ------------- --------------- ------------- -------------
<S><C>
Kermit M. Beseke 35,157 $53,439(2) 38,250 62,375 $ 2,110,977 $3,239,908
Dean W. Nordahl 0 0 14,875 25,750 830,780 1,440,890
Gene C. Leonard 0 0 16,000 27,750 896,000 1,554,000

</TABLE>

- -----------------

(1) Value is based on a share price of $56.00, which was the last reported sale
price for a share of Secure Common Stock on the Nasdaq National Market on
December 29, 1995, minus the exercise price.
(2) Mr. Beseke exercised an option to purchase 35,157 shares of Secure Common
Stock on January 13, 1995. The exercise price of such option was $.08 per
share, the fair market value of a share of Secure Common Stock on the date
of grant, as determined by the Board of Directors. Value Realized is based
on the attributed fair market value of a share of Secure Common Stock on
the date of exercise, which was $1.60 on January 13, 1995, as previously
determined by the Board of Directors.

EMPLOYMENT CONTRACTS; SEVERANCE, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

Employment Agreements
- ---------------------

The Company has employment agreements with each of the 1995 Named Executive
Officers, Kermit M. Beseke, Dean W. Nordahl and Gene C. Leonard.

KERMIT M. BESEKE. Mr. Beseke's employment agreement provides that Mr.
Beseke will serve as the Company's Chief Executive Officer and remains in effect
until December 31, 1996, unless terminated by Mr. Beseke upon 30-days' written
notice, subject to the Company's right to terminate the agreement immediately
for cause or Mr. Beseke's death. Beginning December 31, 1996, the agreement
shall renew for successive one-year terms unless either party gives written
notice to the other of non-renewal within 30 days prior to scheduled renewal.
The Company also may terminate Mr. Beseke at any time for any other reason (or
no reason), subject to the obligation of the Company to pay Mr. Beseke an amount
equal to 12-months' base salary. Mr. Beseke's annual base salary is $180,000,
subject to review by the Compensation Committee. Mr. Beseke also is eligible to
receive annual cash bonuses and stock option grants and other awards under the
Amended and Restated 1995 Omnibus Stock Plan as determined by and at the
discretion of the Compensation Committee. Mr. Beseke also is entitled to all
rights and benefits for which Mr. Beseke is eligible under any deferred bonus,
pension, group insurance, profit sharing or other Company benefits which may be
in force from time to time. Mr. Beseke's spouse is the beneficiary of a term
life insurance policy, on the life of Mr. Beseke, for which the Company pays the
annual premium. The annual premium of such policy in 1995 was $1,459.

During the term of his employment, Mr. Beseke is prohibited from competing
with the Company. Mr. Beseke also is prohibited from soliciting employees or
customers of the Company for Mr. Beseke's own account or the account of a third
party during the term of Mr. Beseke's employment and for 12 months after Mr.
Beseke's termination.

100
<PAGE>

DEAN W. NORDAHL. Mr. Nordahl's employment agreement remains in effect
until October 1998, unless terminated by Mr. Nordahl upon 30-days' written
notice, subject to the Company's right to terminate the agreement immediately
for cause. The Company also may terminate Mr. Nordahl at any time for any other
reason (or no reason), subject to the obligation of the Company to pay Mr.
Nordahl an amount equal to six-months' base salary. Mr. Nordahl's annual base
salary is subject to annual review by the Company. Mr. Nordahl's annual base
salary in 1996 is $90,000. Mr. Nordahl also is eligible to receive cash bonuses
and stock option grants and other awards under the Omnibus Stock Plan as
determined by and at the discretion of the Compensation Committee. Mr. Nordahl
also is entitled to all rights and benefits for which Mr. Nordahl is eligible
under any deferred bonus, pension, group insurance, profit-sharing or other
Company benefits which may be in force from time to time.

Upon termination of Mr. Nordahl's employment, the Company has the option to
retain Mr. Nordahl as a consultant. If the Company exercises such option, Mr.
Nordahl shall hold himself available to render consulting services in his area
of expertise for up to one year for not more than 34 hours per month, for which
Mr. Nordahl will receive 50% of his applicable monthly base salary when
terminated. Such consulting arrangement may be terminated by the Company upon
90-days' written notice to Mr. Nordahl. If the Company terminates the
consulting arrangement in such manner, the Company shall continue to pay Mr.
Nordahl his consulting fee for such 90-day period but Mr. Nordahl is not
obligated to render any services to the Company during such period. Thereafter,
the Company shall have no further obligation to pay Mr. Nordahl consulting fees.

During the term of his employment, Mr. Nordahl is prohibited from competing
with the Company. Following the termination of Mr. Nordahl's employment, if the
Company exercises its option to have Mr. Nordahl render consulting services, Mr.
Nordahl, for the term of such consulting arrangement, will be prohibited from
competing with the Company.

Effective May 1996, Mr. Nordahl assumed the position of Controller.

GENE C. LEONARD. Mr. Leonard's employment agreement remains in effect
until October 1998, unless terminated by Mr. Leonard upon 30-days' written
notice, subject to the Company's right to terminate the agreement immediately
for cause. The Company also may terminate Mr. Leonard at any time for any other
reason (or no reason), subject to the obligation of the Company to pay Mr.
Leonard an amount equal to 12-months' base salary. Mr. Leonard's annual base
salary is subject to annual review by the Company. Mr. Leonard's annual base
salary in 1996 is $100,592. Mr. Leonard also is eligible to receive annual cash
bonuses and stock option grants and other awards under the Amended and Restated
1995 Omnibus Stock Plan as determined by and at the discretion of the
Compensation Committee. Mr. Leonard also is entitled to all rights and benefits
for which Mr. Leonard is eligible under any deferred bonus, pension, group
insurance, profit-sharing or other Company benefits which may be in force from
time to time.

Upon termination of Mr. Leonard's employment, the Company has the option to
retain Mr. Leonard as a consultant. If the Company exercises such option, Mr.
Leonard shall hold himself available to render consulting services in his area
of expertise for up to one year for not more than 34 hours per month, for which
Mr. Leonard will receive 50% of his applicable monthly base salary when
terminated. Such consulting arrangement may be terminated by the Company upon
90-days' written notice to Mr. Leonard. If the Company terminates the
consulting arrangement in such manner, the Company shall continue to pay Mr.
Leonard his consulting fee for such 90-day period but Mr. Leonard is not
obligated to render any services to the Company during such period. Thereafter,
the Company shall have no further obligation to pay Mr. Leonard consulting fees.

During the term of his employment, Mr. Leonard is prohibited from competing
with the Company. Following the termination of Mr. Leonard's employment, if the
Company exercises its option to have Mr. Leonard render consulting services, Mr.
Leonard, for the term of such consulting arrangement, will be prohibited from
competing with the Company.

101
<PAGE>

Employment Agreements Following the Border Acquisition
- ------------------------------------------------------

The Company will have separate employment agreements with each of Steven
Lamb, Glenn G. Mackintosh and Donald Whitbeck (each a "Border Executive")
following consummation of the Border Acquisition. Mr. Mackintosh will serve as
the Vice President and General Manager--Firewall Division, Mr. Whitbeck will
serve as the Vice President of Marketing and Sales and Mr. Lamb will serve as an
employee for a transitional period that will end on or before December 31, 1996.

Unless previously terminated, Mr. Lamb will be terminated by the Company on
December 31, 1996. Upon termination, Mr. Lamb will be entitled to receive the
balance of his base salary for the remainder of the two-year period ending on
the second anniversary of the Border Effective Date.

The employment agreements for Messrs. Mackintosh and Whitbeck will remain
in effect for three years, unless terminated by such Border Executive upon
written notice, subject to the Company's right to terminate the agreement
immediately for cause or due to the death of such Border Executive.

The Company also may terminate the Border Executive for any other reason
(or no reason), at any time in the case of Messrs. Mackintosh and Whitbeck, and
on or after October 31, 1996 in the case of Mr. Lamb, subject to the obligation
of the Company to pay such Border Executive an amount equal to a certain portion
of his base salary.

The annual base salary of each Border Executive shall be as follows: Mr.
Lamb's annual base salary will be $150,000; Mr. Mackintosh's base salary will be
$125,000; and Mr. Whitbeck's annual base salary will be $100,000, in each case,
subject to review by the Board of Directors. Each Border Executive also will be
entitled to all rights and benefits for which such Border Executive will be
eligible under any deferred bonus, pension, group insurance, profit-sharing or
other Company benefits which may be in force from time to time.

Messrs. Mackintosh and Whitbeck were each awarded a non-statutory option to
purchase 25,000 shares of Secure Common Stock with an exercise price of $27.00
per share (the fair market value on the date of grant) under the Amended and
Restated 1995 Omnibus Stock Plan. Mr. Mackintosh was awarded an additional
non-statutory option to purchase 15,000 shares of Secure Common Stock with an
exercise price of $27.00 per share (a $2.00 per share discount from the fair
market value on the date of grant) under the Amended and Restated 1995 Omnibus
Stock Plan. Such options are subject to the closing of the Border Acquisition
and vest over three years from the Border Effective Date. Messrs. Mackintosh
and Whitbeck will also be eligible to receive annual cash bonuses and additional
stock option grants and other awards under the Amended and Restated 1995 Omnibus
Stock Plan as determined by and at the discretion of the Board of Directors.

Each Border Executive will be prohibited from competing with the Company
and from soliciting employees or customers of the Company for such Executive's
own account or the account of a third party during the 12 month period after
such Border Executive's termination.

Employment Agreements Following the Enigma Acquisition
- ------------------------------------------------------

The Company will have separate employment agreements with each of Gerald L.
Hilton, John R. Muir, William H. Bosen, Robert J. Bosen and Thomas J. Brady
(each an "Enigma Executive") following consummation of the Merger.

Mr. Hilton will serve as an employee for a transitional period that will
end on or before September 30, 1996. Unless previously terminated, Mr. Hilton
will be terminated by the Company on September 30, 1996. Upon termination, Mr.
Hilton will be entitled to receive the balance of his base salary for the
remainder of the two-year period ending on the second anniversary of the Enigma
Effective Time.

Each of the employment agreements for Messrs. William Bosen, Robert Bosen
and Brady will provide that such Enigma Executive will serve the Company in an
executive capacity, initially in the same office that he

102
<PAGE>

occupied with Enigma immediately prior to the Merger. Mr. Muir will serve as
Vice President and General Manager --Enigma Division. Each agreement will
remain in effect for three years, unless terminated by such Enigma Executive
upon written notice, subject to the Company's right to terminate such agreement
immediately for cause or due to the death of such Enigma Executive.

The Company also may terminate each Enigma Executive at any time for any
other reason (or no reason), subject to the obligation of the Company to pay
such Enigma Executive an amount equal to a certain portion of his base salary.

The annual base salary of each Enigma Executive shall be as follows: Mr.
Hilton's annual base salary will be $175,000; Mr. Muir's annual base salary will
be $130,000; Mr. William Bosen's annual base salary will be $100,000; Mr. Robert
Bosen's annual base salary will be $100,000; and Mr. Brady's annual base salary
will be $106,000, in each case, subject to review by the Board of Directors.
Each Enigma Executive also will be entitled to all rights and benefits for which
such Enigma Executive will be eligible under any deferred bonus, pension, group
insurance, profit sharing or other Company benefits which may be in force from
time to time.

Messrs. Muir, William Bosen, Robert Bosen and Brady were each awarded a
non-statutory option to purchase 15,000 shares of Secure Common Stock, in each
case with an exercise price of $25.00 per share (the fair market value on the
date of grant) under the Amended and Restated 1995 Omnibus Stock Plan. Such
options are subject to the closing of the Enigma Acquisition and vest over
three years from the Enigma Effective Time.

Mr. Muir was awarded an additional non-statutory option to purchase 25,000
shares of Secure Common Stock at $15.00 per share (the fair market value on the
date of grant) under the Amended and Restated 1995 Omnibus Stock Plan. Messrs.
William and Robert Bosen were each awarded an additional non-statutory option to
purchase 10,000 shares of Secure Common Stock with an exercise price of $26.25
per share (the fair market value on the date of grant) under the Amended and
Restated 1995 Omnibus Stock Plan. Messrs. Muir, William Bosen, Robert Bosen and
Brady will also be eligible to receive annual cash bonuses and additional stock
option grants and other awards under the Amended and Restated 1995 Omnibus Stock
Plan as determined by and at the discretion of the Board of Directors.

Each Enigma Executive will be prohibited from competing with the Company
and from soliciting employees or customers of the Company for such Executive's
own account or the account of a third party during the 12 month period after
such Executive's termination. During this period, the terminated Enigma
Executive will receive an amount equal to 25% of his then-current base salary
and provide consulting services to the Company upon such terms as shall be
mutually agreed by the Company and such Enigma Executive, not to exceed a
maximum of 20 hours per month.

CERTAIN TRANSACTIONS

Stephen M. Puricelli, a director of the Company, is the Chairman of the
Compensation Committee of the Board of Directors. Mr. Puricelli also is a
general partner of Costine Associates, L.P., which is the General Partner of
Corporate Venture Partners, L.P. ("CVP"), which owns approximately 22% of the
capital stock of the Company. In 1995, the Company issued 416,875 shares of
Series A Convertible Preferred Stock of the Company to CVP at an aggregate price
of $933,800 pursuant to the exercise of warrants held by CVP. Such shares of
Preferred Stock converted to Secure Common Stock at the closing of the Company's
initial public offering in November 1995. Dennis J. Shaughnessy, a director of
the Company, is a member of the Compensation Committee of the Board of
Directors. Mr. Shaughnessy also is a Managing Director of Grotech Capital Group
("Grotech"), which owns approximately 27% of the capital stock of the Company.
In 1995, the Company issued 446,731 shares of Series A Convertible Preferred
Stock of the Company to Grotech at an aggregate purchase price of $1,000,678
pursuant to the exercise of warrants held by Grotech. Such shares of Preferred
Stock converted to Secure Common Stock at the closing of the Company's initial
public offering in November 1995.

Pursuant to a Registration Rights Agreement between the Company, Grotech
and CVP dated July 14, 1989, as amended by an amendment dated December 13, 1989,
the shares of Secure Common Stock issued to CVP

103
<PAGE>
and Grotech upon the conversion of the Preferred Stock issued pursuant to the
exercise of the warrants are subject to certain registration rights. Pursuant
to such registration rights, Grotech and CVP and certain permitted transferees
have rights to demand registration under the federal securities laws of the
shares of Secure Common Stock. In addition, in the event the Company proposes
to register additional securities under the federal securities laws, Grotech and
CVP (or their permitted transferees) will have rights, subject to certain
exceptions and limitations, to have the shares of Secure Common Stock included
in such registration statement. The Company has agreed that, in the event of
any registration of securities owned by Grotech and CVP (or their permitted
transferees) in accordance with the provisions thereof, it will indemnify such
persons, and certain related persons, against liabilities incurred in connection
with such registration, including liabilities arising under the federal
securities laws. The registration rights are subject to certain limitations
intended to prevent undue interference with the Company's ability to distribute
securities.

The Company conducts business with Midwest Systems, Inc. ("Midwest"), which
is a distributor of certain of the Company's products and is a computer hardware
vendor to the Company. In 1995, the Company received revenue of $420,000 from
sales to Midwest and purchased $1,120,000 of goods from Midwest. In the first
quarter of 1996, the Company received revenue of $326,000 from sales to Midwest
and purchased $47,000 of goods from Midwest. The spouse of Kermit Beseke,
President, Chief Executive Officer and a director of the Company, is a Vice
President of Midwest.

DESCRIPTION OF CAPITAL STOCK

General
- -------

The Company's Certificate of Incorporation authorizes the issuance of up to
25,000,000 shares of Common Stock, $.01 par value and 2,000,000 shares of
preferred stock, $.01 par value, the rights and preferences of which may be
established from time to time by the Company's Board of Directors. As of July
26, 1996, 6,772,158 shares of Secure Common Stock were issued and outstanding
and held by 2,868 beneficial stockholders, and no shares of preferred stock were
issued and outstanding.

Common Stock
- ------------

Holders of Secure Common Stock are entitled to one vote per share on all
matters submitted to a vote of stockholders. There are no cumulative voting
rights for the election of directors, which means that the holders of more than
50% of such outstanding shares voting for the election of directors can elect
all of the directors of the Company standing for election. Subject to the
rights of any outstanding class or series of preferred stock created by the
authority of the Board of Directors, holders of Secure Common Stock are entitled
to receive dividends as and when declared by the Board of Directors out of funds
legally available therefor. Subject to the rights of any outstanding class or
series of preferred stock created by the authority of the Board of Directors, in
the event of the liquidation, dissolution or winding up of the Company, the
holder of each share of Secure Common Stock is entitled to share equally in the
balance of any of the Company's assets available for distribution to
stockholders. Outstanding shares of Secure Common Stock do not have
subscription or conversion rights and there are no redemption or sinking fund
provisions applicable thereto. Holders of Secure Common Stock have no
preemptive rights to purchase pro rata portions of new issues of Secure Common
Stock or preferred stock of the Company.

Preferred Stock
- ---------------

Pursuant to the Company's Certificate of Incorporation, the Board of
Directors has the authority, without further action by the stockholders, to
issue up to 2,000,000 shares of preferred stock in one or more classes or series
and to fix the designations and the voting, powers, preferences, and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof, including dividend rights, redemption and
liquidation preferences, purchase, retirement or sinking fund for the purchase,
retirement or redemption of such shares, conversion rights, voting rights, any
or all of which may be greater than the rights of the Secure Common Stock. The
Board of Directors, without stockholder approval, can issue preferred stock with
voting, conversion or other rights that could adversely affect the voting power
and other rights of the holders of Secure Common Stock.

104

<PAGE>
Preferred stock could thus be issued quickly with terms calculated to delay or
prevent a change in control of the Company or make removal of management more
difficult. Additionally, the issuance of preferred stock may have the effect of
decreasing the market price of the Secure Common Stock, and may adversely affect
the voting and other rights of the holders of Secure Common Stock. Except for
the Special Voting Share to be issued in connection with the Border Acquisition,
the Company has no present plans to issue any shares of preferred stock. See
"The Border Acquisition -- Description of New Border Exchangeable Shares".

Antitakeover Effects of Delaware Law and Certain Charter and By-Law Provisions
- ------------------------------------------------------------------------------

The Company is subject to Section 203 of the DGCL, which, subject to
certain exceptions, prohibits a publicly held Delaware corporation from engaging
in a "business combination" with an "interested stockholder" for a period of
three years following the date that such stockholder became an interested
stockholder, unless: (i) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder; (ii) upon
consummation of the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (x) by persons who are directors and also
officers and (y) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (iii) on or subsequent
to such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock that is not owned by the interested stockholder.

Section 203 defines "business combination" to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10% or
more of the assets of the corporation involving the interested stockholder;
(iii) subject to certain exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the corporation to the
interested stockholder; (iv) any transaction involving the corporation that has
the effect of increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested stockholder; and
(v) the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or through
the corporation. In general, Section 203 defines an interested stockholder as
an entity or person beneficially owning 15% or more of the outstanding voting
stock of the corporation or any entity or person affiliated with or controlling
or controlled by such entity or person.

The Company's Certificate of Incorporation provides that all stockholder
action must be effected at a duly called meeting of stockholders and not by a
consent in writing, and that, beginning with the 1996 Annual Meeting of
Stockholders, the directors of the Company will be divided into three classes
and elected for staggered three-year terms. The Certificate of Incorporation
also provides that directors may be removed only for cause. The staggered terms
for directors implemented at the 1996 Annual Meeting of Stockholders and the
provision allowing for the removal of directors only for cause may have the
effect of lengthening the time required for a person to acquire control of the
Company. This could deprive the Company's stockholders of opportunities to
realize a premium for their Secure Common Stock and could make removal of
incumbent directors more difficult. At the same time, these provisions may have
the effect of inducing any persons seeking control of the Company to negotiate
terms acceptable to the Board of Directors.

The DGCL provides generally that the affirmative vote of a majority of the
shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or by-laws, unless a corporation's certificate of
incorporation or by-laws, as the case may be, requires a greater percentage.
The Company's Certificate of Incorporation requires the affirmative vote of the
holders of at least 75% of the outstanding voting stock of the Company to amend
or repeal certain of the provisions of the Certificate of Incorporation. A 75%
vote also is required to amended or repeal the Company's By-Laws. The By-Laws
may also be amended or repealed by a majority vote of the Board of Directors.
Such stockholder vote would be in addition to any separate class vote that might
in the future be required pursuant to the terms of any preferred stock that
might be outstanding at the time any such amendments are submitted to
stockholders.

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<PAGE>

The Company's By-Laws provide that special meetings of stockholders may be
called only by the chief executive officer of the Company and upon the written
request of a majority of the Board of Directors or, in certain circumstances, by
a committee of the Board of Directors. Also, the Board of Directors may call
such special meetings of stockholders in certain circumstances. These
provisions could have the effect of delaying, until the next annual
stockholders' meeting, stockholder actions that are favored by the holders of a
majority of the outstanding voting securities of the Company. These provisions
may also discourage another person or entity from making a tender offer for
Secure Common Stock, because such person or entity, even if it acquired a
majority of the outstanding voting securities of the Company, would be able to
take action as a stockholder (such as electing new directors or approving a
merger) only at a duly called stockholders' meeting.

The foregoing provisions could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from acquiring,
control of the Company.

The Certificate of Incorporation contains certain provisions permitted
under the DGCL relating to the liability of directors. These provisions
eliminate a director's liability for monetary damages for a breach of fiduciary
duty, except in certain circumstances involving certain wrongful acts, such as
the breach of a director's duty of loyalty or acts or omissions not in good
faith that involve intentional misconduct, or a knowing violation of law, any
unlawful acts under Section 174 of the DGCL or any transaction from which the
director derived an improper personal benefit. The By-Laws also contain
provisions indemnifying the directors and officers of the Company to the fullest
extent permitted by the DGCL. The Company believes that these provisions will
assist the Company in attracting and retaining qualified individuals to serve as
directors and officers.

Registration Rights
- -------------------

The holders of 3,552,635 shares of Secure Common Stock are entitled to
certain rights with respect to the registration of such shares under the
Securities Act. Under the terms of the agreements between the Company and the
holders of such registrable securities, if the Company proposes to register any
of its securities under the Securities Act, either for its own account or for
the account of other security holders exercising registration rights, such
holders are entitled to notice of such registration and are entitled to include
shares of such Secure Common Stock therein at the Company's expense.
Furthermore, holders may require the Company to file additional registration
statements on Form S-3 at the Company's expense. These rights are subject to
certain conditions and limitations, among them the right of the underwriters of
an offering to limit the number of shares included in such registration in
certain circumstances. In addition to the foregoing registration rights, Border
Shareholders and Enigma Shareholders shall be entitled to certain rights with
respect to the shares of Secure Common Stock issued or issuable pursuant to the
Acquisition Agreements. See "The Border Acquisition Agreement and Related
Agreements -- Certain Agreements of Secure" and "The Enigma Acquisition
Agreement and Related Agreements -- Certain Agreements of Secure".

Transfer Agent and Registrar
- ----------------------------

The Transfer Agent and Registrar for the Secure Common Stock of the Company
is Norwest Bank Minnesota, N.A.

LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings.

106

<PAGE>

INFORMATION CONCERNING BORDER

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Overview
- --------

During 1994, Border focused on the various stages of product development
and beta testing and initial sales of its Janus product. At December 31, 1994,
Border had minimal revenues of $188,000 and four full-time employees. In 1995,
Border focused on the development of its sales strategy, building of its
infrastructure, marketing activities and the development of its customer base.
Commercial shipment of BorderWare commenced in April 1995.

During 1995 and continuing into the current year, Border experienced
significant growth in both revenue and employees. To accommodate this
accelerated growth, Border invested heavily in infrastructure development during
1995, in the formation of a management team and in staffing of all key
positions. All functional areas of Border added key employees in the second
half of 1995 or in the first quarter of 1996. Key management hired included a
chief financial officer and a vice president of marketing and sales.

In 1995, Border realized significant revenue growth as a result of the
release of its current version of the BorderWare Firewall Server and significant
investment in developing its distribution channels.

Border has committed significant research and development resources to
BorderWare and intends to continue to increase its research and development
expenses, as well as its sales and marketing expenses. As a consequence,
operating results for a given period could be disproportionately affected by any
shortfall in expected revenue. Although Border has experienced revenue growth
in recent periods, such growth rates may not be sustainable and are not
necessarily indicative of future operating results. Given Border's short
operating history and recent revenue growth, Border believes that period to
period comparisons of its financial results are not necessarily meaningful and
should not be relied upon as an indication of future performance.

107

<PAGE>

Results of Operations
- ---------------------

The following table presents for the periods indicated, selected results of
operations of Border expressed as a percentage of revenue:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
-----------------------------------------------------------------------
1994 1995 1995 1996
- -------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
Revenue 100.0% 100.0% 100.0% 100.0%
Cost of sales 6.5 10.3 5.4 11.6
- -------------------------------------------------------------------------------------------------------------------------
Gross profit 93.5 89.7 94.6 88.4

Operating expenses
Sales and marketing 42.4 48.1 40.7 47.6
Research and development 44.6 17.9 21.9 9.3
General and administrative 12.9 21.6 15.1 14.4
- -------------------------------------------------------------------------------------------------------------------------
Total operating expense 99.9 87.6 77.7 71.3
- -------------------------------------------------------------------------------------------------------------------------

Operating income (loss) (6.4) 2.1 16.9 17.1
Other income -- -- -- 1.9
Other expense
- -------------------------------------------------------------------------------------------------------------------------
Income before income taxes (6.4) 2.1 16.9 19.0
Income taxes -- 0.6 - 7.2
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) (6.4)% 1.5% 16.9% 11.8%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------

</TABLE>

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995

REVENUE. Border's revenue increased by 742% to $2,341,000 for the first
quarter of 1996, up from $278,000 from the same period of 1995. The increased
revenues resulted from the global development of the distributor and reseller
network for the Borderware Firewall product family and from increased marketing,
advertising and promotion.

GROSS PROFIT. Cost of Sales is comprised of media materials, product
manuals, labor associated with the distribution of Border's products, and
royalty payments for the right to include certain third party software in
Border's products. Gross Profit as a percentage of revenue declined from 94.6%
in the first quarter of 1995 to 88.4% in the same period of 1996 due to an
increase in third party software license fees.

SALES AND MARKETING. Sales and Marketing expenses increased from $113,000
in the first quarter of 1995 to $1,115,000 in the same period of 1996. As a
percentage of revenue, expenses increased from 40.7% in 1995 to 47.6% in 1996.
The increase is due to an increase in sales and marketing staff, as well as due
to the increased advertising expenditures to promote the Borderware Firewall
product family.

RESEARCH AND DEVELOPMENT. Research and Development expenses increased by
256% from $61,000 in the first quarter of 1995 to $217,000 in the same period of
1996. Expenses declined as a percentage of revenue from 21.9% in 1995 to 9.3%
in 1996. The expense increase was primarily due to the increase in research and
development staff.

GENERAL AND ADMINISTRATIVE General and administrative expenses increased
from $42,000 in the first quarter of 1995, to $338,000 in the same period of
1996. As a percentage of revenue, expenses decreased from 15.1% in 1995 to
14.4% in 1996. The increase in 1996 was due to an increase in management and
administrative
108
<PAGE>

staffing levels required to support increased business levels, as well as
increased legal and consulting fees for on-going operations.

INTEREST INCOME. Interest earned in the first quarter of 1996 reflects
interest earned on cash and cash equivalents generated in two private financing
rounds completed in the quarter.

INCOME TAX. Border recognized a provision for income taxes in the first
quarter. This provision considers the results of its European operations in the
U.K. and loss carry forwards from previous years.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

REVENUE. Border's revenue is comprised of sales of software licenses and
support services. Revenue increased from $139,000 in 1994 to $3,317,000 in
1995. The increase in 1995 resulted from the development of a worldwide network
of distributors and resellers for the BorderWare Firewall product family, and
increased advertising and promotion.

COST OF SALES. Cost of Sales is comprised of media, product manuals, labor
associated with the distribution of Border's products, and royalty payments for
the right to include certain third party software in the company's products.
Cost of Sales increased as a percentage of sales from 6.5% in 1994 to 10.3% in
1995 due to the inclusion of third party software requiring the payment of
royalties.

SALES AND MARKETING. Sales and marketing expenses include salaries of
sales and marketing personnel, sales commissions, customer service, advertising
and other selling related expenses. Sales and Marketing expenses increased from
$59,000 in 1994 to $1,596,000 in 1995 and increased as a percentage of revenue
from 42.4% in 1994 to 48.1% in 1995. Increases are related to growth in Sales
and Marketing personnel and increased advertising expenditures during the year
to promote the BorderWare Firewall product family. Border will continue with
efforts to grow revenue through increasing personnel to support channels of
distribution, opening international sales offices, and increased advertising and
promotion expenses.

RESEARCH AND DEVELOPMENT. Research and development expenses include
salaries of personnel, and equipment and facility costs required to conduct the
development of new products. However, the Border anticipates expenses to
decrease as a percentage of revenue compared to 1995. Expenses increased from
$62,000 in 1994 to $593,000 in 1995. The primary driver of expense growth is
the increase in research and development personnel. As a percentage of revenue,
research and development decreased from 44.6% in 1994 to 17.9% in 1995.

GENERAL AND ADMINISTRATIVE. General and administration expenses include
salaries of general management, administrative personnel and related overhead
costs. General and administrative expenses increased in 1995 to $717,000 from
$18,000 in 1994 with an investment in management and administrative staff
required to support increased business levels as well as professional fees for
legal and audit.

INCOME TAXES. Income tax expenses of $21,000 in 1995 are related to the
operations of the joint venture partner in the U.K. Canadian operations were
able to apply tax loss carry forwards to earnings to minimize tax expenses.

Liquidity and Capital Resources
- -------------------------------

Border's cash and cash equivalents increased by approximately $9.5 million
from December 31, 1995 to March 31, 1996. The increase resulted from the
proceeds of private financing rounds completed in the first quarter. Border
anticipates using available cash to fund growth in operations and invest in
capital equipment. In the first quarter of 1996, Border used $517,000 of cash
in operations. In 1995, Border generated $376,000 of cash from operations,
compared to the use of $77,000 of cash in 1994.

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<PAGE>

Capital additions in the first quarter of 1996 totaled $281,000 and were
primarily made up of computer equipment, office furniture and leasehold
improvements. In 1995, cash totaling $269,000 was used in investing and
financing activities. Cash used in investing activities purchased equipment,
primarily computers and technology equipment for use by employees. The number
of employees has increased significantly from two at the end of 1994 to 40 at
the close of 1995. Border also invested in a joint venture in the United
Kingdom in 1995 to further the distribution of its products in Europe. Cash was
also used to pay down long-term debts incurred in 1994.

At its current level of operation, Border believes that its existing cash
balances are sufficient to meet current working capital and capital expenditure
requirements through at least the next 12 months.

BUSINESS

Overview
- --------

Border develops, produces, markets and licenses network security products.
Border's current product, the BorderWare Firewall Server, also known as
BorderWare, provides enterprise-wide security for organizational networks.
BorderWare enables organizational networks to extend their network boundaries.
The BorderWare Firewall Server protects networks from attacks and provides the
necessary services to enable an organization to establish a presence on the
Internet. BorderWare's flexibility allows it to fit into an organization's
communications infrastructure while maintaining complete transparency to
protected internal users. BorderWare's simplicity of integration and ease of
configuration have allowed Border to develop substantial market penetration in
the rapidly growing firewall market. In a February, 1996 report, International
Data Corporation ("IDC"), a leading independent computer research organization,
ranked Border as the number two vendor of firewall software worldwide in terms
of units sold during 1995. In May, 1996, NETWORK WORLD recommended the
BorderWare Firewall Server as one of the three leading products that should be
considered when purchasing a firewall.

BorderWare's architecture is secure from the ground up. BorderWare not
only provides internal users with transparent access to external services such
as World Wide Web ("WWW"), File Transfer Protocol ("FTP") and Telnet, but also
incorporates secure services such as Domain Name System, a WWW server and an FTP
server directly on the firewall. This allows outsiders access to public data on
the firewall, while denying them access to the protected network. Borderware's
embedded authentication server allows authorized external users to access the
internal network. Border's Secure Server Net provides scalability and
flexibility using a separate secure network for organizations which need to
deploy multi-platform commerce servers and specialized database applications
which have not been built with full security. On the Secure Server Net, these
specialized third-party servers are protected by the firewall, with BorderWare
granting only limited, well-defined access to these services.

Border's marketing strategy is to focus on the entry level to mid-range
price sector of the network security market through a high volume two-tiered
international sales network of distributors and value-added resellers. Border
has relationships with 21 international distributors including Digital Equipment
Corporation, Nippon Telephone and Telegraph, and EMJ Data Systems Ltd.
delivering approximately 700 reselling locations in over 30 countries. The
simplicity of installation and use make BorderWare well suited to a multi-level
distribution strategy.

Technology
- ----------

BorderWare's primary level of security resides in its foundation which is
built from the base up starting with a "hardened kernel" as the core of its
operating system. BorderWare provides enhanced security by re-engineering and
incorporating the operating system, rather than simply being layered on top of a
standard operating system. The Border solution combines this secure foundation
with packet filtering, gateway proxies, secure application servers and
encryption, to provide the highest levels of security possible. Each subsequent
layer of functionality is then secured and integrated into the system.

110

<PAGE>

SECURITY. Border has taken a new approach to network security by adopting
an entire architecture approach to the design of its firewall products, starting
with a "hardened kernel" as the core of its operating system. Standard
operating systems are inherently insecure. Rather than attempting to wrap a
layer or layers of security around an existing operating system, Border has
secured its operating system in order to create a solid foundation for an all
encompassing security solution. The Border solution combines this secure
foundation with packet filtering, gateway proxies, secure application servers,
and encryption to provide the highest levels of security possible. Each
subsequent layer of functionality is then secured and integrated into the
system, which allows BorderWare to monitor, filter, authenticate and control
network and incoming traffic.

Border was the first firewall vendor to incorporate secured application
servers, such as WWW and email, directly into the firewall as a commercial
product, fully integrating them into the core security system. These servers
run in independent isolated environments in the firewall. In the event that a
server or application is compromised, the rest of the firewall's servers and
applications are unaffected.

Border's Secure Server Net (SSN) feature provides a separate secure network
as an extension of the firewall to house third party network servers such as an
interactive database or other information server. Instead of placing these
publicly accessible services on the external network where they would be subject
to attack, or on the protected network which compromises internal security, the
SSN provides a third network that is protected by the firewall for the safe
deployment of these services. Due to the protected nature of the SSN, if one of
these third party servers is penetrated, the internal network remains
uncompromised.

Border's embedded authentication server provides strong authentication for
authorizing access across the firewall. Basic password level security relies on
re-usable passwords which may be discovered and exploited by unauthorized users.
One-time password technology uses passwords that are never repeated, often
generated by a hardware device, which are verified by authentication servers to
validate access. Since Border incorporates an embedded authentication server
directly into its product, the customer need not purchase a separate third party
authentication server.

The BorderWare Firewall Server provides comprehensive audit, logging and
report generation tools to enable effective management reporting of all access
attempts. Special security alarms and alert notifications bring unauthorized
access attempts to the immediate attention of the administrator.

Border tests the integrity of its network security by contracting with
organizations skilled in challenging security elements of networks, hardware and
applications. To date, there have been no breaches of Border's security products
in respect of any such tests.

TRANSPARENCY. BorderWare provides unobtrusive security. It can be
seamlessly integrated into new or existing networks without interfering with
legitimate corporate network services and business requirements. BorderWare
does not alter the work behavior of internal users nor does it require
modification to existing or new software in use on the protected network.

FLEXIBILITY AND COMPLETENESS. Border's firewall solution combines a
"hardened" operating system, packet filtering, gateway proxies, secure
application servers (such as WWW, FTP and email), encryption and an embedded
authentication server, all integrated into the security based foundation.
BorderWare also includes additional optional servers such as a POP mailbox
server which manages internal email. Additionally, the SSN provides a separate
secure network for multi-platform application servers, thereby providing
flexibility and scalability to its users. Third party servers deployed on the
SSN can facilitate load sharing, allow public access to proprietary servers, and
allow secured remote access.

The Borderware Firewall Server
- ------------------------------

The BorderWare Firewall Server is one of the best selling firewall security
products in the market, providing comprehensive, enterprise-wide security for
organizational networks. In a February, 1996 report, IDC ranked Border as the
number two vendor of firewall software worldwide in terms of units sold during
1995. In

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<PAGE>

May, 1996, NETWORK WORLD recommended the BorderWare Firewall Server as one of
the three leading products that should be considered when purchasing a firewall.
Border is committed to a security first', enterprise wide, multi-platform
solution.

The BorderWare Firewall Server is a complete "plug-and-play" solution that
protects networks from attacks and provides the necessary services to enable an
organization to establish a presence on the Internet. BorderWare's primary
level of security resides in its foundation which is built from the base up
starting with a "hardened kernel" as the core of its operating system. Into
this secure foundation, Border integrates packet filtering, gateway proxies,
secure application servers (such as WWW, FTP and email), encryption and an
embedded authentication server, to construct a security architecture.

The following table sets forth information regarding certain of the Border
product features:

ENVIRONMENT DESCRIPTION FEATURES
- ----------- ----------- --------
<S> <C> <C>
Internet Protects internal networks and Firewall transparent to internal
public access servers from users
unauthorized external access Hides internal address structure
Strong authentication restricting
access to trusted networks
Embedded secure application
servers
Embedded optional public access
servers
SSN network for additional third
party servers

LANs, WANs and intranets Protects internal departments from Facilitates adherence to company
access by unauthorized internal policies as only authorized
users employees have access to critical
information
Covers wide variety of platforms
and communication links
Embedded optional internal servers

Enterprise Security Management Provides centralized configuration, Ease of implementation
monitoring, administration and Ease of administration
management capabilities Centralized management
Comprehensive audit, logging and
report generation
Alarm notification

Service and support Complete support for BorderWare Centralized high level technical
applications support
Updates available via FTP
Local market service

</TABLE>

Border's embedded authentication server provides strong authentication for
authorizing access across the firewall so that the customer need not purchase a
separate third party authentication server. To further secure against server
attacks, Border has implemented a Secure Server Net (SSN) which provides a
separate secure network for custom networking servers. Instead of placing
publicly accessible servers on the external network where they are open to
attack, or on the internal network where security is compromised, the SSN
provides a third network that is protected by the firewall. This allows secure
deployment of arbitrary servers to the Internet and also provides the ability to
distribute load by replacing the optional servers on the firewall.

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<PAGE>

Border provides software updates across the Internet. The user interface
on the BorderWare Firewall Server provides customers with a simple interface to
apply updates to the system which are available via the Internet using FTP.

BorderWare Version 4.0, which Border expects to commence shipping by the
end of August 1996, will further increase the range of features and the ease of
use of Border's products. This new version provides end-to-end encryption
between corporate offices and can create Virtual Private Networks ("VPNs"),
seemingly local area networks across the Internet, while securing the data
through cryptography. Border is continuing to develop enhancements and
additions to its BorderWare products to further broaden its network security
solutions base and to attempt to facilitate easier use while increasing
security.

BorderWare is priced between $4,000 and $11,000 depending upon the number
of approved users. With the introduction of BorderWare Version 4.0, pricing
will range from $4,000 to $15,000 and will be based upon the features selected.

Sales and Marketing
- -------------------

Border uses distributors to leverage its own sales force for day to day
reseller relationship maintenance and order execution, as well as in the
procuring of new resellers. Direct contact with resellers in the areas of
training and support allows Border to augment the reseller's effectiveness, and
to gather customer feedback to assist Border's product development process.
This transfers the effort required in order fulfillment to the distributors'
multiple reseller channels. Border's two-tiered distribution channels also
allows it to competitively price its products, in an attempt to appeal to entry-
level and mid-priced range customers.

Currently, Border has relationships with 21 international distributors
including Digital Equipment Corporation, Nippon Telephone and Telegraph, and EMJ
Data Systems Ltd. delivering approximately 700 reselling locations in over 30
countries. No distributor accounts for greater than 10% of Border's business.

In support of its sales efforts, Border employs regional managers who are
responsible for reseller recruitment, training and support. Border has five
regional managers overseeing operations in North America, two overseeing
operations in the Asia Pacific region and five overseeing operations in Europe,
Africa and the Middle East. Border conducts on-site reseller training courses
and focused advertising and promotion campaigns. Comprehensive targeted
marketing programs include print advertising, direct mail, trade events,
seminars, public relations, third party communication programs and participation
in distributor sponsored marketing programs. In addition, Border maintains a
direct relationship with its resellers for the delivery of co-operative
marketing funds, advertising and promotional programs and Border's product
support programs.

A critical element to successful marketing and quality control of Border's
installations is its reseller certification program. This program was designed
to assist and improve the reseller base and includes certification of resellers
as qualified end-user support centers, on-site training and implementation of
targeted marketing programs. These programs increase the effectiveness of the
reseller channels and create closer ties with Border's marketing programs. The
certification process requires a financial and a training time commitment from
the reseller. Currently, approximately 44% of Border's resellers have been
upgraded and certified as "BORDERWARE AUTHORIZED RESELLERS".

A key aspect in accelerating a reseller's sales curve is the BorderWare
launch kit. It provides an essential one-time package of goods and services
designed to give Border's resellers a strong initial sales boost to generate
significant revenue shortly after the initiation of selling activity. The
reseller launch kit includes an on-site two day technical training course, one
demonstration BorderWare unit, two BorderWare evaluation units, an initial
stocking order of three BorderWare units, an initial advertising fund, reseller
co-op credits and marketing, sales and advertising materials.

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Border attempts to stimulate interest in network security features and
support its marketing efforts through its public relations program, speaking
engagements, attendance at trade shows, white papers, technical notes and other
published materials. Border's Internet home page is www.border.com.

Customer Service and Support
- ----------------------------

Border offers support by an internal technical team directly to and through
its network of resellers to its existing customers under product licensing
agreements. Reseller and end-user support services are available from Border's
North American and European offices. In addition, support is available through
fax, WWW and e-mail for non-critical issues and ongoing assistance. Border
plans to provide around-the-clock, business day, voice support by the end of
1996. Border also has upgraded its WWW site to enable access through a
searchable on-line information base to the most commonly asked service questions
and a range of technical information for its customer's further education and
understanding of BorderWare. Customers are able to complete a "trouble ticket"
on the WWW site which leads to 24 hour response time on service questions.
Licensed support also includes updates to Border's products. Software updates
and application notes are publicized through e-mail and are available through
FTP.

Research and Development
- ------------------------

Border's research and development team of approximately 32 staff members is
comprised of software developers, product managers, a quality assurance team and
technical writing staff. The research and development team works closely with
marketing to develop products or features that fit the demographic model of
Border's distribution channels and its extensive worldwide customer base.

Border uses market research as a key tool in its research and development
process. Border's broad base of distributors and resellers is a powerful
resource for product investigation and ongoing feedback.

BorderWare conforms to the international standards defined by the Internet
Engineering Task Force (IETF), the National Computer Security Association (NCSA)
and the Secure Wide Area Networking Task Force (SWANTF). Border is a
participant in the development of these standards.

Intellectual Property and Other Proprietary Rights
- --------------------------------------------------

Border relies primarily upon a combination of copyright, trade mark and
trade secret laws, license agreements and employee and third party development
agreements to establish and protect proprietary rights in its products and
technology. The source codes for Border's products and technology are protected
both as trade secrets and as unpublished copyrighted works, however, Border
currently has no patents for its product and technology.

The trade marks owned by Border include BorderWare Firewall Server and
BorderWare Fire-Wall Server. Border has filed applications for the registration
of its trade marks with the Canadian and United States trade mark offices.
Border has also filed trademark applications in England, Germany, Hong Kong,
Japan, Korea, Malaysia and Taiwan.

Border also utilizes certain software technologies that it licenses from
third parties, including software that is integrated with internally developed
software and used in Border's product to perform key functions.

Competition
- -----------

The market for network security products and services and, in particular,
firewall industry products and services, is intensely competitive, rapidly
evolving and subject to technological change. Currently Border's major
competitors in the network security market include Checkpoint Software
Technology, Ltd., Raptor Systems Inc., Trusted Information Systems Inc., Secure,
Sun Microsystems Inc., and several other lower volume firewall providers, as
confirmed by IDC research.

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<PAGE>

Facilities
- ----------

Border's head office is a leased facility of approximately 9,900 square
feet located on two floors of an office building located in downtown Toronto.
In addition, Border leases approximately 2,700 square feet in Waterloo, Ontario
as an additional research and development facility.

Employees
- ---------

As of April 30, 1996, Border had 96 personnel, including five part-time and
eight co-op student employees, consisting of 23 in sales and marketing, 32 in
research and development, 20 in customer service and 21 in administration and
finance. None of Border's employees is represented by a labor union or is
subject to a collective bargaining agreement.

Acquisition of European Operations
- ----------------------------------

Prior to May 17, 1996, Border owned a 31% interest in Border Network
Technologies Europe Limited, a company incorporated under the laws of England
("Border Europe"), the primary business of which is the distribution, sales,
marketing and support of BorderWare Firewall Server in Europe. On May 17, 1996,
Border acquired the remaining 69% interest in Border Europe.

INFORMATION CONCERNING ENIGMA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Overview
- --------

Enigma designs, develops, markets and supports the SAFEWORD family of
network security products. Enigma was founded in 1982 to create solutions for
network security. During the period from its inception to 1989, Enigma
researched, developed and commercialized various network security products,
including its initial SAFEWORD software products and hardware tokens for
minicomputers, mainframe computers and enterprise-wide information protection.
Since that time, Enigma has focused its development efforts on extending the
SAFEWORD technology to additional platforms, making the SAFEWORD product family
more modular and portable. In 1994, Enigma introduced the SAFEWORD AS network
authentication server software, which utilizes client/server architecture to
authenticate users, regardless of their method for accessing the network.

Enigma's revenues are principally derived from software license fees, the
sale of hardware tokens and maintenance service fees. Revenues from products
and licenses are recognized upon shipment, net of allowances for estimated
future returns. Through March 31, 1996, returns had not been significant.
Maintenance service revenue is recognized over the term of the contract.

A relatively small number of customers account for a significant percentage
of Enigma's revenues. Enigma expects that licenses of its products to a limited
number of customers may continue to account for a high percentage of revenues
for the foreseeable future. There can be no assurance that any customer will
continue to purchase Enigma's products. In addition, Enigma has experienced
some seasonality in its business, and Enigma may continue to experience such
seasonality.

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Results of Operations
- ---------------------

The following table sets forth selected statement of operations data as a
percentage of net revenues for the periods indicated:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------------------------
1993 1994 1995 1995 1996
- -------------------------------------------------------------------------------------------------------------------
(unaudited)

- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue 29.7 34.5 25.2 22.3 19.1
- -------------------------------------------------------------------------------------------------------------------
Gross profit 70.3 65.5 74.8 77.7 80.9

Operating expenses:
Selling and marketing 38.4 23.8 27.9 19.7 24.7
Research and development 22.5 16.2 15.0 6.7 19.3
General and administrative 21.7 17.3 20.9 13.0 29.2
- -------------------------------------------------------------------------------------------------------------------
Total operating expenses 82.6 57.3 63.8 39.4 73.2
- -------------------------------------------------------------------------------------------------------------------

Operating income (loss) (12.3) 8.2 11.0 38.3 7.7
Interest (expense), net (8.5) (5.9) (3.6) 2.3 2.7
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) (20.8)% 2.3% 7.4% 36.0% 5.0%
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

</TABLE>

COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996 AND 1995

REVENUE. Revenue in the first quarter of 1996 was $1.4 million as compared
to $1.5 million for the same period in 1995. Revenue for 1995 included a sale
to one customer representing approximately $1.0 million of revenue for the
quarter, whereas 1996 revenue was distributed amongst a larger customer base.

GROSS PROFIT. Cost of revenue primarily consists of the assembly and
delivery of Enigma's hardware tokens and technical support provided to
customers. Gross profit for the first quarter of both 1996 and 1995 were
approximately $1.1 million. Enigma's gross profit in the first quarter of 1996
was 80.9% of revenue as compared to 77.7% of revenue during the first quarter of
1995. The increase in gross profit was primarily attributable to the mix of
hardware and software products sold during the quarter.

SELLING AND MARKETING. Selling and marketing expenses consist primarily of
personnel costs (including sales commissions), advertising, public relations and
trade shows. Selling and marketing expenses were $345,000 during the first
quarter of 1996 as compared to $295,000 for the same period in 1995. Selling
and marketing expenses as a percentage of revenue for 1996 were 5% higher than
the same period of 1995 due to hiring additional marketing and sales staff,
participation in certain trade shows and increases in public relations efforts
during 1996.

RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of salaries, related benefits and outside development arrangements.
Research and development expenses were $270,000 during the first quarter of 1996
as compared to $101,000 for the same period in 1995. Research and development
expenses rose to 19.3% of net revenue in the first quarter of 1996 from 6.7% of
revenue in the first quarter of 1995 due to Enigma's efforts in two areas:
(i) a secured, remote Graphical User Interface (GUI); and (ii) a Windows NT
client. The GUI based management system provides an easy to use interface for
managing security related information scaleable to meet the requirements of an
enterprise wide network, and can be administered from a single location
virtually anywhere on the network. Enigma expects to introduce a Windows NT
authentication server in the third
116
<PAGE>

quarter of 1996 in response to overwhelming demand from customers as their
network solutions migrate toward a Windows NT operating environment.

GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of personnel costs, facilities and professional fees. General and
administrative expenses were $407,000 during the first quarter of 1996 as
compared to $195,000 for the same period in 1995. General and administrative
expenses in the first quarter of 1996 were 29.2% of revenue as compared to 13.0%
for the same period in 1995. This increase is due to an increase in
administrative staff and related benefits, increases to facilities and
professional fees attributable to performing 3 years auditing and ongoing tax
advice in anticipation of Enigma's initial public offering prior to announcement
of the proposed Enigma Merger.

INTEREST EXPENSE. Interest expense of $38,000 during the first quarter of
1996 was comparable to interest expense of $35,000 incurred in 1995.
Substantially all Enigma's financing was provided by borrowings from its
principal stockholder.

COMPARISON OF YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

REVENUE. Revenue increased 52.6 percent from $1.6 million in 1993 to $2.4
million in 1994 and increased 60.8 percent to $3.9 million in 1995. The
increase from 1993 to 1994 was primarily due to growth in software licensing and
hardware unit sales to a major new customer. The increase from 1994 to 1995 was
primarily due to increases in software licensing revenues both to existing
customers and to new customers.

GROSS PROFIT. Cost of revenue consists of costs associated with the
assembly and delivery of Enigma's hardware tokens and with technical support
provided to customers. Enigma's gross margin increased 42.0 percent from $1.1
million in 1993 to $1.6 million in 1994 and increased 83.8 percent to $2.9
million in 1995. Gross profit as a percentage of revenue was 70.3 percent, 65.5
percent and 74.8 percent in 1993, 1994 and 1995, respectively. The difference
in gross profit between periods resulted primarily from changes in the mix of
specific products sold in each period and, to a lesser extent, changes in
procedures. Gross profit in 1995 was positively affected by increased software
licensing, as a percentage of revenue, which generally has an insignificant cost
of revenue.

SELLING AND MARKETING. Selling and marketing expenses consist primarily of
personnel costs, including sales commissions, and all costs of advertising,
public relations, seminars, trade shows and selling and marketing overhead.
Selling and marketing expenses decreased 5.9 percent from $612,000 in 1993 to
$576,000 in 1994 and increased 89.1 percent to $1.1 million in 1995. Selling
and marketing expenses as a percentage of revenues were 38.5 percent, 23.7
percent and 27.9 percent in 1993, 1994 and 1995, respectively. Selling and
marketing expenses were relatively flat in absolute dollars from 1993 to 1994,
primarily as a result of conservative spending due to financial constraints.
The percentage decrease in 1994 was primarily due to allocation over a higher
revenue base. The dollar and percentage increases in 1995 were primarily due to
costs associated with increased bonuses and sales commissions, increased costs
associated with advertising and trade shows and personnel increases in the sales
and marketing groups.

RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of salaries and other personnel-related expenses. Research and
development expenses increased 10.1 percent from $357,000, or 22.5 percent of
net revenues, in 1993 to $393,000, or 16.2 percent of net revenues, in 1994, and
increased 48.9 percent to $585,000, or 15.0 percent of net revenues, in 1995.
The increase in absolute dollars in 1994 and 1995 was primarily attributable to
an increase in the number of personnel associated with Enigma's ongoing
technical development efforts.

GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of personnel costs, rent and professional fees. General and
administrative expenses increased 21.4 percent from $345,000 in 1993 to
$419,000 in 1994 and 94.3 percent to $814,000 in 1995. General and
administrative expenses as a percentage of revenue were 21.7 percent, 17.3
percent and 20.9 percent in 1993, 1994 and 1995, respectively. The dollar
increase in 1994 was principally due to increased personnel-related expenses.
The percentage decrease in 1994 was primarily due to allocation over a larger
revenue base. The dollar and percentage increase in 1995 was

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<PAGE>

primarily due to increased personnel-related expenses and increased office space
costs resulting from the relocation of headquarter offices to larger facilities.

INTEREST. Interest expenses were $135,000, $143,000 and $139,000 in 1993,
1994 and 1995, respectively. Interest expenses as a percentage of revenue were
8.5 percent, 5.9 percent and 3.6 percent in 1993, 1994 and 1995, respectively.
The percentage decrease was due primarily to a larger revenue base.

INCOME TAXES. Enigma has made no provision for income taxes as a result of
Enigma's net operating loss ("NOL") carryforwards, which have largely offset
taxable income. At December 31, 1995, Enigma had NOL carryforwards for federal
income tax reporting purposes of approximately $7.7 million and development and
investment tax credit carryforwards of approximately $70,000.

Under the provisions of the Code, a change of more than 50 percent in the
ownership of Enigma may limit the actual amount of the NOL carryforwards
ultimately utilized by Enigma. Such a change in ownership may have occurred in
connection with a recapitalization of Enigma in 1993. Enigma is currently
assessing possible restrictions on use of its NOL carryforwards as a result of
such possible change in ownership. There can be no assurance that Enigma's NOL
carryforwards will be available for use in the future. Unutilized NOL
carryforwards will expire between 2001 and 2009.

Liquidity and Capital Resources
- -------------------------------

Since its inception, Enigma has financed its operations through the private
issuance of capital stock and notes to shareholders, and through short-term
borrowings. As of March 31, 1996, Enigma had outstanding approximately $2.0
million in principal and accrued interest to a shareholder and an affiliate of
its major shareholder. Such indebtedness bears interest at rates of 9.5
percent, 10.0 percent, 11.5 percent and 12.0 percent. This shareholder and the
affiliate of the major shareholder have agreed to defer until January 1, 1997
all principal and interest obligations on the indebtedness.

Operations used net cash of $281,000 in 1993, generated net cash of $80,000
in 1994 and used net cash of $104,000 in 1995 and used net cash of $212,000 in
the three months ended March 31, 1996. In 1993, net cash used in operations
resulted primarily from net losses. In 1994, net cash provided by operations
was primarily due to revenue deferrals and net income, largely offset by
increases in inventory and accounts receivable. In 1995, net cash used in
operations was primarily the result of an increase in accounts receivable offset
by net income and deferred revenue. In 1996, net cash used in operations was
primarily the result of increased accounts receivable offset partially by
increased accounts payable.

In 1993, 1994, 1995 and the three months ended March 31, 1996, the net cash
used in investing activities was for the acquisition of property and equipment.
Capital expenditures were $24,000, $40,000, $161,000 and $61,000 in 1993, 1994,
1995 and 1996, respectively. As of March 31, 1996, Enigma had no material
commitments to make capital expenditures.

Cash flows from financing activities in 1993, 1994 and 1996 include
advances by principal shareholders, and, in 1993, 1994, 1995 and 1996 include
interest accruals on long-term debt to the shareholders.

At March 31, 1996, Enigma had $6,000 in cash and cash equivalents and a
working capital deficit of $1,422,000. Enigma maintains a $50,000 bank line of
credit used principally to secure foreign production of certain parts used in
Enigma's products. The line of credit is secured by a guarantee from a
shareholder that is also an affiliate of the major shareholder of Enigma. As of
March 31, 1996, approximately $50,000 was outstanding under the line of credit.
Borrowings under the line of credit bear interest at the bank's prime rate plus
2.5 percent.

BUSINESS

Enigma designs, develops, markets and supports network security products
for a wide variety of computer environments in Fortune 500 companies,
governments and major international organizations. Enigma's products

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are designed to provide a highly reliable network authentication system which
can be scaled across heterogenous enterprise networks. Enigma offers dynamic
password authentication servers that work with most popular third party tokens,
and software-only solutions which can be electronically distributed. Enigma has
outstanding licenses authorizing more than 500,000 users, and its customers
include American Express Company, The Boeing Company, Cisco Systems, Inc.,
Citicorp, Ericsson Telecom AB, Novell, Inc. and Sun Microsystems, Inc.

The Enigma Solution
- -------------------

Enigma's SAFEWORD family of products permits network access by use of a
"dynamic password" , a password that once authenticated for a single use becomes
invalid for subsequent entries by anyone onto the network. Enigma offers
server-based network authentication software and software and hardware based
individual authenticators (also referred to as "tokens"). Enigma's products
operate on a number of platforms, utilize industry standards, are highly
scalable and have a high degree of functionality.

Organizations use the SAFEWORD family of products to create a high level of
confidence that their networks are secure from unauthorized access. A user
attempting to gain access to a network, whether from within or outside of an
organization's offices, enters his or her user identification in the usual
manner. The user is then prompted to enter a password. The authorized user is
at that time informed of the new single-use password by using a SOFTOKEN
software token residing on the user's workstation or a SAFEWORD hardware token
resembling a personal calculator and retained in his or her possession. The
password entered by the user is specific to this occasion and is comprised of a
different set of alphanumeric characters than was entered by the user
previously. If the new, dynamic password is entered correctly and is
recognized, this user is permitted access to the network. Even if intercepted
by traditional means, the dynamic password is worthless to an unauthorized user
seeking access to the network, as the intercepted password is only valid for
access on that single occasion. The source code underlying SAFEWORD utilizes
the Data Encryption Standard ("DES") algorithm, which is widely recognized as a
government certified and industry-tested standard, to ensure that an
unauthorized user will be unable to gain access by calculating a subsequent
authorized dynamic password. By using Enigma's products, an organization can
significantly enhance network security by ensuring an extremely high likelihood
of positive user identification and authentication.

Products
- --------

Enigma licenses and sells the SAFEWORD family of network authentication
software products and individual authenticating devices.

NETWORK AUTHENTICATION SOFTWARE PRODUCTS

SAFEWORD network authentication software operates on a wide variety of
platforms, including various versions of UNIX, VAX, IBM mainframes, Tandem,
Stratus, Novell and other systems, and is compatible with a wide range of
telecommunications products and protocols, including those offered by Cisco
Systems, Inc., Ascend Communications, Inc., Shiva Corp., 3Com Corp. and Bay
Networks, which is important to organizations operating a heterogeneous
computing environment. SAFEWORD also works in conjunction with existing
authorization software developed for IBM mainframe systems including RACF, ACF2,
and Top Secret, which is valuable to customers using a large number of existing
business applications and databases residing on such systems. Enigma's current
network authentication software products are as follows:

PRODUCT DESCRIPTION
<S> <C>
SAFEWORD AS A central security resource for the entire network. Works with many types of
multi-user computers, routers, bridges and gateways connected via TCP/IP and
provides access control and authentication for users on local network and remote
users accessing host systems via dial-in or over the Internet.

</TABLE>
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<PAGE>

PRODUCT DESCRIPTION
<S> <C>
SAFEWORD FOR VAX SYSTEMS System or account access control for VAX/VMS protected by dynamic passwords.

SAFEWORD UNIX-SAFE Access control for UNIX, protected by dynamic passwords. Supports AIX, System
V, BSDI 4.2, ULTRIX, XENIX and HPUX versions of UNIX.

SAFEWORD TANDEM-SAFE System or account access control for Tandem Guardian 90 protected by dynamic passwords.

SAFEWORD STRATUS-SAFE System or account access control for Stratus VOS protected by dynamic
passwords.

SAFEWORD FOR VTAM-SAFE Host access control for dial-in and local lines, and identification verification for
applications accessed through MVS/VTAM, providing dynamic password
protection. It can be interfaced with RACF, ACF2 and Top Secret.

SAFEWORD FOR RACF The same functionality as SAFEWORD FOR VTAM-SAFE while also sharing the RACF
database and making extensive use of advanced features now available via RACF.

SAFEWORD SAF/XTN Provides enhanced identification verification for IBM MVS mainframe systems
using RACF, ACF2 or Top Secret. Uses the same database as RACF, ACF2 and
Top Secret to archive authentication data.

</TABLE>

SAFEWORD network authentication software supports a large number of
hardware token alternatives, including tokens manufactured by Digital Pathways
Inc., Racal-Guardata, Inc., CryptoCard, Digiline, ActivCard, Inc., Leemah
DataCom Security Corporation and others, most of which utilize the DES
algorithm. SAFEWORD databases of authenticated users are encrypted utilizing
the DES algorithm for further protection from unauthorized access. A computer
hardware failure of one SAFEWORD AS server does not disable the customer's
ability to authenticate users because SAFEWORD AS is designed to be fault
tolerant. SAFEWORD AS offers high throughput, which enables users to support a
high volume of user authentication requests through the use of multiple servers
which SAFEWORD AS keeps automatically synchronized. While Enigma recommends the
dynamic password methodology for most uses, the design of SAFEWORD AS software
is flexible in allowing the customer to use fixed password security, dynamic
password security or, in the future, card readers and/or biometric security
methods, giving customers flexibility in determining which methods are
appropriate for given users, processes, systems or applications.

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INDIVIDUAL AUTHENTICATING DEVICES

SAFEWORD SOFTOKEN is Enigma's software based password generator, or
"token." Enigma also currently offers three hardware tokens: SAFEWORD DES
GOLD, SAFEWORD DES SILVER and SAFEWORD MULTISYNC.

PRODUCT DESCRIPTION
<S> <C>
SAFEWORD SOFTOKEN Low cost software that can be widely distributed electronically and runs on
Windows and Macintosh personal computers and some UNIX workstations and
emulates the DES GOLD and SAFEWORD MULTISYNC cards, providing dynamic
password protection at a low cost.

SAFEWORD DES GOLD A credit-card sized password generator utilizing DES to generate synchronous or
asynchronous passwords for an unlimited number of hosts. The card has nine
memories, one of which may be programmed in ANSI X9.9 mode. It offers three
display formats and user-setable hard personal identification number ("PIN") and
is manually or electronically programmable by the customer, or available in
pre-programmed mode.

SAFEWORD DES SILVER A credit-card sized password generator which generates synchronous dynamic
passwords at the press of a single button. It offers three display formats and is
electronically programmable by the customer or available in pre-programmed
mode.

SAFEWORD MULTISYNC A credit-card sized password generator which generates synchronous passwords
for up to four different hosts, each either in DES or X9.9 mode. It offers three
display formats and user-setable hard PIN, and is manually or electronically
programmable by the customer, or available in pre-programmed mode. Enigma
believes that its patented use of multiple DES keys gives SAFEWORD MULTISYNC the
highest level of security of any token currently commercially available.

</TABLE>

As an added security feature, certain of Enigma's hardware tokens permit a
systems administrator to require an individual user to enter a personal
identification number into the token. Only after correctly entering the
personal identification number into the token does the token generate the
dynamic password needed to gain access to that customer's computer network.
This feature provides further security by rendering a lost or stolen card
useless to someone who does not know the authorized user's PIN.

Additionally, Enigma offers a product that allows customers to program
their hardware tokens with unique DES keys that are known only to the customer.

Technology
- ----------

Enigma's technology is the result of more than a decade of efforts in
network authenticating technology. Three patents have been issued to Enigma for
its technology. Enigma designed and developed the SAFEWORD family of products
to provide technological features that are intended to be make Enigma's products
particularly attractive to most large organizations.

DYNAMIC PASSWORDS. Enigma's products rely on dynamic passwords, which are
relatively inexpensive and compatible with existing computing and networking
equipment utilized by most organizations. Since each password can only be used
one time, methods of electronically trying many passwords have an extremely low
mathematical probability of being successful. Physical observation or
electronic interception of the entered password will not enable the eavesdropper
to gain access, without calculating a subsequent authorized dynamic password, a
process made extremely unlikely by the use by SAFEWORD of the Data Encryption
Standard ("DES")

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algorithm. The DES algorithm is widely recognized as a government certified and
industry-tested standard. SAFEWORD databases of user authentication codes and
authorizations are themselves encrypted utilizing the DES algorithm for further
protection from unauthorized access. Enigma believes that dynamic password
technology provides the best combination of value and security effectiveness
available for computer or network access control.

AUTHENTICATION PROTOCOLS AND INTERFACE MODULES. The SAFEWORD AS software
has been specifically designed to support existing and emerging authentication
protocols. Four TCP/IP based protocols, XTACACS, TACACS+, RADIUS and EASSP,
currently are supported. Certain of these authentication protocols have been
adopted by many manufacturers of access equipment, and permit transmission of a
user's name and password from numerous connection points and through various
network connectors, gateways, routers, servers and ports to the authentication
server. In addition, the SAFEWORD Application Interface, a linkable library of
files, is included with SAFEWORD to allow customers to create support for other
levels of authentication at either the application or the transaction level.
The SAFEWORD Application Interface can be linked by a customer with virtually
any application or new or customized authentication products. After such
linkage, execution of the application will permit the application or product to
pass a user-entered name and dynamic password to the SAFEWORD Application
Interface, which communicates with SAFEWORD and returns the result of the
authentication query to the application or product.

OPEN ARCHITECTURE AND INTER-OPERABILITY. Enigma's SAFEWORD family of
products has been designed specifically to operate on a wide variety of
platforms and is compatible with a wide range of telecommunications products and
protocols, which is important to organizations operating a heterogeneous
computing environment. Further, the SAFEWORD software has been designed to
support multiple token types manufactured by Enigma and others, including the
SOFTOKEN software token, within a single network.

SCALABILITY. One SAFEWORD database can support greater than one million
users, and each authentication server can contain several databases. Further,
SAFEWORD allows the support of a high volume of user authentication requests
through the use of multiple servers which SAFEWORD keeps automatically
synchronized.

FULLY DOWNLOADABLE, ALL SOFTWARE SOLUTION. Enigma has focused on
developing technology to permit a downloadable, all software solution. Thus,
through the use of the combination of the SAFEWORD network authentication
software and SAFEWORD SOFTOKEN software password generators or "tokens," an
organization can achieve an all-software authentication solution for its
network. Such an all software solution reduces the aggregate cost of the
authentication system, and, as the basic SAFEWORD software is available for
down-load from Enigma's World Wide Web site, allows for rapid installment of an
authentication system on an organization's network.

FAULT TOLERANCE. The SAFEWORD database is automatically mirrored on each
of up to four SAFEWORD servers on a network to achieve this fault tolerance. As
a result, a computer hardware failure of one SAFEWORD server does not prevent
the authentication of users.

Sales, Marketing and Support
- ----------------------------

Enigma sells its products in North America and overseas through its direct
sales personnel, through systems integrators and consultants and through
distributors based in Europe, Japan and Australia. Enigma is currently seeking
to expand its sales and marketing staff in North America, and is devoting
substantial additional resources to marketing and public relations activities
and business development activities in order to expand its third party
distribution channels.

Enigma offers a free three-user software license for a trial period. This
free trial license is available for down-load from Enigma's World Wide Web site.
The trial license can be converted to a commercial license and the number of
users can be increased by means of an unlocking code provided by Enigma after a
purchase order is received from the customer.

International sales accounted for 32 percent, 15 percent and 15 percent of
Enigma's net revenues in 1993, 1994 and 1995, respectively. Although government
regulations may change, current U.S. government export

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regulations do not require the issuance of special export licenses for products
such as Enigma's which utilize encryption technology for password authentication
purposes.

Enigma markets its products through a variety of programs including public
relations, trade shows, direct mail, telesales and a World Wide Web site
containing product information and documentation. Enigma is a partner in the
third-party vendor programs of a variety of hardware manufacturers and is
currently developing its own partner program.

CompuServe recently announced that it will provide security services for
commercial Internet service providers utilizing Enigma's products. In addition,
Enigma has developed co-marketing and joint packaging relationships with certain
suppliers of products for remote LAN access, Internet access and Internet
firewalls. For example, Novell recently began joint packaging SAFEWORD in
conjunction with its own "NetWare Connect" remote LAN access product. Further,
Enigma has made SAFEWORD compatible with product offerings from Cisco Systems,
Inc., Novell, Inc., Primary Access (a division of 3Com Corp.), Ascend
Communications, Inc., Xylogics, Inc. (a division of Bay Networks Incorporated),
Milkyway Networks Corporation and many others.

Enigma warrants its software products for a period of twelve months after
the initial shipment to the customer. The warranty states that the software
will conform to the specifications published by Enigma. During this period, the
customer also receives improvements which Enigma makes to the software products
licensed by the customer.

Customers
- ---------

Enigma targets its marketing efforts on large, technically sophisticated
organizations that are perceived as leaders within defined industry segments and
which can benefit from the functionality, scalability and inter-operability
provided by the SAFEWORD family of products. A significant portion of Enigma's
revenues have historically been attributable to follow-on sales to existing
customers, including upgrades to support additional users, new or replacement
tokens and software maintenance, and Enigma intends to continue to focus on such
sales in the future.

In 1994 and 1995, revenues attributable to Citicorp represented 29 percent
and 38 percent, respectively, of Enigma's net revenues. No other customer
accounted for more than 10 percent of revenues in any of the past three fiscal
years.

Product Development
- -------------------

The market for Enigma's products is characterized by rapidly changing
technologies, extensive research and new product introductions. Enigma's
software development concentrates on providing technologically advanced,
enterprise-wide computer security for medium to large corporations, including
Internet service providers. Current development efforts include adapting
SAFEWORD AS technology to additional platforms, particularly Microsoft's Windows
NT and Tandem's Guardian 90. Further development efforts include authorization
features that allow Enigma's products to be the central controlling agents that
govern the networks, computers and applications that users may access. This
effort will continue to utilize open and industry standard technologies such as
the TACACS+ and RADIUS protocols for providing authorization and accounting as
well as authentication.

Development is underway to enhance inter-operability between SAFEWORD AS
and additional security systems such as firewalls, customer databases and
accounting systems. This effort will assist customers and strategic technology
or marketing partners to fully integrate Enigma's products with their own
applications or systems.

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Manufacturing
- -------------

The hardware component of the SAFEWORD system involves hardware tokens and
token programmers. Enigma has historically contracted for the manufacture of
its hardware tokens with Kwang Woo Electronics, Inc. ("Kwang Woo"), an assembly
subcontractor located in South Korea. Enigma recently qualified a second source
supplier in the Philippines (Asionics, Ltd.), and is negotiating with two
additional U.S. suppliers for the production of tokens. Through 1996, Enigma
anticipates that a substantial portion of tokens it contracts for will be
produced by Kwang Woo. After delivery to Enigma, the tokens are checked for
quality and, if desired by the end-user, programmed.

Enigma currently has limited sources for the manufacture of its hardware
tokens and token programmers. While Enigma has generally been able to obtain
adequate supplies of these products in a timely manner from current vendors and
believes that alternate vendors can be identified if current vendors are unable
to fulfill its needs, delays or failure to identify alternate vendors, or a
reduction or interruption in supply or a significant increase in the
manufacturing costs could materially adversely affect Enigma's business and
results of operations.

Although Enigma generally uses standard parts and components for its
hardware products, certain components are currently available only from a single
source or from limited sources. For example, the microprocessor contained in
Enigma's hardware tokens are currently purchased only from NEC Corp. ("NEC"), a
Japanese semiconductor manufacturer. While NEC has introduced certain
microprocessors that could substitute for the one currently used by Enigma, the
use of an alternative microprocessor in its hardware tokens would take six
months or more of development and production prior to its first use in the
production of tokens. NEC has given Enigma a commitment that it will not
terminate production of the microprocessor used by Enigma without six months'
prior notice, and NEC holds a purchase order from Enigma for 100,000
microprocessors, which commenced delivery in March 1996. Notwithstanding that
purchase order, there can be no assurance that NEC will be able to furnish
Enigma with a sufficient number of microprocessors to meet customer demand, that
Enigma will be able to purchase microprocessors from NEC at commercially
acceptable prices or, if NEC discontinues the manufacture of certain
microprocessors, that Enigma will be able to procure microprocessors from
another supplier on timely basis and at commercially acceptable prices.

Enigma has established an in-house software duplication operation for
certain of its software products, and purchases duplicating services for certain
other software products from outside vendors.

Enigma has a formal quality control program to satisfy its customers'
requirements for high quality and reliable security products. As part of this
program, Enigma continually monitors its software development and approval
process and works with its hardware suppliers to improve process control and
product design. Enigma's tokens are tested by the supplier prior to shipment,
tested upon receipt by Enigma and each token is tested again by Enigma prior to
shipment to a customer. Software is released following alpha and beta testing
by Enigma and outside contractors.

Competition
- -----------

Competition is intense among providers of network security systems. There
are a number of companies whose technical approach is based upon the dynamic
password concept upon which Enigma's offerings are based, and which offer
software and/or hardware products that are competitive with those offered by
Enigma, including Security Dynamics, Inc. ("SDI"), Digital Pathways Inc., CKS
Group, Inc., Blockade, Leemah DataCom Security Corporation and Racal-Guardata,
Inc. In addition, certain other companies do not offer authentication software
solutions but produce DES based hardware tokens which are compatible with
SAFEWORD. Such companies benefit from the selection of SAFEWORD software by
customers while competing with Enigma for hardware token revenues. Enigma
believes that its largest competitor is SDI. Digital Pathways Inc. recently has
become a full-range competitor by adding a software authentication server to
complement its traditional hardware products. Digital Pathways Inc. offers
both hardware and software tokens, which enables it to compete directly against
Enigma in certain instances. In addition, Digital Pathways Inc. provides dial-
back security systems.

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Intellectual Property Rights and Patents
- ----------------------------------------

Enigma relies on a combination of patent, trade secret, copyright and
trademark law, software licenses and nondisclosure agreements to establish and
protect its intellectual property rights in its software and hardware products.

Enigma currently possesses two United States patents that expire in 2007
and 2008 and one United Kingdom patent that expires in 2003. These patents
cover computer network user authentication and access control techniques
employing dynamic passwords.

Enigma's standard software license agreement grants the licensee a non-
transferable and non-exclusive internal use license for the software licensed.
Pursuant to the software license agreement (i) all copies of licensed programs
are the property of Enigma and may not be distributed by the licensee without
Enigma's prior written consent, (ii) the licensee may not copy the licensed
programs, except for backup or archival copies, and may not attempt to recreate
source code and (iii) Enigma provides a twelve month limited warranty that the
software will conform to the specifications published by Enigma and disclaims
all other warranties, either express or implied. However, Enigma has in the
past often shipped products without requiring the customer to sign a software
license. The failure to obtain signed software license agreements could limit
Enigma's ability to protect its intellectual property rights and subject Enigma
to additional state law warranty claims, which could have a material adverse
effect on Enigma's financial condition and results of operations.

Employees
- ---------

At March 31, 1996 Enigma employed 39 full-time employees. Of these
employees, 13 employees were involved in product development, 6 employees were
involved in sales and marketing, 3 employees were involved in customer support,
10 employees were involved in production and shipping and 7 employees were
involved in administration and finance. No employees are covered by any
collective bargaining arrangements with respect to his or her employment by
Enigma.

Facilities
- ----------

Enigma's principal administrative, sales and marketing, research and
development and support facilities consist of an aggregate of approximately
15,300 square feet of office space in Concord, California.

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------------------
PROPOSAL THREE
------------------

ELECTION OF DIRECTORS

The business of the Company is managed by or under the direction of a Board
of Directors with the number of directors fixed from time to time by the Board
of Directors. The Board is divided into three classes. The Board of Directors
has nominated Mr. Kamm, a current director of the Company, for reelection and
the four other persons named below for election as directors, each to serve for
a term expiring at the Annual Meeting of Stockholders to be held in 1997, 1998
or 1999, as indicated. Proxies solicited by the Board of Directors will, unless
otherwise directed, be voted to elect the five nominees named below. The
election of Messrs. Adamou, Forbes and Mackintosh is effective for a term
commencing on the Border Effective Date. The election of Mr. Rundquist is
effective for a term commencing at the Enigma Effective Time.

Each nominee has indicated a willingness to serve as a director for the
term indicated. In case any nominee is not a candidate for any reason, the
proxies named in the enclosed form of proxy may vote for a substitute nominee in
their discretion.

DIRECTOR NOMINEES FOR TERM EXPIRING IN 1997:

ERVIN F. KAMM, JR., AGE 56

ADAM ADAMOU, AGE 29

DIRECTOR NOMINEES FOR TERM EXPIRING IN 1998:

ROBERT FORBES, AGE 47

DIRECTOR NOMINEE FOR TERM EXPIRING IN 1999:

GLENN G. MACKINTOSH, AGE 34

ERIC P. RUNDQUIST, AGE 48

For certain information concerning each of the nominees and the other
members of the Board of Directors of the Company see "Information Concerning
Secure -- Directors and Management".

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION, FOR THE INDICATED
TERMS, OF EACH OF THE FOREGOING NOMINEES TO THE BOARD OF DIRECTORS OF THE
COMPANY.

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------------------
PROPOSAL FOUR
------------------

APPROVAL OF AMENDMENT TO
AMENDED AND RESTATED 1995 OMNIBUS STOCK PLAN

PROPOSED AMENDMENTS REQUIRING STOCKHOLDER APPROVAL

Secure and Border agreed in the Border Acquisition Agreement that Secure
would propose to its stockholders at the Special Meeting an increase by
1,000,000 in the number of shares reserved for issuance upon the exercise of
options granted under the Amended and Restated 1995 Omnibus Stock Plan. Secure
and Enigma agreed in the Enigma Acquisition Agreement that, assuming
consummation of the Border Acquisition, Secure should propose an increase of an
aggregate of 2,000,000 in the number of shares reserved for issuance under the
Amended and Restated 1995 Omnibus Stock Plan. The focus of Secure, Border and
Enigma in establishing the amount of the proposed increase of the reserve was to
help assure the success of Secure after the Acquisitions. Secure, Border and
Enigma believe that Secure's need for highly qualified employees, combined with
the increased competition for the limited supply of qualified personnel, will
make the Amended and Restated 1995 Omnibus Stock Plan essential to Secure's
ability to recruit and retain its employees. Secure believes that an adequate
reserve of shares for issuance under the Amended and Restated 1995 Omnibus Stock
Plan will be necessary to enable Secure to successfully compete with other
companies to secure and retain valuable employees. The Board of Directors has
approved such increase.

Stockholders will also be asked to approve an amendment to the Amended and
Restated 1995 Omnibus Stock Plan regarding the grant of options and other awards
in substitution for stock options and other awards held by employees of other
corporations who are about to become employees of the Company or a subsidiary of
the Company, or whose employer is about to become a subsidiary of the Company,
as the result of a merger or consolidation of the Company or a subsidiary of the
Company with another corporation, the acquisition by the Company or a subsidiary
of the Company of all or substantially all the assets of another corporation or
the acquisition by the Company or a subsidiary of the Company of at least 50% of
the issued and outstanding stock of another corporation. Under the proposed
amendment to the Amended and Restated 1995 Omnibus Stock Plan, the Board of
Directors of the Company would be granted discretion to vary the terms and
conditions of any substitute options and other awards so granted from the terms
and conditions set forth in the Amended and Restated 1995 Omnibus Stock Plan to
the extent that the Board of Directors deems appropriate to conform the
substitute options and other awards to the options and other awards in
substitution for which they are granted. The Board of Directors is not
authorized to vary such terms and conditions so as to affect the status of any
such substitute option as an incentive stock option under the Internal Revenue
Code. The purpose of this amendment is to permit the Board of Directors, in the
case of the Company's merger with or acquisition of another corporation, maximum
flexibility to grant the holders of options and other awards in such other
corporation options and other awards of equal value to acquire Common Stock of
the Company, even when to do so requires a departure from the terms and
conditions prescribed by the Amended and Restated 1995 Omnibus Stock Plan.

SUMMARY OF THE PROVISIONS OF THE AMENDED AND RESTATED 1995 OMNIBUS STOCK PLAN

Amended and Restated 1995 Omnibus Stock Plan
- --------------------------------------------

In September 1995, the Board of Directors of the Company adopted, and the
Company's stockholders approved, the Company's 1995 Omnibus Stock Plan. Such
plan superseded both the 1989 Incentive Stock Option Plan and the 1994
Non-Qualified Stock Option Plan of the Company, and no new options were granted
under either of the superseded plans. In March 1996, the Board of Directors,
subject to obtaining stockholder approval, approved an amendment to the 1995
Omnibus Stock Plan to increase the total number of shares of Secure Common Stock
available for issuance and to restate such plan in its entirety. The Amended
and Restated 1995

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Omnibus Stock Plan was approved by the stockholders in May 1996. The following
discussion describes the features of the Amended and Restated 1995 Omnibus Stock
Plan.

As of June 30, 1996, an aggregate of 691,098 shares of Secure Common Stock
had been issued under the Amended and Restated 1995 Omnibus Stock Plan and
options to purchase an aggregate of 684,519 shares of Secure Common Stock were
outstanding and held by the employees, executive officers and directors of the
Company under the Amended and Restated 1995 Omnibus Stock Plan. On such date,
an aggregate of 568,514 shares of Secure Common Stock were available for future
grants of awards under the Amended and Restated 1995 Omnibus Stock Plan.
Options outstanding at June 30, 1996 have per share exercise prices ranging from
$.01 to $30.00, or a weighted average per share exercise price of $8.26, and
expire ten years from the date of grant of the option on dates ranging between
September 2000 and May 2006 (unless exercised prior to that time).
Approximately 275 employees are currently eligible to participate in the Amended
and Restated 1995 Omnibus Stock Plan.

Purpose
- -------

The purpose of the Amended and Restated 1995 Omnibus Stock Plan is to
motivate key personnel, including non-employee directors, to produce a superior
return to the stockholders of the Company by offering such personnel an
opportunity to realize stock appreciation, by facilitating stock ownership, and
by rewarding them for achieving a high level of corporate financial performance.
The Amended and Restated 1995 Omnibus Stock Plan is also intended to facilitate
recruiting and retaining key personnel of outstanding ability by providing an
attractive capital accumulation opportunity.

Administration
- --------------

The Amended and Restated 1995 Omnibus Stock Plan is administered by a
committee (the "Committee") of three or more directors who are "disinterested
persons" within the meaning of Rule 16b-3 under the Exchange Act. The
Compensation Committee of the Board of Directors currently serves as the
Committee that administers the Amended and Restated 1995 Omnibus Stock Plan, all
of whose members are "disinterested directors" for purposes of Exchange Act Rule
16b-3 and "outside directors" for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended, (the "Code"). Subject to the provisions of
the Amended and Restated 1995 Omnibus Stock Plan, the Committee has the
exclusive power to make awards under the Amended and Restated 1995 Omnibus Stock
Plan, to determine when and to whom awards will be granted, and the form, amount
and other terms and conditions of each award. The Committee has the authority
to interpret the Amended and Restated 1995 Omnibus Stock Plan and any award or
agreement made under the Amended and Restated 1995 Omnibus Stock Plan, to
establish, amend, waive and rescind any rules and regulations relating to the
administration of the Amended and Restated 1995 Omnibus Stock Plan, to determine
the terms and provisions of any agreements entered into under the Amended and
Restated 1995 Omnibus Stock Plan (not inconsistent with the Amended and Restated
1995 Omnibus Stock Plan), and to make all other determinations necessary or
advisable for the administration of the Amended and Restated 1995 Omnibus Stock
Plan. The Committee may delegate all or part of its responsibilities under the
Amended and Restated 1995 Omnibus Stock Plan to persons who are not
"disinterested persons" within the meaning of Exchange Act Rule 16b-3 for
purposes of determining and administering awards solely to employees who are not
then subject to the reporting requirements of Section 16 of the Exchange Act.

Notwithstanding the foregoing, the granting, terms, conditions and
eligibility requirements of awards granted to outside directors (as defined in
the Amended and Restated 1995 Omnibus Stock Plan) are governed solely by the
provisions of the Amended and Restated 1995 Omnibus Stock Plan pertaining
thereto, and the Committee has no discretion with respect to the granting of
such awards or to alter or amend any terms, conditions or eligibility
requirements of such awards to outside directors.

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Number of Shares and Eligibility
- --------------------------------

As of September 30, 1995, the effective date of the Amended and Restated
1995 Omnibus Stock Plan, the total number of shares of Secure Common Stock
available for distribution under the Amended and Restated 1995 Omnibus Stock
Plan was 1,444,131 (subject to adjustment for future stock splits, stock
dividends and similar changes in the capitalization of the Company), which
number was increased by 500,000 shares to 1,944,131 on May 1, 1996.. No
participant may receive, in any one calendar year, any combination of options
and stock appreciation rights relating to more than 250,000 shares of Secure
Common Stock in the aggregate under the Amended and Restated 1995 Omnibus Stock
Plan.

All employees of the Company and its affiliates are eligible to receive
awards under the Amended and Restated 1995 Omnibus Stock Plan at the discretion
of the Committee. Outside directors will receive grants of non-statutory
options as set forth under "Types of Awards--Outside Director Options" below.
Awards other than incentive stock options also may be awarded by the Committee
to individuals who are not employees or outside directors but who provide
services to the Company or its affiliates in the capacity of an independent
contractor. The Company currently has approximately 275 employees eligible to
receive awards under the Amended and Restated 1995 Omnibus Stock Plan.

The Amended and Restated 1995 Omnibus Stock Plan provides that all awards
are to be evidenced by written agreements containing the terms and conditions of
the awards. Such agreements are subject to amendment, including unilateral
amendments by the Company (with the approval of the Committee) unless such
amendments are deemed by the Committee to be materially adverse to the recipient
and are not required as a matter of law. Any shares of Secure Common Stock
subject to an award under the Amended and Restated 1995 Omnibus Stock Plan which
are not used because the terms and conditions of the award are not met may again
be used for an award under the Amended and Restated 1995 Omnibus Stock Plan.
However, shares of Secure Common Stock with respect to which a stock
appreciation right has been exercised (in cash and/or in stock) may not again be
awarded under the Amended and Restated 1995 Omnibus Stock Plan.

As described below, the Board of Directors, subject to stockholder
approval, has approved an amendment to the Amended and Restated 1995 Omnibus
Stock Plan to increase by 2,000,000 (from 1,944,131 to 3,944,131) the number of
shares of Secure Common Stock available for issuance under the Amended and
Restated 1995 Omnibus Stock Plan.

Types of Awards
- ---------------

The types of awards that may be granted under the Amended and Restated 1995
Omnibus Stock Plan include incentive and non-statutory stock options, stock
appreciation rights, restricted stock, performance units and other stock-based
awards (awards of, or based on, stock other than options, stock appreciation
rights, restricted stock or performance units). Subject to certain restrictions
applicable to outside director options and incentive stock options, awards will
be exercisable by the recipients at such times as are determined by the
Committee.

In addition to the general characteristics of all of the awards described
in this Proxy Statement, the basic characteristics of awards that may be granted
under the Amended and Restated 1995 Omnibus Stock Plan are as follows:

INCENTIVE AND NON-STATUTORY STOCK OPTIONS. Options may be granted to
recipients at such exercise prices as the Committee may determine but not less
than 50% of their fair market value (as defined in the Amended and Restated 1995
Omnibus Stock Plan) as of the date the option is granted. Stock options may be
granted and exercised at such times as the Committee may determine, except that,
unless applicable federal tax laws are modified, (1) no incentive stock option
may be granted at less than fair market value, (2) no incentive stock options
may be granted more than ten years after the effective date of the Amended and
Restated 1995 Omnibus Stock Plan, (3) an incentive stock option shall not be
exercisable more than ten years after the date of grant, and (4) the aggregate
fair market value of the shares of Company Secure Common Stock with respect to
which incentive stock options may first become exercisable in any calendar year
for any employee may not exceed $100,000 under the

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Amended and Restated 1995 Omnibus Stock Plan or any other plan of the Company.
Additional restrictions apply to an incentive stock option granted to an
individual who beneficially owns more than ten percent of the combined voting
power of all classes of stock of the Company.

The purchase price payable upon exercise of options may be payable in cash,
or through a reduction of the number of shares of Secure Common Stock delivered
to the participant upon exercise of the option or by delivering stock already
owned by the participant (where the fair market value of the shares of Secure
Common Stock withheld or delivered on the date of exercise is equal to the
option price of the stock being purchased), or in a combination of cash and such
stock, unless otherwise provided in the applicable award agreement. To the
extent permitted by law, the participants may simultaneously exercise options
and sell the stock purchased upon such exercise pursuant to brokerage or similar
relationships and use the sale proceeds to pay the purchase price.

OUTSIDE DIRECTOR OPTIONS. Beginning with the 1996 Annual Meeting of
Stockholders, and for each subsequent Annual Meeting of Stockholders thereafter,
each outside director is granted an option to purchase 4,375 shares of Secure
Common Stock at the conclusion of each such Annual Meeting at a price equal to
the fair market value of a share of Secure Common Stock on the date of grant,
such options to vest on the date of the next Annual Meeting of Stockholders
subsequent to the grant. Each person who is elected to be an outside director
between Annual Meetings of Stockholders shall be granted a stock option on the
date such person is elected. The number of shares of Secure Common Stock
covered by such option shall be pro-rated from 4,375 for the number of months
which have expired from the most recent Annual Meeting of Stockholders, such
options to vest on the date of the next Annual Meeting of Stockholders
subsequent to the grant.

STOCK APPRECIATION RIGHTS AND PERFORMANCE UNITS. The value of a stock
appreciation right granted to a recipient is determined by the appreciation in
Secure Common Stock, subject to any limitations upon the amount or percentage of
total appreciation that the Committee may determine at the time the right is
granted. The recipient receives all or a portion of the amount by which the
fair market value of a specified number of shares of Secure Common Stock, as of
the date the stock appreciation right is exercised, exceeds a price specified by
the Committee at the time the right is granted. The price specified by the
Committee must be at least 100% of the fair market value of the specified number
of shares of Secure Common Stock to which the right relates determined as of the
date the stock appreciation right is granted. A stock appreciation right may be
granted in connection with a previously or contemporaneously granted option, or
independent of any option. No stock appreciation right may be exercised less
than six months from the date it is granted unless the recipient dies or becomes
disabled.

Performance units entitle the recipient to payment in amounts determined by
the Committee based upon the achievement of specified performance targets during
a specified term. With respect to recipients who are "covered employees" under
Section 162(m) of the Code, such performance targets will consist of one or any
combination of two or more of revenue, revenue per employee, earnings before
income tax (profit before taxes), earnings before interest and income tax, net
earnings (profits after taxes), earnings per employee, tangible, controllable or
total asset turnover, earnings per share, operating income, total stockholder
return, market share, return on equity, before- or after-tax return on net
assets, distribution expense, inventory turnover, or economic value added, and
any such targets may relate to one or any combination of two or more of
corporate, group, unit, division, affiliate or individual performance.

Payments with respect to stock appreciation rights and performance shares
of Secure Common Stock may be paid in cash, shares of Secure Common Stock or a
combination of cash and shares of Secure Common Stock as determined by the
Committee.

RESTRICTED STOCK AND OTHER STOCK-BASED AWARDS. The Company's Secure Common
Stock granted to recipients may contain such restrictions as the Committee may
determine, including provisions requiring forfeiture and imposing restrictions
upon stock transfer. A participant with a restricted stock award shall have all
the other rights of a stockholder including, but not limited to, the right to
receive dividends and the right to vote. The Committee may also from time to
time grant awards of unrestricted stock or other stock-based awards such as
awards denominated in stock units, securities convertible into stock and phantom
securities.

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Transferability
- ---------------

During the lifetime of a participant to whom an award is granted, only such
participant (or such participant's legal representative) may exercise an option
or stock appreciation right or receive payment with respect to performance units
or any other award. No award of restricted stock (prior to the expiration of
the restrictions), options, stock appreciation rights, performance units or
other stock-based award (other than an award of stock without restrictions) may
be sold, assigned, transferred, exchanged or otherwise encumbered (other than
pursuant to a qualified domestic relations order as defined in the Code or Title
I of ERISA or the rules thereunder), and any attempt to do so will not be
effective, except that an agreement may provide that an award may be
transferable to a successor in the event of a participant's death.

Acceleration of Awards, Lapse of Restrictions
- ---------------------------------------------

The Committee may accelerate vesting requirements, performance cycles and
the expiration of the applicable term or restrictions, and adjust performance
targets and payments, upon such terms and conditions as are set forth in the
participant's agreement, or otherwise in the Committee's discretion, which may
include, without limitation, acceleration resulting from a change in control,
fundamental change (as such term is defined in the Amended and Restated 1995
Omnibus Stock Plan), a recapitalization, a change in accounting practices of the
Company, a change in the participant's title or employment responsibilities, or
the participant's death, disability or retirement.

Duration, Adjustments, Modifications, Termination
- -------------------------------------------------

The Amended and Restated 1995 Omnibus Stock Plan will remain in effect
until all stock subject to it is distributed or all awards have expired or
lapsed, whichever occurs later, or the Amended and Restated 1995 Omnibus Stock
Plan is terminated as described below.

In the event of a fundamental change, recapitalization, reclassification,
stock dividend, stock split, stock combination or other relevant change, the
Committee has the discretion to adjust the number and type of shares of Secure
Common Stock available for awards or the number and type of shares of Secure
Common Stock and amount of cash subject to outstanding awards, the option
exercise price of outstanding options, and outstanding awards of performance
units and payments with regard thereto. Adjustments in performance targets and
payments on performance units are also permitted upon the occurrence of such
events as may be specified in the related agreements, which may include a change
in control.

The Amended and Restated 1995 Omnibus Stock Plan also gives the Board the
right to terminate, suspend or modify the Amended and Restated 1995 Omnibus
Stock Plan, except that amendments to the Amended and Restated 1995 Omnibus
Stock Plan are subject to stockholder approval if needed to comply with Exchange
Act Rule 16b-3, the incentive stock option provisions of the Code, their
successor provisions, or any other applicable law or regulation.

Under the Amended and Restated 1995 Omnibus Stock Plan, the Committee may
cancel outstanding options and stock appreciation rights generally in exchange
for cash payments to the recipients upon the occurrence of a fundamental change.

SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES

The Company has been advised by its counsel that awards made under the
Amended and Restated 1995 Omnibus Stock Plan generally will result in the
following tax events for United States citizens under current United States
federal income tax laws.

INCENTIVE STOCK OPTIONS. A recipient will realize no taxable income, and
the Company will not be entitled to any related deduction, at the time an
incentive stock option is granted under the Amended and Restated 1995 Omnibus
Stock Plan. If certain statutory employment and holding period conditions are
satisfied before the

131
<PAGE>

recipient disposes of shares of Secure Common Stock acquired pursuant to the
exercise of such an option, then no taxable income will result upon the exercise
of such option and the Company will not be entitled to any deduction in
connection with such exercise. Upon disposition of the shares of Secure Common
Stock after expiration of the statutory holding periods, any gain or loss
realized by a recipient will be a capital gain or loss. The Company will not be
entitled to a deduction with respect to a disposition of the shares of Secure
Common Stock by a recipient after the expiration of the statutory holding
periods.

Except in the event of death, if shares of Secure Common Stock acquired by
a recipient upon the exercise of an incentive stock option are disposed of by
such recipient before the expiration of the statutory holding periods (a
"disqualifying disposition"), such recipient will be considered to have realized
as compensation, taxable as ordinary income in the year of disposition, an
amount, not exceeding the gain realized on such disposition, equal to the
difference between the exercise price and the fair market value of the shares of
Secure Common Stock on the date of exercise of the option. The Company will be
entitled to a deduction at the same time and in the same amount as the recipient
is deemed to have realized ordinary income. Any gain realized on the
disposition in excess of the amount treated as compensation or any loss realized
on the disposition will constitute capital gain or loss, respectively. If the
recipient pays the option price with shares of Secure Common Stock that were
originally acquired pursuant to the exercise of an incentive stock option and
the statutory holding periods for such shares of Secure Common Stock have not
been met, the recipient will be treated as having made a disqualifying
disposition of such shares of Secure Common Stock, and the tax consequences of
such disqualifying disposition will be as described above.

The foregoing discussion applies only for regular tax purposes. For
alternative minimum tax purposes, an incentive stock option will be treated as
if it were a non-statutory stock option, the tax consequences of which are
discussed below.

NON-STATUTORY STOCK OPTIONS. A recipient will realize no taxable income,
and the Company will not be entitled to any related deduction, at the time a
non-statutory stock option is granted under the Amended and Restated 1995
Omnibus Stock Plan. At the time of exercise of a non-statutory stock option,
the recipient will realize ordinary income, and the Company will be entitled to
a deduction, equal to the excess of the fair market value of the stock on the
date of exercise over the option price. Upon disposition of the shares of
Secure Common Stock, any additional gain or loss realized by the recipient will
be taxed as a capital gain or loss.

STOCK APPRECIATION RIGHTS AND PERFORMANCE UNITS. Generally (1) the
recipient will not realize income upon the grant of a stock appreciation right
or performance unit award, (2) the recipient will realize ordinary income, and
the Company will be entitled to a corresponding deduction, in the year that
cash, shares of Secure Common Stock or a combination of cash and shares of
Secure Common Stock are delivered to the recipient upon exercise of a stock
appreciation right and (3) the amount of such ordinary income and deduction will
be the amount of cash received plus the fair market value of the shares of
Secure Common Stock received on the date of issuance. The federal income tax
consequences of a disposition of unrestricted shares of Secure Common Stock
received by the recipient upon exercise of a stock appreciation right or in
payment of a performance share award are the same as described below with
respect to a disposition of unrestricted shares of Secure Common Stock.

RESTRICTED AND UNRESTRICTED STOCK. Unless the recipient files an election
to be taxed under Section 83(b) of the Code, (1) the recipient will not realize
income upon the grant of restricted stock, (2) the recipient will realize
ordinary income, and the Company will be entitled to a corresponding deduction,
when the restrictions have been removed or expire, and (3) the amount of such
ordinary income and deduction will be the fair market value of the restricted
stock on the date the restrictions are removed or expire. If the recipient
files an election to be taxed under Section 83(b) of the Code, the tax
consequences to the recipient and the Company will be determined as of the date
of the grant of the restricted stock rather than as of the date of the removal
or expiration of the restrictions.

With respect to awards of unrestricted stock, (1) the recipient will
realize ordinary income and the Company will be entitled to a corresponding
deduction upon the grant of the unrestricted stock, and (2) the amount of such
ordinary income and deduction will be the fair market value of such unrestricted
stock on the date of grant.

132
<PAGE>

When the recipient disposes of restricted or unrestricted stock, the
difference between the amount received upon such disposition and the fair market
value of such shares of Secure Common Stock on the date the recipient realizes
ordinary income will be treated as a capital gain or loss.

WITHHOLDING. The Amended and Restated 1995 Omnibus Stock Plan permits the
Company to withhold from awards an amount sufficient to cover any required
withholding taxes. In lieu of cash, a participant may elect to cover
withholding obligations through a reduction in the number of shares of Secure
Common Stock to be delivered to such participant or by delivery of shares of
Secure Common Stock already owned by the participant. Unless otherwise
permitted by the Committee, the use of stock to satisfy withholding obligations
is subject to certain restrictions if the participant is subject to the
reporting requirements of Section 16 of the Exchange Act.

BOARD OF DIRECTORS' RECOMMENDATION

At meetings held on May 28, 1996 and June 21, 1996, subject to stockholder
approval, the Board of Directors unanimously adopted amendments to the Amended
and Restated 1995 Omnibus Stock Plan to increase the number of shares of Secure
Common Stock that may be issued under the Amended and Restated 1995 Omnibus
Stock Plan (from 1,944,131 to 3,944,131) and to provide the Board of Directors
flexibility to grant holders of options and other awards in companies acquired
by Secure options to purchase Secure Common Stock on substantially the same
terms as such holders' options or awards in the acquired company. On such date,
the Board of Directors also unanimously resolved to submit such amendments to
the Special Meeting for approval by the stockholders.

In addition, the Board of Directors is submitting the entire Amended and
Restated 1995 Omnibus Stock Plan, as amended, for approval by the stockholders.
Such submission is necessary for the Company to comply with the requirements of
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section
162(m)"). Generally, Section 162(m) prohibits a publicly traded corporation
from deducting compensation in excess of $1 million per taxable year paid to any
person who, on the last day of the taxable year, is the chief executive officer
or one of the four most highly compensated executive officers other than the
chief executive officer. Under Section 162(m), compensation that qualifies as
"performance-based compensation" is not counted for purposes of the $1 million
limit. In addition to other requirements, Section 162(m) requires that a
compensation plan be submitted to the stockholders of a company for approval to
be considered as "performance-based compensation." Currently, the Company does
not pay compensation to any applicable person such that the compensation would
be affected by the requirements of Section 162(m). The Board of Directors,
however, believes it to be in the best interests of the long-term growth and
performance of the Company to maintain flexibility with respect to compensation,
and, therefore, to comply with Section 162(m).

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENTS TO
THE SECURE COMPUTING CORPORATION AMENDED AND RESTATED 1995 OMNIBUS STOCK PLAN
DISCUSSED IN THIS PROXY STATEMENT.

133
<PAGE>

ACCOUNTANTS

The firm of Ernst & Young LLP has been the auditors for Secure since the
Company's inception in July 1989. A representative of Ernst & Young LLP will be
present at the Special Meeting and will be afforded an opportunity to make a
statement if such representative so desires and will be available to respond to
appropriate questions during the Special Meeting.

ADDITIONAL MATTERS

Stockholder proposals intended to be presented at the 1997 Annual Meeting
of Stockholders must be received by the Company at is principal executive office
no later than November 28, 1996 for inclusion in the Proxy Statement for that
meeting.

By Order of The Board of Directors,

/s/ James E. Nicholson

James E. Nicholson
SECRETARY

August 5, 1996

134
<PAGE>

INDEX TO FINANCIAL STATEMENTS

Historical Secure Financial Statements. . . . . . . . . . . . . . . . . . F-2

Historical Border Consolidated Financial Statements . . . . . . . . . . . F-20

Historical Enigma Financial Statements. . . . . . . . . . . . . . . . . . F-30

F-1

<PAGE>

Report of Independent Auditors

The Board of Directors
Secure Computing Corporation

We have audited the accompanying balance sheets of Secure Computing Corporation
as of December 31, 1994 and 1995, and the related statements of operations,
stockholders' equity (deficit) and cash flows for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Secure Computing Corporation at
December 31, 1994 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.

As discussed in the notes to the financial statements, in 1993 the Company
changed its method of accounting for income taxes.

Ernst & Young LLP

Minneapolis, Minnesota
January 30, 1996

F-2

<PAGE>
<TABLE>
<CAPTION>
SECURE COMPUTING CORPORATION

BALANCE SHEETS

DECEMBER 31 MARCH 31,
1994 1995 1996
(UNAUDITED)
-----------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 934,000 $ 32,599,000 $ 30,867,000
Accounts receivable (net of allowance for doubtful
accounts of 1994--none; December 31, 1995 and
March 31, 1996--$48,000) 2,178,000 3,779,000 4,102,000
Deferred income taxes 700,000 936,000 936,000
Inventory 99,000 433,000 471,000
Other current assets 86,000 234,000 400,000
-----------------------------------------
Total current assets 3,997,000 37,981,000 36,776,000

Property and equipment:
Equipment 2,756,000 4,289,000 4,901,000
Furniture and fixtures 551,000 817,000 1,160,000
Leasehold improvements 160,000 272,000 419,000
-----------------------------------------
3,467,000 5,378,000 6,480,000
Accumulated depreciation (1,968,000) (2,928,000) (3,215,000)
-----------------------------------------
1,499,000 2,450,000 3,265,000

Deferred income taxes 673,000 437,000 437,000

Intangible assets (net of accumulated amortization
of December 31, 1994--$199,000; December 31,
1995--$238,000 and March 31, 1996--$248,000) 383,000 449,000 470,000

Other assets 38,000 33,000 35,000

-----------------------------------------
Total assets $ 6,590,000 $ 41,350,000 $ 40,983,000
-----------------------------------------
-----------------------------------------

</TABLE>

F-3

DECEMBER 31 MARCH 31,
1994 1995 1996
(UNAUDITED)
-----------------------------------------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 350,000 $ 964,000 $ 835,000
Accrued payroll liability 780,000 1,415,000 1,303,000
Contract loss reserve 200,000 250,000 250,000
Other accrued liabilities 263,000 563,000 444,000
Deferred revenue 283,000 790,000 819,000
Current portion of long-term debt 197,000 - -
-----------------------------------------
Total current liabilities 2,073,000 3,982,000 3,651,000

Long-term debt 1,003,000 - -

Redeemable Convertible Preferred Stock:
$2.24 Series A, par value $.01 per share:
Issued and outstanding share--December 31,
1994--2,385,808; December 31, 1995--none
and March 31, 1996--none
Redemption and liquidation value--December 31,
1994--$6,968,000 6,957,000 - -
$3.00 Series B, par value $.01 per share:
Issued and outstanding share--December 31,
1994--333,333; December 31, 1995--none
and March 31, 1996--none
Redemption and liquidation value--December 31,
1994--$1,023,000 992,000 - -

Stockholders' equity (deficit):
Common Stock, par value $.01 per share:
Issued and outstanding shares--December 31,
1994--387,869; December 31, 1995--6,480,011
and March 31, 1996--6,592,108 4,000 65,000 66,000
Additional paid-in capital - 42,823,000 42,960,000
Accumulated deficit (4,439,000) (5,520,000) (5,694,000)
-----------------------------------------
Total stockholders' equity (deficit) (4,435,000) 37,368,000 37,332,000
-----------------------------------------
Total liabilities and stockholders' equity (deficit) $ 6,590,000 $ 41,350,000 $ 40,983,000
-----------------------------------------
-----------------------------------------

</TABLE>
SEE ACCOMPANYING NOTES.

F-4

<PAGE>
<TABLE>
<CAPTION>
SECURE COMPUTING CORPORATION

STATEMENTS OF OPERATIONS

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31 MARCH 31
1993 1994 1995 1995 1996
----------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Government contracts $9,389,000 $13,744,000 $14,849,000 $1,097,000 $2,002,000
Products and services 8,000 1,486,000 5,863,000 3,450,000 5,351,000
----------------------------------------------------------------------
9,397,000 15,230,000 20,712,000 4,547,000 7,353,000
Cost of revenue 6,271,000 9,828,000 13,529,000 2,918,000 4,513,000
----------------------------------------------------------------------
Gross profit 3,126,000 5,402,000 7,183,000 1,629,000 2,840,000

Operating expenses:
Selling and marketing 545,000 1,221,000 2,691,000 411,000 1,308,000
Research and development 521,000 1,403,000 3,691,000 859,000 1,460,000
General and administrative 1,649,000 1,749,000 1,936,000 279,000 631,000
----------------------------------------------------------------------
2,715,000 4,373,000 8,318,000 1,549,000 3,399,000
----------------------------------------------------------------------
Operating income (loss) 411,000 1,029,000 (1,135,000) 80,000 (559,000)

Interest expense (218,000) (164,000) (100,000) (29,000) -
Interest and other income 17,000 126,000 261,000 16,000 385,000
----------------------------------------------------------------------
Income (loss) before income taxes and
cumulative effect of accounting change 210,000 991,000 (974,000) 67,000 (174,000)
Income tax benefit 502,000 502,000 - - -
----------------------------------------------------------------------
Income (loss) before cumulative effect of
accounting change 712,000 1,493,000 (974,000) 67,000 (174,000)
Cumulative effect of change in method of
accounting for income taxes 350,000 - - - -
----------------------------------------------------------------------
Net income (loss) $1,062,000 $1,493,000 $(974,000) $67,000 $ (174,000)
----------------------------------------------------------------------
----------------------------------------------------------------------

Net income (loss) per share:
Primary $.58 $.78 $(.60) $(.07) $(.03)
Fully diluted $.32 $.40 $(.22) $ .02
Supplementary $.43 $(.20) $ .02

Weighted average shares outstanding:
Primary 1,039,000 1,282,000 1,623,000 1,345,000 6,557,000
Fully diluted 3,288,000 3,750,000 4,383,000 4,030,000
Supplementary 3,864,000 4,458,000 4,105,000

</TABLE>
SEE ACCOMPANYING NOTES.

F-5

<PAGE>

Secure Computing Corporation

Statement of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>

ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993 280,150 $3,000 $ - $(6,056,000) $(6,053,000)
Exercise of incentive stock options 46,813 - 4,000 - 4,000
Preferred Stock accretion - - (4,000) (3,000) (7,000)
Dividends accrued on Preferred Stock - - - (450,000) (450,000)
Net income for the year - - - 1,062,000 1,062,000
--------------------------------------------------------------------------------
Balance at December 31, 1993 326,963 3,000 - (5,447,000) (5,444,000)
Exercise of incentive stock options 60,906 1,000 6,000 - 7,000
Preferred Stock accretion - - (6,000) (3,000) (9,000)
Dividends accrued on Preferred Stock - - - (482,000) (482,000)
Net income for the year - - - 1,493,000 1,493,000
--------------------------------------------------------------------------------
Balance at December 31, 1994 387,869 4,000 - (4,439,000) (4,435,000)
Exercise of incentive stock options 216,919 2,000 90,000 - 92,000
Exercise of Common Stock warrants 164,619 2,000 367,000 - 369,000
Fractional shares from stock split (31) - - - -
Initial public offering of Common
Stock, net of expenses 2,250,000 22,000 32,687,000 - 32,709,000
Preferred Stock conversion 3,460,635 35,000 10,119,000 - 10,154,000
Preferred Stock accretion - - (11,000) - (11,000)
Dividends accrued on Preferred Stock - - (429,000) (107,000) (536,000)

--------------------------------------------------------------------------------
Net loss for the year - - (974,000) (974,000)
Balance at December 31, 1995 6,480,011 65,000 42,823,000 (5,520,000) 37,368,000
Exercise of incentive stock options 112,097 1,000 59,000 - 60,000
Compensation expense - - 78,000 - 78,000
Net loss for the three months ended
March 31, 1996 - - - (174,000) (174,000)
--------------------------------------------------------------------------------
Balance at March 31, 1996 (unaudited) 6,592,108 $66,000 $42,960,000 $(5,694,000) $37,332,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

</TABLE>
SEE ACCOMPANYING NOTES.

F-6
<PAGE>

SECURE COMPUTING CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31 MARCH 31

1993 1994 1995 1995 1996
----------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $1,062,000 $1,493,000 $ (974,000) $ 67,000 $ (174,000)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Cumulative effect of change in accounting for
income taxes (350,000) - - - -
Loss on disposal of property and equipment 41,000 - - - -
Compensation expense on stock options - 9,000 57,000 8,000 95,000
Depreciation 481,000 667,000 960,000 151,000 287,000
Amortization 155,000 39,000 39,000 10,000 11,000
Deferred income taxes (502,000) (522,000) - 77,000 -
Other 46,000 56,000 (3,000) --
Changes in operating assets and liabilities:
Accounts receivable 111,000 (1,030,000) (1,601,000) 552,000 (323,000)
Inventory (42,000) (56,000) (334,000) 52,000 (38,000)
Other current assets 45,000 (39,000) (148,000) (156,000) (166,000)
Accounts payable 154,000 (280,000) 614,000 (214,000) (129,000)
Accrued liabilities and reserves 314,000 543,000 928,000 28,000 (247,000)
Deferred revenue 14,000 269,000 507,000 27,000 28,000
----------------------------------------------------------------------------
Net cash provided by (used in) operating activities 1,529,000 1,149,000 45,000 602,000 (656,000)

INVESTING ACTIVITIES
Purchase of property and equipment (1,244,000) (890,000) (1,911,000) (249,000) (1,102,000)
Increase in intangible and other assets (89,000) (74,000) (100,000) (21,000) (34,000)
----------------------------------------------------------------------------
Net cash used in investing activities (1,333,000) (964,000) (2,011,000) (270,000) (1,136,000)

FINANCING ACTIVITIES
Payment on notes payable and long-term debt (250,000) (1,750,000) (1,200,000) (47,000) -
Proceeds from notes long-term debt - 1,200,000 - - -
Proceeds from issuance of Common Stock 4,000 7,000 33,170,000 13,000 60,000
Proceeds from issuance of Series A Convertible
Redeemable Preferred Stock - - 1,661,000 - -
Proceeds from issuance of Series B Convertible
Redeemable Preferred stock - 967,000 - - -
----------------------------------------------------------------------------
Net cash provided by (used in) financing activities (246,000) 424,000 33,631,000 (34,000) 60,000
----------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents (50,000) 609,000 31,665,000 298,000 (1,732,000)
Cash and cash equivalents at beginning of period 375,000 325,000 934,000 934,000 32,599,000
----------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 325,000 $ 934,000 $32,599,000 $1,232,000 $30,867,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES.

F-7
<PAGE>

SECURE COMPUTING CORPORATION

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Secure Computing Corporation (the "Company") designs and assembles products to
enable electronic commerce by protecting an organization's computer network and
its computers from access by unauthorized users. The Company's principal markets
are the United States government under development contracts, including the
Secure Network Server product, and domestic commercial companies for the
Sidewinder Internet firewall product. Presently, government contracts and
product sales make up a majority of the Company's revenue.

REVENUE RECOGNITION

GOVERNMENT CONTRACTS

Government contract revenues for cost-plus-fixed-fee contracts are recognized on
the basis of costs incurred during the period plus the fee earned. Award fees
are recognized based upon the percentage of completion and forecasted profit. A
provision is made for the estimated loss, if any, on government contracts.

Under its government contracts, the Company bears the risk that increased or
unexpected costs required to perform specified services may reduce the amount of
the Company's fee. In addition, recoverable expenses billed by the Company are
subject to review and audit by the Defense Contract Audit Agency, which could
result in amounts previously billed being renegotiated. Pursuant to their terms,
these contracts are generally also subject to termination at the convenience of
the applicable government agency. If the contract is terminated, the Company
typically would be reimbursed for its costs to the date of its termination plus
the cost of an orderly termination, and paid a portion of the fee.

At December 31, 1994 and 1995 and March 31, 1996, the Company had deferred
revenue of $253,000, $382,000 and $336,000, respectively, related to government
contracts.

F-8

<PAGE>

SECURE COMPUTING CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PRODUCTS AND SERVICES

The Company recognizes product revenue at the time of shipment. The Company has
entered into customer support and maintenance agreements with various customers.
The Company accounts for the obligations under these agreements by deferring a
pro rata portion of revenue and recognizing it either ratably as the obligations
are fulfilled or upon completion of performance.

CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

INVENTORY

Inventory consists mainly of purchased components and is valued at the lower of
cost (first-in, first-out method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost. Depreciation is computed using
accelerated methods over the estimated useful lives of the assets.

INTANGIBLE ASSETS

Intangible assets consist of patents and trademarks and are amortized using the
straight line method over the estimated useful lives of the assets, which range
up to ten years.

INCOME TAXES

Effective January 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." As permitted under the new rules, prior years' financial statements were
not restated. The cumulative effect of adopting Statement No. 109 as of January
1, 1993 was to increase net income by $350,000.

F-9

<PAGE>

SECURE COMPUTING CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INTERIM FINANCIAL INFORMATION

The accompanying financial statements as of March 31, 1996 and for the three
month periods ended March 31, 1995 and 1996 are unaudited, but, in the opinion
of management of the Company, reflect all adjustments (consisting of normal and
recurring accruals) necessary for a fair presentation. The results of operations
for the three month period ended March 31, 1996 are not necessarily indicative
of the results that may be expected for the full year ending December 31, 1996.

RESEARCH AND DEVELOPMENT

Research and development expenditures are charged to operations as incurred.
Statement of Financial Accounting Standards No. 86 "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed," requires
capitalization of certain software development costs subsequent to the
establishment of technological feasibility.

Based on the Company's product development process, technological feasibility is
established upon completion of a working model. Costs incurred by the Company
between completion of the working model and the point at which the product is
ready for general release have been insignificant. All research and development
costs have been expensed.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

NET INCOME (LOSS) PER SHARE

Net income (loss) per share is computed using the weighted average number of
shares of common stock and common stock equivalents, if dilutive, outstanding
during the periods presented after giving effect to the application of
Securities and Exchange Commission Staff Accounting Bulletin No. 83 ("SAB No.
83"). Pursuant to SAB No. 83, all common shares issued and stock options and
warrants granted by the Company at a price less than

F-10

<PAGE>

SECURE COMPUTING CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

the initial public offering price during the twelve months preceding the
offering date (using the treasury stock method until shares are issued) have
been included in the calculation of common and common equivalent shares
outstanding for all periods up to the initial public offering date. The fully
diluted income (loss) per share is presented using the "if converted" method and
reflects the impact of the conversion of the preferred stock to common stock at
the beginning of the earliest period presented or at the date of issuance, if
later.

In computing supplementary net income (loss) per share, interest expense related
to bank debt retired with the proceeds of Common Stock issued in the initial
public offering has been added back to net income (loss). The weighted average
number of shares used in the calculation consists of common and common
equivalent shares, if dilutive, outstanding during the period after giving
effect to the conversion of all preferred stock to Common Stock, additional SAB
No. 83 shares as determined above and the required shares of Common Stock issued
to repay bank debt.

STOCK OPTIONS

The Company follows Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25) in accounting for its employee stock
options. In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The Company is required to adopt the provisions of the Statement
beginning in 1996. Upon adoption of Statement No. 123, the Company intends to
continue to measure compensation cost using the methods described in APB 25.

RECLASSIFICATIONS

Certain amounts presented in the 1994 and 1993 financial statements have been
reclassified to conform with the 1995 presentation.

F-11

<PAGE>

SECURE COMPUTING CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. ACCOUNTS RECEIVABLE

At December 31, 1995 and March 31, 1996, approximately 72% and 53%,
respectively, of accounts receivable were due from the United States government.
Substantially all accounts receivable were due from the United States government
at December 31, 1994 and 1993. Unbilled accounts receivable from all customers
were $174,000, $640,000 and $519,000 at December 31, 1994 and 1995 and March 31,
1996, respectively.

3. NOTES PAYABLE TO STOCKHOLDERS

In August 1994, the holder of a convertible debenture converted the $250,000 in
principal and all accrued and unpaid interest into 136,409 shares of the
Company's Series A Cumulative Redeemable Convertible Preferred Stock at a
conversion rate of $2.24 per share.

4. DEBT

Long-term debt consists of the following:

DECEMBER 31 MARCH 31,
1994 1995 1996
-----------------------------------------------------

Bank term note $1,200,000 $ - $ -
Less current portion (197,000) - -
-----------------------------------------------------
$1,003,000 $ - $ -
-----------------------------------------------------
-----------------------------------------------------

The Company received the term loan on December 30, 1994 for the purpose of
paying off certain debt and the balance of another term loan. The term loan was
paid in full following the Company's initial public offering.

In addition, the Company has a $500,000 short-term line of credit, on which no
funds have been drawn as of December 31, 1995. The Company may borrow against
the line of credit up to 60% of accounts receivable that are less than 60 days
outstanding. The line bears interest on the outstanding balance at an annual
rate equal to the prime rate plus 1% and is secured by accounts receivable,
inventory, intangibles and all general business assets as well as a key man life
insurance policy.

F-12

<PAGE>

SECURE COMPUTING CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. LEASES

In December 1995, the Company renegotiated the lease agreement for its
headquarters in order to expand its facilities. The lease is for a period of ten
years and expires February 2006. Future lease payments for all operating leases,
excluding executory costs such as management and maintenance fees, are as
follows:

1996 $ 908,000
1997 809,000
1998 724,000
1999 821,000
2000 870,000
Thereafter 4,819,000
--------------
$8,951,000
--------------
--------------

Rent expense was $317,000, $523,000, $769,000, $176,000 and $285,0000, for the
years ended December 31, 1993, 1994 and 1995 and the three months ended March
31, 1995 and 1996, respectively.

6. CAPITAL STOCK

REORGANIZATION AND STOCK SPLIT

On September 30, 1995, the Company effected a reorganization (the "1995
Reorganization") which included a 1.25-for-1 split of the Company's Common
Stock. Accordingly, all share, per share, weighted average share information and
redeemable convertible preferred stock have been restated to reflect the split.

Following the 1995 Reorganization, the Company had 30,460,635 shares of
authorized capital stock, consisting of 25,000,000 shares of Common Stock and
5,460,635 shares of Preferred Stock, of which 3,127,302 shares were designated
Series A Convertible Preferred Stock, 333,333 were designated Series B
Convertible Preferred Stock and 2,000,000 shares of Preferred Stock undesignated
as to its series. In December 1995, the Board of Directors elected to decrease
the amount of authorized Preferred Stock to 2,000,000 undesignated shares.

F-13

<PAGE>

SECURE COMPUTING CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. CAPITAL STOCK (CONTINUED)

INITIAL PUBLIC OFFERING

In November 1995, the Company sold 2,250,000 shares of Common Stock in an
initial public offering from which the Company received $33,480,000 before
deducting expenses.

PREFERRED STOCK

Upon the conclusion of the Company's initial public offering, all outstanding
shares of preferred stock were converted on a one-for-one basis to Common Stock.
Prior to that date, the Company had issued 3,127,302 shares of $2.24 Series A
Cumulative Redeemable Convertible Preferred Stock and 333,333 shares of $3.00
Series B Cumulative Redeemable Convertible Preferred Stock.

Series A and B Preferred Stock accrued cumulative dividends at $.20 and $.24 per
share per annum, respectively. Dividends in arrears prior to conversion for
Series A Convertible Preferred Stock at November 17, 1995 and December 31, 1994
and 1993 were $2,093,000, $1,624,000 and $1,165,000, respectively, and for
Series B Cumulative Redeemable Convertible Preferred Stock at November 17, 1995
and December 31, 1994 were $90,000 and $23,000, respectively. Upon conversion,
all rights to receive the dividends in arrears ceased.

WARRANTS

Warrants for the purchase of 164,619 shares of Common Stock at $2.24 per share
and warrants for the purchase of 741,494 shares of Series A Convertible
Preferred Stock at $2.24 per share that were outstanding at December 31, 1994
were fully exercised during 1995.

F-14

<PAGE>

Secure Computing Corporation

Notes to Financial Statements (continued)

7. STOCK OPTIONS

The Board of Directors and the stockholders approved the revised 1989 Incentive
Stock Option Plan (the "ISO Plan"), effective September 19, 1990, and the Non-
Qualified Stock Option Plan (the "Non-ISO Plan"), effective May 25, 1994. In
September 1995, the Board of Directors and the stockholders approved the
Company's 1995 Omnibus Stock Plan (the "Stock Plan"). The Stock Plan supersedes
both the ISO Plan and the Non-ISO Plan and no new options will be granted under
either of the superseded plans. Under the terms of the Stock Plan, key employees
and non-employees may be granted options to purchase up to 1,444,131 shares of
the Company's Common Stock.

A summary of changes in outstanding options and common shares reserved under the
Plan are as follows:

SHARES
AVAILABLE FOR OPTIONS PRICE
GRANT OUTSTANDING EXERCISABLE PER SHARE
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1992 67,899 369,875 41,688 $ .08 to $ .59
Shares authorized 498,669 - - -
Granted or became exercisable (273,500) 273,500 117,688 .08 to .59
Exercised - (46,813) (46,813) .08 to .20
Canceled 13,875 (13,875) (875) .08 to .59
----------------------------------------------------------------------
Balance at December 31, 1993 306,943 582,687 111,688 .08 to .59
Shares authorized 125,000 - - -
Granted or became exercisable (348,083) 348,083 269,831 .01 to 1.60
Exercised - (60,906) (60,906) .08 to .59
Canceled 44,875 (44,875) (12,250) .08 to .59
----------------------------------------------------------------------
Balance at December 31, 1994 128,735 824,989 308,363 .01 to 1.60
Shares authorized 207,500 - - -
Granted or became exercisable (241,000) 241,000 257,935 .01 to 52.88
Exercised - (218,544) (218,544) .01 to 1.60
Canceled 74,937 (74,937) (750) .20 to .59
----------------------------------------------------------------------
Balance at December 31, 1995 170,172 772,508 347,004 .01 to 52.88
Granted or became exercisable (30,500) 30,500 19,750 .01 to 30.00
Exercised - (112,097) (112,097) .08 to 1.60
Canceled 48,000 (48,000) - 1.60 to 52.88
----------------------------------------------------------------------
Balance at March 31, 1996
(unaudited) 187,672 642,911 254,657 $ .01 to $30.00
----------------------------------------------------------------------
----------------------------------------------------------------------

</TABLE>

F-15

<PAGE>

Secure Computing Corporation

Notes to Financial Statements (continued)

7. STOCK OPTIONS (CONTINUED)

The issuance of stock options to board members with an exercise price less than
the fair value on the date of grant was accounted for as compensation expense to
be recognized over the service period of one year. At December 31, 1994, 1995
and March 31, 1996, $9,000, $66,000 and $83,000, respectively, had been accrued
for the unexercised options as a component of deferred compensation.

8. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's net deferred tax assets are as follows:

DECEMBER 31
1994 1995
---------------------------
Deferred tax assets:
Accrued liabilities $ 26,000 $ 193,000
Contract loss reserve 80,000 100,000
Payroll liabilities 63,000 102,000
Book over tax amortization 45,000 49,000
Book over tax depreciation 36,000 64,000
Income tax credits - 190,000
Net operating loss carryforward 1,479,000 3,233,000
---------------------------
Total deferred tax assets before valuation
allowance 1,729,000 3,931,000
Less valuation allowance (356,000) (2,558,000)
---------------------------
Net deferred tax assets $1,373,000 $1,373,000
---------------------------
---------------------------

Management believes it is more likely than not that the net deferred tax assets
of $1,373,000 at December 31, 1995 will be realized. However, the amount of the
deferred tax assets considered realizable could be reduced in the near term if
estimates of future taxable income are reduced.

F-16

<PAGE>

Secure Computing Corporation

Notes to Financial Statements (continued)

8. INCOME TAXES (CONTINUED)

At December 31, 1995, the Company had a net operating loss carryforward (NOL) of
approximately $8,100,000 which are available to offset taxable income through
2010. For financial reporting purposes, a valuation allowance has been recorded
to offset deferred tax assets that may not be realized. Included in the NOL is
approximately $4,100,000 of deductions resulting from disqualifying dispositions
of stock options. These deductions currently have a full valuation allowance and
when realized for financial statement purposes they will not result in a
reduction in income tax expense. Rather, the benefit will be recorded as
additional paid-in-capital.

Significant components of the income tax benefits are as follows:

YEAR ENDED DECEMBER 31
1993 1994 1995
-------------------------------------
Current:
Federal $ - $ 17,000 $ -
State - 3,000 -
-------------------------------------
Total current - 20,000 -

Deferred:
Federal (425,000) (443,000) -
State (77,000) (79,000) -
-------------------------------------
$(502,000) $(502,000) $ -
-------------------------------------
-------------------------------------

In 1995, $25,000 of taxes were paid. No income taxes were paid in 1994 or 1993.

A reconciliation of statutory federal income taxes to the income tax benefit
recorded is as follows:

YEAR ENDED DECEMBER 31
1993 1994 1995
---------------------------------------

Income taxes at statutory rate $ 73,000 $ 347,000 $ (341,000)
State taxes, net of federal benefit 11,000 50,000 (49,000)
Change in valuation allowance (586,000) (854,000) 2,202,000
Effect of disqualifying dispositions and
income tax credits - - (1,841,000)
Other - (45,000) 29,000
---------------------------------------
$(502,000) $(502,000) $ -
---------------------------------------
---------------------------------------

F-17

<PAGE>

Secure Computing Corporation

Notes to Financial Statements (continued)

9. EMPLOYEE BENEFIT PLAN

The Company has a combined voluntary defined contribution plan under Sections
401(k) and 401(a) of the Internal Revenue Code which covers substantially all
employees of the Company. Contributions to the voluntary 401(a) portion of the
plan are limited to the employer's discretionary annual contribution.

The Company recognized expense for contributions to the plans as follows:

YEAR ENDED DECEMBER 31 THREE MONTHS ENDED
MARCH 31
1993 1994 1995 1995 1996
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Defined contribution plan - 401(k) $ 17,000 $ 31,000 $ 44,000 $ 37,000 $ 12,000
Voluntary contribution plan - 401(a) 132,000 287,000 451,000 100,000 161,000
--------------------------------------------------------
$149,000 $318,000 $495,000 $137,000 $173,000
--------------------------------------------------------
--------------------------------------------------------

</TABLE>

10. MANAGEMENT INCENTIVE PLAN

The Company has a management incentive plan designed to attract, retain and
provide performance incentives for key management personnel. The plan provides
for a cash bonus to be paid to certain employees upon attainment of certain
individual and Company performance objectives. For the years ended December 31,
1993, 1994 and 1995 and the three months ended March 31, 1995 and 1996, the
Company recognized expense of $90,000, $116,000, $272,000, $45,000 and $64,000,
respectively, under the plan.

11. RELATED PARTY TRANSACTIONS

The Company conducts business with Midwest Systems, Inc. (Midwest), of which a
key employee is related to an officer of the Company. Midwest distributes
certain of the Company's products and is a computer hardware vendor to the
Company. For the year ended December 31, 1995 and the three months ended March
31, 1996, the Company had revenue of $420,000 and $326,000 from sales to Midwest
and purchased $1,120,000 and $47,000 of goods from Midwest. At December 31, 1995
and March 31, 1996, accounts receivable and accounts payable related to Midwest
were $70,000 and $249,000 and $170,000 and $22,000, respectively.

F-18

<PAGE>

NOTE 12. SUBSEQUENT EVENTS

ACQUISITIONS

In May 1996, the Company acquired Webster Network Strategies, Inc. ("Webster"),
a Florida based Internet software developer, for 102,000 shares of Common Stock
valued at $2,601,000 and $500,000 cash in exchange for all outstanding Common
Stock of Webster. The acquisition is accounted for under the purchase method,
and results of Webster operations since May 1996 are included in the Company's
statement of operations. In conjunction with the purchase, the Company recorded
a purchased technology charge for substantially all of the purchase price
including acquisition expenses. Former Webster stockholders have escrowed 10,000
shares of Common Stock to cover post-acquisition contingent legal expenses.

Also in May 1996, the Company agreed to acquire Canadian based Border Network
Technologies Inc. ("Border"), a network security software provider, for
approximately 5,000,000 shares of Common Stock and the conversion of
approximately 1,500,000 warrants and stock options.

In June 1996, the Company agreed to acquire Enigma Logic, Inc. ("Enigma"), a
California based developer of identification and authentication software and
products, for approximately 2,100,000 shares of Common Stock and the conversion
of approximately 600,000 stock options.

Both the Border and Enigma acquisitions are intended to be accounted for as a
pooling of interests under the rules of Accounting Principles Board Opinion No.
16. The acquisitions are expected to close in August 1996.

In conjunction with the proposed acquisitions, the Company has also agreed to
grant approximately 150,000 stock options to key employees of Border and Enigma
contingent on the closing of the proposed acquisitions.

STOCK OPTION PLAN

The Stock Plan was amended in May 1996 to reserve an additional 500,000 shares
for future grants.

F-19

<PAGE>

BORDER NETWORK TECHNOLOGIES INC.

CONSOLIDATED FINANCIAL STATEMENTS
(expressed in Canadian dollars)

F-20

<PAGE>

AUDITORS' REPORT

To the Board of Directors of
Border Network Technologies Inc.

We have audited the consolidated balance sheet of Border Network Technologies
Inc. as at December 31, 1995 and the consolidated statements of operations and
retained earnings (deficit) and changes in financial position for the year then
ended. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at December 31, 1995 and the
results of its operations and the changes in its financial position for the year
then ended in accordance with generally accepted accounting principles in
Canada.

The financial statements as at December 31, 1994 and for the period then ended
were audited by other auditors who expressed an opinion without reservation on
those statements in their report dated October 2, 1995.

PRICE WATERHOUSE

Chartered Accountants

Toronto, Canada
March 29, 1996

F-21

<PAGE>

BORDER NETWORK TECHNOLOGIES INC.

CONSOLIDATED BALANCE SHEET
(expressed in Canadian dollars)
- --------------------------------------------------------------------------------

MARCH 31 DECEMBER 31
1996 1995 1994
(unaudited)

ASSETS

Current assets
Cash $13,161,910 $ 163,479 $18,367
Accounts receivable (Note 2) 2,156,838 1,294,352 140,203
Prepaid expenses 478,334 22,138 9,600
Income taxes recoverable - - 40,000
----------- ---------- --------
15,797,082 1,479,969 208,170

Capital assets (Note 3) 603,424 285,984 3,865
----------- ---------- --------
$16,400,506 $1,765,953 $212,035
----------- ---------- --------
----------- ---------- --------

LIABILITIES

Current liabilities
Accounts payable $ 1,306,807 $1,330,611 $ 93,681
Deferred support revenue 217,501 235,079 2,720
Income taxes payable 258,534 36,406 -
Current portion of long-term debt (Note 6) 30,772 23,582 80,000
----------- ---------- --------
1,813,614 1,625,678 176,401

Long-term debt (Note 6) 42,911 46,329 10,000
----------- ---------- --------
1,856,525 1,672,007 186,401

SHAREHOLDERS' EQUITY

Share capital (Note 7) 17,606,510 38,000 38,000

Retained earnings (deficit) (3,062,529) 55,946 (12,366)
----------- ---------- --------
14,543,981 93,946 25,634
----------- ---------- --------
$16,400,506 $1,765,953 $212,035
----------- ---------- --------
----------- ---------- --------

F-22

<PAGE>

BORDER NETWORK TECHNOLOGIES INC.

CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
(expressed in Canadian dollars)
- --------------------------------------------------------------------------------

THREE MONTHS YEAR ENDED PERIOD ENDED
ENDED MARCH 31 DECEMBER 31 DECEMBER 31
1996 1995 1995 1994
(unaudited)

<S> <C> <C> <C> <C>
Revenue $3,183,847 $378,501 $4,511,229 $187,949

Cost of goods sold 368,822 20,872 462,026 11,705
---------- -------- ---------- --------

2,815,025 357,629 4,049,203 176,244

Expenses
Sales and marketing 1,516,250 154,342 2,170,818 80,861
Research and development 294,579 83,149 806,877 83,733
General and administrative 459,317 56,861 975,317 24,016
---------- -------- ---------- --------
2,270,146 294,352 3,953,012 188,610
---------- -------- ---------- --------
Income (loss) from operations 544,879 63,277 96,191 (12,366)

Interest income 60,670 - - -
---------- -------- ---------- --------
Income (loss) before provision
for income taxes 605,549 63,277 96,191 (12,366)

Provision for income taxes 230,674 - 27,879 -
---------- -------- ---------- --------
Net income (loss) for the period 374,875 63,277 68,312 (12,366)

Retained earnings (deficit), beginning
of period 55,946 (12,366) (12,366) -

Excess of share repurchase price over
carrying value (Note 7(c)) (3,493,350) - - -
---------- -------- ---------- --------

Retained earnings (deficit),
end of period $(3,062,529) $ 50,911 $ 55,946 $(12,366)
---------- -------- ---------- --------
---------- -------- ---------- --------

</TABLE>

F-23

<PAGE>

BORDER NETWORK TECHNOLOGIES INC.

CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(expressed in Canadian dollars)
- --------------------------------------------------------------------------------

THREE MONTHS YEAR ENDED PERIOD ENDED
ENDED MARCH 31 DECEMBER 31 DECEMBER 31
1996 1995 1995 1994
(unaudited)

<S> <C> <C> <C> <C>
Cash provided by (used in)
Operating activities
Net income (loss) for the period $ 374,875 $ 63,277 $ 68,312 $(12,366)
Item not involving cash
Amortization 59,607 1,000 47,223 555
Changes in noncash working capital items (1,137,936) (36,470) 395,728 (93,402)
---------- -------- ---------- --------

(703,454) 27,807 511,263 (105,213)
---------- -------- ---------- --------
Financing activities
Change in long-term debt, net 3,772 2,000 (20,089) 90,000
Issuance (redemption) of common shares (3,500,000) - - 38,000
Issuance of Class A shares, net 8,165,805 - - -
Issuance of special warrants, net 9,409,355 - - -
---------- -------- ---------- --------
14,078,932 2,000 (20,089) 128,000
---------- -------- ---------- --------

Investing activities
Purchase of capital assets (377,047) (22,665) (329,342) (4,420)
Investment in joint venture (Note 4) - - (16,720) -
---------- -------- ---------- --------
(377,047) (22,665) (346,062) (4,420)
---------- -------- ---------- --------
Increase in cash during the period 12,998,431 7,142 145,112 18,367

Cash, beginning of period 163,479 18,367 18,367 -
---------- -------- ---------- --------

Cash, end of period $13,161,910 $ 25,509 $163,479 $ 18,367
---------- -------- ---------- --------
---------- -------- ---------- --------

</TABLE>

F-24

<PAGE>

BORDER NETWORK TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(expressed in Canadian dollars
(amounts at March 31, 1996 and for the three-month
periods ended March 31, 1996 and 1995 are unaudited)
- --------------------------------------------------------------------------------

1. INCORPORATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION
Revenue from the sale of software is recognized when shipped, and is net of
discounts and allowances for estimated future returns and exchanges.
Revenue from support contracts is deferred and taken into income on a
straight-line basis over the term of the contract.

CONSOLIDATION
The company accounts for its investment in a joint venture using the
proportionate consolidation method.

TRANSLATION OF FOREIGN CURRENCIES
The economic activities of Border Network Technologies Europe Limited
("Border Europe"), a self-sustaining joint venture, are independent of the
company and have a base currency in pounds sterling. Border Europe's
financial statements have been translated using the current rate method.

Other assets and liabilities in foreign currency are translated into
Canadian dollars at year-end exchange rates. Any resulting exchange
adjustments are included in current earnings. Revenue and costs are
translated at the average exchange rate prevailing during the year.

AMORTIZATION
Capital assets are recorded at cost and are amortized on a straight-line
basis over their estimated useful lives as follows:

Computer equipment 3 years
Office equipment 5 years
Leasehold improvements 5 years

INVESTMENT TAX CREDITS
Investment tax credits are accounted for using the cost reduction method.
Under this method, investment tax credits are deducted from the related
asset or expenditure.

INCORPORATION
The company was incorporated under the laws of the Province of Ontario on
January 13, 1994.

2. RELATED PARTY TRANSACTIONS

THREE MONTHS
ENDED MARCH 31
1996 1995

Shareholder reselling product as a distributor
Sales to a shareholder for the period $394,816 $156,587
Amount receivable from shareholder, included
in accounts receivable, at end of period 311,743 124,099
Interest paid on loans from related parties for the period 6,772 -

F-25

<PAGE>

BORDER NETWORK TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(expressed in Canadian dollars
(amounts at March 31, 1996 and for the three-month
periods ended March 31, 1996 and 1995 are unaudited) Page 2
- --------------------------------------------------------------------------------

PERIOD ENDED DECEMBER 31
1995 1994

Shareholder reselling product as a distributor
Sales to a shareholder for the period $1,182,948 $116,671
Amount receivable from shareholder, included
in accounts receivable, at end of period 363,534 96,358
Interest paid on loans from related parties for the period 9,467 2,000

3. CAPITAL ASSETS

NET
-------------------------------
ACCUMULATED MARCH 31 DECEMBER 31
COST AMORTIZATION 1996 1995 1994

Computer equipment $488,590 $ 70,666 $417,924 $218,756 $ 1,929
Office equipment 152,967 9,827 143,140 50,338 1,936
Leasehold improvements 69,252 26,892 42,360 16,890 -
-------- -------- -------- -------- ------
$710,809 $107,385 $603,424 $285,984 $3,865
-------- -------- -------- -------- ------
-------- -------- -------- -------- ------

4. INVESTMENT IN BORDER NETWORK TECHNOLOGIES EUROPE LIMITED

The company acquired 31.7% of the common shares of Border Europe on July 1,
1995. At March 31, 1996, Border Europe was under the joint control of the
company and two other venturers. The consolidated financial statements
include the company's proportionate share of the revenues, expenses, assets
and liabilities of the joint venture, net of intercompany eliminations, as
follows:

MARCH 31 DECEMBER 31
1996 1995

Current assets $ 46,940 $181,774
Capital assets 12,377 12,062
--------- --------

$ 59,317 $193,836
--------- --------
--------- --------

Current liabilities $ 40,886 $129,040
Equity 18,431 64,796
--------- --------

$ 59,317 $193,836
--------- --------
--------- --------

Revenue $129,683 $164,768
Expenses 176,048 99,972
--------- --------

Net income (loss) for the period $ (46,365) $ 64,796
--------- --------
--------- --------

F-26

<PAGE>

BORDER NETWORK TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(expressed in Canadian dollars
(amounts at March 31, 1996 and for the three-month
periods ended March 31, 1996 and 1995 are unaudited) Page 3
- --------------------------------------------------------------------------------

5. LINE OF CREDIT

A general security agreement has been registered as collateral for an
authorized line of credit of $400,000.

6. LONG-TERM DEBT
<TABLE>
<CAPTION>

MARCH 31 DECEMBER 31
1996 1995 1994

<S> <C> <C> <C>
Bank loan, bearing interest at prime plus 1.5%, due
in equal monthly amounts to October 2000, secured
by capital assets $54,911 $57,911 $ -
Due to individuals related to a shareholder, bearing
interest at 50%, due July 1996 18,772 12,000 10,000
Due to shareholder, bearing interest at prime plus 2%,
repayable commencing January 1995
in monthly amounts of $4,167 - - 50,000
Due to shareholder, bearing interest at prime plus 2%,
repayable April 1995 - - 30,000
------- ------ ------

73,683 69,911 90,000
Less: Current portion (30,772) (23,582) (80,000)
------- ------ ------

$42,911 $46,329 $10,000
------- ------ ------
------- ------ ------

7. Share capital
MARCH 31 DECEMBER 31
1996 1995 1994

Authorized
Unlimited number of common shares
Unlimited number of nonvoting Class A shares
Issued
6,600,000 (1995 - 100; 1994 - 100) common shares $ 31,350 $38,000 $38,000
3,400,000 (1995 - Nil; 1994 - Nil) Class A shares 8,165,805 - -
1,820,000 (1995 - Nil; 1994 - Nil) special warrants 9,409,355 - -
----------- ------ ------

$17,606,510 $38,000 $38,000
----------- ------ ------
----------- ------ ------

</TABLE>

F-27

<PAGE>

BORDER NETWORK TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(expressed in Canadian dollars
(amounts at March 31, 1996 and for the three-month
periods ended March 31, 1996 and 1995 are unaudited) Page 4
- --------------------------------------------------------------------------------

In February 1996, the following events occurred:

(a) The 100 issued and outstanding common shares were subdivided on an
80,000 to 1 basis, thereby creating 8 million issued and outstanding
common shares. The authorized capital was amended to include an
unlimited number of Class A nonvoting shares. Class A shares convert
into common shares upon the earliest of:

- the issuance of a receipt for a final prospectus;
- June 30, 1997; and
- a one-third vote by the holders of the Class A shares.

(b) The company issued 3.4 million Class A shares for gross proceeds of
$8.5 million.

(d) The company granted stock options to certain full-time employees and
directors to purchase 996,000 common shares of the company at a price
of $2.50 per share.

(e) The company issued 1,820,000 special warrants for gross proceeds of
$10 million. Each special warrant is exchangeable into one common
share (1.1 common shares if a receipt for a final prospectus is not
issued by September 1, 1996), for no additional consideration, and
will be automatically exercised upon the earlier of:

- the issuance of a receipt for a final prospectus; and
- December 31, 1997.

(f) The company issued 91,000 special warrants to the brokers of
transaction (e) above in exchange for services provided.

8. COMMITMENTS

The company has leased premises requiring the following annual rental
payments:

1996 $136,000
1997 181,000
1998 120,000
\

F-28

<PAGE>

BORDER NETWORK TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(expressed in Canadian dollars
(amounts at March 31, 1996 and for the three-month
periods ended March 31, 1996 and 1995 are unaudited) Page 5
- --------------------------------------------------------------------------------

9. INCOME TAXES

The company has claimed income tax credits in respect of scientific
research and development costs incurred of approximately $40,000. The
benefit of this item has not been reflected in these consolidated financial
statements.

10. ECONOMIC DEPENDENCE

For the three months ended March 31, 1996, approximately 31% (1995 - 44%)
of total sales were made to a related company (Note 2) and the joint
venture (Note 4), and approximately 86% (1995 - 80%) of total sales were
attributable to eight customers.

11. SUBSEQUENT EVENTS

(a) Effective May 22, 1996, the company acquired the remaining 68.3% of
Border Europe in exchange for cash consideration of $1.26 million and
81,818 common shares.

(b) On May 28, 1996, the company entered into an acquisition and pre-
amalgamation agreement with Secure Computing Corporation ("Secure").
Upon closing, which is expected to occur in August 1996, the company
will become a wholly-owned subsidiary of Secure.

F-29

<PAGE>

ENIGMA LOGIC, INC.
FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED) AND
DECEMBER 31, 1995 AND 1994

F-30

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Enigma Logic, Inc.

In our opinion, the accompanying balance sheets and the related statements of
operations, shareholders' deficit and cash flows present fairly, in all material
respects, the financial position of Enigma Logic, Inc. at December 31, 1994 and
1995 and the results of its operations and its cash flows for the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

Price Waterhouse LLP
San Jose, California
March 1, 1996, except for Note 8, which is as of July 29, 1996.

F-31

<PAGE>

ENIGMA LOGIC, INC.
BALANCE SHEETS
- --------------------------------------------------------------------------------

DECEMBER 31, MARCH 31,
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA) 1994 1995 1996
(Unaudited)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash $ 316 $ 205 $ 6
Accounts receivable 419 1,019 1,437
Inventory 170 173 272
Other current assets - - 82
-------- -------- --------
Total current assets 905 1,397 1,797

Property and equipment, net of accumulated
depreciation of $53, $87 and $102 (Unaudited) 67 186 232
Other assets 9 30 30
-------- -------- --------
$ 981 $ 1,613 $ 2,059
-------- -------- --------
-------- -------- --------

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
Short-term borrowings $ 50 $ 50 50
Accounts payable 247 207 409
Accrued compensation 177 238 192
Deferred revenues 387 502 567
Due to shareholders - - 2,001
-------- -------- --------
Total current liabilities 861 997 3,219

Long-term debt to shareholders 1,700 1,845 -
-------- -------- --------
Total liabilities 2,561 2,842 3,219
-------- -------- --------

Commitments (Note 5)

Shareholders' deficit:
Preferred shares without par value, 7,000,000
shares authorized; none issued - - -
Common shares, $0.01 par value; 50,000,000
shares authorized; 18,134,680, 18,295,908
and 18,295,908 (unaudited) shares issued
and outstanding 181 183 183
Additional paid-in-capital 7,085 7,142 7,142
Accumulated deficit (8,846) (8,554) (8,485)
-------- -------- --------
Total shareholders' deficit (1,580) (1,229) (1,160)
-------- -------- --------
$981 $1,613 $2,059
-------- -------- --------
-------- -------- --------

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-32

<PAGE>

ENIGMA LOGIC, INC.
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------

YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
(AMOUNTS IN THOUSANDS) 1993 1994 1995 1995 1996
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net revenues $ 1,590 $ 2,426 $ 3,901 $ 1,499 $ 1,395
Cost of net revenues 472 838 982 335 266
-------- -------- -------- -------- --------
Gross margin 1,118 1,588 2,919 1,164 1,129
-------- -------- -------- -------- --------

Operating expenses:
Marketing and selling 612 576 1,089 295 345
Engineering 357 393 585 101 270
General and administrative 345 419 814 195 407
-------- -------- -------- -------- --------
1,314 1,388 2,488 591 1,022
-------- -------- -------- -------- --------

Income (loss) from operations (196) 200 431 573 107

Interest (expense), net (135) (143) (139) (35) (38)
-------- -------- -------- -------- --------

Net income (loss) $ (331) $ 57 $ 292 $ 538 $ 69
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-33

<PAGE>

ENIGMA LOGIC, INC.
STATEMENT OF SHAREHOLDERS' DEFICIT
- --------------------------------------------------------------------------------

Total
SERIES A SERIES B SHARE-
PREFERRED SHARES PREFERRED SHARES COMMON SHARES PAID-IN ACCUMULATED HOLDERS
(AMOUNTS IN THOUSANDS) SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT DEFICIT

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 973 $ 1,946 2,063 $ 2,578 1,794 $ 18 $ 509 $ (8,572) $ (3,521)

Conversion of Preferred
Series A (973) (1,946) - - 4,902 49 1,897 - -

Conversion of Preferred
Series B - - (2,063) (2,578) 3,268 32 2,546 - -

Conversion of debt to
preferred shareholder - - - - 8,171 82 2,133 - 2,215

Net loss - - - - - - - (331) (331)
-------- -------- -------- -------- -------- -------- -------- -------- --------

Balance at December 31, 1993 - - - - 18,135 181 7,085 (8,903) (1,637)

Net income - - - - - - 57 57
-------- -------- -------- -------- -------- -------- -------- -------- --------

Balance at December 31, 1994 - - - - 18,135 181 7,085 (8,846) (1,580)

Issuance of Common Stock - - - - 100 1 49 - 50

Stock Option Exercises - - - - 61 1 8 - 9

Net income - - - - - - - 292 292
-------- -------- -------- -------- -------- -------- -------- -------- --------

Balance at December 31, 1995 - - - - 18,296 183 7,142 (8,554) (1,229)

Net income (Unaudited) - - - - - - - 69 69
-------- -------- -------- -------- -------- -------- -------- -------- --------
Balance at March 31, 1996
(Unaudited) - $ - - $ - 18,296 $ 183 $ 7,142 $ (8,485) $ (1,160)
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-34

<PAGE>

ENIGMA LOGIC, INC.
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------

YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
(AMOUNTS IN THOUSANDS) 1993 1994 1995 1995 1996
(Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (331) $ 57 $ 292 $ 538 $ 69
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation 31 12 42 11 15
Stock expense - - 50 - -
Change in assets and liabilities:
Accounts receivable (26) (120) (600) (280) (418)
Inventory - (108) (3) 79 (99)
Other assets 6 - (21) 2 -
Accounts payable 43 6 (40) (64) 202
Accrued compensation 7 (22) 61 (12) (46)
Deferred revenue (11) 255 115 (60) 65
------- ------ ------- ------- ------
Net cash provided (used) by operating
activities (281) 80 (104) 214 (212)
------- ------ ------- ------- ------

CASH FLOWS FROM INVESTING ACTIVITIES -
Acquisition of property and equipment (24) (40) (161) (46) (61)
------- ------ ------- ------- ------

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from shareholders 289 266 145 (18) 156
Proceeds from exercise of stock options - - 9 - -
Capital raising costs - - - - (82)
------- ------ ------- ------- ------
Net cash provided by financing activities 289 266 154 (18) 74
------- ------ ------- ------- ------

Net increase (decrease) in cash (16) 306 (111) 150 (199)

Cash, beginning of year 26 10 316 316 205
------- ------ ------- ------- ------
Cash, end of year $ 10 $ 316 $ 205 $ 466 $ 6
------- ------ ------- ------- ------
------- ------ ------- ------- ------

NONCASH TRANSACTIONS:
Conversion of Preferred Stock to Common Stock $ 4,706 $ - $ - $ - $ -
------- ------ ------- ------- ------
------- ------ ------- ------- ------

Conversion of debt and interest to Common Stock $ 2,215 $ - $ - $ - $ -
------- ------ ------- ------- ------
------- ------ ------- ------- ------

SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 6 $ 7 $ 6 $ 2 $ 2
------- ------ ------- ------- ------
------- ------ ------- -------

Cash paid for income taxes $ - $ - $ - $ - $ -
------- ------ ------- ------- ------
------- ------ ------- ------- ------

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-35

<PAGE>

ENIGMA LOGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995 AND 1994 1
- --------------------------------------------------------------------------------

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY
Enigma Logic, Inc. (the Company) produces dynamic password security systems
which prevent unauthorized access to data or programs stored on computer
networks. The Company was incorporated in California on July 26, 1982 and
has its offices and operating facilities in Concord, California.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.

CASH
There are no current compensating balance requirements. The Company's bank
line of credit is guaranteed by the major shareholder. For the purposes of
the Statement of Cash Flows, the Company considers all highly liquid
investments purchased with an original maturity of three months or less to
be cash equivalents.

REVENUE RECOGNITION
Revenue from the sale of the Company's products is generally recognized
upon shipment. Revenues received under maintenance agreements are
recognized over the terms of the agreements. The Company also provides
free technical support for limited warranty periods following delivery of
its products. Provision is made in the financial statements for the
estimated cost of this support.

CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of accounts receivable.
The Company performs ongoing credit evaluations of its customers' financial
condition. The Company has not historically experienced accounts
receivable collection problems and, as a result, an allowance for bad debt
has not been required.

INVENTORY
Inventories consist primarily of purchased parts and are stated at the
lower of cost (first-in, first-out) or market.

F-36

<PAGE>

ENIGMA LOGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995 AND 1994 2
- --------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets,
generally three to five years. Ordinary maintenance and repairs are
charged to expense as incurred; major improvements are capitalized.

FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company's financial instruments, including
accounts receivable and long-term debt to shareholders, approximate fair
value.

SOFTWARE DEVELOPMENT COSTS
In accordance with SFAS No. 86, "Accounting for the Cost of Capitalized
Software to be Sold, Leased or Otherwise Marketed," the Company examines
its software development costs after technological feasibility has been
established to determine the amount of capitalization that is required.
For all periods presented herein, software development costs incurred
subsequent to the establishment of technological feasibility have been
immaterial.

NEW ACCOUNTING PRONOUNCEMENT
In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123).
The Company does not intend to adopt the measurement provisions of SFAS 123
with regard to employee-based stock compensation and will adopt the
disclosure provisions in the year ending December 31, 1996.

INTERIM RESULTS (UNAUDITED)
The accompanying balance sheet at March 31, 1996, the statement of
shareholders' equity for the three months ended March 31, 1996 and the
statements of income and of cash flows for the three month periods ended
March 31, 1995 and 1996 are unaudited. In the opinion of management, these
statements have been prepared on the same basis as the audited financial
statements and include all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the results of the
interim periods. The data disclosed in these notes to the financial
statements for these periods are also unaudited.

2. DEBT AGREEMENTS

Short-term borrowings were outstanding under a $50,000 bank line of credit,
which can be terminated by either party. Interest on the loans accrues at
2.5% above the bank prime rate, which was 10.75% at March 31, 1996.

The controlling shareholder has made cash advances to the Company in
exchange for notes bearing interest at 91/2 to 12% that are due on demand.
The shareholder, however, has agreed not to demand payment on any of the
notes or interest through December 31, 1996.

F-37

<PAGE>

ENIGMA LOGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995 AND 1994 3
- --------------------------------------------------------------------------------

3. INCOME TAXES

At December 31, 1995, the Company had net operating loss carryforwards for
federal income tax reporting purposes of approximately $7,700,000 and
development and investment tax credit carryforwards of approximately
$70,000 which can be used to reduce future federal income tax liabilities.
These carryforwards expire between 2001 and 2009.

The Company also has net operating loss carryforwards for state income tax
reporting purposes of approximately $1,500,000 that expire between 1996 and
2000.

The components of net deferred tax assets consist of the following (in
thousands):

December 31,
1994 1995

Deferred tax assets:
Net operating losses $ 2,740 $ 2,730
Reserves, accruals and other 150 190
Tax credit carryforwards 70 70
-------- --------
2,960 2,990
Deferred tax valuation allowance (2,960) (2,990)
-------- --------

Net deferred tax asset $ - $ -
-------- --------
-------- --------

The Company has established a valuation allowance equal to its deferred tax
assets on the basis that management cannot conclude that it is more likely
than not that they will be realized. Management's assessment is based on
the Company's history of net operating losses ("NOL's") and other
uncertainties regarding the timing of the utilization of the NOL
carryforwards. Section 382 of the Internal Revenue Code restricts the
annual utilization of the NOL's incurred prior to a change in ownership.
Such a change in ownership may have occurred in connection with a
recapitalization of the Company in 1993, and the Company is currently
assessing possible restrictions on the use of its NOL carryforwards as a
result of such possible change in ownership. There can be no assurance
that the Company's NOL carryforwards will be available for use in the
future.

Differences in the net operating loss carryforwards for financial statement
and income tax purposes arise from the timing of the recognition of certain
revenues and expenses.

F-38

<PAGE>

ENIGMA LOGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995 AND 1994 4
- --------------------------------------------------------------------------------

4. STOCK OPTIONS

1985 STOCK PLAN
In 1985, the Company adopted an Incentive Stock Option Plan which provides
for grants of options at a price not less than the fair market value of the
stock on the date of grant as determined by the Company's Board of
Directors. Grants to employees owning more than 10% of the Company's
outstanding voting stock must be priced not less than 110% of the fair
market value of the stock on the date of the grant. Options generally
become exercisable over vesting periods as determined by the Board of
Directors up to five years from the date of grant. The plan has a ten year
life which expired in February, 1995, at which time 9,641 options were
ungranted. At March 31, 1996, options to purchase 284,891 shares of Common
Stock were outstanding under the plan at $0.15-$0.25 per share.

The following table summarizes activity in the Company's 1985 Incentive
Stock Option Plan:

SHARES OPTIONS OUTSTANDING
AVAILABLE PRICE PER
FOR GRANT SHARES SHARE

Balance at December 31, 1993 134,864 220,896 $0.15
Options granted (48,000) 48,000 $0.15
Options canceled 7,892 (7,892) $0.15
------- -------

Balance at December 31, 1994 94,756 261,004 $0.15
Options granted (236,891) 236,891 $0.25
Options canceled 151,776 151,776) $0.15
Options exercised - (61,228) $0.15
Ungranted within 10 year limit (9,641) - $0.15
------- -------

Balance at December 31, 1995 - 284,891 $0.15-$0.25
------- -------
------- -------

1994 STOCK PLAN
In 1994, the Company adopted the 1994 Stock Option Plan for which an
aggregate of 2,000,000 shares of Common Stock have been reserved for
issuance. As of March 31, 1996, options to purchase 2,000,000 shares of
Common Stock at $0.15-$0.75 per share have been issued under the 1994 Stock
Option Plan. The 1994 Stock Option Plan provides for the granting to key
executive employees and directors of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or nonqualified stock options, as designated at the time of
the grant. To the extent an optionee would have the right in any calendar
year to exercise for the first time one or more incentive stock options for
shares having an aggregate fair market value in excess of $100,000, any
such excess options shall be treated as nonqualified stock options.

F-39

<PAGE>

ENIGMA LOGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995 AND 1994 5
- --------------------------------------------------------------------------------

1995 STOCK PLAN
In 1995, the Company adopted the 1995 Stock Option Plan for which an
aggregate of 1,525,000 shares of Common Stock have been reserved for
issuance. As of March 31, 1996, options to purchase 1,525,000 shares of
Common Stock at $0.25 per share have been issued under the 1995 Stock
Option Plan. The 1995 Stock Option Plan provides for the granting to key
executive employees and directors of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or nonqualified stock options, as designated at the time of
the grant. To the extent an optionee would have the right in any calendar
year to exercise for the first time one or more incentive stock options for
shares having an aggregate fair market value in excess of $100,000, any
such excess options shall be treated as nonqualified stock options. The
options generally vest over a two-year period.

1996 STOCK PLAN
In 1996, the Company adopted the 1996 Stock Option Plan for which an
aggregate of 2,150,000 shares of Common Stock have been reserved for
issuance. As of March 31, 1996, options to purchase 1,109,776 shares of
Common Stock at $0.75 per share have been issued under the 1996 Stock
Option Plan. The 1996 Stock Option Plan provides for the granting to
employees and directors of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
or nonqualified stock options, as designated at the time of the grant. To
the extent an optionee would have the right in any calendar year to
exercise for the first time one or more incentive stock options for shares
having an aggregate fair market value in excess of $100,000, any such
excess options shall be treated as nonqualified stock options. The options
generally vest over a four-year period.

1994, 1995 AND 1996 STOCK PLANS
The exercise price of all incentive stock options must be at least equal to
the fair market value of the Common Stock of the Company on the date of
grant. The exercise price of any incentive stock option granted to an
optionee who owns stock possessing more than 10 percent of the voting power
of all classes of the Company's stock must equal at least 110 percent of
the fair market value of the Common Stock on the date of grant. The
exercise price of any nonqualified stock option must be at least equal to
85 percent of the fair market value of the Common Stock of the Company on
the date of the grant.

The term of an incentive stock option may not exceed ten years, and no
incentive stock option granted to a ten percent shareholder shall be
exercisable for five years from the date of granting.

ALL PLANS
As of March 31, 1996, options exercisable under all Plans totaled
approximately 2,909,000 shares at $0.15 to $0.75 per share.

F-40

<PAGE>

ENIGMA LOGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995 AND 1994 6
- --------------------------------------------------------------------------------

5. COMMITMENTS

Rental expense for the Company's offices and operating facilities amounted
to $115,000, $82,000 and $80,000 in 1995, 1994 and 1993, respectively, and
$51,000 (unaudited) and $23,000 (unaudited) for the three months ended
March 31, 1996 and 1995, respectively. Future minimum payment on operating
leases was $1,011,000 at December 31, 1995.

Minimum future lease payments on noncancelable operating leases as of
December 31, 1995 are as follows:

1996 $225,000
1997 235,000
1998 243,000
1999 193,000
2000 115,000
Thereafter -

6. SALES TO SIGNIFICANT CUSTOMERS AND EXPORT SALES

One customer accounted for 38% of total revenue in 1995 and 29% of total
revenue in 1994. Four customers accounted for 54% (unaudited) of total
revenue for the three months ended March 31, 1996 and one customer
accounted for 80% (unaudited) of total revenue for the three months ended
March 31, 1995. International sales accounted for 15%, 15% and 32% of
sales in 1995, 1994 and 1993, respectively. Three customers accounted for
17%, 15% and 10%, respectively, of total accounts receivable at
December 31, 1995. Three customers accounted for 19%, 13% and 11%,
respectively, of total accounts receivable at December 31, 1994. Two
customers accounted for 20% (unaudited) and 18% (unaudited) of accounts
receivable at March 31, 1996.

7. RECAPITALIZATION

In 1986, the Company's Articles of Incorporation were amended to authorize
issuance of 5,000,000 shares of preferred stock. Subsequently, 997,480
shares of Series A Preferred Stock were issued to one of the holders of
Common Stock and 2,626,500 shares of Series B Preferred Stock were issued
principally to two investment funds. The investment funds also advanced
$1,566,000 to the Company in exchange for notes.

F-41

<PAGE>

ENIGMA LOGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995 AND 1994 7
- --------------------------------------------------------------------------------

In 1989, all the Series B Preferred Stock and notes held by the funds were
sold to the holder of the outstanding Series A Preferred Stock, and the
Company amended its Articles of Incorporation to authorize the issuance of
7,000,000 shares of Preferred Stock. In December 1992, the Shareholders
adopted a Plan of Reorganization whereby all outstanding Series A and B
Preferred Stock and the $1,566,000 of notes, exclusive of accrued interest,
were converted to Common Stock. Accrued interest of $649,000 on the notes
was canceled under the Plan.

Implementation of the plan was completed in June 1993, at which time the
cancellation of accrued interest and conversion of the preferred shares and
notes were recorded in the Company's financial statements. The Plan also
voided all outstanding warrants for the purchase of preferred and common
shares, most of which had been issued in connection with the issuance of
the Preferred Stock and notes.

8. SUBSEQUENT EVENTS

On June 26, 1996, the Company entered into a definitive agreement to
exchange all of its outstanding shares and options for 2.69 million shares
and options of Secure Computing in an acquisition to be accounted for as a
pooling of interests. The acquisition is expected to close in late August
1996.

In July 1996, the Company entered into a $500,000 Revolving Line of Credit
with a Bank (the Line). The Line expires October 31, 1996 and bears
interest at prime plus one percent. The Line is collateralize by
qualifying receivables and inventories under a borrowing base calculation.

F-42

<PAGE>

APPENDIX A

THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S.
PERSONS UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, OR AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE.

ACQUISITION AND PRE-AMALGAMATION AGREEMENT

AMONG

SECURE COMPUTING CORPORATION,

EDGE ACQUISITION INC.

AND

BORDER NETWORK TECHNOLOGIES INC.

[CONFORMED COPY -- AS AMENDED]

A-1

<PAGE>

TABLE OF CONTENTS

ARTICLE I THE AMALGAMATION; EFFECTIVE TIME; THE REORGANIZATION;
CLOSING...................................................................A-1

1.1 The Amalgamation..................................................A-1

1.2 Effective Time of Amalgamation....................................A-1

1.3 Stock Option Assumption Agreements................................A-1

1.4 Reorganization of Capital.........................................A-10

1.5 Stated Capital of Exchangeable Shares.............................A-11

1.6 Exchangeable Share Option.........................................A-11

1.7 Closing...........................................................A-11

1.8 Material Adverse Effect...........................................A-12

1.9 Adjustments to Exchange Ratio.....................................A-12

1.10 Dissenters' Rights...............................................A-12

ARTICLE II LIMITED GUARANTY OF BORDER AFFILIATES.........................A-12

ARTICLE III REPRESENTATIONS AND WARRANTIES...............................A-13

3.1 Representations and Warranties of Border..........................A-13

(a) Corporate Organization.........................................A-13

(b) Qualification to do Business...................................A-14

(d) Corporate Authority............................................A-14

(e) Capitalization.................................................A-15

(f) Consents and Approvals; No Violation...........................A-15

(g) Actions, Suits, Proceedings....................................A-16

(h) Compliance with Applicable Laws and Other Instruments..........A-16

(i) Environmental Laws.............................................A-16

(j) Employees......................................................A-17

(k) Employee Plans.................................................A-17

(l) Labor Matters..................................................A-17

(m) Financial Statements...........................................A-17

(n) Tax Returns and Audits.........................................A-18

(o) Changes, Dividends, etc........................................A-18

(p) Title to the Assets............................................A-19

(q) Payment Obligations............................................A-19

(r) Condition of Assets............................................A-19

A-2

<PAGE>

(s) Intellectual Property Rights...................................A-19

(t) Contracts, Leases, Commitments and Agreements..................A-20

(u) Consents of Third Parties......................................A-20

(v) Composition of Assets..........................................A-20

(w) Insurance......................................................A-20

(x) Licenses and Permits...........................................A-20

(y) Conflicts of Interest..........................................A-20

(z) No Existing Discussions........................................A-21

(aa) Pooling of Interests..........................................A-21

(bb) Opinion of Financial Advisor..................................A-21

(cc) Border Stock Options..........................................A-21

(dd) Agreements of Border Affiliates...............................A-21

(ee) Agreements for Class A Conversion.............................A-21

(ff) Residence of Border Shareholders, Optionholders
and Warrantholders............................................A-22

(gg) Full Disclosure...............................................A-22

3.2 Representations and Warranties of Secure and Amalgamation Sub.....A-22

(a) Corporate Organization.........................................A-22

(b) Qualification to do Business...................................A-22

(d) Corporate Authority............................................A-23

(e) Authorization for Secure Common Shares.........................A-23

(f) Consents and Approvals; No Violation...........................A-23

(g) Ownership of Amalgamation Sub; No Prior Activities; Assets of
Amalgamation Sub...............................................A-24

(h) SEC Reports; Financial Statements; Capitalization..............A-24

(i) Absence of Certain Changes or Events...........................A-26

(j) Actions, Suits, Proceedings....................................A-26

(k) ERISA and Related Matters......................................A-26

(l) Taxes..........................................................A-27

(m) Pooling of Interests...........................................A-28

(n) Opinion of Financial Advisor...................................A-28

(o) Agreements of Certain Secure Stockholders......................A-28

(p) Full Disclosure................................................A-28

ARTICLE IV CERTAIN COVENANTS.............................................A-29

4.1 Conduct of Border's Business Pending the Amalgamation.............A-29

4.2 Proxy Statement...................................................A-29

4.3 Stockholders' Meetings............................................A-30

4.4 No Solicitation...................................................A-31

4.5 Books and Records; Access and Information.........................A-31

4.6 Notification of Certain Matters...................................A-32

4.7 Confidentiality...................................................A-32

4.8 Pooling...........................................................A-32

4.9 Tax-Free Rollover.................................................A-33

A-3

<PAGE>

4.10 Employment Agreements............................................A-33

4.11 Books and Records; Access and Information........................A-33

4.12 Sales of Equity Securities.......................................A-33

4.13 Stock Options....................................................A-33

4.14 Ancillary Documents/Reservation of Shares........................A-34

4.15 NASDAQ...........................................................A-35

4.16 Compliance with Regulation S and Regulation D....................A-35

ARTICLE V CONDITIONS TO CLOSING..........................................A-36

5.1 Conditions to Obligation of Secure and Amalgamation Sub to Close..A-36

(a) Representations and Warranties.................................A-36

(b) Observance and Performance.....................................A-36

(d) Stockholder Approval...........................................A-36

(e) Consents of Third Parties......................................A-36

(f) Legal Opinion..................................................A-36

(g) Pooling Letters................................................A-37

(h) Comfort Letter.................................................A-37

(i) Copies of Documents............................................A-37

(j) Employment Agreements..........................................A-37

(k) No Legal Actions...............................................A-37

(l) Canadian Securities Matters....................................A-37

(m) Closing Documents..............................................A-37

(n) Proceedings and Documents......................................A-37

(o) Ancillary Documents............................................A-38

(p) Border Dissenters' Rights......................................A-38

5.2 Conditions to Obligation of Border to Close.......................A-38

(a) Representations and Warranties.................................A-38

(b) Observance and Performance.....................................A-38

(d) Consents, Approvals, Etc.......................................A-38

(e) Stockholder Approval...........................................A-38

(f) Legal Opinion..................................................A-38

(g) Pooling Letters................................................A-39

(h) Tax Opinion....................................................A-39

(i) Employment Agreements..........................................A-39

(j) No Legal Actions...............................................A-39

(k) Closing Documents..............................................A-39

(l) Proceedings and Documents......................................A-39

(m) Canadian Securities Matters....................................A-40

(n) Ancillary Documents............................................A-40

(o) Listing on Prescribed Stock Exchange...........................A-40

(p) Election of Directors..........................................A-40

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<PAGE>

ARTICLE VI REGISTRATION RIGHTS...........................................A-40

6.1 Certain Definitions; General Provisions...........................A-40

6.2 Required Registration.............................................A-41

6.3 Registration Procedures...........................................A-42

6.4 Expenses..........................................................A-44

6.5 Indemnification...................................................A-45

ARTICLE VII CERTIFICATES AND FRACTIONAL SHARES...........................A-46

7.1 Issuance of Certificates Representing Exchangeable Shares.........A-46

7.2 Distributions with Respect to Unsurrendered Certificates..........A-47

7.3 No Fractional Shares..............................................A-47

7.4 Lost Certificates.................................................A-48

7.5 Extinguishment of Rights..........................................A-48

ARTICLE VIII CERTAIN RIGHTS OF SECURE TO ACQUIRE EXCHANGEABLE SHARES.....A-48

8.1 Secure Liquidation Call Right.....................................A-48

8.2 Secure Redemption Call Right......................................A-50

8.3 Withholding Rights................................................A-51

ARTICLE IX TERMINATION...................................................A-51

9.1 Termination.......................................................A-51

9.2 Effect of Termination.............................................A-52

ARTICLE X MISCELLANEOUS..................................................A-52

10.1 Survival of Representations, Warranties, Covenants and
Agreements.......................................................A-52

10.2 Expenses.........................................................A-52

10.3 Notices..........................................................A-52

10.4 Amendments.......................................................A-54

10.5 Waiver...........................................................A-54

A-5

<PAGE>

10.6 Brokers..........................................................A-54

10.7 Publicity........................................................A-54

10.8 Headings.........................................................A-55

10.9 Nonassignability.................................................A-55

10.10 Parties in Interest; Third Party Beneficiaries..................A-55

10.11 Counterparts....................................................A-55

10.12 Governing Law...................................................A-55

10.13 Severability....................................................A-56

10.14 Remedies........................................................A-56

10.15 Entire Agreement................................................A-56

A-6

<PAGE>
SCHEDULES
SECTION
BORDER
- ------

Border Schedule of Exceptions. . . . . . . . . . . . . . . . . . . . 3.1
List of Border Shareholders and
Information as to Capital Stock. . . . . . . . . . . . . . . . . . 3.1(e)
List of Border Actions, Suits, Proceedings . . . . . . . . . . . . . 3.1(g)
List of Border Benefit Plans . . . . . . . . . . . . . . . . . . . . 3.1(k)
List of Border Labor Matters . . . . . . . . . . . . . . . . . . . . 3.1(l)
Border Financial Statements. . . . . . . . . . . . . . . . . . . . . 3.1(m)
Border Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(n)
Changes, Dividends, etc. . . . . . . . . . . . . . . . . . . . . . . 3.1(o)
List of Permitted Encumbrances . . . . . . . . . . . . . . . . . . . 3.1(p)
List of Border Intellectual Property . . . . . . . . . . . . . . . . 3.1(s)
List of Other Material Contracts . . . . . . . . . . . . . . . . . . 3.1(t)
List of Border Insurance Policies. . . . . . . . . . . . . . . . . . 3.1(w)
List of Licenses and Permits . . . . . . . . . . . . . . . . . . . . 3.1(x)
Conflicts of Interest. . . . . . . . . . . . . . . . . . . . . . . . 3.1(y)

SECURE
- ------
Secure Schedule of Exceptions. . . . . . . . . . . . . . . . . . . . 3.2
List of Secure Subsidiaries. . . . . . . . . . . . . . . . . . . . . 3.2(a)
Information as to Secure Capital Stock . . . . . . . . . . . . . . . 3.2(h)(iv)
Certain Changes or Events Regarding Secure . . . . . . . . . . . . . 3.2(i)
List of Secure Actions, Suits, Proceedings . . . . . . . . . . . . . 3.2(j)
List of Secure Pension Plans . . . . . . . . . . . . . . . . . . . . 3.2(k)

EXHIBITS

Amalgamation Agreement . . . . . . . . . . . . . . . . . . . . . . . A
Border Affiliate Agreements. . . . . . . . . . . . . . . . . . . . . B
Regulation S Version . . . . . . . . . . . . . . . . . . . . . . B-1
Regulation D Version . . . . . . . . . . . . . . . . . . . . . . B-2
Secure Affiliate Agreement . . . . . . . . . . . . . . . . . . . . . C
Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . D
S. Lamb. . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
Glenn Mackintosh . . . . . . . . . . . . . . . . . . . . . . . . D-2
D. Whitbeck. . . . . . . . . . . . . . . . . . . . . . . . . . . D-3
Support Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . E
Voting and Exchange Trust Agreement. . . . . . . . . . . . . . . . . F
Certificate of Designation . . . . . . . . . . . . . . . . . . . . . G
Provisions Attaching to Exchangeable Shares. . . . . . . . . . . . . H

A-7

<PAGE>

ACQUISITION AND PRE-AMALGAMATION AGREEMENT

ACQUISITION AND PRE-AMALGAMATION AGREEMENT (the "Agreement"), dated
as of May 28, 1996, as amended as of July 31, 1996, among Secure Computing
Corporation, a Delaware corporation ("Secure"), Edge Acquisition Inc., an
Ontario corporation and a direct wholly owned subsidiary of Secure
("Amalgamation Sub"), and Border Network Technologies Inc., an Ontario
corporation ("Border").

RECITALS

WHEREAS, the Board of Directors of Secure, Amalgamation Sub and Border
each have determined that it is in the best interests of their respective
shareholders for Secure to acquire shares in the capital stock of Border upon
the terms and subject to the conditions herein;

WHEREAS, in furtherance of such acquisition, the Board of Directors of
Secure, Amalgamation Sub and Border have each approved the execution and
delivery of this Agreement in order to provide for (i) the amalgamation (the
"Amalgamation") of Amalgamation Sub and Border whereupon each outstanding share
of Border's common stock, without par value ("Border Common Stock") and Class A
nonvoting stock, without par value ("Border Class A Stock", and together with
the Border Common Stock, collectively "Border Stock") shall be exchanged for
Class B Shares (as defined in the Amalgamation Agreement) of the continuing
corporation resulting from the Amalgamation (the "Continuing Corporation") and
(ii) pursuant to a reorganization of capital of the Continuing Corporation (the
"Reorganization") the exchange of such Class B Shares of the Continuing
Corporation for exchangeable non-voting shares of the Continuing Corporation
(the "Exchangeable Shares");

WHEREAS, the Amalgamation shall be effected under Section 174 of the
Business Corporations Act (Ontario) (the "OBCA") pursuant to the terms hereof
and an Amalgamation Agreement (the "Amalgamation Agreement") substantially in
the form of Exhibit A hereto;

WHEREAS, the Reorganization shall be effected by means of the filing
of articles of amendment of the Continuing Corporation pursuant to Section 171
of the OBCA;

WHEREAS, Border has delivered to Secure signed Affiliate Agreements
substantially in the form of Exhibit B hereto from certain Border shareholders
who collectively own a sufficient number of shares of Border Stock to ensure
approval of this Agreement and the Amalgamation as required by the OBCA at the
Border shareholders' meeting to be held in accordance with this Agreement;

WHEREAS, Secure has delivered to Border signed Affiliate Agreements
substantially in the form of Exhibit C hereto from certain Secure stockholders
who own a sufficient number of Secure Common Shares (as hereinafter defined) to
ensure approval of the issuance of

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<PAGE>

the Secure Common Shares issuable pursuant to the terms of the Exchangeable
Shares and the amendment of the Company's 1995 Omnibus Stock Plan at the Secure
shareholders' meeting to be held in accordance with this Agreement;

WHEREAS, in connection with the Amalgamation, and after giving effect
thereto, holders of Border Stock will receive in respect of each share of Border
Stock held by them immediately before the implementation of the Amalgamation,
one Class B Share from the Continuing Corporation which will each in turn be
exchanged for 0.50 (the "Exchange Ratio") Exchangeable Shares from the
Continuing Corporation pursuant to the Reorganization subject to Section 1.9
hereof;

WHEREAS, the Exchangeable Shares are to be exchangeable by the holders
for shares of common stock, par value $.01 per share, of Secure ("Secure Common
Shares") on a one-for-one basis at any time until the tenth anniversary of the
Closing Date (such Secure Common Shares issuable pursuant to the terms of the
Exchangeable Shares being hereinafter sometimes referred to as the "Share
Consideration");

WHEREAS, for Canadian federal income tax purposes, it is intended that
on the exchange of Border Stock for Class B Shares and on the exchange of Class
B Shares for Exchangeable Shares, holders of Border Stock who are resident in
Canada and hold such shares as capital property for purposes of the Income Tax
Act (Canada) will not generally realize any gain or loss pursuant to the Income
Tax Act (Canada); and

WHEREAS, it is intended that the Amalgamation shall be accounted for
by Secure as a pooling of interests under United States generally accepted
accounting principles ("United States GAAP");

WHEREAS, it is intended that the offer and sale of the securities
offered by Secure and Amalgamation Sub pursuant to this Agreement shall be
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act");

NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, Secure, Amalgamation Sub,
and Border hereby agree as follows:

A-9

<PAGE>

ARTICLE I

THE AMALGAMATION; EFFECTIVE TIME; THE REORGANIZATION; CLOSING

1.1 THE AMALGAMATION. Subject to the terms and conditions of this
Agreement, at the time that the Amalgamation becomes effective, (i) Amalgamation
Sub shall be amalgamated with Border, (ii) the share exchanges contemplated by
Article 2 of the Amalgamation Agreement shall be completed in the manner set
forth in the Amalgamation Agreement, (iii) each option to purchase one share of
Border Common Stock pursuant to a Border Stock Option (as defined in Section
3.1(e)), whether vested or unvested, shall become an option to acquire a Class B
share of the Continuing Corporation (the "Class B Option") on the same terms and
conditions, including the same exercise price, as the Border Stock Option,
(iv) each special warrant to acquire one share of Border Common Stock (a "Border
Special Warrant") shall become a special warrant to acquire one Class B Share of
the Continuing Corporation (the "Class B Special Warrant") on the same terms and
conditions as enumerated in the Special Warrant Indenture, dated March 6, 1996,
and (v) each warrant to acquire a Border Special Warrant (a "Border Broker
Warrant") shall become one warrant to acquire one Class B Special Warrant on the
same terms and conditions, including the same exercise price, as enumerated in
the Agency Agreement, dated March 6, 1996. The Amalgamation shall be effected
under Section 174 of the OBCA pursuant to the terms of the Amalgamation
Agreement.

1.2 EFFECTIVE TIME OF AMALGAMATION. Secure, Amalgamation Sub and
Border will, on the date of the Closing (or on such other date as Secure and
Border may agree) cause Articles of Amalgamation to be executed and filed with
the Ministry of Consumer and Commercial Relations for the Province of Ontario as
provided in Section 178 of the OBCA. The Amalgamation shall become effective at
the time at which the Articles of Amalgamation shall have been accepted for
filing by the Ontario Ministry of Consumer and Commercial Relations.

1.3 STOCK OPTION ASSUMPTION AGREEMENTS. Immediately following the
Amalgamation, the Secure Stock Option Assumption Agreements (as defined in
Section 4.13) shall become effective and each holder of a Class B Option who has
entered into a Secure Stock Option Assumption Agreement shall thereafter have an
option to acquire from Secure (the "Secure Stock Option"), on substantially the
same terms and conditions as under the Class B Option (except as provided
herein), a number of Secure Common Shares equal to the product (rounded down to
the nearest whole share) of (i) the number of Class B Shares issuable upon
exercise of the Class B Option immediately following the Amalgamation and
(ii) the Exchange Ratio. The price per Secure Common Share at which such Secure
Stock Option is exercisable shall be the amount (rounded up to the nearest whole
cent) obtained by dividing (i) the exercise price per Class B Share under the
Class B Option immediately following the Amalgamation by (ii) the Exchange
Ratio.

1.4 REORGANIZATION OF CAPITAL. Immediately following the time at
which the Amalgamation becomes effective on the date of Closing and after the
Secure Stock Option Assumption Agreements become effective, Secure shall take
all necessary steps and procedures to

A-10

<PAGE>

cause the Continuing Corporation to file Articles of Amendment pursuant to
Section 171 of the OBCA providing for the exchange of each Class B Share of the
Continuing Corporation into the number of Exchangeable Shares of the Continuing
Corporation equal to the product (rounded down to the nearest whole share) of
(x) the number of Class B Shares to be exchanged and (y) the Exchange Ratio,
subject to Section 1.9 hereof, having the rights, privileges, restrictions and
conditions set forth in Exhibit H hereto (the "Exchangeable Share Provisions").
The Reorganization shall become effective at the time at which the Articles of
Amendment shall have been accepted for filing by the Ontario Ministry of
Consumer and Commercial Relations and such time of effectiveness is hereinafter
referred to as the "Effective Time". At and after the Effective Time each Class
B Special Warrant shall be a special warrant to acquire the number of
Exchangeable Shares equal to the product (rounded down to the nearest whole
share) of (m) the number of Class B Shares issuable upon the exercise of the
Class B Special Warrant and (n) the Exchange Ratio, subject to Section 1.9
hereof (an "Exchangeable Share Warrant") and each warrant to acquire one Class B
Special Warrant shall be a warrant to acquire an Exchangeable Share Warrant.
Secure covenants to cause Continuing Corporation to enter into any indenture
supplemental to the Special Warrant Indenture dated March 6, 1996 to evidence
the rights and obligations of holders of the Exchangeable Share Warrants.

1.5 STATED CAPITAL OF EXCHANGEABLE SHARES. For purposes of the OBCA,
the aggregate stated capital of all Exchangeable Shares issued on the exchange
described in Section 1.4 will be the aggregate stated capital immediately after
the Amalgamation attributable to the Class B Shares exchanged into Exchangeable
Shares.

1.6 EXCHANGEABLE SHARE OPTION. Any holder of a Border Stock Option
who does not enter into a Secure Stock Option Assumption Agreement with Secure
to effect the exchange of such holder's Class B Option into a Secure Stock
Option shall at and after the Effective Time have an option to acquire from the
Continuing Corporation (the "Exchangeable Share Option"), on substantially the
same terms and conditions as under the Class B Option (except as provided
herein), a number of Exchangeable Shares equal to the product (rounded down to
the nearest whole share) of (i) the number of Class B Shares issuable upon
exercise of the Class B Option immediately following the Amalgamation and
(ii) the Exchange Ratio. The price per Exchangeable Share at which such
Exchangeable Share Option is exercisable shall be the amount (rounded up to the
nearest whole cent) obtained by dividing (i) the exercise price per Class B
Share under the Class B Option immediately following the Amalgamation by
(ii) the Exchange Ratio.

1.7 CLOSING. The closing of the Amalgamation and the Reorganization
(the "Closing") shall take place (i) at the offices of Osler, Hoskin & Harcourt,
Suite 6600, 1 First Canadian Place, Toronto, Ontario, Canada at 10:00 a.m. on
the business day immediately following the date on which the last to be
fulfilled or waived of the conditions set forth in Article V hereof shall be
fulfilled or waived in accordance with this Agreement or (ii) at such other
place and/or time and/or on such other date as Secure and Border may agree. At
the Closing, the parties hereto shall deliver the documents contemplated hereby
together with such other customary documents as may be reasonably requested by
the parties.

A-11

<PAGE>

1.8 MATERIAL ADVERSE EFFECT. When used in connection with Border or
its subsidiary, or Secure or any of its subsidiaries, as the case may be,
"Material Adverse Effect" means any change or effect that, individually or when
taken together with all other such changes or effects that have occurred prior
to the date of determination of the occurrence of the Material Adverse Effect,
is or is reasonably likely to be materially adverse to the business, affairs,
operations, assets, liabilities (contingent or otherwise) or capital of Border
and its subsidiary or Secure and its subsidiaries, as the case may be, in each
case taken as a whole.

1.9 ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted appropriately so as to maintain the relative proportionate interests
of the holders of Border Stock and the holders of Secure Common Shares to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Secure
Common Shares or Border Stock), reorganization, recapitalization or other like
change with respect to Secure Common Shares or Border Stock occurring after the
date hereof and prior to the Effective Time.

1.10 DISSENTERS' RIGHTS. Holders of Border Stock may exercise rights
of dissent with respect to such shares in connection with the Amalgamation or
the Reorganization pursuant to and in the manner set forth in Section 185 of the
OBCA and Article 3 of the Amalgamation Agreement. Border shall give Secure (i)
prompt notice of any written demand of a right of dissent, withdrawals of such
demands, and any other instruments served pursuant to the OBCA in respect of
such right of dissent and received by Border and (ii) the opportunity to
participate in all negotiations and proceedings with respect to such rights.
Border shall not, except with the prior written consent of Secure, voluntarily
make any payment with respect to any such rights or offer to settle or settle
any such rights.

ARTICLE II

LIMITED GUARANTY OF BORDER AFFILIATES

2.1 INDEMNIFICATION BY BORDER AFFILIATES. Each affiliate of Border,
as described in Section 3.1(dd) hereof (a "Border Affiliate") shall provide a
limited recourse indemnification to Secure in the form set forth in the Border
Affiliate Agreement (as defined in Section 3.1(dd)). Such indemnification shall
be exercisable by Secure only until March 1, 1997. The indemnification shall be
a several obligation of each Border Affiliate whereby Secure will be held
harmless from and after the Effective Time against and with respect to the
matters set forth in the Border Affiliate Agreements.

2.2 PRO RATA EXERCISE. Secure shall only be entitled to exercise its
rights of indemnification provided for in the Border Affiliate Agreements in the
event that any claim or claims for indemnification it may have aggregate not
less than U.S. $1,000,000, and then only

A-12

<PAGE>

with respect to claims for indemnification in excess of such amount. Any claim
made under the Border Affiliate Agreements for indemnification shall be
exercised pro rata among all Border Affiliates.

2.3 SECURITY. As security for its obligations under the
indemnification provisions of the Border Affiliate Agreements, each Border
Affiliate shall grant to Secure a security interest in 10% of their respective
Exchangeable Shares of the Continuing Corporation. Secure's security interest
shall also extend to the proceeds of any sale of the Exchangeable Shares granted
as security to Secure. Any Exchangeable Shares (or proceeds thereof) pledged as
security under the Affiliate Agreements will be held by a third party mutually
acceptable to Border and Secure acting reasonably. Secure acknowledges that it
will not have any right to possess or otherwise dispose of any such Exchangeable
Shares or proceeds until its indemnification claim has been conclusively
resolved.

2.4 PROCEDURES FOR INDEMNIFICATION. Promptly after the discovery by
Secure of any event involving the subject matter of the foregoing indemnity
provisions (including without limitation receipt by Secure of notice of the
commencement of any action by a third party), Secure shall, if a claim is to be
made thereon against the Border Affiliates pursuant to the provisions of the
Border Affiliate Agreements, promptly notify each Border Affiliate thereof at
such Border Affiliate's address as set forth on the books and records of
Continuing Corporation; but the omission to so notify the Border Affiliates will
not relieve them from any liability which they may have to Secure otherwise. In
case such action is brought against Secure and it notifies the Border Affiliates
of the commencement thereof, the Border Affiliates shall have the right to
participate in, and, to the extent that they may wish, the right to select
separate counsel to participate in the defense of such action.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1 REPRESENTATIONS AND WARRANTIES OF BORDER. Except as otherwise
set forth on the Border Schedule of Exceptions dated the date hereof (the
"Border Schedules," which shall be organized by reference to specific sections
hereof as indicated below and which shall be deemed to include any information
specifically incorporated by reference on any of the Border Schedules), Border
hereby represents and warrants to Secure and Amalgamation Sub that:

(a) CORPORATE ORGANIZATION. Border is a corporation duly organized
and validly subsisting under the laws of the Province of Ontario, Canada.
True and correct copies of the Certificate and Articles of Incorporation
and all amendments thereto of Border in effect as of the date of this
Agreement have been provided to Secure. Except as contemplated by the next
paragraph, Border does not have any direct or indirect subsidiaries or any
other equity

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<PAGE>

interest in any other firm, corporation, partnership, joint venture
association or other business organization.

Pursuant to an Agreement dated May 11, 1996, as amended by an
agreement dated May 17, 1996 (copies of which have been provided to Secure)
(the "Border Europe Agreement"), by and among Border, Border Network
Technologies Europe Limited ("Border Europe"), and the other shareholders
of Border Europe, Border has purchased all of the remaining outstanding
capital stock of Border Europe. The closing of the purchase and sale of
such Border Europe shares occurred on May 17, 1996. Such closing occurred
pursuant to the terms of the Border Europe Agreement without amendment,
modification or waiver. All of the issued and outstanding capital stock of
Border Europe is owned 100% by Border directly, free and clear of any
security interest, claim, charge, lien, encumbrance or adverse interest of
any nature other than the security interest of the Royal Bank of Canada
pursuant to the General Security Agreement referred to on Schedule 3.1(p).
Further, there are not any outstanding or authorized options, warrants,
calls, rights, commitments or any other agreements of any character to
which Border Europe is a party or by which Border Europe may be bound
requiring it to issue, transfer, sell, deliver, purchase, redeem or acquire
any shares of its capital stock or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for or
acquire, any shares of capital stock of Border Europe.

(b) QUALIFICATION TO DO BUSINESS. Each of Border and Border Europe
is duly qualified or licensed to do business as an extra-provincial or a
foreign corporation in each jurisdiction wherein the nature of its
activities or of its properties owned or leased makes such qualification or
licensing necessary and the failure to be so qualified or licensed would
have a Material Adverse Effect on Border.

(c) CORPORATE POWER. Each of Border and Border Europe has the
requisite corporate power and authority to own and operate its properties,
to carry on its business as now being conducted, and in the case of Border,
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby.

(d) CORPORATE AUTHORITY. Subject to the approval of the shareholders
of Border at the meeting to be held in accordance with Section 4.3(b)
hereof, the execution and delivery of this Agreement by Border, and the
consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of Border. This
Agreement and all other instruments required hereby to be executed and
delivered by Border have been, or will be, duly executed and delivered by
authorized officers of Border and are, or when delivered will be, legal,
valid and binding obligations of Border, enforceable against Border, in
accordance with their terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general principles of equity.

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<PAGE>

(e) CAPITALIZATION. Schedule 3.1(e) attached hereto contains the
name of each shareholder and special warrant holder of Border and the
number of shares of Border Stock, Border Special Warrants and Border Broker
Warrants owned by each shareholder or warrant holder, as the case may be,
as of the date hereof. The authorized capital stock of Border is set forth
on Schedule 3.1(e). All of the outstanding shares of Border Stock have
been duly authorized and validly issued and are outstanding as fully paid
and nonassessable. Except as set forth on Schedule 3.1(e), no shares of
Border Stock are reserved for issuance. Except pursuant to the terms of
this Agreement or as specifically contemplated hereby or as set forth on
Schedule 3.1(e) with respect to Border Special Warrants, Border Broker
Warrants and options issued to Border employees and directors to acquire
shares of Border Stock (the "Border Stock Options"), there are not as of
the date hereof and there will not be at the Effective Time any outstanding
or authorized options, warrants, calls, rights, commitments or any other
agreements of any character to which Border is a party, or by which it is
bound, requiring it to issue, transfer, sell, purchase, redeem or acquire
any shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock or other securities of Border. Except pursuant to the terms
of this Agreement or as specifically contemplated hereby or as set forth on
Schedule 3.1(e), there are not as of the date hereof and there will not be
at the Effective Time any shareholder agreement, voting trust or other
agreements to which Border or, to the best knowledge of Border, any of the
Border Shareholders is a party, or by which Border or, to the best
knowledge of Border, any of the Border Shareholders is bound, relating to
shares of Border Stock.

(f) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement nor the consummation by Border of the
transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the Articles of Incorporation of Border or
Border Europe; (ii) require, on the part of Border or Border Europe, any
consent, approval, authorization or permit of, or filing with or
notification to, any governmental authority, except (A) applicable
requirements, if any, of the Securities Act (Ontario), as amended, and the
rules and regulations promulgated thereunder (the "OSA"), and other
relevant Canadian securities statutes, the applicable rules, regulations
and policies of a stock exchange in Canada in respect of the listing of the
Exchangeable Shares (as contemplated by Section 4.9), filings with the
agency under the Investment Canada Act, and filings under the Competition
Act (Canada), (B) and the filing of Articles of Amalgamation and Articles
of Amendment pursuant to the OBCA and appropriate documents with the
relevant authorities of other jurisdictions in which Border or Border
Europe is authorized to do business, and (C) such other consents,
approvals, authorizations or permits as shall have been obtained prior to
the Effective Time; (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 or acceleration or lien or
other charge or encumbrance) under any of the terms, conditions or
provisions of any note, license, agreement, Material Contract (as
hereinafter defined) or other material instrument to which Border or Border
Europe or any of their respective assets may be bound, except for the
requirement to obtain the consents of

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third parties referred to in Section 5.1(e) and except for such violations,
breaches and defaults (or rights of termination, cancellation or acceleration or
lien or other charge or encumbrance) as to which requisite waivers or consents
have been or will by the Effective Date be obtained or which do not have a
Material Adverse Effect on Border; or (iv) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in this
Section 3.1(f) and the consents of third parties referred to in Section 5.1(e)
are duly and timely obtained or made, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Border or Border Europe which
violation results in a Material Adverse Effect on Border.

(g) ACTIONS, SUITS, PROCEEDINGS. Other than as set forth on Schedule
3.1(g), there are no actions, suits or proceedings pending or, to the best
knowledge of Border, threatened against Border or Border Europe or any of
their respective properties or businesses in any court or before any
governmental authority; without limiting the generality of the foregoing,
and except as set forth on Schedule 3.1(g), there are no such actions,
suits or proceedings alleging potential liability; neither Border nor
Border Europe is subject to any order, writ, injunction or decree of any
court or governmental authority.

(h) COMPLIANCE WITH APPLICABLE LAWS AND OTHER INSTRUMENTS. The
business and operations of Border and Border Europe have been and are being
conducted in all respects in accordance with all applicable laws, rules or
regulations of all governmental and regulatory authorities, including
without limitation all laws, rules and regulations relating to the
environment or occupational health and safety (hereinafter collectively
referred to as "Environmental Laws"), other than where failure to so comply
does not have a Material Adverse Effect on Border. Neither Border nor
Border Europe is in violation of any building code, special use permit,
zoning ordinance or any other applicable law, rule or regulation, and there
are no administrative or other governmental claims pending against Border
or Border Europe alleging or inquiring as to the existence of any such
violation, other than any violation that does not have a Material Adverse
Effect on Border. Border is not in violation of its Articles of
Incorporation.

(i) ENVIRONMENTAL LAWS. Each of Border or Border Europe has obtained
all material permits and other governmental authorizations required under
applicable Environmental Laws (and has complied in all material respects
with the terms and conditions thereof) and has not received any
communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges Border or Border Europe is not in full
compliance with applicable Environmental Laws. Neither Border nor Border
Europe has improperly disposed of, spilled or otherwise released any
hazardous substances or materials the release or disposal of which is
regulated by any law, rule or regulation, and no circumstances exist which,
to best knowledge of Border, would subject Border or Border Europe to any
liability with respect to the environmental contamination of any property.

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(j) EMPLOYEES. Border has provided Secure with a true and correct
list of all hourly employees and salaried employees of Border and Border
Europe at the date hereof and in the case of each such employee sets forth
the position, level of compensation, earned and accrued vacation, date of
employment and citizenship.

(k) EMPLOYEE PLANS. Neither Border nor Border Europe has any
pension, retirement, profit sharing, bonus, deferred compensation, stock
option, group insurance or other employee benefit plans covering employees
of Border except Border's Eye, Dental and Prescription Plan with Imperial
Life Insurance Company. True and correct copies of such plan and of the
related agreements have been furnished by Border to Secure. Border has
paid all premiums when due under such plan. Other than the periodic
payments of premiums after the date hereof and routine administrative
duties, Border has no liability or obligations of any nature (whether
absolute, accrued or contingent and whether due or to become due) with
respect to such plan. There are no restrictions on the rights of Border to
terminate its participation in such plan without incurring any liability
thereunder. Such plan is not subject to the Employee Retirement Income
Security Act of 1974, as amended.

(l) LABOR MATTERS. Except as set forth on Schedule 3.1(1), neither
Border nor Border Europe has any existing labor disputes or disturbances,
and there are no existing employment, consulting, non-competition,
severance, indemnification or non-disclosure agreements or collective
bargaining agreements between Border or Border Europe and any of their
respective past or present employees, officers and directors. Neither
Border nor Border Europe is a party to any collective bargaining agreement
or other labor union contract applicable to persons employed by Border or
Border Europe. To the best knowledge of Border, there is not at present
any solicitation or campaign by any labor organization or employee for the
representation of Border's or Border Europe's employees by a labor
organization.

(m) FINANCIAL STATEMENTS. Attached to this Agreement as
Schedule 3.1(m) are financial statements for the year ended December 31,
1995 and for the three months ended March 31, 1996. Such financial
statements (i) have been prepared consistent with the books and records of
Border, (ii) present fairly the financial condition of Border at the
balance sheet dates and the results of its operations and cash flows for
the periods therein specified in all material respects, and (iii) have, in
all material respects, been prepared in accordance with Canadian generally
accepted accounting principles ("Canadian GAAP") applied on a consistent
basis. Specifically, but not by way of limitation, the balance sheets or
notes thereto disclose all of the debts, liabilities and obligations of any
nature (whether absolute, accrued or contingent and whether due or to
become due) of Border as required by Canadian GAAP to be disclosed in
financial statements at the dates thereof. The balance sheets include
appropriate reserves in accordance with Canadian GAAP for all taxes and
other liabilities accrued at such dates but not then payable.

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(n) TAX RETURNS AND AUDITS. All required federal, provincial, local
and foreign tax returns or appropriate extension requests of Border have
been filed when due, or appropriate extension requests have been filed and
remain in effect, and all federal, provincial, local and foreign taxes
required to be paid with respect to such returns have been paid or due
provision for the payment thereof has been made. Border is not delinquent
in the payment of any such tax or in the payment of any assessment or
governmental charge, other than any such delinquency that would not have a
Material Adverse Effect on Border. Except as disclosed in Schedule 3.1(n),
Border has not received notice of any tax deficiency proposed or assessed
against it, and has not executed any waiver of any statute of limitations
on the assessment or collection of any tax. Except as disclosed on
Schedule 3.1(n), none of Border's tax returns has been audited by
governmental authorities in a manner to bring such audits to Border's
attention. Border does not have any tax liabilities except those reflected
on the Border Schedules and those incurred in the ordinary course of
business since December 31, 1995.

(o) CHANGES, DIVIDENDS, ETC. Except as disclosed on Schedule 3.1(o)
and except for the transactions contemplated by this Agreement, since
December 31, 1995 neither Border nor Border Europe has: (a) incurred any
material debts, obligations or liabilities, absolute, accrued or contingent
and whether due or to become due, except current liabilities incurred in
the ordinary course of business, which (individually or in the aggregate)
will not have a Material Adverse Effect on Border; (b) paid any obligation
or liability other than, or discharged or satisfied any liens or
encumbrances other than those securing, current liabilities, in each case
in the ordinary course of business; (c) declared or made any payment or
distribution to shareholders, or purchased or redeemed any of its shares of
capital stock or other securities, or obligated itself to do so;
(d) mortgaged, pledged or subjected to lien, charge, security interest or
other encumbrance any of its assets, tangible or intangible, except in the
ordinary course of business; (e) sold, transferred or leased any of its
assets except in the ordinary course of business; (f) canceled or
compromised any debt or claim, or waived or released any right of material
value; (g) suffered any physical damage, destruction or loss (whether or
not covered by insurance) which has had or may have a Material Adverse
Effect on Border; (h) entered into any transaction other than in the
ordinary course of business; (i) encountered any labor difficulties or
labor union organizing activities; (j) issued or sold any shares of capital
stock or other securities or granted any options, warrants or other
purchase rights with respect thereto; (k) made any acquisition or
disposition of any material assets or become involved in any other material
transaction, other than for fair value in the ordinary course of business;
(l) increased the compensation payable, or to become payable, to any of its
employees or directors, or made any bonus payment or similar arrangement
with any employees or directors or increased the scope or nature of any
fringe benefits provided for its employees or directors; or (m) agreed to
do any of the foregoing other than pursuant hereto. Since December 31,
1995 the business of Border has been carried on only in the ordinary and
usual course, and there has been no change, occurrence or circumstance
since December 31, 1995 that would be likely to have a Material Adverse
Effect on Border.

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(p) TITLE TO THE ASSETS. Border has good and marketable title to all
of its assets, free and clear of all liens, pledges, security interests,
conditional sale agreements, license agreements, charges and encumbrances
that will continue after the Effective Time except as disclosed in the
financial statements described in Section 3.1(m) and encumbrances listed in
Schedule 3.1(p) attached hereto (the "Permitted Encumbrances").

(q) PAYMENT OBLIGATIONS. Border's accounts receivable have arisen
and will arise in the normal course of the operation of Border's business,
and constitute and will constitute valid and binding obligations of the
account debtors and obligors, enforceable in accordance with their terms at
the amount recorded therefor in the books and records of Border (without
giving effect to any allowance for doubtful accounts) and are not and will
not be subject to any discounts, whether for prompt payment or otherwise.

(r) CONDITION OF ASSETS. The plant, offices and equipment owned or
leased by Border have been kept in good condition and repair in the
ordinary course of business, ordinary wear and tear excepted. Copies of
all current product brochures for Border's products have been provided to
Secure. The brochures fairly describe such products. Defective products
returned to Border for repair or replacement have not had a Material
Adverse Effect on Border.

(s) INTELLECTUAL PROPERTY RIGHTS. Schedule 3.1(s) attached hereto
lists all patents, trademarks, trade names, service marks and copyrights
(and all applications therefor) used in and material to Border's business.
Except as disclosed in Schedule 3.1(s), Border (i) owns or has the
exclusive right to use all such patents, trademarks, trade names, service
marks and copyrights (and all applications therefor) and all trade secrets,
inventions, know-how, designs, processes, computer programs, specifications
and formulas otherwise used in and material to Border's business and
(ii) is not using any confidential information or trade secrets of others
without permission; provided, however, that the foregoing representation
and warranty is limited to Border's knowledge insofar as it relates to
components that are supplied by third parties and included in Border's
products. Except as set forth in the Border Schedules, Border is not
obligated to pay royalties, fees or other payments to any owner of,
licensor of, or other claimant to, any patent, trademark, service mark,
trade name, copyright or other intellectual property. Border has not
transferred or conveyed any rights to others in the intellectual property
of Border, other than rights to use that are incidental to sales of
Border's products. Except as listed on Schedule 3.1(s) attached hereto,
Border is not, nor has it received notice with respect to, infringing upon
or otherwise acting adversely to any known right or claimed right of any
person under or with respect to any patents, trademarks, service marks,
trade names, copyrights, licenses or other intellectual property rights;
provided, however, that the foregoing representation and warranty is
limited to Border's knowledge insofar as it relates to components that are
supplied by third parties and included in Border's products. Other than as
set forth in the Border Schedules, all software writing with respect to
Border's products has been performed by employees of Border.

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(t) CONTRACTS, LEASES, COMMITMENTS AND AGREEMENTS. To the extent not
listed on any other Schedule hereto, Schedule 3.1(t) hereto lists all
contracts, leases, commitments and agreements (other than purchase orders
from customers) to which Border is a party or by which it is bound that
(i) provide for aggregate payments in any year of at least $50,000,
(ii) contain an escalation, renegotiation or redetermination clause, or
(iii) cannot be canceled without liability, premium or penalty on notice of
not more than 30 days (the "Material Contracts"). Border and, to the best
knowledge of Border, each other party thereto, have in all respects
substantially performed all obligations required to be performed by them to
date, and are not in default under any of the Material Contracts. Each of
the Material Contracts is in full force and effect and, except as set forth
on the Border Schedules, does not require the consent of any party to the
transactions contemplated hereby, and Border has not waived or assigned to
any other person any of its rights thereunder.

(u) CONSENTS OF THIRD PARTIES. All agreements and consents of any
parties to the execution and delivery of this Agreement and the
consummation by Border of the transactions contemplated hereby as required
pursuant to the terms of this Agreement have been or will by the Effective
Time be obtained.

(v) COMPOSITION OF ASSETS. The assets of Border, including leased
assets, comprise all material property and assets employed by Border in its
business.

(w) INSURANCE. Border has in force the property and casualty
insurance set forth on Schedule 3.1(w) attached hereto. All policies
providing such insurance are in full force and effect and Border has
received no notice of impending cancellation or nonrenewal thereof.

(x) LICENSES AND PERMITS. Schedule 3.1(x) attached hereto contains a
list of all material licenses and permits granted to or by Border or Border
Europe. Each of Border and Border Europe possesses from the appropriate
agency, commission, board and governmental body and authority all material
licenses, certifications, permits and regulatory approvals required by law
or otherwise necessary for the operation of its business. All such
licenses, certifications, permits and approvals granted to Border or Border
Europe are in full force and effect, and no action to terminate any such
license, certification, permit or approval is pending or, to the best
knowledge of Border, has been threatened by any governmental agency or
other party.

(y) CONFLICTS OF INTEREST. Except as disclosed in Schedule 3.1(y),
to the best knowledge of Border, no officer, director or shareholder of
Border or any affiliate (as such term is defined in Rule 405 under the
Securities Act) of any such person has any direct or indirect interest
(i) in any entity which does business with Border, (ii) in any property,
asset or right which is used by Border in the conduct of its business, or
(iii) in any contractual relationship with Border other than as an
employee. For the purpose of this Section 3.1(y),

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there shall be disregarded any interest which arises solely from the
ownership of less than a 1% equity interest in a corporation whose stock is
regularly traded on any securities exchange or in the over-the-counter
market.

(z) NO EXISTING DISCUSSIONS. Border is not engaged, directly or
indirectly, in any discussions or negotiations with any other party with
respect to an Acquisition Proposal (as defined in Section 4.4).

(aa) POOLING OF INTERESTS. Neither Border nor any of its affiliates
(as such term is defined in Rule 405 under the Securities Act) has, to its
knowledge and based upon consultation with Border's independent
accountants, taken or agreed to take any action that would affect the
ability of Secure to account for the business combination to be effected by
the Amalgamation as a pooling of interests.

(bb) OPINION OF FINANCIAL ADVISOR. Border has been advised by its
financial advisor, Broadview Associates, LP, that in its opinion, as of the
date hereof, the Exchange Ratio is fair to the Border Shareholders from a
financial point of view.

(cc) BORDER STOCK OPTIONS. None of the holders of the Border Stock
Options (as defined in Section 3.1(e)) (or any portion thereof) will be
entitled to receive cash or other property (other than shares of Border,
Continuing Corporation or Secure) as a result of the transactions
contemplated hereby.

(dd) AGREEMENTS OF BORDER AFFILIATES. Border has delivered to Secure
a written agreement (a "Border Affiliate Agreement") from each person who
is, or may be deemed to be, an "affiliate" of Border for purposes of
Rule 145 under the Securities Act, substantially in the form of Exhibit B
hereto. Assuming that the shares of Border Stock covered by the Border
Affiliate Agreements are present and voted in accordance with the terms of
such Border Affiliate Agreements at the Border shareholders' meeting to be
held in accordance with Section 4.3(b), the shares of Border Stock covered
by such Agreements are and will be sufficient to ensure the approval of
this Agreement and the Amalgamation in accordance with the OBCA and any
other applicable requirements.

(ee) AGREEMENTS FOR CLASS A CONVERSION. Border has delivered to
Secure binding written agreements from certain holders of shares of Border
Class A Stock evidencing their agreement to exercise their right to convert
all such shares of Border Class A Stock into shares of Border Common Stock
prior to the Effective Time. Assuming that such holders exercise their
conversion right in accordance with the terms of such agreements, all of
the issued and outstanding Class A Shares shall be deemed to be converted
into shares of Border Common Stock in accordance with the terms of the
Border Class A Stock. No holder of Border Class A Stock will have any
rights in connection with such conversion other than the right to receive
shares of Border Common Stock.

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(ff) RESIDENCE OF BORDER SHAREHOLDERS, OPTIONHOLDERS AND
WARRANTHOLDERS. Border represents that, to the knowledge of Border, none
of the shareholders, optionholders and warrantholders of Border is a
"U.S. Person," within the meaning of Rule 902(o) under the Securities Act.

(gg) FULL DISCLOSURE. Border has not knowingly withheld from Secure
any material facts relating to Border. No representation or warranty by
Border contained in this Agreement contains any untrue statement of a
material fact (as defined in the OSA), or omits to state any material fact
necessary to make the representations and warranties herein contained not
misleading.

3.2 REPRESENTATIONS AND WARRANTIES OF SECURE AND AMALGAMATION SUB.
Except as otherwise set forth on the Secure Schedule of Exceptions dated the
date hereof (the "Secure Schedule of Exceptions," which shall be organized by
reference to specific sections hereof as indicated below and which shall be
deemed to include any information specifically incorporated by reference on any
of the Border Schedules), each of Secure and Amalgamation Sub represents and
warrants to Border that:

(a) CORPORATE ORGANIZATION. Each of Secure and its subsidiaries
(including Amalgamation Sub) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. Schedule 3.2(a) sets forth the name and jurisdiction of
incorporation of each subsidiary of Secure. True and correct copies of the
Charter and By-Laws of Secure and each of its subsidiaries as in effect as
of the date of this Agreement have been provided to Border. Except as set
forth in Schedule 3.2(a), all the issued and outstanding shares of capital
stock of each of Secure's subsidiaries are owned by either Secure or
another of Secure's subsidiaries free and clear of any security interest,
claim, charge, lien, encumbrance or adverse interest of any nature.
Amalgamation Sub is a taxable Canadian corporation for purposes of the
Income Tax Act (Canada).

(b) QUALIFICATION TO DO BUSINESS. Each of Secure and its
subsidiaries (including Amalgamation Sub) is duly qualified or licensed to
do business and in good standing as a foreign corporation in each
jurisdiction wherein the nature of its activities or of its properties
owned or leased makes such qualification or licensing necessary and failure
to be so qualified or licensed would have a Material Adverse Effect on
Secure.

(c) CORPORATE POWER. Each of Secure and its subsidiaries (including
Amalgamation Sub) has the requisite power and authority (corporate or
otherwise) to own and operate its properties, to carry on its business as
now being conducted, and, in the case of Secure and Amalgamation Sub, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.

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(d) CORPORATE AUTHORITY. Subject to approval by the stockholders of
Secure at the meeting to be held in accordance with Section 4.3(a) hereof,
the execution and delivery of this Agreement by Secure and Amalgamation
Sub, and the consummation of the transactions contemplated hereby, have
been or will be duly authorized by all necessary corporate action on the
part of Secure and Amalgamation Sub. This Agreement and all other
instruments required hereby to be executed and delivered by Secure or
Amalgamation Sub have been or will be, duly executed and delivered by
authorized officers of Secure or Amalgamation Sub, as the case may be, and
are or will be, legal, valid and binding obligations of Secure and
Amalgamation Sub, enforceable against Secure and Amalgamation Sub in
accordance with their terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general principles of equity.

(e) AUTHORIZATION FOR SECURE COMMON SHARES. Subject to approval by
the stockholders of Secure at the meeting to be held in accordance with
Section 4.3(a) hereof, Secure has taken or will take all necessary action
to permit it to issue the number of Secure Common Shares required to be
issued pursuant to the terms of the Exchangeable Shares; and the Secure
Common Shares to be issued pursuant to the terms of the Exchangeable Shares
will, when issued, be validly issued, fully paid and nonassessable and no
shareholder of Secure will have any preemptive right of subscription or
purchase in respect thereof.

(f) CONSENTS AND APPROVALS; NO VIOLATION. Subject to approval by the
stockholders of Secure at the meeting to be held in accordance with Section
4.3(a) hereof, neither the execution and delivery of this Agreement nor the
consummation by Secure and Amalgamation Sub of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the Charter or By-Laws of Secure or any of its subsidiaries;
(ii) require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental authority, except (A) filings by
Secure, pursuant to the applicable requirements of the Securities Exchange
Act of 1934, as amended (the "Securities Exchange Act") and under the
Securities Act and applicable state securities laws, (B) applicable
requirements, if any, of the OSA and other relevant Canadian securities
statutes, filings with the agency under the Investment Canada Act, and
filings under the Competition Act (Canada), and (C) the filings of Articles
of Amalgamation and Articles of Amendment pursuant to the OBCA and
appropriate documents with the relevant authorities of other jurisdictions
in which Border is authorized to do business; (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 or
acceleration or lien or other charge or encumbrance) under any of the
terms, conditions or provisions of any note, license, agreement, Secure
Material Contract (as hereinafter defined) or other instrument by which
Secure or Amalgamation Sub or any of their assets may be bound, except for
such violations, breaches and defaults (or rights of termination,
cancellation or acceleration or lien or other charge or encumbrance) as to
which requisite waivers or consents have been obtained; or (iv) assuming
the covenants, approvals, authorizations or permits and filings or
notifications

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referred to in this Section 3.2(f) are duly and timely obtained or made,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Secure or Amalgamation Sub or to any of their respective
assets.

(g) OWNERSHIP OF AMALGAMATION SUB; NO PRIOR ACTIVITIES; ASSETS OF
AMALGAMATION SUB.

(i) Amalgamation Sub has been formed solely for the purpose of
engaging in the transactions contemplated hereby.

(ii) The capital stock of Amalgamation Sub is, and as of the
Effective Time will be, owned 100% by Secure directly. Further,
except as specifically contemplated hereby, there are not and will not
be at the Effective Time any outstanding or authorized options,
warrants, calls, rights, commitments or any other agreements of any
character to which Amalgamation Sub is a party or by which
Amalgamation Sub may be bound requiring it to issue, transfer, sell,
deliver, purchase, redeem or acquire any shares of capital stock or
any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for or acquire, any shares of
capital stock of Amalgamation Sub.

(iii) As of the Effective Time, except for obligations or
liabilities incurred in connection with its incorporation or
organization and the transactions contemplated hereby, Amalgamation
Sub will not have incurred, directly or indirectly through any
subsidiary or affiliate, any obligations or liabilities or engaged in
any business or activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person or entity.

(iv) Secure will take all action necessary to ensure that
Amalgamation Sub at no time prior to the Effective Time owns any asset
other than an amount of cash necessary to incorporate Amalgamation Sub
and to pay the expenses of the Amalgamation attributable to
Amalgamation Sub in connection with the Amalgamation.

(h) SEC REPORTS; FINANCIAL STATEMENTS; CAPITALIZATION.

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schedules included therein, at the time filed or as subsequently
amended contained any untrue statement of a material fact or omitted
to state a 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.

(ii) The balance sheets and the related statements of
operations, stockholders' equity (deficit) and cash flows (including
the related notes thereto) of Secure included in the Secure SEC
Reports complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, are in accordance with the books and records of
Secure, have been prepared in accordance with United States GAAP
applied on a basis consistent with prior periods (except as otherwise
noted therein), and present fairly the financial position of Secure as
of their respective dates, and the results of its operations and its
cash flows for the periods presented therein (subject, in the case of
the interim financial statements, to normal year-end adjustments).

(iii) Secure's balance sheet and the related statement of
operations of Secure at March 31, 1996 and for the three months then
ended (the "Secure Financial Statements") are included in Secure's
Form 10-Q for the quarter ended March 31, 1996 as filed with the SEC,
and as provided to Border as part of the Secure SEC Reports. The
Secure Financial Statements have been prepared consistent with the
books and records of Secure, have been prepared in accordance with
United States GAAP applied on a basis consistent with prior periods
(except as otherwise noted therein), and present fairly the
consolidated financial position of Secure as of such date and the
results of its operations for the period presented therein.

(iv) As of December 31, 1995, the authorized capital stock of
Secure consisted of (i) 25,000,000 shares of Common Stock, par value
$.01 per share, of which 6,480,011 shares were issued and outstanding,
no shares were held in treasury, 772,508 shares were reserved for
future issuance pursuant to outstanding options under Secure's stock
option plans, and 170,172 were reserved for future issuance pursuant
to options that may be issued thereafter pursuant to Secure's 1995
Omnibus Stock Plan and (ii) 2,000,000 shares of undesignated Preferred
Stock, none of which was issued and outstanding. Other than as listed
on Schedule 3.2(h)(iv), no change in the authorized capital stock and
no material change in the number of issued and outstanding shares has
occurred between December 31, 1995 and the date hereof.

(i) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Secure SEC Reports or Schedule 3.2(i) or as contemplated by the Secure
Financial Statements and except for the transactions contemplated hereby,
since December 31, 1995, the business of Secure has been carried on only in
the ordinary and usual course, and there has been no

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change, occurrence or circumstance since December 31, 1995 that would be likely
to have a Material Adverse Effect on Secure.

(j) ACTIONS, SUITS, PROCEEDINGS. Except as set forth in Schedule
3.2(j) or as reflected in the Secure SEC Reports, there are no claims,
actions, suits, proceeding or investigations pending or, to the knowledge
of Secure, threatened against Secure or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority
or body, domestic or foreign, that could have a Material Adverse Effect on
Secure.

(k) ERISA AND RELATED MATTERS.

(i) Schedule 3.2(k) identifies each "employee benefit plan," as
defined in section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), currently or previously maintained, contributed
to or entered into by Secure or any of its subsidiaries under which Secure
or any of its subsidiaries or any ERISA Affiliate thereof has any present
or future obligation or liability (collectively, the "Secure Employee
Plans"). All Employee Plans which individually or collectively would
constitute an "employee pension benefit plan," as defined in section 3(2)
of ERISA (collectively, the "Secure Pension Plans"), are identified as such
in such Schedule 3.2(k). All contributions due from Secure or any of its
subsidiaries through the Effective Time with respect to any of the Secure
Employee Plans have been or will be timely made as required under ERISA or
any other applicable legislation or have been accrued on Secure's financial
statements as of March 31, 1996. Each Secure Employee Plan has been
maintained in material compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations,
including, without limitation, ERISA and the United States Internal Revenue
Code of 1986, as amended (the "Code"), which are applicable to such Secure
Employee Plans.

(ii) No Secure Pension Plan constitutes, or has since the
enactment of ERISA constituted, a "multiemployer plan," as defined in
section 3(37) of ERISA. No Secure Pension Plans are subject to Title IV of
ERISA. No "prohibited transaction," as defined in section 405 of ERISA or
section 4975 of the Code, has occurred with respect to any Secure Employee
Plan which is covered by Title I of ERISA which would have a Material
Adverse Effect on Secure, excluding transactions affected pursuant to a
statutory or administrative exemption. Nothing done or omitted to be done
and no transaction or holding of any asset under or in connection with any
Secure Employee Plan has or will make Secure or any officer or director of
Secure subject to any material liability under Title I of ERISA or liable
for any material tax or penalty pursuant to sections 4972, 4975, 4976 of
the Code or section 502 of ERISA.

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thereof is exempt from tax pursuant to section 501(a) of the Code. Secure
has delivered to Border or its counsel a complete and correct copy of the
most recent Internal Revenue Service determination letter with respect to
each Secure 401(a) Plan.

(iv) Each Secure plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured arrangements), workers'
benefits, vacation benefits, severance benefits, disability benefits, death
benefits, hospitalization benefits, retirement benefits, disability
benefits, death benefits, hospitalization benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options, stock
purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement insurance, compensation or benefits for
employees, consultants or directors (collectively "Secure Benefit
Arrangements") has been maintained in substantial compliance with its terms
and with the requirements prescribed by any and all statutes, orders, rules
and regulations which are applicable to such Secure Benefit Arrangement.

(v) There has been no amendment to, written interpretation or
announcement (whether or not written) by Secure or any of its subsidiaries
relating to, or change in employee participation or coverage under, any
Secure Employee Plan or Secure Benefit Arrangement that would increase
materially the expense of maintaining such Secure Employee Plan or Secure
Benefit Arrangement above the level of the expense incurred in respect
thereof for the fiscal year ended December 31, 1995.

(vi) No benefit payable or which may become payable by Secure or
any of its subsidiaries pursuant to any Secure Employee Plan or any Secure
Benefit Arrangement or as a result of or arising under this Agreement shall
constitute an "excess parachute payment" (as defined in section 280G(b)(1)
of the Code) which is subject to the imposition of an excise tax under
section 4999 of the Code or which would not be deductible by reason of
section 280G of the Code.

(vii) Secure and each of its subsidiaries is in compliance in
all material respects with all applicable laws, agreements and contracts
relating to employment, employment practices, wages, hours, and terms and
conditions of employment, including, but not limited to, employee
compensation matters, but not including ERISA.

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executed any waiver of any statute of limitations on the assessment or
collection of any material tax. Except as set forth on the Secure
Schedules, none of Secure's tax returns has been audited by governmental
authorities in a manner to bring such audits to Secure's attention. Secure
does not have any material tax liabilities except those reflected on the
Secure Schedules and those incurred in the ordinary course of business
since December 31, 1995. Secure is not, for purposes of subsection
112(2.2) of the Income Tax Act (Canada), a specified financial institution
or a specified person in relation to such institution.

(m) POOLING OF INTERESTS. Neither Secure nor any of its affiliates
(as such term is defined in Rule 405 under the Securities Act) has, to its
knowledge and based upon consultation with its independent accountants,
taken or agreed to take any action that would affect the ability of Secure
to account for the business combination to be effected by the Amalgamation
as a pooling of interests.

(n) OPINION OF FINANCIAL ADVISOR. Secure has been advised by its
financial advisor, Robertson, Stephens & Company, L.P., that in its
opinion, as of the date hereof, the Exchange Ratio is fair to Secure and
its stockholders from a financial point of view.

(o) AGREEMENTS OF CERTAIN SECURE STOCKHOLDERS. Secure has delivered
to Border a written agreement (a "Secure Affiliate Agreement") from each
person who is, or may be deemed to be, an "affiliate" of Secure for
purposes of Rule 145 under the Securities Act, substantially in the form of
Exhibit C hereto. Assuming that the Secure Common Shares covered by the
Secure Affiliate Agreements are present and voted in accordance with the
terms of such Agreements at the Secure shareholders' meeting to be held in
accordance with Section 4.3(a), the Secure Common Shares covered by such
agreements are and will be sufficient to ensure the approval of the
issuance of Secure Common Shares pursuant to the terms of the Exchangeable
Shares and the proposal to amend the 1995 Omnibus Stock Plan.

(p) FULL DISCLOSURE. Secure has not knowingly withheld from Border
any material facts relating to Secure. No representation or warranty by
Secure contained in this Agreement contains any untrue statement of a
material fact, or omits to state any material fact necessary to make the
representations and warranties herein contained not misleading.

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ARTICLE IV

CERTAIN COVENANTS

4.1 CONDUCT OF BORDER'S BUSINESS PENDING THE AMALGAMATION. Border
warrants and agrees that, from December 31, 1995 to the Effective Time, except
as disclosed in the Border Schedules and except for entering into this Agreement
and consummating the transactions expressly contemplated hereby or to the extent
that Secure shall otherwise consent in writing, which consent shall not be
unreasonably withheld:

(a) Border has operated and shall operate its business substantially
as presently planned or operated and only in the ordinary, usual and
customary manner, and, consistent with such operation, it has and will use
its reasonable efforts to preserve intact its present business organization
and its relationships with persons having business relationships with it.

(b) No amendment has been or shall be made to the Articles of
Incorporation of Border.

(c) There has been and shall be no changes in the number of shares,
par value or class of authorized or issued capital stock of Border, other
than shares of Border Common Stock issued upon the conversion of the shares
of Border Class A Stock in accordance with their terms or pursuant to the
exercise of special warrants, broker warrants or stock options listed on
Schedule 3.1(e). In addition, Border has not and shall not grant or issue
any option, warrant, convertible security, or other right to acquire any
shares of capital stock of Border.

(d) There has not been and shall not be any declaration or payment of
any dividend or other distribution in respect to the capital stock of
Border.

(e) Border has not and shall not (i) enter into any employment
contract or consulting agreement or make any offer of employment to any
person or offer to engage any person as a consultant, or (ii) increase the
wages, salary, fees or other compensation of any person(s) presently
employed or rendering any service(s) to Border, except in the ordinary
course of business and consistent with past practice.

(f) Except in the ordinary course of business, Border has not and
shall not enter into, materially amend or renew, or waive or release any
rights of material value under, any Material Contract.

4.2 PROXY STATEMENT. (a) As promptly as practicable after the
execution of this Agreement, Secure shall prepare and file with the SEC a
Proxy Statement (the "Secure Proxy Statement") to be sent to the
stockholders of Secure in connection with the meeting of Secure's
stockholders (the "Secure Stockholders' Meeting") to be held in accordance
with Section 4.3(a) below to vote upon the issuance of the Secure Common

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Shares issuable pursuant to the terms of the Exchangeable Shares and to
vote upon an amendment to Secure's 1995 Omnibus Stock Plan. Border agrees
to cooperate with Secure in preparing and filing the Secure Proxy
Statement. The Secure Proxy Statement shall include the recommendation of
the Board of Directors of Secure in favor of (i) issuance of the Secure
Common Shares issuable pursuant to the terms of the Exchangeable Shares and
(ii) amendment to Secure's 1995 Omnibus Stock Plan.

(b) Border shall take such action as may be necessary to ensure that
the information to be supplied by Border for inclusion in the Secure Proxy
Statement shall not, at the time filed with the SEC, and, in addition, at
the date it or any amendments or supplements thereto are mailed to
stockholders, at the time of the Secure Stockholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light of
the circumstances under which it shall be made, is false or misleading with
respect to any material fact, or omit to state any material fact necessary
in order to make the statements made in the Secure Proxy Statement not
false or misleading. Border will promptly notify Secure in writing if
prior to the Effective Time it shall obtain knowledge of any fact that
would make it necessary to amend or supplement the Secure Proxy Statement
in order to render the statements made therein not misleading or to comply
with applicable law.

(c) Secure shall take such action as may be necessary to ensure that
the information supplied by Secure for inclusion in the Secure Proxy
Statement shall not, at the time filed with the SEC, and, in addition, at
the date it or any amendments or supplements thereto are mailed to
stockholders, at the time of the Secure Stockholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light of
the circumstances under which it shall be made, is false or misleading with
respect to any material fact, or omit to state any material fact necessary
in order to make the statements made in the Secure Proxy Statement not
false or misleading. Secure will promptly amend or supplement the Secure
Proxy Statement if prior to the Effective Time it shall obtain knowledge of
any fact that would make it necessary to amend the Secure Proxy Statement
in order to render the statements made therein not misleading or to comply
with applicable law.

4.3 STOCKHOLDERS' MEETINGS. (a) Secure shall call a meeting of its
stockholders as promptly as practicable for the purpose of voting upon the
issuance of the Secure Common Shares issuable pursuant to the terms of the
Exchangeable Shares. Secure will, through its Board of Directors,
recommend to its stockholders approval of the issuance of such Secure
Common Shares. Secure shall use all reasonable efforts to solicit from its
stockholders proxies in favor of the issuance of such shares. In addition,
Secure shall also propose to its stockholders at such Secure Stockholders'
Meeting as a separate proposal an amendment to the 1995 Omnibus Stock Plan
to increase the number of shares covered by one million (1,000,000) Secure
Common Shares. Secure will, through its Board of Directors, recommend to
its stockholders approval of the

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proposal to amend the 1995 Omnibus Stock Plan. Secure shall use all
reasonable efforts to solicit from its stockholders proxies in favor of
such proposal. In connection with the Secure Stockholders' Meeting, Secure
shall also cause to be nominated for election as directors of Secure the
following individuals: Glenn Mackintosh, Adam Adamou and Robert Forbes.
Secure will, through its Board of Directors, recommend to its stockholders
election of the foregoing individuals at such Secure Stockholders' Meeting
and shall use all reasonable efforts to solicit from its stockholders
proxies in favor of their election. Alternatively, at the sole discretion
of Secure, in lieu of the nomination of the foregoing individuals for
election at such Secure Stockholders' Meeting, the Board of Directors of
Secure may elect the foregoing individuals as directors by action of the
Board of Directors.

(b) Border shall call a meeting of its shareholders to be held in
Canada as promptly as practicable for the purpose of voting upon this
Agreement and the Amalgamation. Border will, through its Board of
Directors, recommend to its shareholders approval of this Agreement and the
Amalgamation. Border shall use all reasonable efforts to obtain at such
meeting the vote or consent of Border shareholders in favor of this
Agreement and the Amalgamation as required by the OBCA.

4.4 NO SOLICITATION. With respect to any Acquisition Proposal (as
hereinafter defined):

(a) Border will not (and will use its best efforts to assure that its
officers, directors, employees, agents and affiliates do not on its behalf)
take any action to solicit, initiate, encourage or support any inquiry,
proposal or offer from, furnish any information to, or participate in any
negotiations with, any corporation, partnership, person or other entity or
group (other than Secure) regarding any acquisition of Border, any merger,
amalgamation, or consolidation with or involving Border, or any take-over
bid, or any sale of stock or other equity securities (including without
limitation by way of a tender offer) or any material portion of the assets
of Border (any of the foregoing inquiries or proposals being referred to
herein as an "Acquisition Proposal").

(b) Border shall immediately notify Secure after receipt of any
Acquisition Proposal, or any request for information relating to Border in
connection with an Acquisition Proposal, or any request for access to the
properties, books or records of Border by any person or entity that informs
Border that it is considering making, or has made, an Acquisition Proposal.
Such notice to Secure shall be made orally and in writing and shall
indicate in reasonable detail the terms and conditions of any such
proposal, inquiry or contact.

4.5 BOOKS AND RECORDS; ACCESS AND INFORMATION. From the date of this
Agreement until the Effective Time, Border shall give to Secure, its officers
and representatives reasonable access to the premises, books and records of
Border, and provide Secure with such

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financial and operating data and other information with respect to its business
and properties as it shall from time to time reasonably request, including,
without limitation, all interim financial data as soon as it becomes available;
provided, however, that any such investigation shall be conducted in such manner
as not to interfere unreasonably with the operation of the business of Border.

4.6 NOTIFICATION OF CERTAIN MATTERS. Subsequent to the date of this
Agreement and on or prior to the Effective Time, Border and Secure shall each
promptly notify the other of:

(i) the receipt of any notice of, or other communication
relating to, a default or event which, with notice or lapse of time or
both, would become a default, under any material agreement to which it is a
party or to which it or any of its respective material properties or assets
may be subject or bound;

(ii) the receipt of any notice or other communication from any
third party whose consent or approval is or may be required in connection
with the transactions contemplated by this Agreement, denying such consent
or approval;

(iii) the receipt of any notice or other communication from any
governmental regulatory agency or authority in connection with the
transactions contemplated hereby; or

(iv) any condition or fact which would not permit it to satisfy
a condition to the other's obligation to effect the transactions
contemplated hereby, including the Amalgamation.

4.7 CONFIDENTIALITY. Each of the parties hereto agrees that it
shall, and shall cause its subsidiaries and the officers, employees and
authorized representatives of each of them to hold in strict confidence all data
and information obtained by them from the other parties hereto (unless such
information is or becomes readily ascertainable from public or published
information) and shall not, and shall ensure that such subsidiaries, directors,
officers, employees and authorized representatives do not, disclose such
information to others without the prior written consent of the party from which
such data or information was obtained, except as required by law after
consultation with counsel. In the event of the termination of this Agreement,
and subject to the Bilateral Limited Non-Disclosure Agreement dated April 17,
1996, between Secure and Border, each of the parties will return or destroy all
documents, work papers and other materials (including all copies made thereof)
obtained pursuant hereto.

4.8 POOLING. Each of Secure and Border agrees not to take any action
that would adversely affect the ability of Secure to account for the
Amalgamation as a pooling of interests under United States GAAP. In addition,
each of Secure and Border hereby covenant and agree to take all steps reasonably
necessary in order to permit Secure to determine, based on the advice of Ernst &
Young LLP and such other advice as Secure may deem relevant, that consummation
of the Amalgamation would be accounted for as a pooling of interests in

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accordance with United States GAAP. In addition, each of Secure and Border
agrees to use all reasonable efforts to cause the Amalgamation to be treated as
a pooling of interests under United States GAAP (including without limitation,
if required in order to obtain the pooling letters contemplated by Sections
5.1(g) and 5.2(g), completing a private sale of Border Stock in an appropriate
amount).

4.9 TAX-FREE ROLLOVER. Each of Secure and Border agrees to use all
reasonable efforts to cause the Amalgamation and the Reorganization to generally
be treated as tax-free rollovers under the Income Tax Act (Canada) such that on
the exchange of Border Shares for Class B Shares and Class B Shares for
Exchangeable Shares, Border shareholders who are resident in Canada for whom the
shares of Border Stock constitute capital property for purposes of the Income
Tax Act (Canada) will not generally realize any gain or loss pursuant to the
Income Tax Act (Canada). Each of Secure and Border agrees to use all reasonable
efforts to ensure that the Exchangeable Shares are not "foreign property" within
the meaning of Section 206 of the Income Tax Act (Canada) (including without
limitation listing the Exchangeable Shares at the Effective Time on a prescribed
stock exchange for purposes of the Income Tax Act (Canada)).

4.10 EMPLOYMENT AGREEMENTS. Secure agrees that, subject to the
closing of the transactions contemplated by this Agreement, it will enter into
an employment agreement with each of Steven Lamb, Glenn Mackintosh and Donald
Whitbeck in the form attached hereto as Exhibit D with such changes thereto in
the case of each such person as may be mutually acceptable to such person and
Secure.

4.11 BOOKS AND RECORDS; ACCESS AND INFORMATION. From the date of this
Agreement until the Effective Time, Secure shall give to Border and its
representatives, reasonable access to the premises, books and records of Secure,
and provide Border with such financial and operating data and other information
with respect to its business and properties as it shall from time to time
reasonably request, including, without limitation, all interim financial data as
soon as it becomes available; provided, however, that any such investigation
shall be conducted in such manner as not to interfere unreasonably with the
operation of the business of Secure.

4.12 SALES OF EQUITY SECURITIES. From the date of this Agreement
until the Effective Time, Secure shall not offer, sell, contract to sell or
otherwise dispose of any equity securities of Secure (other than (i) pursuant to
this Agreement, (ii) Secure Common Shares not exceeding 5% of the Secure Common
Shares outstanding on the date hereof or (iii) pursuant to the 1995 Omnibus
Stock Plan of Secure (or predecessor plans).

4.13 STOCK OPTIONS. (a) Secure agrees that it will provide each
holder of a Border Stock Option with the opportunity to enter into an agreement
with Secure and Continuing Corporation in a form mutually acceptable to Secure
and Border (the "Secure Stock Option Assumption Agreement"), which will become
effective immediately following the Amalgamation and prior to the
Reorganization, providing that each Class B Option shall become an option to
acquire from Secure (the "Secure Stock Option"), on substantially the same terms
and conditions

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as under the Class B Option (except as provided herein), a number of Secure
Common Shares equal to the product (rounded down to the nearest whole share) of
(i) the number of Class B Shares issuable upon exercise of the Class B Option
immediately following the Amalgamation and (ii) the Exchange Ratio. The price
per Secure Common Share at which such Secure Option is exercisable shall be the
amount (rounded up to the nearest whole cent) obtained by dividing (i) the
exercise price per Class B Share under the Class B Option immediately following
the Amalgamation by (ii) the Exchange Ratio. Secure agrees that, promptly after
the Closing Date, it will register the Secure Common Shares issuable with
respect to all Secure Stock Options, and all Class B Options that shall not have
been exchanged for Secure Stock Options, pursuant to the Securities Act and will
register or qualify such Secure Common Shares under applicable state or
provincial securities or blue sky laws and will use its best efforts to maintain
the effectiveness of such registrations or qualifications as may be necessary in
connection with the offer and sale of such Secure Common Shares.

(b) Border shall use its reasonable best efforts to cause each holder
of a Border Stock Option to enter into a Secure Stock Option Assumption
Agreement.

4.14 ANCILLARY DOCUMENTS/RESERVATION OF SHARES. (a) Provided all
other conditions of this Agreement have been satisfied or waived, Border and
Amalgamation Sub shall, as promptly as practicable thereafter, jointly file
Articles of Amalgamation pursuant to Section 178 of the OBCA to give effect to
the Amalgamation in accordance with the terms of the Amalgamation Agreement..

(b) Immediately following the time at which the Amalgamation becomes
effective, Secure shall take all necessary steps to cause the Continuing
Corporation to file Articles of Amendment pursuant to Section 171 of the
OBCA giving effect to the Reorganization.

(i) Secure and the Continuing Corporation shall execute and
deliver a Support Agreement between Secure and the Continuing
Corporation containing the terms and conditions set forth in Exhibit E
hereto (the "Support Agreement"), together with such other terms and
conditions as may be agreed to by the parties hereto acting
reasonably;

(ii) Secure, the Continuing Corporation and a Canadian Trust
Company to be selected by Secure, reasonably satisfactory to Border,
shall execute and deliver a Voting and Exchange Trust Agreement
containing the terms and conditions set forth in Exhibit F hereto (the
"Voting Trust and Exchange Agreement"), together with such other terms
and conditions as may be agreed to by the parties hereto acting
reasonably; and

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(iii) Secure shall file with the Secretary of State of the State
of Delaware a certificate of designation which shall be in
substantially the form set forth in Exhibit G hereto.

At and after the Effective Time, Secure shall duly and timely perform its
obligations expressed in the Amalgamation Agreement. The Amalgamation
Agreement and the other documents referred to in this Section 4.14(b) are
sometimes referred to herein as the "Ancillary Documents."

(d) At or prior to the Effective Time, Secure will reserve for
issuance such number of Secure Common Shares as shall be necessary to give
effect to the exchanges, conversions and assumptions of options
contemplated hereby.

4.15 NASDAQ. Secure shall cause the Secure Common Shares issuable
pursuant to the terms of the Exchangeable Shares to be eligible for quotation on
the Nasdaq National Market.

4.16 COMPLIANCE WITH REGULATION S AND REGULATION D. The parties
hereby acknowledge that the securities offered by Secure and Amalgamation Sub
pursuant to this Agreement are being offered to Steven Lamb, Glenn Mackintosh,
Donald Whitbeck, 1158585 Ontario Inc. and Computer Solutions Group in reliance
upon Regulation D under the Securities Act and are being offered to all other
shareholders and warrantholders of Border in reliance upon Regulation S under
the Securities Act. The parties hereby agree that they will take all steps
necessary to comply with the provisions of Regulation D and Regulation S,
including timely filing of all documents required to be filed with any
governmental authority. Secure and Border acknowledge that securities law
legends reciting the requirements of applicable securities laws may be placed on
the certificates evidencing the securities issued pursuant to this Agreement.
Secure acknowledges and agrees that if an opinion of counsel is required by any
such legend in connection with the transfer of such securities, (i) an opinion
from Skadden, Arps, Slate, Meagher & Flom ("Skadden Arps") or Faegre & Benson
LLP will be considered acceptable for purposes of satisfying such requirement,
and (ii) Secure will pay the reasonable fees and expenses charged by the firm
rendering such opinion. The holder of a certificate bearing a securities law
legend may, at its option, select Skadden Arps or Faegre & Benson LLP to render
such opinion, and Secure shall be required to accept the opinion of either firm.

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ARTICLE V

CONDITIONS TO CLOSING

5.1 CONDITIONS TO OBLIGATION OF SECURE AND AMALGAMATION SUB TO CLOSE. The
obligation of Secure and Amalgamation Sub to effect the closing of the
transactions contemplated by this Agreement is subject to the satisfaction prior
to or at the Closing of the following conditions:

(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Border under this Agreement shall be true and correct in all
material respects as of the date of this Agreement.

(b) OBSERVANCE AND PERFORMANCE. Border shall have performed and
complied in all material respects with all covenants and agreements
required by this Agreement to be performed and complied with by it prior to
or as of the Closing Date.

(c) OFFICERS' CERTIFICATE. Border shall have delivered to Secure a
certificate, dated the Closing Date, executed by the President of Border
and certifying to the satisfaction of the conditions specified in Sections
5.1(a) and (b) hereof, insofar as they relate to Border.

(d) STOCKHOLDER APPROVAL. The issuance of the Secure Common Shares
pursuant to the terms of the Exchangeable Shares and the amendment to the
1995 Omnibus Stock Plan shall have been approved by the affirmative
requisite vote of the stockholders of Secure. This Agreement and the
Amalgamation shall have been approved by the requisite affirmative vote of
the shareholders of Border.

(e) CONSENTS OF THIRD PARTIES. All material consents, waivers,
approvals, authorizations, or orders required to be obtained, and all
material filings required to be made, by Border for the authorization,
execution and delivery of this Agreement and the consummation by it of the
transactions contemplated hereby shall have been obtained and made by
Border. Secure shall have received duly executed copies of all material
consents and agreements necessary for Border to effect the transactions
contemplated hereby. Secure hereby agrees to use its best efforts to
assist Border in obtaining such consents and agreements; provided, however,
that Secure shall not be obligated to accept any terms materially different
from those that presently exist in order to obtain any such consent or
agreement.

(f) LEGAL OPINION. Secure shall have received an opinion, dated the
Closing Date, from Osler, Hoskin & Harcourt, counsel to Border, with
respect to such matters as shall be reasonably requested by Secure.

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(g) POOLING LETTERS. Ernst & Young LLP shall have issued to Secure a
letter to the effect that the Amalgamation will qualify as a pooling of
interests for United States GAAP accounting purposes. In addition, Price
Waterhouse shall have issued to Border a letter that Border is an entity
that would qualify as a party to a pooling of interests for United States
GAAP accounting purposes.

(h) COMFORT LETTER. On the date of mailing of the Secure Proxy
Statement and on the Closing Date, Secure shall have received a "comfort
letter" from Border's independent auditors addressed to Secure, dated as of
a date within two business days of the date of such mailing or the Closing
Date, as the case may be, in form and substance reasonably acceptable to
Secure and customary in scope and substance for such letters delivered by
independent auditors. Such comfort letter shall cover such financial data
and information regarding Border as shall be required in the Secure Proxy
Statement.

(i) COPIES OF DOCUMENTS. Secure shall have received, to the extent
requested by Secure, copies of all documents and instruments listed in any
of the Schedules to this Agreement.

(j) EMPLOYMENT AGREEMENTS. Secure shall have entered into an
employment agreement with each of Steven Lamb, Glenn Mackintosh and Donald
Whitbeck in the form attached hereto as Exhibit D, with such changes
thereto in the case of each such person as may be mutually acceptable to
such person and Secure.

(k) NO LEGAL ACTIONS. No court or governmental authority of
competent jurisdiction shall have issued an order, not subsequently
vacated, restraining, enjoining or otherwise prohibiting the consummation
of the transactions contemplated by this Agreement, and no governmental
agency shall have instituted an action or proceeding which shall not have
been previously dismissed seeking to restrain, enjoin or prohibit the
consummation of the transactions contemplated by this Agreement.

(l) CANADIAN SECURITIES MATTERS. Secure shall have received any
consents, orders or approvals required from Canadian governmental
authorities or agencies under the OSA or other applicable Canadian
securities laws.

(m) CLOSING DOCUMENTS. Secure shall have received such further
instruments and documents as may be reasonably required for Border to
consummate the transactions contemplated hereby.

(n) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
and actions taken in connection with the transactions contemplated hereby
and all certificates, opinions, agreements, instruments and documents
mentioned herein or incident to any such transaction shall be reasonably
satisfactory in form and substance to Secure and its counsel.

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(o) ANCILLARY DOCUMENTS. The Ancillary Documents shall have been
executed and delivered by all parties thereto.

(p) BORDER DISSENTERS' RIGHTS. The holders of no more than three
percent (3%) of the outstanding shares of Border Stock shall have exercised
dissenters' rights in respect of the Amalgamation and the Reorganization.

5.2 CONDITIONS TO OBLIGATION OF BORDER TO CLOSE. The obligation of
Border to effect closing of the transactions contemplated by this Agreement is
subject to the satisfaction prior to or at the Closing of the following
conditions:

(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Secure and Amalgamation Sub under this Agreement shall be
true and correct in all material respects as of the date of this Agreement.

(b) OBSERVANCE AND PERFORMANCE. Secure and Amalgamation Sub shall
have performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed and complied with by
them prior to or as of the Closing Date.

(c) OFFICERS' CERTIFICATE. Secure shall have delivered to Border a
certificate, dated the Closing Date, executed by the Chief Executive
Officer or President and the Chief Financial Officer of Secure and
certifying to the satisfaction of the conditions specified in Sections
5.2(a) and (b) hereof.

(d) CONSENTS, APPROVALS, ETC. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all
material filings required to be made, by Secure for the authorization,
execution and delivery of this Agreement and the consummation by it of the
transactions contemplated hereby shall have been obtained and made by
Secure.

(e) STOCKHOLDER APPROVAL. The issuance of the Secure Common Shares
pursuant to the terms of the Exchangeable Shares and the amendment to the
1995 Omnibus Stock Plan shall have been approved by the affirmative
requisite vote of the stockholders of Secure. This Agreement and the
Amalgamation shall have been approved by the requisite affirmative vote of
the shareholders of Border. The Reorganization shall have been approved by
the requisite approval of the shareholders of Continuing Corporation.

(f) LEGAL OPINION. Border shall have received an opinion, dated the
Closing Date, from Faegre & Benson LLP, counsel to Secure and Amalgamation
Sub, or Stikeman, Elliott, Canadian counsel to Secure and Amalgamation Sub,
with respect to such matters as shall be reasonably requested by Border.
In addition, the shareholders of Border shall have received an opinion,
dated the Closing Date, from Faegre & Benson LLP or Stikeman,

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Elliott with respect to (i) the due and valid issuance of the securities
being issued in connection with the Amalgamation and Reorganization and
(ii) the enforceability of the third-party beneficiary provisions of
Section 10.10.

(g) POOLING LETTERS. Ernst & Young LLP shall have issued to Secure a
letter to the effect that the Amalgamation will qualify as a pooling of
interests for United States GAAP accounting purposes. In addition, Price
Waterhouse shall have issued to Border a letter to the effect that Border
is an entity that would qualify as a party to a pooling of interests for
United States GAAP accounting purposes.

(h) TAX OPINION. Border shall have received the written opinion of
Osler, Hoskin & Harcourt to the effect that on the exchange of Border
Shares for Class B Shares and the exchange of Class B Shares for
Exchangeable Shares, Border shareholders who are resident in Canada and for
whom the shares of Border Stock constitute capital property for purposes of
the Income Tax Act (Canada) will not generally realize any gain or loss
pursuant to the Income Tax Act (Canada).

(i) EMPLOYMENT AGREEMENTS. Each of Steven Lamb, Glen Mackintosh and
Donald Whitbeck and Secure shall have entered into an employment agreement
with Secure in the form attached hereto as Exhibit D, with such changes
thereto in the case of each such person as may be mutually acceptable to
such person and Secure.

(j) NO LEGAL ACTIONS. No court or governmental authority of
competent jurisdiction shall have issued an order, not subsequently
vacated, restraining, enjoining or otherwise prohibiting the consummation
of the transactions contemplated by this Agreement, and no governmental
agency shall have instituted an action or proceeding which shall not have
been previously dismissed seeking to restrain, enjoin or prohibit the
consummation of the transactions contemplated by this Agreement.

(k) CLOSING DOCUMENTS. Border shall have received such further
instruments and documents as may be reasonably required for Secure and
Amalgamation Sub to consummate the transactions contemplated hereby.

(l) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
and actions taken in connection with the transactions contemplated hereby
and all certificates, opinions, agreements, instruments and documents
mentioned herein or incident to any such transaction shall be reasonably
satisfactory in form and substance to Border and its counsel.

(m) CANADIAN SECURITIES MATTERS. Secure shall have received any
consents, orders or approvals required from Canadian governmental
authorities or agencies under the OSA or other applicable Canadian
securities laws.

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(n) ANCILLARY DOCUMENTS. The Ancillary Documents shall have been
executed and delivered by all parties thereto.

(o) LISTING ON PRESCRIBED STOCK EXCHANGE. The Exchangeable Shares
shall have been approved for listing at the Effective Time on a prescribed
stock exchange for purposes of the Income Tax Act (Canada).

(p) ELECTION OF DIRECTORS. Glenn Mackintosh, Adam Adamou and Robert
Forbes shall have been elected as directors of Secure.

ARTICLE VI

REGISTRATION RIGHTS

6.1 CERTAIN DEFINITIONS; GENERAL PROVISIONS. For purposes of this
Article VI:

(a) "Register", "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.

(b) "Registrable Securities" means (i) the Secure Common Shares
issued or issuable in exchange for outstanding Exchangeable Shares, and (ii) any
Secure Common Shares issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of,
Registrable Securities or Exchangeable Shares; provided, however, that as to any
particular security or securities that are Registrable Securities, such
securities shall cease to be Registrable Securities when (x) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement or (y) such securities shall
have been sold to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act.

(c) "Date of termination of the pooling period" means the date that
Secure publishes financial results (including combined sales and net income)
covering at least 30 days of operations after the Effective Time of the
Amalgamation. Secure agrees to publish such results as soon as reasonably
practicable for the calendar quarter that includes the first full calendar month
of operations after the Effective Time (E.G., in the event that the Effective
Time is in August 1996, the first full calendar month of operations after the
Effective Time would be included in the results of operations for the quarter
ended September 30, 1996).

(d) "Record Holder" means a person in whose name Registrable
Securities are registered. For purposes of determining whether a person is a
Record Holder of Registrable Securities, such person shall be deemed to hold not
only the outstanding Registrable Securities

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registered in such person's name, but also all Registrable Securities issuable
in exchange for outstanding Exchangeable Shares registered in such person's name
and all Registrable Securities issuable upon the conversion or exercise of any
warrant, right or other security registered in such person's name which is
issued (i) as a dividend or other distribution with respect to, (ii) in exchange
for or (iii) in replacement of, Registrable Securities or Exchangeable Shares.

(e) For purposes of determining the number of shares of Registrable
Securities outstanding at any time, there shall be included not only Registrable
Securities outstanding at such time but also all Registrable Securities issuable
in exchange for outstanding Exchangeable Shares or upon the conversion or
exercise of any outstanding warrant, right or other security which is issued
(i) as a dividend or other distribution with respect to, (ii) in exchange for or
(iii) in replacement of, Registrable Securities or Exchangeable Shares.

(f) Notwithstanding any other provision of this Article VI, in no
event will Secure be required by this Agreement to file a registration statement
or to cause such registration statement to remain effective at any time after
three years from the Closing Date.

(g) Notwithstanding any other provision of this Article VI, Secure
shall not be required to include in any single registration any shares of
Registrable Securities that are in excess of 10% of the total number of
Registrable Securities issuable to any particular Record Holder of Registrable
Securities as of the Effective Time.

6.2 REQUIRED REGISTRATION.

(a) If at any time after the date of termination of the pooling
period, Secure shall receive a written request therefor from any Record Holder
or Record Holders of an aggregate of more than 20% of the shares of Registrable
Securities then outstanding, Secure shall prepare and file a registration
statement under the Securities Act covering such number of shares of Registrable
Securities as the Record Holder or Record Holders making such request shall
specify and shall use its best efforts to cause such registration statement to
become effective. In addition, upon the receipt of such request, Secure shall
promptly give written notice to all other Record Holders of Registrable
Securities then outstanding that such registration is to be effected. Secure
shall include in such registration statement such number of shares of
Registrable Securities for which it has received written requests to register by
such other Record Holders within twenty days after the delivery of Secure's
written notice to such other Record Holders. In the event that the Record
Holders of a majority of the Registrable Securities to be covered by such
registration under this Section 6.2 determine for any reason not to proceed with
a registration at any time before the registration statement has been declared
effective by the SEC, and such registration statement, if theretofore filed with
the SEC, is withdrawn with respect to the Registrable Securities covered
thereby, and the Record Holders of such Registrable Securities agree to bear
their own expenses incurred in connection therewith and to reimburse Secure for
the expenses incurred by it attributable to its efforts to cause a registration
statement to become effective with respect to Registrable Securities, then the
right to require Secure to register Registrable Securities pursuant to

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this Section 6.2 at the expense of Secure shall not be deemed to have been
exercised; provided, however, that if the Record Holders of such Registrable
Securities do not reimburse Secure for all such expenses incurred by it, Secure
shall be deemed to have discharged its obligation to cause a registration
statement to become effective with respect to Registrable Securities.

(b) If an offering registered pursuant to this Section 6.2 is
underwritten, the managing underwriter shall be selected by Secure and shall be
approved by the Record Holders of a majority of the Registrable Securities for
which registration has been requested, which approval shall not be unreasonably
withheld. Any other holder of securities of Secure having registration rights
("Other Holder") may include securities ("Additional Securities") in such
registration; provided, however, that if in the good faith judgment of the
managing underwriter of such public offering the inclusion of such Additional
Securities would interfere with the successful marketing of the Registrable
Securities then the size of the registration shall be reduced by excluding from
such registration (i) first, Additional Securities until no Other Holder has
included in the registration a greater percentage of such Other Holder's Secure
securities than the largest percentage of Registrable Securities of any Record
Holder that are included in the registration, and (ii) second, Additional
Securities and Registrable Securities pro rata by number of shares.

(c) The obligation of Secure under this Section 6.2 shall be limited
to three registration statements. Secure shall not be obligated to prepare and
file a second registration statement until six months have elapsed from the
effective date of the first registration statement filed pursuant to this
Section 6.2 and shall not be obligated to prepare and file a third registration
statement until six months have elapsed from the effective date of the second
registration statement filed pursuant to this Section 6.2. Secure shall pay the
expenses described in Section 6.4 for the three registration statements filed
pursuant to this Section 6.2.

(d) Notwithstanding the foregoing, if Secure shall furnish to the
holders requesting a registration pursuant to this Section 6.2, a certificate
signed by the Chief Executive Officer of Secure stating that in the good faith
judgment of the Board of directors of Secure, it would be seriously detrimental
to Secure and its stockholders for such registration statement to be filed and
it is therefore essential to defer the filing of such registration statement,
Secure shall have the right to defer such filing for a period of not more than
forty-five days after receipt of the request of the holders; provided, however,
that Secure may not use this right with respect to a request under Section 6.2
more than once in any twelve month period.

6.3 REGISTRATION PROCEDURES. If and when Secure is required by the
provisions of Section 6.2 to effect the registration of shares of Registrable
Securities under the Securities Act, Secure will:

(a) Prepare and file with the Commission a registration statement
with respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective for such period as may be
reasonably necessary to effect the sale of such securities, not to exceed nine
months;

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(b) Prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for such period
as may be reasonably necessary to effect the sale of such securities, not to
exceed nine months;

(c) Furnish to the security holders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;

(d) Use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as such participating holders may reasonably request
in writing within twenty days following the original filing of such registration
statement, except that Secure shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;

(e) Notify the security holders participating in such registration,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed;

(f) Notify such holders promptly as any request by the Commission for
the amending or supplementing of such registration statement or prospectus or
for additional information;

(g) Prepare and file with the Commission, promptly upon the request
of any such holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such holders (and
concurred in by counsel for Secure), is required under the Securities Act or the
rules and regulations thereunder in connection with the distribution of the
Registrable Securities by such holder;

(h) Prepare and promptly file with the Commission and promptly notify
such holders of the filing of such amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;

(i) Advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for

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that purpose and promptly use its best efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be issued;

(j) Not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such holders shall
have reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities Act
or the rules and regulations thereunder, after having been furnished with a copy
thereof at least five business days prior to the filing thereof, unless in the
opinion of counsel for Secure the filing of such amendment or supplement is
reasonably necessary to protect Secure from any liabilities under any applicable
federal or state law and such filing will not violate applicable law; and

(k) At the request of such holder, furnish on the effective date of
the registration statement and, if such registration includes an underwritten
public offering, at the closing provided for in the underwriting agreement:
(i) opinions, dated such respective dates, of the counsel representing Secure
for the purposes of such registration, addressed to the underwriters, if any,
and to the holder or holders making such request, covering such matters as such
underwriters and holder or holders may reasonably request; and (ii) letters,
dated such respective dates, from independent certified public accountants of
Secure, addressed to the underwriters, if any, and to the holder or holders
making such request, covering such matters as such underwriters and holder or
holders may reasonably request, in which letter such accountants shall state
(without limiting the generality of the foregoing) that they are independent
certified public accountants within the meaning of the Securities Act and that
in the opinion of such accountants the financial statements and other financial
data of Secure included in the registration statement or the prospectus or any
amendment or supplement thereto comply in all material respects with the
applicable accounting requirements of the Securities Act.

6.4 EXPENSES.

(a) With respect to the three registrations requested pursuant to
Section 6.2 hereof (except as otherwise provided in such section with respect to
registrations voluntarily terminated at the request of the requesting security
holders), all fees, costs and expenses of and incidental to such registration
(as specified in paragraph (b) below) shall be borne by Secure, provided,
however, that any security holders participating in such registration shall bear
their pro rata share of the underwriting discount and commissions and transfer
taxes.

(b) The fees, costs and expenses of registration to be borne by
Secure as provided in paragraph (a) above shall include, without limitation, all
registration, filing, and NASD fees, printing expenses, fees and disbursements
of counsel and accountants for Secure, fees and disbursements of counsel for the
underwriter or underwriters of such securities (if Secure and/or selling
security holders are required to bear such fees and disbursements), all legal
fees and disbursements and other expenses of complying with state securities or
blue sky laws of any jurisdictions in which the securities to be offered are to
be registered or qualified (except as

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provided in 6.4(a) above), and the premiums and other costs of policies of
insurance against liability (if any) arising out of such public offering; fees
and disbursements of counsel and accountants for the selling security holders
and any other expenses incurred by the selling security holders not expressly
included above shall be borne by the selling security holders.

6.5 INDEMNIFICATION.

(a) Secure will indemnify and hold harmless each holder of shares of
Registrable Securities which are included in a registration statement pursuant
to the provisions of Section 6.2 hereof, its directors and officers, and any
underwriter (as defined in the Securities Act) for such holder and each person,
if any, who controls such holder or such underwriter within the meaning of the
Securities Act, from and against and will reimburse such holder and each such
underwriter and controlling person with respect to, any and all loss, damage,
liability, cost and expense to which such holder or any such underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
Secure will not be liable in any such case to the extent that any such loss,
damage, liability, cost or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by such holder, such underwriter or such
controlling person in writing specifically for use in the preparation thereof.

(b) Each holder of shares of Registrable Securities which are
included in a registration pursuant to the provisions of Section 6.2 hereof will
indemnify and hold harmless Secure, its directors and officers, any controlling
person and any underwriter with respect to, any and all loss, damage, liability,
cost or expense to which Secure or any controlling person and/or any underwriter
may become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was so made in reliance upon and in strict conformity with
written information furnished by such holder specifically for use in the
preparation thereof.

(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section 6.5 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b),

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promptly notify the indemnifying party of the commencement thereof; but the
omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than hereunder.
In case such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
if the defendants in any action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or in addition to those available to the
indemnifying party, or if there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified party,
the indemnified party or parties shall have the right to select separate counsel
to participate in the defense of such action on behalf of such indemnified party
or parties. After notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party pursuant to the provisions of said
paragraph (a) or (b) for any legal or other expense subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnified party shall have
employed counsel in accordance with the provision of the preceding sentence,
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action, or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.

ARTICLE VII

CERTIFICATES AND FRACTIONAL SHARES

7.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES. At or
promptly after the Effective Time, Secure shall cause Continuing Corporation to
deposit with a trust company licensed under the laws of Ontario or Canada to be
selected by Secure, reasonably satisfactory to Border, at its principal office
in Toronto, Ontario (the "Depositary"), for the benefit of the holders of Class
B Shares exchanged pursuant to the Reorganization, certificates representing the
Exchangeable Shares issued pursuant to the Reorganization upon the exchange of
outstanding Class B Shares. Upon surrender to the Depositary for cancellation
of a certificate which immediately prior to the time that the Amalgamation
becomes effective represented outstanding shares of Border Stock which were
exchanged for Class B Shares on the Amalgamation and thereafter exchanged for
Exchangeable Shares pursuant to the Reorganization, together with such other
documents and instruments as would have been required to effect the transfer of
the shares formerly represented by such certificate under the OBCA and such
additional documents and instruments as the Depositary may reasonably require,
the holder of such surrendered certificate shall be entitled to receive in
exchange therefor, and the Depositary shall deliver to such holder, a
certificate representing that

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number (rounded down to the nearest whole number) of Exchangeable Shares which
such holder has the right to receive (together with any dividends or
distributions with respect thereto pursuant to Section 7.2 hereof and any cash
in lieu of fractional Exchangeable Shares pursuant to section 7.3 hereof), and
the certificate so surrendered shall forthwith be cancelled. Certificates
representing Class B Shares shall not be issued. In the event of a transfer of
ownership of shares of Border Stock which is not registered in the transfer
records of Border, a certificate representing the proper number of Exchangeable
Shares may be issued to a transferee if the certificate representing such shares
of Border Stock is presented to the Depositary, accompanied by all documents
required to evidence and effect such transfer. Until surrendered as
contemplated by this Section 7.1, each certificate which immediately prior to
the time that the Amalgamation becomes effective represented outstanding shares
of Border Stock that were exchanged for Class B Shares on the Amalgamation shall
be deemed at any time after the time that the Amalgamation becomes effective to
represent only the right to receive upon such surrender (i) the certificate
representing Exchangeable Shares as contemplated by this Section 7.1, (ii) a
cash payment in lieu of any fractional Exchangeable Shares as contemplated by
Section 7.3 and (iii) any dividends or distributions with a record date after
the Effective Time theretofore paid or payable with respect to Exchangeable
Shares as contemplated by Section 7.2.

7.2 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No
dividends or other distributions declared or made after the Effective Time with
respect to Exchangeable Shares with a record date after the Effective Time shall
be paid to the holder of any unsurrendered certificate which immediately prior
to the time that the Amalgamation becomes effective represented outstanding
shares of Border Stock that were exchanged pursuant to Section 2.1 of the
Amalgamation Agreement, and no cash payment in lieu of fractional shares shall
be paid to any such holder pursuant to Section 7.3, unless and until the holder
of record of such certificate shall surrender such certificate in accordance
with Section 7.1. Subject to applicable law, at the time of such surrender of
any such certificate (or in the case of clause (iii) below, at the appropriate
payment date), there shall be paid to the record holder of the certificates
representing whole Exchangeable Shares without interest (i) the amount of any
cash payable in lieu of a fractional Exchangeable Share to which such holder is
entitled pursuant to Section 7.3, (ii) the amount of dividends or other
distributions with a record date after the Effective Date theretofore paid with
respect to such whole Exchangeable Share, and (iii) the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole Exchangeable Share.

7.3 NO FRACTIONAL SHARES. No certificates or scrip representing
fractional Exchangeable Shares shall be issued upon the surrender for exchange
of certificates pursuant to Section 7.1 and no dividend, stock split or other
change in the capital structure of Continuing Corporation shall relate to any
such fractional security and such fractional interests shall not entitle the
owner thereof to vote or to exercise any rights as a security holder of
Continuing Corporation. In lieu of any such fractional securities, each person
entitled to a fractional interest in an Exchangeable Share will receive from
Continuing Corporation (in the case of fractional interests in Exchangeable
Shares) an amount of cash (rounded to the nearest whole cent), without interest,
equal to the product of (i) such fraction, multiplied by (ii) the average of the
closing prices for Secure Common Shares on the Nasdaq National Market as of each
of the thirty (30) consecutive

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trading days immediately preceding the Effective Time as quoted in the Wall
Street Journal or other reliable financial newspaper or publication. For the
purposes of the preceding sentence, a "trading day" means a day on which trading
generally takes place on Nasdaq and on which trading in Secure Common Shares has
occurred.

7.4 LOST CERTIFICATES. In the event any certificate which
immediately prior to the Effective Time represented outstanding shares of Border
Stock that were exchanged pursuant to Section 2.1 of the Amalgamation Agreement
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such certificate to be lost, stolen or
destroyed, the Depositary will issue in exchange for such lost, stolen or
destroyed certificate, certificates representing Exchangeable Shares (and any
dividends or distributions with respect thereto and any cash pursuant to Section
7.2) deliverable in respect of the number of Class B Shares to which such holder
would be entitled as determined in accordance with the Amalgamation Agreement.
When authorising such payment in exchange for any lost, stolen or destroyed
certificate, the person to whom certificates representing Exchangeable Shares
are to be issued shall, at the discretion of Continuing Corporation, as a
condition precedent to the issuance thereof, give a bond satisfactory to
Continuing Corporation in such sum as Continuing Corporation may direct or
otherwise indemnify Continuing Corporation in a manner satisfactory to
Continuing Corporation against any claim that may be made against Continuing
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.

7.5 EXTINGUISHMENT OF RIGHTS. Any certificate which immediately
prior to the Effective Time represented outstanding shares of Border Stock that
were exchanged pursuant to Section 2.1 of the Amalgamation Agreement and not
deposited, with all other instruments required by Section 7.1, on or prior to
the sixth anniversary of the Effective Time shall cease to represent a claim or
interest of any kind or nature as a shareholder of Border, Continuing
Corporation or Secure. On such date, the Exchangeable Shares to which the
former registered holder of the certificate referred to in the preceding
sentence was ultimately entitled shall be deemed to have been surrendered to
Continuing Corporation together with all entitlements to dividends,
distributions and interests thereon held for such former registered holder.

ARTICLE VIII

CERTAIN RIGHTS OF
SECURE TO ACQUIRE EXCHANGEABLE SHARES

8.1 SECURE LIQUIDATION CALL RIGHT. (a) Secure shall have the
overriding right (the "Liquidation Call Right"), in the event of and
notwithstanding the proposed liquidation, dissolution or winding-up of
Continuing Corporation pursuant to Article 5 of the Exchangeable Share
Provisions to purchase from all but not less than all of the holders of
Exchangeable Shares on the Liquidation Date (as defined in the Exchangeable
Share Provisions) all but not less than all of the Exchangeable Shares held by
each such holder on payment by Secure of an amount per Exchangeable Share equal
to (a) the Current Market Price (as defined in the Exchangeable Share
Provisions) of a Secure Common Share on the last Business Day prior to the
Liquidation Date,

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which shall be satisfied in full by causing to be delivered to such holder one
Secure Common Share, plus (b) an additional amount equivalent to the full amount
of all dividends declared and unpaid on such Exchangeable Share and all
dividends declared on Secure Common Shares which have not been declared on such
Exchangeable Shares in accordance with Section 7.1 of the Exchangeable Share
Provisions (collectively the "Liquidation Call Purchase Price"), provided that
if the record date for any such declared and unpaid dividends occurs on or after
the Liquidation Date, the Liquidation Call Purchase Price shall not include such
additional amount equivalent to such dividends. In the event of the exercise of
the Liquidation Call Right by Secure, each holder shall be obligated to sell all
the Exchangeable Shares held by the holder to Secure on the Liquidation Date on
payment by Secure to the holder of the Liquidation Call Purchase Price for each
such Exchangeable Share.

(b) To exercise the Liquidation Call Right, Secure must notify Continuing
Corporation's transfer agent (the "Transfer Agent"), as agent for the holders of
Exchangeable Shares, and Continuing Corporation of Secure's intention to
exercise such right at least 55 days before the Liquidation Date in the case of
a voluntary liquidation, dissolution or winding up of Continuing Corporation and
at least five Business Days before the Liquidation Date in the case of an
involuntary liquidation, dissolution or winding up of Continuing Corporation.
The Transfer Agent will notify the holders of Exchangeable Shares as to whether
or not Secure has exercised the Liquidation Call Right forthwith after the
expiry of the period during which the same may be exercised by Secure. If
Secure exercises the Liquidation Call Right, on the Liquidation Date Secure will
purchase and the holders will sell all of the Exchangeable Shares then
outstanding for a price per Exchangeable Share equal to the Liquidation Call
Purchase Price.

(c) For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Liquidation Call Right, Secure shall deposit with the Transfer
Agent, on or before the Liquidation Date, certificates representing the
aggregate number of Secure Common Shares deliverable by Secure in payment of the
total Liquidation Call Purchase Price and a cheque or cheques in the amount of
the remaining portion, if any, of the total Liquidation Call Purchase Price.
Provided that the total Liquidation Call Purchase Price has been so deposited
with the Transfer Agent, on and after the Liquidation Date the rights of each
holder of Exchangeable Shares will be limited to receiving such holder's
proportionate part of the total Liquidation Call Purchase Price payable by
Secure upon presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the holder shall on
and after the Liquidation Date be considered and deemed for all purposes to be
the holder of the Secure Common Shares delivered to it. Upon surrender to the
Transfer Agent of a certificate or certificates representing Exchangeable
Shares, together with such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under the OBCA and the by-laws of
Continuing Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require, the holder of such surrendered
certificate or certificates shall be entitled to receive in exchange therefor,
and the Transfer Agent on behalf of Secure shall deliver to such holder,
certificates representing the Secure Common Shares to which the holder is
entitled and a cheque or cheques of Secure payable at par and in Canadian
dollars at any branch of the bankers of Secure or of Continuing Corporation in
Canada in payment of the remaining portion, if any, of the total Liquidation
Call Purchase Price. If Secure does not exercise the Liquidation Call Right in
the manner described above, on the

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Liquidation Date the holders of the Exchangeable Shares will be entitled to
receive in exchange therefor the liquidation price otherwise payable by
Continuing Corporation in connection with the liquidation, dissolution or
winding-up of Continuing Corporation pursuant to Article 5 of the Exchangeable
Share Provisions.

8.2 SECURE REDEMPTION CALL RIGHT. (a) Secure shall have the
overriding right (the "Redemption Call Right"), notwithstanding the proposed
redemption of Exchangeable Shares by Continuing Corporation pursuant to Article
7 of the Exchangeable Share Provisions, to purchase from all but not less than
all of the holders of Exchangeable Shares to be redeemed on the Redemption Date
(as defined in the Exchangeable Share Provisions) all but not less than all of
the Exchangeable Shares held by each such holder on payment by Secure to the
holder of an amount per Exchangeable Share equal to (a) the Current Market Price
(as defined in the Exchangeable Share Provisions) of a Secure Common Share on
the last Business Day prior to the Redemption Date which shall be satisfied in
full by causing to be delivered to such holder one Secure Common Share plus (b)
an additional amount equivalent to the full amount of all dividends declared and
unpaid on such Exchangeable Share and all dividends declared on Secure Common
Shares that have not been declared on such Exchangeable Share in accordance with
Section 7.1 of the Exchangeable Share Provisions (collectively the "Redemption
Call Purchase Price"), provided that if the record date for any such declared
and unpaid dividends occurs on or after the Redemption Date, the Redemption Call
Purchase Price shall not include such additional amount equivalent to such
dividends. In the event of the exercise of the Redemption Call Right by Secure,
each holder shall be obligated to sell all the Exchangeable Shares held by the
holder and otherwise to be redeemed to Secure on the Redemption Date on payment
by Secure to the holder of the Redemption Call Purchase Price for each such
Exchangeable Share.

(b) To exercise the Redemption Call Right, Secure must notify the Transfer
Agent, as agent for the holders of Exchangeable Shares, and Continuing
Corporation of Secure's intention to exercise such right at least 125 days
before the Automatic Redemption Date (as defined in the Exchangeable Share
Provisions), in the case of the Automatic Redemption (as defined in the
Exchangeable Share Provisions), or at least 35 days before the Section 12(g)
Redemption Date (as defined in the Exchangeable Share Provisions), in the case
of Section 12(g) Redemption. The Transfer Agent will notify the holders of the
Exchangeable Shares as to whether or not Secure has exercised the Redemption
Call Right forthwith after the expiry of the period during which the same may be
exercised by Secure. If Secure exercises the Redemption Call Right, on the
Redemption Date Secure will purchase and the holders will sell all of the
Exchangeable Shares to be redeemed for a price per Exchangeable Share equal to
the Redemption Call Purchase Price.

(c) For the purposes of completing the purchase of Exchangeable Shares
pursuant to the Redemption Call Right, Secure shall deposit with the Transfer
Agent, on or before the Redemption Date, certificates representing the aggregate
number of Secure Common Shares deliverable by Secure in payment of the total
Redemption Call Purchase Price and a cheque or cheques in the amount of the
remaining portion, if any, of the total Redemption Call Purchase Price.
Provided that the total Redemption Call Purchase Price has been so deposited
with the Transfer Agent, on and after the Redemption Date the rights of each
holder of Exchangeable Shares so purchased will be limited to receiving such
holder's proportionate part of the total Redemption Call Purchase Price

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<PAGE>

payable by Secure upon presentation and surrender by the holder of certificates
representing the Exchangeable Shares purchased by Secure from such holder and
the holder shall on and after the Redemption Date be considered and deemed for
all purposes to be the holder of the Secure Common Shares delivered to such
holder. Upon surrender to the Transfer Agent of a certificate or certificates
representing Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the OBCA and the by-laws of Continuing Corporation and such additional documents
and instruments as the Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to receive in exchange
therefor, and the Transfer Agent on behalf of Secure shall deliver to such
holder, certificates representing the Secure Common Shares to which the holder
is entitled and a cheque or cheques of Secure payable at par and in Canadian
dollars at any branch of the bankers of Secure or of Continuing Corporation in
Canada in payment of the remaining portion, if any, of the total Redemption Call
Purchase Price. If Secure does not exercise the Redemption Call Right in the
manner described above, on the Redemption Date the holders of the Exchangeable
Shares will be entitled to receive in exchange therefor the redemption price
otherwise payable by Continuing Corporation in connection with the redemption of
Exchangeable Shares pursuant to Article 7 of the Exchangeable Share Provisions.

8.3 WITHHOLDING RIGHTS. Secure and the Depositary shall be entitled
to deduct and withhold from the consideration otherwise payable to any holder of
Exchangeable Shares such amounts as Secure or the Depositary is required or
permitted to deduct and withhold with respect to such payment under the United
States Internal Revenue Code of 1986, as amended, the INCOME TAX ACT (Canada) or
any provision of state, provincial, local or foreign tax law. To the extent
that amounts are so withheld, such withheld amounts shall be treated for all
purposes hereof as having been paid to the holder of shares in respect of which
such deduction and withholding was made, provided that such withheld amounts are
actually remitted to the appropriate taxing authority. To the extent that the
amount so required or permitted to be deducted or withheld from any payment to a
holder exceeds the cash portion of the consideration otherwise payable to the
holder, Secure and the Depositary are hereby authorised to sell or otherwise
dispose of at fair market value such portion of such consideration as is
necessary to provide sufficient funds to Secure or the Depositary, as the case
may be, in order to enable it to comply with such deduction or withholding
requirement and Secure or the Depositary shall give an accounting to the holder
with respect thereto and any balance of such proceeds of sale.

ARTICLE IX

TERMINATION

9.1 TERMINATION. This Agreement may be terminated and the
Amalgamation abandoned at any time prior to the time at which the Amalgamation
becomes effective, whether before or after approval of the Amalgamation by the
shareholders of Border or Secure:

(a) by mutual consent of the Boards of Directors of Secure and
Border;

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<PAGE>

(b) by either Secure or Border if (i) any of the conditions to their
respective obligations specified in Article V hereof have not been
satisfied or waived by September 30, 1996, or (ii) the Amalgamation shall
not have been consummated by September 30, 1996; provided, however, that
the right to terminate this Agreement pursuant to this Section 9.1 shall
not be available to any party whose failure to fulfill any obligation under
this Agreement shall have been the cause of, or resulted in, the failure of
any of the conditions specified in Article V that are required to have been
satisfied prior to the Amalgamation.

9.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement by either Secure or Border, as provided above, this Agreement shall
thereafter become void and there shall be no liability on the part of any party
hereto or their respective directors, officers, shareholders or agents, except
as provided in Sections 4.7 and 10.2 hereof and except that any such termination
shall be without prejudice to the rights of any party hereto arising out of the
willful breach by any other party of any covenant or agreement contained in this
Agreement.

ARTICLE X

MISCELLANEOUS

10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The representations, warranties, covenants and agreements of Secure
and Border in this Agreement shall survive the Effective Time until March 1,
1997.

10.2 EXPENSES. Whether or not the Amalgamation and Reorganization are
consummated, all costs and expenses (including without limitation the fees and
expenses of investment bankers, brokers, attorneys and accountants) incurred in
connection with this Agreement and the transactions contemplated hereby shall be
borne by the party incurring such costs and expenses.

10.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given, if given) by hand delivery, transmitted by
telegram, telex or telecopy or mailed by registered or certified mail, postage
prepaid, return receipt requested, as follows:

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(a) If to Secure or Amalgamation Sub to:

Secure Computing Corporation
2675 Long Lake Road
Roseville, Minnesota 55113
USA
Attention: Kermit M. Beseke, CEO
Telephone: (612) 628-2722
Telecopy: (612) 628-2702

with copies to:

Secure Computing Corporation
2675 Long Lake Road
Roseville, Minnesota 55113
USA
Attention: Timothy McGurran, CFO
Telephone: (612) 628-2700
Telecopy: (612) 628-2702

James E. Nicholson
Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
USA
Telephone: (612) 336-3203
Telecopy: (612) 336-3026

(b) If to Border to:

Border Network Technologies Inc.
20 Toronto Street, Suite 406
Toronto, Ontario MSC 2B8
CANADA
Attention: Steven Lamb
Telephone: (416) 368-7157
Telecopy: (416) 368-6223

A-53

<PAGE>

with a copy to:

James E. Kofman
Osler, Hoskin & Harcourt
P. O. Box 50
1 First Canadian Place
Toronto, Ontario M5X 1B8
CANADA
Telephone: (416) 862-6420
Telecopy: (416) 862-6666

or to such other address as the person to whom notice is given has previously
furnished to the other parties in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.

10.4 AMENDMENTS. This Agreement may be amended by all the parties
hereto by action taken by their respective Boards of Directors at any time
before or after approval thereof by the shareholders of Border or the
stockholders of Secure, but, after such approval, no amendment shall be made
which by law requires further approval by such shareholders or stockholders
without such further approval. This Agreement may not be amended, modified or
supplemented except by written agreement of the parties hereto.

10.5 WAIVER. At any time prior to the Effective Time, Secure or
Border may (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
obligations of the other party or any of the conditions to its own obligations
contained herein to the extent permitted by law. Any agreement on the part of
Secure and Border to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of Secure and Border,
respectively. Any such agreement on the part of Border shall also be binding
upon the Border Shareholders.

10.6 BROKERS. Border, on the one hand, and Secure and Amalgamation
Sub on the other, each represent and warrant to the others that no broker,
finder or investment banker engaged by them is entitled to any brokerage,
finder's or other fee or commission, in connection with the transactions
contemplated hereby, other than obligations of Secure to Robertson, Stephens &
Company, L.P., for which Secure is responsible, and obligations of Border to
Broadview Associates LP, for which Border is responsible.

10.7 PUBLICITY. No party other than Secure shall make any public
announcement or issue any press release concerning the transactions contemplated
by this Agreement, and any public announcement or press release by Secure shall
require the prior approval of Border both as to the making of such announcement
or release and as to the form and content thereof, except to

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<PAGE>

the extent that Secure is advised by counsel, in good faith, that such
announcement or release is required as a matter of law and full opportunity for
prior consultation is afforded to Border to the extent practicable.

10.8 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

10.9 NONASSIGNABILITY. This Agreement shall not be assigned by
operation of law or otherwise.

10.10 PARTIES IN INTEREST; THIRD PARTY BENEFICIARIES. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their successors and permitted assigns, and nothing in this Agreement, expressed
or implied, is intended to confer upon any other person any rights or remedies
of any nature under or by reason of this Agreement. Notwithstanding the
foregoing, the parties agree that holders of Border Stock shall be third party
beneficiaries of (i) the representations and warranties of Secure contained in
Section 3.2 hereof and (ii) the covenants of Secure contained in Articles II,
VI, VII and VIII hereof; PROVIDED, HOWEVER, that holders of Border Stock shall
be third party beneficiaries thereof only to the extent that any claim or claims
aggregate not less than U.S. $1,000,000 (the "Indemnification Basket"), and then
only with respect to claims in excess of such amount. In the event that any
claim or claims under this Section 10.10 exceed in the aggregate the
Indemnification Basket, then the Indemnification Basket shall be allocated pro
rata, based upon Border Stock held on the Closing Date by holders of Border
Stock making such claim or claims, and holders of Border Stock presenting such
claim or claims shall be entitled to recover the amount of any claim or claims
in excess of the pro rata amount of the Indemnification Basket applicable to
such holder. Notwithstanding the foregoing, the Indemnification Basket shall
not apply to any claim or claims based upon (i) the representations and
warranties of Secure contained in Section 3.2(e) hereof and (ii) the covenants
of Secure contained in Articles II, IV, VII and VIII hereof.

10.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed to constitute an original and shall
become effective when one or more counterparts have been signed by each of the
parties hereto.

10.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS EXECUTED AND FULLY PERFORMED WITHIN THE STATE OF
DELAWARE. EXCEPT TO THE EXTENT MANDITORILY GOVERNED BY ONTARIO LAW, SECURE,
AMALGAMATION SUB AND BORDER EACH HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY DELAWARE STATE OR FEDERAL COURT SITTING IN THE CITY OF
WILMINGTON, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND SECURE, AMALGAMATION SUB AND

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<PAGE>

BORDER EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH DELAWARE STATE COURT
OR SUCH FEDERAL COURT. SECURE, AMALGAMATION SUB AND BORDER EACH HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, (i) THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING AND (ii) ANY RIGHT TO A TRIAL BY JURY. SECURE, AMALGAMATION SUB
AND BORDER EACH HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF COPIES OF THE
SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY
DELIVERING A COPY OF SUCH PROCESS TO SECURE, AMALGAMATION SUB OR BORDER, AS
TH E CASE MAY BE, AT THE RESPECTIVE ADDRESS SPECIFIED IN SECTION 8.3 OR BY
ANY OTHER METHOD PROVIDED BY LAW. SECURE, AMALGAMATION SUB AND BORDER EACH
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR BY ANY OTHER MANNER PROVIDED BY LAW. BORDER HEREBY APPOINTS CT
CORPORATION SYSTEM WITH AN ADDRESS ON THE DATE HEREOF AT THE CORPORATION
TRUST COMPANY, THE CORPORATION TRUST CENTER, 1209 ORANGE STREET, WILMINGTON,
DELAWARE 19801, USA AS ITS AGENT TO RECEIVE PROCESS IN ALL ACTIONS OR
PROCEEDINGS RELATED HERETO.

10.13 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable.

10.14 REMEDIES. Nothing contained herein is intended to or shall be
construed so as to limit the remedies which any party may have against the
others in the event of a breach by any party of any representation, warranty,
covenant or agreement made under or pursuant to this Agreement, it being
intended that any remedies shall be cumulative and not exclusive.

10.15 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules attached hereto, constitutes the entire agreement among the parties
hereto and, other than the Bilateral Limited Non-Disclosure Agreement dated
April 17, 1996 between Secure and Border, which shall continue until the
Closing, supersedes all prior agreements and understandings oral or written,
among the parties hereto with respect to the subject matter hereof and thereof.

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<PAGE>

IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of Secure, Amalgamation Sub and Border
on the date first above written.

SECURE COMPUTING CORPORATION

By: /s/ Kermit M. Beseke
----------------------------------------
President and Chief Executive Officer

EDGE ACQUISITION INC.

By: /s/ Kermit M. Beseke
----------------------------------------
President

BORDER NETWORK TECHNOLOGIES INC.

By: /s/ Steven Lamb
----------------------------------------
Chairman and Chief Executive Officer

By: /s/ Robert Forbes
----------------------------------------
Director

A-57

<PAGE>

APPENDIX B

AGREEMENT AND PLAN OF MERGER

AMONG

SECURE COMPUTING CORPORATION,

OWL ACQUISITION, INC.

AND

ENIGMA LOGIC, INC.

[conformed copy, as amended]

B-1

<PAGE>

TABLE OF CONTENTS

ARTICLE I THE MERGER; EFFECTIVE TIME; CLOSING...............................B-8
1.1 THE MERGER..........................................................B-8
1.2 EFFECTIVE TIME......................................................B-8
1.3 CLOSING.............................................................B-8
ARTICLE II CHARTER AND BY-LAWS OF THE SURVIVING CORPORATION.................B-9
2.1 THE CHARTER.........................................................B-9
2.2 THE BYLAWS..........................................................B-9
ARTICLE III DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.............B-9
3.1 DIRECTORS...........................................................B-9
3.2 OFFICERS............................................................B-9
ARTICLE IV MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE
MERGER......................................................................B-9
4.1 CONSIDERATION FOR MERGER; CONVERSION OR CANCELLATION OF SHARES IN
MERGER..................................................................B-9
4.2 PAYMENT FOR SHARES IN THE MERGER....................................B-10
4.3 FRACTIONAL SHARES...................................................B-11
4.4 ESCROW OF SECURE COMMON SHARES......................................B-11
4.5 CONVERSION OF ENIGMA STOCK OPTIONS..................................B-11
4.6 ADJUSTMENTS TO EXCHANGE RATIO.......................................B-12
4.7 DISSENTERS' RIGHTS..................................................B-12
ARTICLE V REPRESENTATIONS AND WARRANTIES....................................B-13
5.1 REPRESENTATIONS AND WARRANTIES OF ENIGMA............................B-13
5.2 REPRESENTATIONS AND WARRANTIES OF SECURE AND MERGER SUB.............B-20
ARTICLE VI CERTAIN COVENANTS................................................B-27
6.1 CONDUCT OF ENIGMA'S BUSINESS PENDING THE MERGER.....................B-27
6.2 CONDUCT OF SECURE'S BUSINESS PENDING THE MERGER.....................B-28
6.3 MERGER INFORMATION STATEMENT........................................B-28
6.4 STOCKHOLDERS' MEETINGS..............................................B-29
6.5 NO SOLICITATION.....................................................B-29
6.6 BOOKS AND RECORDS; ACCESS AND INFORMATION...........................B-30
6.7 NOTIFICATION OF CERTAIN MATTERS.....................................B-30
6.8 CONFIDENTIALITY.....................................................B-31
6.9 POOLING.............................................................B-31
6.10 TAX-FREE REORGANIZATION............................................B-31
6.11 BOOKS AND RECORDS; ACCESS AND INFORMATION..........................B-31
6.12 EMPLOYMENT AGREEMENTS..............................................B-31
6.13 SALES OF EQUITY SECURITIES.........................................B-31
6.14 STOCK OPTIONS......................................................B-32
6.15 NASDAQ.............................................................B-32
6.16 BEST EFFORTS.......................................................B-32
6.18 LOCATION OF ENIGMA LOGIC...........................................B-32
ARTICLE VII CONDITIONS TO CLOSING...........................................B-32

B-2

<PAGE>

7.1 CONDITIONS TO OBLIGATION OF SECURE AND MERGER SUB TO CLOSE..........B-32
7.2 CONDITIONS TO OBLIGATION OF ENIGMA TO CLOSE.........................B-34
ARTICLE VIII TERMINATION....................................................B-36
8.1 TERMINATION.........................................................B-36
8.2 EFFECT OF TERMINATION...............................................B-36
ARTICLE IX MISCELLANEOUS....................................................B-37
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS...B-37
9.2 EXPENSES............................................................B-37
9.3 NOTICES.............................................................B-37
9.4 AMENDMENTS..........................................................B-38
9.5 WAIVER..............................................................B-39
9.6 BROKERS.............................................................B-39
9.7 PUBLICITY...........................................................B-39
9.8 HEADINGS............................................................B-39
9.9 NONASSIGNABILITY....................................................B-39
9.10 PARTIES IN INTEREST; THIRD PARTY BENEFICIARIES.....................B-39
9.11 COUNTERPARTS.......................................................B-40
9.12 GOVERNING LAW......................................................B-40
9.13 SEVERABILITY.......................................................B-41
9.14 REMEDIES...........................................................B-41
9.15 ENTIRE AGREEMENT...................................................B-41

B-3

<PAGE>

SCHEDULES
Section

ENIGMA
Enigma Schedule of Exceptions . . . . . . . . . . . . . . . . . 5.1
List of Enigma Shareholders and
Information as to Capital Stock . . . . . . . . . . . . . . . 5.1(e)
List of Enigma Actions, Suits, Proceedings. . . . . . . . . . . 5.1(g)
List of Enigma Benefit Plans. . . . . . . . . . . . . . . . . . 5.1(k)
List of Enigma Labor Matters. . . . . . . . . . . . . . . . . . 5.1(l)
Enigma Financial Statements . . . . . . . . . . . . . . . . . . 5.1(m)
Enigma Tax Matters. . . . . . . . . . . . . . . . . . . . . . . 5.1(n)
Changes, Dividends, etc.. . . . . . . . . . . . . . . . . . . . 5.1(o)
List of Permitted Encumbrances. . . . . . . . . . . . . . . . . 5.1(p)
List of Enigma Intellectual Property. . . . . . . . . . . . . . 5.1(s)
List of Other Material Contracts. . . . . . . . . . . . . . . . 5.1(t)
List of Enigma Insurance Policies . . . . . . . . . . . . . . . 5.1(v)
List of Licenses and Permits. . . . . . . . . . . . . . . . . . 5.1(w)
Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . 5.1(x)

SECURE

Secure Schedule of Exceptions . . . . . . . . . . . . . . . . . 5.2
List of Secure Subsidiaries . . . . . . . . . . . . . . . . . . 5.2(a)
Information as to Secure Capital Stock. . . . . . . . . . . . . 5.2(h)(iv)
Certain Changes or Events Regarding Secure. . . . . . . . . . . 5.2(i)
List of Secure Actions, Suits, Proceedings. . . . . . . . . . . 5.2(j)
List of Secure Pension Plans. . . . . . . . . . . . . . . . . . 5.2(k)

EXHIBITS

Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . A
Enigma Affiliate Agreement. . . . . . . . . . . . . . . . . . . B
Secure Affiliate Agreement. . . . . . . . . . . . . . . . . . . C
Employment Agreements . . . . . . . . . . . . . . . . . . . . . D
Gerald L. Hilton. . . . . . . . . . . . . . . . . . . . . . . D-1
John R. Muir. . . . . . . . . . . . . . . . . . . . . . . . . D-2
William H. Bosen. . . . . . . . . . . . . . . . . . . . . . . D-3
Robert Bosen. . . . . . . . . . . . . . . . . . . . . . . . . D-4
Thomas J. Brady . . . . . . . . . . . . . . . . . . . . . . . D-5
Form of Opinion of Wilson Sonsini Goodrich & Rosati, P.C. . . . E
Form of Opinion of Faegre & Benson LLP. . . . . . . . . . . . . F

B-4

<PAGE>

TABLE OF DEFINED TERMS

Defined Term Section

Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . Heading
Secure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Heading
Merger Sub. . . . . . . . . . . . . . . . . . . . . . . . . . . Heading
Enigma. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Heading
Enigma Common Shares. . . . . . . . . . . . . . . . . . . . . . Recitals
CGCL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Secure Common Shares. . . . . . . . . . . . . . . . . . . . . . Recitals
Exchange Ratio. . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Securities Act. . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . Section 1.1
DGCL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1
Secure Companies. . . . . . . . . . . . . . . . . . . . . . . . Section 4.1
Share Consideration . . . . . . . . . . . . . . . . . . . . . . Section 4.1
Transfer Agent. . . . . . . . . . . . . . . . . . . . . . . . . Section 4.2
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.2
Escrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.4
Escrow Agent. . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.4
Escrow Shares . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.4
Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . Section 4.4
Proportionate Interest. . . . . . . . . . . . . . . . . . . . . Section 4.4
Escrow Fund . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.4
Enigma Stock Option . . . . . . . . . . . . . . . . . . . . . . Section 4.5
Secure Stock Option . . . . . . . . . . . . . . . . . . . . . . Section 4.5
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . Section 4.7
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . Article V
Enigma Schedule of Exceptions . . . . . . . . . . . . . . . . . Section 5.1
Securities Exchange Act . . . . . . . . . . . . . . . . . . . . Section 5.1
Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . Section 5.1
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.1
Reportable Event. . . . . . . . . . . . . . . . . . . . . . . . Section 5.1
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.1
Permitted Encumbrances. . . . . . . . . . . . . . . . . . . . . Section 5.1
Material Contracts. . . . . . . . . . . . . . . . . . . . . . . Section 5.1

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Enigma Affiliate Agreement. . . . . . . . . . . . . . . . . . . Section 5.1
Secure Schedule of Exceptions . . . . . . . . . . . . . . . . . Section 5.2
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.2
Secure SEC Reports. . . . . . . . . . . . . . . . . . . . . . . Section 5.2
Secure Financial Statements . . . . . . . . . . . . . . . . . . Section 5.2
Secure Employee Plans . . . . . . . . . . . . . . . . . . . . . Section 5.2
Secure Pension Plans. . . . . . . . . . . . . . . . . . . . . . Section 5.2
Secure 401(a) Plan. . . . . . . . . . . . . . . . . . . . . . . Section 5.2
Secure Benefit Arrangements . . . . . . . . . . . . . . . . . . Section 5.2
Secure Affiliate Agreement. . . . . . . . . . . . . . . . . . . Section 5.2
Border Agreement. . . . . . . . . . . . . . . . . . . . . . . . Section 5.2
Merger Information Statement. . . . . . . . . . . . . . . . . . Section 6.3
Acquisition Proposal. . . . . . . . . . . . . . . . . . . . . . Section 6.5
Comfort Letter. . . . . . . . . . . . . . . . . . . . . . . . . Section 7.1
Indemnification Basket. . . . . . . . . . . . . . . . . . . . . Section 9.10

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of June 24,
1996, as amended as of July 31, 1996, among Secure Computing Corporation, a
Delaware corporation ("Secure"), Owl Acquisition, Inc., a California
corporation and a direct wholly owned subsidiary of Secure ("Merger Sub"),
and Enigma Logic, Inc., a California corporation ("Enigma").

RECITALS

WHEREAS, the Board of Directors of Secure, Merger Sub and Enigma each
have determined that it is in the best interests of their respective
shareholders for Merger Sub to merge with and into Enigma upon the terms and
subject to the conditions herein;

WHEREAS, Enigma has delivered to Secure signed Affiliate Agreements
substantially in the form of Exhibit B hereto from certain Enigma shareholders
who collectively own a sufficient number of shares of common stock, par value
$.01 per share, of Enigma ("Enigma Common Shares") to ensure approval of this
Agreement and the Merger as required by the California General Corporation Law
("CGCL");

WHEREAS, Secure has delivered to Enigma signed Affiliate Agreements
(Voting Version) substantially in the form of Exhibit C hereto from certain
Secure stockholders who own a sufficient number of shares of common stock, par
value $.01 per share, of Secure ("Secure Common Shares") to ensure approval of
the issuance of the Secure Common Shares issuable pursuant hereto at the Secure
shareholders' meeting to be held in accordance with this Agreement;

WHEREAS, in connection with the Merger, and after giving effect
thereto, each Enigma Common Share outstanding at the Effective Time of the
Merger will be converted into 0.112715 (the "Exchange Ratio") of a Secure Common
Share;

WHEREAS, for federal income tax purposes, it is intended that the
Merger (as hereinafter defined) shall qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code");

WHEREAS, Secure, Merger Sub, and Enigma desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
WHEREAS, it is intended that the Merger shall be accounted for by
Secure as a pooling of interests under generally accepted accounting principles
("GAAP");

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WHEREAS, it is intended that the offer and sale of the securities
offered by Secure pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act");

NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, Secure, Merger Sub and
Enigma hereby agree as follows:
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING

1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereinafter defined), Enigma and Merger Sub
shall consummate a merger (the "Merger") in which (i) Merger Sub shall be merged
with and into Enigma and the separate corporate existence of Merger Sub shall
thereupon cease, (ii) Enigma shall be the successor or surviving corporation in
the Merger and shall continue to be governed by the laws of the State of
California, and (iii) the separate corporate existence of Enigma with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger. The corporation surviving the Merger is sometimes hereinafter
referred to as the "Surviving Corporation". At the election of Secure, any
direct, newly organized wholly owned subsidiary of Secure may be substituted for
Merger Sub as a constituent corporation in the Merger. In such event, the
parties agree to execute an appropriate amendment to this Agreement in order to
reflect the foregoing. The Merger shall have the effects specified in this
Agreement and the CGCL.

1.2 EFFECTIVE TIME. Secure, Merger Sub and Enigma will, on the date
of the Closing (or on such other date as Secure and Enigma may agree) (i) cause
a properly executed agreement of merger conforming to the requirements of
Chapter 11 of the CGCL to be filed with the Secretary of State of California as
provided in Section 1108(d)(2) of the CGCL. The Merger shall become effective
at the time at which such agreement of merger shall have been filed with and
accepted by the Secretary of State of California or such later time as Secure
and Enigma may agree and specify in the agreement of merger in accordance with
Section 1101(e) of the CGCL, and such time of effectiveness is hereinafter
referred to as the "Effective Time".

1.3 CLOSING. The closing of the Merger (the "Closing") shall take
place (i) at the offices of Faegre & Benson LLP, 2200 Norwest Center,
Minneapolis, Minnesota, at 10:00 a.m. on the business day on which the last to
be fulfilled or waived of the conditions set forth in Article VII hereof shall
be fulfilled or waived in accordance with this Agreement or (ii) at such other
place and/or time and/or on such other date as Secure and Enigma may agree. At
the Closing, the parties hereto shall deliver the documents contemplated hereby
together with such other customary documents as may be reasonably requested by
the parties.

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ARTICLE II
CHARTER AND BY-LAWS OF THE SURVIVING CORPORATION

2.1 THE CHARTER. The Articles of Incorporation ("Charter") of the
Surviving Corporation shall be amended and restated as of the Effective Time to
conform substantially to the Articles of Incorporation of Merger Sub, except
that the name of the Surviving Corporation shall remain "Enigma Logic, Inc."

2.2 THE BYLAWS. The Bylaws of the Surviving Corporation shall be amended
and restated as of the Effective Time to conform substantially to the Bylaws of
Merger Sub.

ARTICLE III
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION

3.1 DIRECTORS. The directors of the Surviving Corporation at the
Effective Time shall, from and after the Effective Time, be the following
individuals: Kermit M. Beseke, Timothy McGurran and John R. Muir, until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Charter and Bylaws.

3.2 OFFICERS. The officers of the Surviving Corporation shall, from
and after the Effective Time, be Kermit M. Beseke, Chairman of the Board, John
R. Muir, President and Chief Executive Officer, Timothy P. McGurran, Chief
Financial Officer and Treasurer, and Steven M. Maurer, Secretary, until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Charter and Bylaws.

ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE MERGER

4.1 CONSIDERATION FOR MERGER; CONVERSION OR CANCELLATION OF SHARES IN
MERGER. The manner of converting or canceling shares of Enigma and Merger Sub
in the Merger shall be as follows:

(a) At the Effective Time, each of the Enigma Common Shares issued
and outstanding immediately prior to the Effective Time (other than Enigma
Common Shares owned by Secure, Merger Sub or any direct or indirect wholly
owned subsidiary of Secure (collectively, "Secure Companies") or any direct
or indirect wholly owned subsidiary of Enigma) shall, by virtue of the
Merger and without any action on the part of the holder thereof and subject
to Section 4.7 below, be converted into Secure Common Shares. Each Enigma
Share shall be converted into the product obtained by multiplying one
(1) Secure Common Share by the Exchange Ratio, provided that a portion of
the Secure Common Shares into which each Enigma Common Share shall be
converted shall be deposited into escrow pursuant to Section 4.4 below.

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<PAGE>

(b) All Enigma Common Shares to be converted into Secure Common
Shares pursuant to this Section 4.1 shall, by virtue of the Merger and
without any action on the part of the holders thereof, cease to be
outstanding, be canceled and retired and cease to exist, and each holder of
any such Enigma Common Shares shall thereafter cease to have any rights with
respect to such Shares, except, subject to Section 4.7 below, the right to
receive for each Enigma Common Share, upon the surrender of the certificate
representing such shares in accordance with Section 4.2, the number of
Secure Common Shares calculated as set forth in this Section 4.1 (the "Share
Consideration") and cash in lieu of fractional Secure Common Shares as
contemplated by Section 4.3.

(c) At the Effective Time, each Enigma Common Share issued and
outstanding and owned by any of the Secure Companies or any direct or
indirect wholly owned subsidiary of Enigma immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding, be canceled and
retired without payment of any consideration therefor and cease to exist.

(d) From and after the Effective Time, each share of Common Stock of
Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into one (1) share of Common Stock of the Surviving
Corporation.

4.2 PAYMENT FOR SHARES IN THE MERGER. At or promptly following the
Effective Time, Secure will cause Norwest Bank Minnesota, N.A., transfer agent
for the Secure Common Shares (the "Transfer Agent"), to send to the holders of
certificates which immediately prior to the Effective Time represented
outstanding Enigma Common Shares (the "Certificates"), (a) a letter of
transmittal in customary form and containing such provisions as the Transfer
Agent may reasonably specify and (b) instructions for use in effecting the
surrender of Certificates in exchange for certificates representing Secure
Common Shares. Upon surrender of a Certificate to the Transfer Agent for
exchange, together with a duly executed letter of transmittal and such other
documents as may be reasonably required by the Transfer Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
representing the number of whole Secure Common Shares that such holder has the
right to receive pursuant to the provisions of this Article IV, and the
Certificate so surrendered shall be canceled. Until surrender as contemplated
by this Section 4.2, each Certificate shall be deemed, from and after the
Effective Time, to represent Secure Common Shares (and the right to receive cash
in lieu of any fractional Secure Common Shares) as contemplated by this Article
IV. If any Certificate shall have been lost, stolen or destroyed, the Transfer
Agent may, in its discretion and as a condition precedent to the issuance of any
Certificate representing Secure Common Shares, require the owner of such lost,
stolen or destroyed Certificate to provide an appropriate affidavit as indemnity
against any claim that may be made against Secure or the Surviving Corporation
with respect to such Certificate.

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<PAGE>

4.3 FRACTIONAL SHARES. No fractional Secure Common Shares shall be
issued in the Merger. In lieu of any such fractional securities, each Enigma
shareholder who would otherwise have been entitled to a fraction of a Secure
Common Share will be paid an amount in cash (without interest) equal to the
product obtained by multiplying such fraction by the closing sale price per
share of Secure Common Shares on the Nasdaq Stock Market on the trading day
immediately preceding the Closing Date. Concurrently with distribution of the
Share Consideration, Secure shall distribute to former shareholders of Enigma
cash in lieu of any fractional interests in accordance with this Agreement.

4.4 ESCROW OF SECURE COMMON SHARES. At the Effective Time, an escrow
("Escrow") shall be established with Norwest Bank Minnesota, N.A. (the "Escrow
Agent"), into which there shall be placed 10% of the Secure Common Shares (the
"Escrow Shares") to be issued by Secure in the Merger. The Escrow shall be
established pursuant to an agreement among the parties hereto and the Escrow
Agent in the form attached hereto as Exhibit A (the "Escrow Agreement"). At the
Effective Time, Secure shall deliver to the Escrow Agent a certificate or
certificates registered in the name of the Escrow Agent for that number of
Secure Common Shares otherwise distributable to the Enigma shareholders which
represents each Enigma shareholder's proportionate interest in the Escrow
Shares. For such purpose, each Enigma shareholder's "proportionate interest"
shall be that number of Secure Common Shares that bears the same ratio to the
Escrow Shares as the number of Secure Common Shares receivable by such Enigma
shareholder in the Merger bears to the total number of Secure Common Shares
receivable by all Enigma shareholders in the Merger. The Secure Common Shares
so delivered to the Escrow Agent and any other securities or other property or
cash, and any income earned with respect thereto, from time to time held by the
Escrow Agent pursuant to the terms of the Escrow Agreement is herein referred to
as the "Escrow Fund." Any shares or other securities from time to time held in
the Escrow Fund shall be registered in the name of the Escrow Agent or its
nominee. The Escrow Fund shall be held by the Escrow Agent in escrow subject to
the terms and conditions of the Escrow Agreement and shall constitute the sole
recourse of Secure, Merger Sub and the Surviving Corporation with respect to
(a) any breach of any representation, warranty or covenant of Enigma pursuant to
this Agreement and (b) the indemnification obligations set forth in the Escrow
Agreement. Eric P. Rundquist is hereby appointed by Enigma as the Shareholder
Representative under the Escrow Agreement.

4.5 CONVERSION OF ENIGMA STOCK OPTIONS. Immediately following the
Merger, each outstanding option to purchase Enigma Common Shares (an "Enigma
Stock Option"), whether vested or unvested shall be exchanged for an option to
acquire Secure Common Shares (a "Secure Stock Option") under the 1995 Omnibus
Stock Plan of Secure on substantially the same terms and conditions as under the
Enigma Stock Option such that such substituted Secure Stock Option satisfies the
"spread-ratio" test and other conditions of Section 424(a) of the Code and such
that no benefit to such optionee is reduced under the terms of such Secure Stock
Option solely as a result of such substitution. The number of Secure Common
Shares subject to such Secure Stock Option shall equal to the product

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<PAGE>

(rounded down to the nearest whole share) obtained by multiplying (a) the number
of Enigma Common Shares issuable upon exercise of the Enigma Stock Option
immediately prior to Merger by (b) the Exchange Ratio, and the price per Secure
Common Share at which such Secure Stock Option is exercisable shall be the
quotient (rounded up to the nearest whole cent) obtained by dividing (c) the
exercise price per Enigma Common Share under the Enigma Stock Option immediately
prior to Merger by (d) the Exchange Ratio.

4.6 ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted appropriately so as to maintain the relative proportionate interests
of the holders of Enigma Common Shares and the holders of Secure Common Shares
to reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Secure
Common Shares or Enigma Common Shares), reorganization, recapitalization or
other like change with respect to Secure Common Shares or Enigma Common Shares
occurring after the date hereof and prior to the Effective Time.

4.7 DISSENTERS' RIGHTS.

(a) Notwithstanding anything to the contrary contained in this
Agreement, any shares of capital stock of Enigma that, as of the Effective
Time, are or may become "dissenting shares" within the meaning of Section
1300(b) of the CGCL shall not be converted into or represent the right to
receive Secure Common Shares in accordance with Section 4.1 (or cash in
lieu of fractional shares in accordance with Section 4.3), and the holder
or holders of such shares shall be entitled only to such rights as may be
granted to such holder or holders in Chapter 13 of the CGCL; provided,
however, that if the status of any such shares as "dissenting shares" shall
not be perfected, or if any such shares shall lose their status as
"dissenting shares," then, as of the later of the Effective Time or the
time of the failure to perfect such status or the loss of such status, such
shares shall automatically be converted into and shall represent only the
right to receive (upon surrender of the Certificate representing such
shares) Secure Common Shares in accordance with Section 4.1 (and cash in
lieu of fractional shares in accordance with Section 4.3).

(b) Enigma shall give Secure (i) prompt notice of any written demand
of a right of dissent, withdrawals of such demands, and any other
instruments served pursuant to the CGCL in respect of such right of dissent
and received by Enigma and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such rights. Enigma shall
not, except with the prior written consent of Secure, voluntarily make any
payment with respect to any such rights or offer to settle or settle any
such rights.

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<PAGE>

ARTICLE V
REPRESENTATIONS AND WARRANTIES

When used in connection with Enigma or Secure and its subsidiaries, as the
case may be, "Material Adverse Effect" means any change or effect that,
individually or when taken together with all other such changes or effects that
have occurred prior to the date of determination of the occurrence of the
Material Adverse Effect, is or is reasonably likely to be materially adverse to
the business, affairs, operations, assets, liabilities (contingent or otherwise)
or capital of Enigma or Secure and its subsidiaries, as the case may be, in each
case taken as a whole.

5.1 REPRESENTATIONS AND WARRANTIES OF ENIGMA. Except as otherwise
set forth on the Enigma Schedule of Exceptions dated the date hereof (the
"Enigma Schedule of Exceptions" which shall be organized by reference to
specific sections hereof as indicated below and which shall be deemed to include
any information specifically incorporated by reference on any of the Enigma
Schedules), Enigma hereby represents and warrants to Secure and Merger Sub that:

(a) CORPORATE ORGANIZATION. Enigma is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California. True and correct copies of the Articles of Incorporation and
the By-Laws of Enigma in effect as of the date of this Agreement have been
provided to Secure. Enigma does not have any direct or indirect
subsidiaries or any other equity interest in any other firm, corporation,
partnership, joint venture association or other business organization.

(b) QUALIFICATION TO DO BUSINESS. Enigma is duly qualified or
licensed to do business as a foreign corporation in each jurisdiction
wherein the nature of its activities or of its properties owned or leased
makes such qualification necessary and failure to be so qualified or
licensed would have a Material Adverse Effect.

(c) CORPORATE POWER. Enigma has the requisite corporate power and
authority to own and operate its properties and to carry on its business as
now being conducted.

(d) CORPORATE AUTHORITY. Subject to approval by the shareholders of
Enigma at the meeting to be held in accordance with Section 6.4(b) hereof
or by consent in writing in accordance with Section 6.4(b) hereof, the
execution and delivery of this Agreement by Enigma, and the consummation of
the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Enigma. This Agreement and all
other instruments required hereby to be executed and delivered by Enigma
have been, or will be, duly executed and delivered by authorized officers
of Enigma, and are, or when delivered will be, legal, valid and binding
obligations of Enigma, enforceable against Enigma in accordance with their
terms, subject, as to enforceability, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general principles of equity.

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<PAGE>

(e) CAPITALIZATION. Schedule 5.1(e) attached hereto contains the
name and address of each person who is a shareholder of record of Enigma at
the date hereof and the number of Enigma Common Shares owned of record by
each such shareholder. The authorized capital stock of Enigma is set forth
on Schedule 5.1(e). All of the outstanding Enigma Common Shares have been,
and all of the outstanding Enigma Common Shares will, at the Effective
Time, be duly authorized and validly issued, fully paid and nonassessable
and free of preemptive rights. Except as set forth on Schedule 5.1(e): no
Enigma Common Shares are held in the treasury of Enigma or reserved for
issuance; there are not as of the date hereof and there will not be at the
Effective Time any outstanding or authorized options, warrants, calls,
rights, commitments or any other agreements of any character to which
Enigma is a party, or by which it is bound, requiring it to issue,
transfer, sell, purchase, redeem or acquire any shares of capital stock or
any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock or other securities
of Enigma ; and there are not as of the date hereof and there will not be
at the Effective Time any shareholder agreement, voting trust or other
agreements or understandings to which Enigma is a party or by which Enigma
is bound relating to the Enigma Common Shares.

(f) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement nor the consummation by Enigma of the
transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the Articles of Incorporation or the By-Laws of
Enigma; (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental authority, except (A)
filings by Secure, pursuant to the applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Securities Exchange Act") and the Securities
Act and under applicable state securities laws, and (B) the filing of a
Certificate of Merger pursuant to the DGCL and the CGCL and appropriate
documents with the relevant authorities of other states in which Enigma is
authorized to do business; (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 or acceleration or
lien or other charge or encumbrance) under any of the terms, conditions or
provisions of any note, license, agreement, Material Contract (as
hereinafter defined) or other material instrument or obligation to which
Enigma, or any of its assets, may be bound, except for the requirement to
obtain the consents of third parties referred to in Schedule 5.1(f) and
except for such violations, breaches and defaults (or rights of
termination, cancellation or acceleration, or lien or other charge or
encumbrance) as to which requisite waivers or consents have been obtained;
or (iv) assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in this Section 5.1(f) and the
consents of third parties referred to in Schedule 5.1(f) are duly and
timely obtained or made, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Enigma or to any of its assets.

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(g) ACTIONS, SUITS, PROCEEDINGS. There are no actions, suits or
proceedings pending against Enigma or any of its properties or business in
any court or before any governmental authority. To the best knowledge of
Enigma there is no such action, suit or proceeding threatened against
Enigma or any of its properties or business which would be reasonably
likely to have a Material Adverse Effect on Enigma. Enigma is not subject
to any order, writ, injunction or decree of any court or governmental
authority.

(h) COMPLIANCE WITH APPLICABLE LAWS AND OTHER INSTRUMENTS. The
business and operations of Enigma have been and are being conducted in all
material respects in accordance with all applicable laws, rules or
regulations of all governmental and regulatory authorities, including
without limitation all laws, rules and regulations relating to the
environment or occupational health and safety (hereinafter collectively
referred to as "Environmental Laws") where the failure to comply with such
laws, rules and regulations would have a Material Adverse Effect. Enigma
is not in material violation of any building code, special use permit,
zoning ordinance or any other applicable law, rule or regulation, and there
are no administrative or other governmental claims pending against Enigma
alleging or inquiring as to the existence of any such violation. Enigma
is not in violation of its Articles of Incorporation or By-Laws.

(i) ENVIRONMENTAL LAWS. Enigma has obtained all permits and other
governmental authorizations required under applicable Environmental Laws
(and has complied in all material respects with the terms and conditions
thereof) and have not received any communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges
Enigma is not in full compliance with applicable Environmental Laws.
Enigma has not improperly disposed of, spilled or otherwise released any
hazardous substances or materials the release or disposal of which is
regulated by any law, rule or regulation, and no circumstances exist which
would subject Enigma to any liability with respect to the environmental
contamination of any property.

(j) EMPLOYEES. Enigma has provided Secure with a true and correct
list of all hourly employees and salaried employees of Enigma at the date
hereof and in the case of each such employee sets forth the position, level
of compensation, date of employment and citizenship.

(k) EMPLOYEE PLANS. Schedule 5.1(k) attached hereto lists all
pension, retirement, profit sharing, bonus, deferred compensation, stock
option, group insurance or other employee benefit plans covering employees
of Enigma. True and correct copies of each of the plans described in
Schedule 5.1(k) and of the related agreements have been furnished by Enigma
to Secure. Where applicable, Enigma has also furnished to Secure the most
recent summary plan description with respect to each of such plans. There
are no pending, or to the best knowledge of Enigma , threatened, claims,
lawsuits or arbitrations which have been asserted or instituted against
such plans or any fiduciaries thereof respecting their duties to the plans
or the assets or any of the trusts under any of the plans. No such plan is
a Multiemployer Plan, as defined in Section 4001(a)(3) of the Employee

Retirement Income Security Act of 1974, as amended ("ERISA"). Each of the
plans described in Schedule 5.1(k) that is subject to ERISA is in
substantial compliance with ERISA. Neither Enigma, its directors, officers
and employees nor, to the best knowledge of Enigma, any fiduciary of any
such plan is in breach of any obligations imposed on fiduciaries under
Title I of ERISA. No "reportable event" as such term is defined in Section
4043(b) of ERISA or prohibited transactions within the meaning of Section
406 of ERISA has occurred with respect to any such plan. Enigma is in
substantial compliance with all applicable requirements of Section 4980B of
the Code.

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(l) LABOR MATTERS. Except as set forth on Schedule 5.1(l), Enigma
has no existing labor disputes or disturbances, and there are no existing
employment, consulting, non-competition, severance, indemnification or non-
disclosure agreements or collective bargaining agreements between Enigma and
any of its past or present employees, officers and directors. There is no
collective bargaining unit representing any of Enigma's employees. No
petition has been filed and is pending with the National Labor Relations
Board any group of employees for an election or certification regarding the
representation of any group of employees by a labor organization, nor to the
best knowledge of Enigma is there at present any solicitation or campaign by
any labor organization or employee for the representation of Enigma's
employees by a labor organization.

(m) FINANCIAL STATEMENTS. Attached to this Agreement as
Schedule 5.1(m) are financial statements for the year ended December 31,
1995 and for the three months ended March 31, 1996 (consisting, with
respect to such three month period, of an unaudited balance sheet, income
statement and cash flow statement). Such financial statements (i) have
been prepared consistent with the books and records of Enigma, (ii) present
fairly the financial condition of Enigma at the balance sheet dates and the
results of its operations and cash flows for the periods therein specified
in all material respects, and (iii) have, in all material respects, been
prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis (except that the financial
statements for the three months ended March 31, 1996 do not contain
footnotes and are subject to normal recurring adjustments). Specifically,
but not by way of limitation, the balance sheets or notes thereto disclose
all of the debts, liabilities and obligations of any nature (whether
absolute, accrued or contingent, and whether due or to become due) as
required by GAAP to be disclosed in financial statements at the dates
thereof. The balance sheets include appropriate reserves in accordance
with GAAP for all taxes and other liabilities accrued at such dates but not
then payable.

(n) TAX RETURNS AND AUDITS. All required federal, state, local and
foreign tax returns or appropriate extension requests of Enigma have been
filed when due, or appropriate extension requests have been filed and
remain in effect, and all federal, state, local and foreign taxes required
to be paid with respect to such returns have been paid or due provision for
the payment thereof has been made. Enigma is not delinquent in the payment
of any such tax or in the payment of any assessment or governmental charge.
Enigma has not received notice of any tax deficiency proposed or assessed
against it, and has not executed any waiver of any statute of limitations
on the assessment or collection of any tax. Except as disclosed on
Schedule 5.1(n), none of Enigma's tax returns has been audited by
governmental authorities in a manner to bring such audits to Enigma's
attention. Enigma does not have any tax liabilities except those reflected
on the Enigma Schedules and those incurred in the ordinary course of
business since March 31, 1996.

(o) CHANGES, DIVIDENDS, ETC. Except as disclosed on Schedule 5.1(o)
and except for the transactions contemplated by this Agreement, since
March 31, 1996 Enigma

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has not: (a) incurred any material debts, obligations or liabilities,
absolute, accrued or contingent and whether due or to become due, except
current liabilities incurred in the ordinary course of business, and debts,
obligations or liabilities which (individually or in the aggregate) are not
reasonably likely to have a Material Adverse Effect on Enigma; (b) paid any
obligation or liability other than, or discharged or satisfied any liens or
encumbrances other than those securing, current liabilities, in each case
other than in the ordinary course of business; (c) declared or made any
payment or distribution to shareholders, or purchased or redeemed any of
its shares of capital stock or other securities, or obligated itself to do
so; (d) mortgaged, pledged or subjected to lien, charge, security interest
or other encumbrance any of its assets, tangible or intangible, except in
the ordinary course of business; (e) sold, transferred or leased any of
its assets except in the ordinary course of business; (f) canceled or
compromised any debt or claim, or waived or released any right of material
value; (g) suffered any physical damage, destruction or loss (whether or
not covered by insurance) which has had or is reasonably likely to have a
Material Adverse Effect on Enigma; (h) entered into any transaction other
than in the ordinary course of business; (i) encountered any organized labor
difficulties or labor union organizing activities; (j) made any acquisition
of any material assets, other than for fair value in the ordinary course of
business; (k) increased the compensation payable, or to become payable, to
any of its employees or directors, or made any bonus payment or similar
arrangement with any employees or directors or increased the scope or nature
of any fringe benefits provided for its employees or directors; or (l)
agreed to do any of the foregoing other than pursuant to this Agreement and
the other agreements and arrangements entered into in connection herewith.
Since March 31, 1996 to Enigma's knowledge there has been no change,
occurrence or circumstance that has affected its business that would be
reasonably likely to have a Material Adverse Effect on Enigma.

(p) TITLE TO THE ASSETS. Enigma has good and marketable title to all
its assets, free and clear of all liens, pledges, security interests,
conditional sale agreements, license agreements, charges and encumbrances
that will continue after the Effective Time except as disclosed in the
financial statements described in Section 5.1(m), encumbrances listed in
Schedule 5.1(p) attached hereto (the "Permitted Encumbrances") and except
for liens for current taxes not yet due and payable and minor liens that
have arisen in the ordinary course of business and that do not (in any case
or in the aggregate) materially detract from the value of the assets
subject thereto or materially impair the operations of the Company.

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(q) PAYMENT OBLIGATIONS. Enigma's accounts receivable have arisen
and will arise in the normal course of the operation of Enigma's business,
and constitute and will constitute valid and binding obligations of the
account debtors and obligors, enforceable in accordance with their terms at
the amount recorded therefor in the books and records of Enigma and are not
and will not be subject to any discounts, whether for prompt payment or
otherwise.

(r) CONDITION OF ASSETS. The plant, offices and equipment owned or
leased by Enigma have been kept in good condition and repair in the
ordinary course of business, ordinary wear and tear excepted. Copies of all
current product brochures for Enigma's products have been provided to
Secure. The brochures fairly describe such products. Since March 31, 1996,
defective products returned to Enigma for repair or replacement have not had
a Material Adverse Effect on Enigma.

(s) INTELLECTUAL PROPERTY RIGHTS. Schedule 5.1(s) attached hereto
lists all patents, trademarks, trade names, service marks and copyrights
(and all applications therefor) of Enigma used in and material to Enigma's
business. Except as disclosed in Schedule 5.1(s), Enigma (i) owns or has
the exclusive right to use all such patents, trademarks, trade names,
service marks and copyrights (and all applications therefor) and all trade
secrets, inventions, know-how, designs, processes, computer programs,
specifications and formulas otherwise used in and material to Enigma's
business and (ii) is not using any confidential information or trade
secrets of others without permission; provided, however, that the foregoing
representation and warranty is limited to Enigma's knowledge insofar as it
relates to components that are supplied by third parties and included in
Enigma's products. Except as set forth in the Enigma Schedules, Enigma is
not obligated to pay royalties, fees or other payments to any owner of,
licensor of, or other claimant to, any patent, trademark, service mark,
trade name, copyright or other intellectual property. Enigma has not
transferred or conveyed any rights to others in the intellectual property
of Enigma, other than rights to use that are incidental to sales of
Enigma's products. Except as listed on Schedule 5.1(s) attached hereto,
Enigma is not, nor has it received notice with respect to, infringing upon
or otherwise acting adversely to any known right or any right known by
Enigma to be claimed by any person under or with respect to any patents,
trademarks, service marks, trade names, copyrights, licenses or other
intellectual property rights; provided, however, that the foregoing
representation and warranty is limited to Enigma's knowledge insofar as it
relates to components that are supplied by third parties and included in
Enigma's products. Other than as set forth in the Enigma Schedules, all
software writing with respect to Enigma's products has been performed by
employees of Enigma.

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(t) CONTRACTS, LEASES, COMMITMENTS AND AGREEMENTS. To the extent not
listed on any other Schedule hereto, Schedule 5.1(t) hereto lists all
contracts, leases, commitments and agreements (other than purchase orders
from customers or to suppliers) to which Enigma is a party or by which it
is bound that (i) provide for aggregate payments in any year of more than
$50,000, (ii) contain a payment escalation, renegotiation or
redetermination clause, or (iii) cannot be canceled without a material
liability, premium or penalty on notice of not more than 30 days (the
"Material Contracts"). Enigma and, to the best knowledge of Enigma, each
other party thereto, have in all material respects substantially performed
all obligations required to be performed by them to date, and are not in
default under any of the Material Contracts. Each of the Material
Contracts is in full force and effect and, except as set forth on the
Enigma Schedules, does not require the consent of any party to the
transactions contemplated hereby, and Enigma has not waived or assigned to
any other person any of its rights thereunder.

(u) COMPOSITION OF ASSETS. The assets of Enigma, including leased
assets, comprise all material property and assets employed Enigma in its
business.

(v) INSURANCE. Enigma has in force the property and casualty
insurance set forth on Schedule 5.1(v) attached hereto. All policies
providing such insurance are in full force and effect and Enigma has
received any no notice of impending cancellation or nonrenewal thereof.

(w) LICENSES AND PERMITS. Schedule 5.1(w) attached hereto contains a
list of all material licenses and permits granted to or by Enigma, other
than licenses granted by Enigma in connection with the sale of its products
and licenses for commercially available software obtained by Enigma in the
ordinary course of business. Enigma possesses from the appropriate agency,
commission, board and governmental body and authority all material
licenses, certifications, permits and regulatory approvals required by law
or otherwise necessary for the operation of its business. All such
licenses, certifications, permits and approvals granted to Enigma are in
full force and effect, and no action to terminate any such license,
certification, permit or approval is pending or, to the best knowledge of
Enigma, has been threatened by any governmental agency or other party.

(x) CONFLICTS OF INTEREST. Except as disclosed in Schedule 5.1(x),
to the best knowledge of Enigma, no officer, director or shareholder of
Enigma or any affiliate (as such term is defined in Rule 405 under the
Securities Act) of any such person has any direct or indirect interest
(i) in any entity which does business with Enigma, (ii) in any property,
asset or right which is used by Enigma in the conduct of its business, or
(iii) in any contractual relationship with Enigma other than as an
employee. For the purpose of this Section 5.1(x), there shall be
disregarded any interest which arises solely from the ownership of less
than a 1% equity interest in a corporation whose stock is regularly traded
on any national securities exchange or in the over-the-counter market.

(y) POOLING OF INTERESTS. Neither Enigma nor any of its affiliates
(as such term is defined in Rule 405 under the Securities Act) has, to its
knowledge and based upon consultation with Enigma's independent
accountants, taken or agreed to take any action that would affect the
ability of Secure to account for the business combination to be effected by
the Merger as a pooling of interests.

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(z) ENIGMA STOCK OPTIONS. None of the holders of the Enigma Stock
Options will be entitled to receive cash or other property by reason of
their Enigma Stock Options (other than Secure Stock Options) as a result of
the transactions contemplated hereby.

(aa) AGREEMENTS OF ENIGMA AFFILIATES. Enigma has delivered to
Secure a written agreement (a "Enigma Affiliate Agreement") from each
person who is, or may reasonably be deemed to be, an "affiliate" of Enigma
for purposes of Rule 145 under the Securities Act, substantially in the
form of Exhibit B hereto. Assuming that the Enigma Common Shares covered
by the Enigma Affiliate Agreements (i) are present and voted in accordance
with the terms of such Enigma Affiliate Agreements at the Enigma
shareholders' meeting to be held in accordance with Section 6.4(b), or (ii)
consent in writing in accordance with Section 6.4(b), Enigma Common Shares
covered by such Agreements are and will be sufficient to ensure the approval
of this Agreement and the Merger in accordance with the CGCL and any other
applicable requirements.

(bb) PRIVATE PLACEMENT MEMORANDUM. Enigma's Private Placement
Memorandum dated March 20, 1996, a true and correct copy of which has been
furnished to Secure, when qualified by the representations and warranties
set forth in the Agreement and the Enigma Schedules, did not as of its date
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein, in the light
of the circumstance under which they were made, not misleading (other than
the information set forth in Exhibit B thereto as to which no
representation or warranty is made).

(cc) INFORMATION IN MERGER INFORMATION STATEMENT. The
information with respect to Enigma contained in the Merger Information
Statement (as defined in Section 6.3) will not, at the time it is mailed to
shareholders of Enigma, or at the time of the meeting of Enigma
shareholders to be held in accordance with Section 6.4(b) hereof, or at the
time that any consent in writing is given by any shareholder of Enigma in
accordance with Section 6.4(b) hereof, or at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

(dd) FULL DISCLOSURE. Enigma has not knowingly withheld from
Secure any material facts relating to Enigma. No representation or
warranty by Enigma contained in this Agreement, when taken together with
the Enigma Schedules, contains any untrue statement of a material fact.

5.2 REPRESENTATIONS AND WARRANTIES OF SECURE AND MERGER SUB.
Except as otherwise set forth on the Secure Schedule of Exceptions dated the
date hereof (the "Secure Schedule of Exceptions," which shall be organized by
reference to specific sections hereof as indicated below and which shall be
deemed to include any information specifically incorporated by reference on
any of the Secure Schedules), each of Secure and Merger Sub represents and
warrants to Enigma that:

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(a) CORPORATE ORGANIZATION. Each of Secure and its subsidiaries
(including Merger Sub) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation.
Schedule 5.2(a) sets forth the name and jurisdiction of incorporation of
each subsidiary of Secure. True and correct copies of the Charter and By-
Laws of Secure have been provided to Enigma. Except as set forth in
Schedule 5.2(a), all the issued and outstanding shares of capital stock of
each of Secure's subsidiaries are owned by either Secure or another of
Secure's subsidiaries free and clear of any security interest, claim,
charge, lien, encumbrance or adverse interest of any nature.

(b) QUALIFICATION TO DO BUSINESS. Each of Secure and its
subsidiaries (including Merger Sub) is duly qualified or licensed to do
business and in good standing as a foreign corporation in each jurisdiction
wherein the nature of its activities or of its properties owned or leased
makes such qualification or licensing necessary and failure to be so
qualified or licensed would have a Material Adverse Effect on Secure.

(c) CORPORATE POWER. Each of Secure and its subsidiaries (including
Merger Sub) has the requisite corporate power and authority to own and
operate its properties, to carry on its business as now being conducted,
and, in the case of Secure and Merger Sub, to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.

(d) CORPORATE AUTHORITY. Subject to approval by the stockholders of
Secure at the meeting to be held in accordance with Section 6.4(a) hereof,
the execution and delivery of this Agreement by Secure and Merger Sub, and
the consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of Secure and
Merger Sub. This Agreement and all other instruments required hereby to be
executed and delivered by Secure or Merger Sub have been or will be, duly
executed and delivered by authorized officers of Secure or Merger Sub, as
the case may be, and are or will be, legal, valid and binding obligations
of Secure and Merger Sub, enforceable against Secure and Merger Sub in
accordance with their terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general principles of equity.

(e) AUTHORIZATION FOR SECURE COMMON SHARES. Subject to approval by
the stockholders of Secure at the meeting to be held in accordance with
Section 6.4(a) hereof, Secure has taken or will take all necessary action
to permit it to issue the number of Secure Common Shares required to be
issued pursuant to the terms of this Agreement. Secure has reserved for
issuance such number of Secure Common Shares as shall be necessary to give
effect to the exchanges, conversions and assumptions of options
contemplated hereby, and the Secure Common Shares to be issued pursuant to
the terms of this Agreement will, when issued, be validly issued, fully
paid and nonassessable and no shareholder of Secure will have any preemptive
right of subscription or purchase in respect thereof.

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(f) CONSENTS AND APPROVALS; NO VIOLATION. Subject to approval by the
stockholders of Secure at the meeting to be held in accordance with Section
6.4(a) hereof, neither the execution and delivery of this Agreement nor the
consummation by Secure and Merger Sub of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of
the Charter or By-Laws of Secure or any of its subsidiaries;
(ii) require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental authority, except (A) filings by
Secure, pursuant to the applicable requirements of the Securities Exchange
Act and under the Securities Act and applicable state securities laws, and
(B) the filings of a Certificate of Merger pursuant to the DGCL and the
CGCL, and appropriate documents with the relevant authorities of other
states in which Enigma is authorized to do business; (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 or acceleration or lien or other charge or encumbrance) under
any of the terms, conditions or provisions of any note, license, agreement,
Secure Material Contract (as hereinafter defined) or other instrument by
which Secure or Merger Sub or any of their assets may be bound, except for
such violations, breaches and defaults (or rights of termination,
cancellation or acceleration or lien or other charge or encumbrance) as to
which requisite waivers or consents have been obtained; or (iv) assuming
the covenants, approvals, authorizations or permits and filings or
notifications referred to in this Section 5.2(f) are duly and timely
obtained or made, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Secure or Merger Sub or to any of their
respective assets.

(g) OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES; ASSETS OF MERGER
SUB.

(i) Merger Sub has been formed solely for the purpose of
engaging in the transactions contemplated hereby.

(ii) The capital stock of Merger Sub is, and as of the Effective
Time will be, (A) owned 100% by Secure directly and (B) validly
issued, fully paid and nonassessable. There are not and will not be
at the Effective Time any outstanding or authorized options, warrants,
calls, rights, commitments or any other agreements of any character to
which Merger Sub is a party to, or by which Merger Sub may be bound
by, requiring it to issue, transfer, sell, deliver, purchase, redeem
or acquire any shares of capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire, any shares of capital stock of Merger Sub.

(iii) As of the Effective Time, except for obligations or
liabilities incurred in connection with its incorporation or
organization and the transactions contemplated hereby, Merger Sub
will not have incurred, directly or indirectly through any subsidiary
or affiliate, any obligations or liabilities or engaged in any
business or activities of any type or kind whatsoever or entered into
any agreements or arrangements with any person or entity.

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(iv) Secure will take all action necessary to ensure that Merger
Sub at no time prior to the Effective Time owns any asset other than
an amount of cash necessary to incorporate Merger Sub, and to pay the
expenses of the Merger attributable to Merger Sub in connection with
the Merger.

(h) SEC REPORTS; FINANCIAL STATEMENTS; CAPITALIZATION.

(i) Secure has filed all forms, reports and documents with the
Securities and Exchange Commission (the "SEC") required to be filed by
it pursuant to the federal securities laws and the SEC rules and
regulations thereunder, all of which complied in all material respects
with all applicable requirements of the Securities Exchange Act and
the Securities Act and the regulations of the SEC promulgated
thereunder (collectively, the "Secure SEC Reports"). True and correct
copies of the Secure SEC Reports have been furnished or made available
to Enigma. None of the Secure SEC Reports, including without
limitation any financial statements or schedules included therein, at
the time filed or as subsequently amended contained any untrue
statement of a material fact or omitted to state a 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.

(ii) The balance sheets and the related statements of operations,
stockholders' equity (deficit) and cash flows (including the related
notes thereto) of Secure included in the Secure SEC Reports complied
in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto,
are in accordance with the books and records of Secure, have been
prepared in accordance GAAP applied on a basis consistent with prior
periods (except as otherwise noted therein), and present fairly the
financial position of Secure as of their respective dates, and the
results of its operations and its cash flows for the periods presented
therein (subject, in the case of the interim financial statements, to
normal year-end adjustments).

(iii) Secure's balance sheet and the related statement of
operations of Secure at March 31, 1996 and for the three months then
ended (the "Secure Financial Statements") are included in Secure's
Form 10-Q for the quarter ended March 31, 1996 as filed with the SEC,
and as provided to Enigma as part of the Secure SEC Reports. The
Secure Financial Statements have been prepared consistent with the
books and records of Secure, have been prepared in accordance with
GAAP applied on a basis consistent with prior periods (except as
otherwise noted therein), and present fairly the consolidated financial
position of Secure as of such date and the results of its operations
for the period presented therein.

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(iv) As of December 31, 1995, the authorized capital stock of
Secure consisted of (i) 25,000,000 shares of Common Stock, par value
$.01 per share, of which 6,480,011 shares were issued and outstanding,
no shares were held in treasury, 772,508 shares were reserved for
future issuance pursuant to outstanding options under Secure's stock
option plans, and 170,172 were reserved for future issuance pursuant
to options that may be issued thereafter pursuant to Secure's 1995
Omnibus Stock Plan and (ii) 2,000,000 shares of undesignated Preferred
Stock, none of which was issued and outstanding. Other than as listed
on the Secure Schedule of Exceptions, no change in the authorized
capital stock and no material change in the number of issued and
outstanding shares has occurred between December 31, 1995 and the date
hereof.

(i) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Secure SEC Reports, or Schedule 5.2(i) or as contemplated by the Secure
Financial Statements, and except for the transactions contemplated hereby,
since March 31, 1996, the business of Secure has been carried on only in
the ordinary and usual course, and to Secure's knowledge there has been no
change, occurrence or circumstance that has affected its business since
March 31, 1996 that would be reasonably likely to have a Material Adverse
Effect on Secure.

(j) ACTIONS, SUITS, PROCEEDINGS. Except as set forth in Schedule
5.2(j) or as reflected in the Secure SEC Reports, there are no claims,
actions, suits, proceeding or investigations pending or, to the knowledge
of Secure, threatened against Secure or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority
or body, domestic or foreign, that would be reasonably likely to have a
Material Adverse Effect on Secure.

(k) ERISA AND RELATED MATTERS.

(i) Schedule 5.2(k) identifies each "employee benefit plan," as
defined in section 3(3) of ERISA, currently or previously maintained,
contributed to or entered into by Secure or any of its subsidiaries
under which Secure or any of its subsidiaries or any ERISA Affiliate
thereof has any present or future obligation or liability
(collectively, the "Secure Employee Plans"). All Employee Plans which
individually or collectively would constitute an "employee pension
benefit plan," as defined in section 3(2) of ERISA (collectively, the
"Secure Pension Plans"), are identified as such in such Schedule
5.2(k). All contributions due from Secure or any of its subsidiaries
through the Effective Time with respect to any of the Secure Employee
Plans have been or will be timely made as required under ERISA or any
other applicable legislation or have been accrued on Secure's
financial statements as of March 31, 1996. Each Secure Employee Plan
has been maintained in material compliance with its terms and with
the requirements prescribed by any and all statutes, orders, rules
and regulations, including, without limitation, ERISA and the Code,
which are applicable to such Secure Employee Plans.

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(ii) No Secure Pension Plan constitutes, or has since the
enactment of ERISA constituted, a "multiemployer plan," as defined in
section 3(37) of ERISA. No Secure Pension Plans are subject to Title
IV of ERISA. No "prohibited transaction," as defined in section 406
of ERISA or section 4975 of the Code, has occurred with respect to any
Secure Employee Plan which is covered by Title I of ERISA which would
have a Material Adverse Effect on Secure, excluding transactions
affected pursuant to a statutory or administrative exemption. Nothing
done or omitted to be done and no transaction or holding of any asset
under or in connection with any Secure Employee Plan has or will make
Secure or any officer or director of Secure subject to any material
liability under Title I of ERISA or liable for any material tax or
penalty pursuant to sections 4972, 4975, 4976 of the Code or section
502 of ERISA.

(iii) Any Secure Pension Plan which is intended to be
qualified under section 401(a) of the Code (a "Secure 401(a) Plan") is
so qualified and has been so qualified during the period from its
adoption to date, and the trust forming a part thereof is exempt from
tax pursuant to section 501(a) of the Code. Secure has delivered to
Enigma or its counsel a complete and correct copy of the most recent
Internal Revenue Service determination letter with respect to each
Secure 401(a) Plan.

(iv) Each Secure plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured arrangements),
workers' benefits, vacation benefits, severance benefits, disability
benefits, death benefits, hospitalization benefits, retirement
benefits, disability benefits, death benefits, hospitalization
benefits, retirement benefits, deferred compensation, profit-sharing,
bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-
retirement insurance, compensation or benefits for employees,
consultants or directors (collectively "Secure Benefit Arrangements")
has been maintained in substantial compliance with its terms and with
the requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Secure Benefit Arrangement.

(v) There has been no amendment to, written interpretation or
announcement (whether or not written) by Secure or any of its
subsidiaries relating to, or change in employee participation or
coverage under, any Secure Employee Plan or Secure Benefit Arrangement
that would increase materially the expense of maintaining such Secure
Employee Plan or Secure Benefit Arrangement above the level of the
expense incurred in respect thereof for the fiscal year ended
December 31, 1995.

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(vi) No benefit payable or which may become payable by Secure or
any of its subsidiaries pursuant to any Secure Employee Plan or any
Secure Benefit Arrangement or as a result of or arising under this
Agreement shall constitute an "excess parachute payment" (as defined
in section 280G(b)(1) of the Code) which is subject to the imposition
of an excise tax under section 4999 of the Code or which would not be
deductible by reason of section 280G of the Code.

(vii) Secure and each of its subsidiaries is in compliance in
all material respects with all applicable laws, agreements and
contracts relating to employment, employment practices, wages, hours,
and terms and conditions of employment, including, but not limited to,
employee compensation matters, but not including ERISA.

(l) TAXES. All material required federal, state, local and foreign
tax returns of Secure have been filed when due, or appropriate extension
requests have been filed and remain in effect, and all material federal,
state, local and foreign taxes required to be paid with respect to such
returns have been paid or due provision for the payment thereof has been
made. Secure is not delinquent in the payment of any such tax or in the
payment of any material assessment or governmental charge. Secure has not
received notice of any material tax deficiency proposed or assessed against
it, and has not executed any waiver of any statute of limitations on the
assessment or collection of any material tax. Except as set forth on the
Secure Schedules, none of Secure's tax returns has been audited by
governmental authorities in a manner to bring such audits to Secure's
attention. Secure does not have any material tax liabilities except those
reflected on the Secure Schedules and those incurred in the ordinary course
of business since December 31, 1995.

(n) OPINION OF FINANCIAL ADVISOR. Secure has been advised by its
financial advisor, Robertson, Stephens & Company LLC, that in its opinion,
as of the date hereof, the Exchange Ratio is fair to Secure and its
stockholders from a financial point of view.

(o) AGREEMENTS OF CERTAIN SECURE STOCKHOLDERS. Secure has delivered
to Enigma a written agreement (a "Secure Affiliate Agreement") from certain
persons who are, or may be deemed to be, "affiliates" of Secure for purposes
of Rule 145 under the Securities Act, substantially in the form of Exhibit C
hereto. Assuming that the Secure Common Shares covered by the Secure
Affiliate Agreements are present and voted in accordance with the terms of
such Agreements at the Secure shareholders' meeting to be held in accordance
with Section 6.3(a), the Secure Common Shares covered by such agreements are
and will be sufficient to ensure the approval of the issuance of Secure
Common Shares pursuant to the terms of this Agreement.

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(p) ACQUISITIONS OF WEBSTER NETWORK STRATEGIES, INC. AND BORDER
NETWORK TECHNOLOGIES INC. True, complete and correct copies of the
Agreement and Plan of Merger among Secure, W Acquisition, Inc. and Webster
Network Strategies, Inc. dated as of May 9, 1996 and the Acquisition and
Pre-Amalgamation Agreement among Secure, Edge Acquisition Inc. and Border
Network Technologies Inc. dated as of May 28, 1996 (the "Border Agreement"),
together with the schedules and exhibits to such agreements, have been
provided to Enigma.

(q) INFORMATION IN MERGER INFORMATION STATEMENT. The information
with respect to Secure contained in the Merger Information Statement (as
defined in Section 6.3) will not, at the time it is mailed to shareholders
of Enigma, or at the time of the meeting of Enigma shareholders to be held
in accordance with Section 6.4(b) hereof, or at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.

(r) FULL DISCLOSURE. Secure has not knowingly withheld from Enigma
any material facts relating to Secure. No representation or warranty by
Secure contained in this Agreement contains any untrue statement of a
material fact.

ARTICLE VI
CERTAIN COVENANTS

6.1 CONDUCT OF ENIGMA'S BUSINESS PENDING THE MERGER. Enigma agrees
that, from the date of this Agreement to the Effective Time, except as disclosed
in the Enigma Schedules and except for entering into this Agreement and
consummating the transactions expressly contemplated hereby, or to the extent
that Secure shall otherwise consent in writing, which consent shall not be
unreasonably withheld:

(a) Enigma shall operate its business substantially as presently
planned or operated and only in the ordinary, usual and customary manner,
and, consistent with such operation, it will use its reasonable efforts to
preserve intact its present business organization and its relationships
with persons having business relationships with it.

(b) No amendment shall be made to the Articles of Incorporation of
Enigma.

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(c) There shall be no changes in the number of shares, par value or
class of authorized or issued capital stock of Enigma, other than shares of
Enigma Common Stock issued pursuant to the exercise of stock options listed
on Schedule 5.1(e). In addition, Enigma shall not grant or issue any
option, warrant, convertible security, or other right to acquire any shares
of capital stock of Enigma.

(d) There shall not be any declaration or payment of any dividend or
other distribution in respect to the capital stock of Enigma.

(e) Enigma shall not (i) enter into any employment contract or
consulting agreement or make any offer of employment to any person or offer
to engage any person as a consultant, or (ii) increase the wages, salary,
fees or other compensation of any person(s) presently employed or rendering
any service(s) to Enigma, except in the ordinary course of business and
consistent with past practice.

(f) Except in the ordinary course of business, Enigma shall not enter
into, materially amend or renew, or waive or release any rights of material
value under, any Material Contract.

6.2 CONDUCT OF SECURE'S BUSINESS PENDING THE MERGER. Secure agrees
that, from the date of this Agreement to the Effective Time, except as disclosed
in the Secure Schedules and except for entering into this Agreement and
consummating the transactions expressly contemplated hereby, or to the extent
that Enigma shall otherwise consent in writing, which consent shall not be
unreasonably withheld:

(a) Secure shall operate its business substantially as presently
planned or operated and only in the ordinary, usual and customary manner,
and, consistent with such operation, it will use its reasonable efforts to
preserve intact its present business organization and its relationships
with persons having business relationships with it.

(b) No amendment shall be made to the Certificate of Incorporation of
Secure.

(c) There shall be no changes in the number of shares, par value or
class of authorized or issued capital stock of Secure, other than
(i) Secure Common Shares issued pursuant to the exercise of stock options
under the 1995 Omnibus Stock Plan of Secure (or predecessor plans), (ii)
stock options and other awards made under the 1995 Omnibus Stock Plan of
Secure, (iii) securities issued pursuant to the Border Agreement or (iv) as
disclosed in the Secure Schedules.

6.3 MERGER INFORMATION STATEMENT . As soon as practicable after the
date hereof, Enigma and Secure shall take such reasonable steps as are necessary
for the prompt preparation of an Information Statement containing information
regarding Secure, Enigma and the Merger (the "Merger Information Statement"), to
be submitted to the shareholders of Enigma in connection with their
consideration and vote upon the Merger. Enigma agrees to provide such Merger
Information Statement to its shareholders in such form as shall be mutually
agreed upon by Enigma and Secure in a timely manner for their consideration
prior to the shareholders' meeting to be held in accordance with Section 6.4(b)
or in connection with the solicitation of written consents in accordance with
Section 6.4(b).

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6.4 STOCKHOLDERS' MEETINGS. (a) Secure shall call a meeting of its
stockholders as promptly as practicable for the purpose of voting upon the
issuance of the Secure Common Shares issuable pursuant to the terms of this
Agreement. Secure will, through its Board of Directors, recommend to its
stockholders approval of the issuance of such Secure Common Shares. Secure
shall use all reasonable efforts to solicit from its stockholders proxies in
favor of the issuance of such shares. In addition, Secure shall propose to its
stockholders at such Secure Stockholders' Meeting as a separate proposal an
amendment to the 1995 Omnibus Stock Plan to increase the number of shares
covered by two million (2,000,000) Secure Common Shares. Secure will, through
its Board of Directors, recommend to its stockholders approval of the proposal
to amend the 1995 Omnibus Stock Plan. Secure shall use all reasonable efforts
to solicit from its stockholders proxies in favor of such proposal. In
connection with the Secure Stockholders' Meeting, Secure shall also cause to be
nominated for election as directors of Secure the following individual: Eric P.
Rundquist. Secure will, through its Board of Directors, recommend to its
stockholders election of the foregoing individual at such Secure Stockholders'
Meeting and shall use all reasonable efforts to solicit from its stockholders
proxies in favor of his election. Alternatively, at the sole discretion of
Secure, in lieu of the nomination of the foregoing individual for election at
such Secure Stockholders' Meeting, the Board of Directors of Secure may elect
the foregoing individual as a director by action of the Board of Directors.

(b) Enigma shall call a meeting, or solicit written consents, of its
shareholders as promptly as practicable for the purpose of voting upon or
consenting to this Agreement and the Merger. Enigma will, through its
Board of Directors, recommend to its shareholders approval of this
Agreement and the Merger. Enigma shall use all reasonable efforts to
obtain at such meeting or through such consent solicitation the vote or
consent of Enigma shareholders in favor of this Agreement and the Merger as
required by the CGCL.

6.5 NO SOLICITATION. With respect to any Acquisition Proposal (as
hereinafter defined):

(a) Enigma will not (and will use its best efforts to assure that its
officers, directors, employees, agents and affiliates do not on its behalf)
take any action to solicit, initiate, encourage or support any inquiry,
proposal or offer from, furnish any confidential information of Enigma to,
or participate in any negotiations with, any corporation, partnership,
person or other entity or group (other than Secure) regarding any
acquisition of Enigma, any merger, Merger, or consolidation with or
involving Enigma, or any take-over bid, or any sale of stock or other
equity securities (including without limitation by way of a tender offer,
but excluding the issuance of Enigma Common Shares upon exercise of an
Enigma Stock Option) or any material portion of the assets of Enigma (any
of the foregoing inquiries or proposals being referred to herein as an
"Acquisition Proposal").

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(b) Enigma shall immediately notify Secure after receipt of any
Acquisition Proposal, or any request for information relating to Enigma in
connection with an Acquisition Proposal, or any request for access to the
properties, books or records of Enigma by any person or entity that informs
Enigma that it is considering making, or has made, an Acquisition Proposal.
Such notice to Secure shall be made orally and in writing and shall indicate
in reasonable detail the terms and conditions of any such proposal, inquiry
or contact.

6.6 BOOKS AND RECORDS; ACCESS AND INFORMATION. From the date of this
Agreement until the Effective Time, Enigma shall give to Secure, its officers
and representatives reasonable access to the premises, books and records of
Enigma, and provide Secure with such financial and operating data and other
information with respect to its business and properties as it shall from time to
time reasonably request, including, without limitation, all interim financial
data as soon as it becomes available; provided, however, that any such
investigation shall be conducted in such manner as not to interfere unreasonably
with the operation of the business of Enigma.

6.7 NOTIFICATION OF CERTAIN MATTERS. Subsequent to the date of this
Agreement and on or prior to the Effective Time, Enigma and Secure shall each
promptly notify the other of:

(i) the receipt of any notice of, or other communication
relating to, a default or event which, with notice or lapse of time or
both, would become a default, under any material agreement to which it
is a party or to which it or any of its respective material properties
or assets may be subject or bound;

(ii) the receipt of any notice or other communication from any
third party whose consent or approval is or may be required in
connection with the transactions contemplated by this Agreement,
denying such consent or approval;

(iii) the receipt of any notice or other communication from
any governmental regulatory agency or authority in connection with
the transactions contemplated hereby;

(iv) any material adverse change in its consolidated business,
consolidated financial condition, operating results, assets,
management, employee relations or customer relations; or

(v) any condition or fact which would not permit it to satisfy a
condition to the other's obligation to effect the transactions
contemplated hereby, including the Merger.

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6.8 CONFIDENTIALITY. Each of the parties hereto agrees that it
shall, and shall cause its subsidiaries and the officers, employees and
authorized representatives of each of them to, hold in strict confidence all
data and information obtained by them from the other parties hereto (unless such
information is or becomes readily ascertainable from public or published
information) and shall not, and shall ensure that such subsidiaries, directors,
officers, employees and authorized representatives do not, disclose such
information to others without the prior written consent of the party from which
such data or information was obtained, except as required by law after
consultation with counsel (provided that any such party shall consult with the
other party prior to making such disclosure). In the event of the termination
of this Agreement, and subject to the Bilateral Limited Non-Disclosure Agreement
dated May 22, 1996 between Secure and Enigma, each of the parties will return or
destroy all documents, work papers and other materials (including all copies
made thereof) obtained pursuant hereto.

6.9 POOLING. Each of Secure and Enigma agrees not to take any action
that would reasonably be expected to adversely affect the ability of Secure to
account for the Merger as a pooling of interests under GAAP. In addition, each
of Secure and Enigma hereby covenant and agree to take all steps reasonably
necessary in order to permit Secure to determine, based on the advice of Ernst &
Young LLP and such other advice as Secure may deem relevant, that consummation
of the Merger would be accounted for as a pooling of interests in accordance
with GAAP. In addition, each of Secure and Enigma agrees to use all reasonable
efforts to cause the Merger to be treated as a pooling of interests under GAAP.

6.10 TAX-FREE REORGANIZATION . Each of Secure and Enigma shall use
its best efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368(a) of the Code.

6.11 BOOKS AND RECORDS; ACCESS AND INFORMATION. From the date of this
Agreement until the Effective Time, Secure shall give to Enigma and its
representatives, reasonable access to the premises, books and records of Secure,
and provide Enigma with such financial and operating data and other information
with respect to its business and properties as it shall from time to time
reasonably request, including, without limitation, all interim financial data as
soon as it becomes available; provided, however, that any such investigation
shall be conducted in such manner as not to interfere unreasonably with the
operation of the business of Secure.

6.12 EMPLOYMENT AGREEMENTS. Secure agrees that, subject to the
closing of the transactions contemplated by this Agreement, it will enter into
an employment agreement with each of Gerald L. Hilton, John R. Muir, William H.
Bosen, Robert Bosen and Thomas J. Brady in the form attached hereto as
Exhibit D, with such changes thereto in the case of each such person as may be
mutually acceptable to such person and Secure.

6.13 SALES OF EQUITY SECURITIES. From the date of this Agreement
until the Effective Time, without the prior written consent of Enigma, which
consent will not be unreasonably withheld, Secure shall not offer, sell,
contract to sell or otherwise dispose of any equity securities of Secure
(other than (i) pursuant to this Agreement and the Border Agreement or
(ii) pursuant to the 1995 Omnibus Stock Plan of Secure (or predecessor plans).

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6.14 STOCK OPTIONS. Secure agrees that, promptly after the Closing
Date, it will register the Secure Common Shares issuable with respect to all
Secure Stock Options pursuant to the Securities Act and will register or qualify
such Secure Common Shares under applicable state or provincial securities or
blue sky laws and will use its best efforts to maintain the effectiveness of
such registrations or qualifications as may be necessary in connection with the
offer and sale of such Secure Common Shares.

6.15 NASDAQ. Secure shall cause the Secure Common Shares issuable
pursuant to the terms of this Agreement to be eligible for quotation on the
Nasdaq National Market.

6.16 BEST EFFORTS. Secure and Enigma shall each use its best efforts
to effect the Merger and the other transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to closing set forth in Article
VII below.

6.17 CALIFORNIA PERMIT; FAIRNESS HEARING. Promptly after the
execution of this Agreement, Secure and Enigma shall prepare and cause to be
filed with the California Commissioner of Corporations (the "California
Commissioner") a permit application under Section 25121 of the CGCL, and related
Merger Information Statement and shall request a hearing on the fairness of the
terms and conditions of the Merger pursuant to Section 25142 of the CGCL. The
parties to this Agreement shall use all commercially reasonable efforts to cause
the California Commissioner to approve the fairness of the terms and conditions
of the Merger at such hearing. Enigma shall provide and include in the Merger
Information Statement such information relating to Enigma as may be required
pursuant to the rules of the California Commissioner. The Merger Information
Statement shall include the recommendation of the board of directors of Enigma
in favor of the Merger.

6.18 LOCATION OF ENIGMA LOGIC. Secure and Enigma agree that the
headquarters and primary base of operations of Enigma will remain in Concord,
California for a period of not less than twelve (12) months following the
Closing.
ARTICLE VII
CONDITIONS TO CLOSING

7.1 CONDITIONS TO OBLIGATION OF SECURE AND MERGER SUB TO CLOSE. The
obligation of Secure and Merger Sub to effect the closing of the transactions
contemplated by this Agreement is subject to the satisfaction prior to or at the
Closing of the following conditions:

(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Enigma under this Agreement shall be true and correct in all
material respects as of the Closing Date with the same effect as though
made on and as of the Closing Date.

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(b) OBSERVANCE AND PERFORMANCE. Enigma shall have performed and
complied in all material respects with all covenants and agreements
required by this Agreement to be performed and complied with by it prior to
or as of the Closing Date.

(c) OFFICERS' CERTIFICATE. Enigma shall have delivered to Secure a
certificate, dated the Closing Date, executed by the President of Enigma
and certifying to the satisfaction of the conditions specified in Sections
7.1(a) and (b) hereof.

(d) STOCKHOLDER APPROVAL. The issuance of the Secure Common Shares
pursuant to the terms of this Agreement shall have been approved by the
affirmative requisite vote of the stockholders of Secure. This Agreement
and the Merger shall have been approved by the requisite affirmative vote or
consent of the shareholders of Enigma.

(e) CONSENTS OF THIRD PARTIES. All material consents, waivers,
approvals, authorizations, or orders required to be obtained, and all
material filings required to be made, by Enigma for the authorization,
execution and delivery of this Agreement and the consummation by it of the
transactions contemplated hereby shall have been obtained and made by
Enigma. Secure shall have received duly executed copies of all material
consents and agreements necessary for Enigma to effect the transactions
contemplated hereby. Secure hereby agrees to use its best efforts to
assist Enigma in obtaining such consents and agreements; provided, however,
that Secure shall not be obligated to accept any terms materially different
from those that presently exist in order to obtain any such consent or
agreement.

(f) LEGAL OPINION. Secure shall have received an opinion, dated the
Closing Date, from Wilson Sonsini Goodrich & Rosati, P.C., counsel to
Enigma, in substantially the form of Exhibit E hereto.

(g) POOLING LETTERS. Ernst & Young LLP shall have issued to Secure a
letter, dated the Closing Date, to the effect that the Merger will qualify
as a pooling of interests for GAAP accounting purposes. In addition, Price
Waterhouse LLP shall have issued to Enigma a letter, dated the Closing
Date, that Enigma is an entity that would qualify as a party to a pooling
of interests for GAAP accounting purposes.

(h) COMFORT LETTER. On the date of mailing of the Merger Information
Statement and on the Closing Date, Secure shall have received a "comfort
letter" from Price Waterhouse LLP independent auditors addressed to Secure,
dated as of a date within two business days of the date of such mailing or
the Closing Date, as the case may be, in form and substance reasonably
acceptable to Secure and customary in scope and substance for such letters
delivered by independent auditors. Such comfort letter shall cover such
financial data and information regarding Enigma as shall be required in the
Merger Information Statement.

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(i) COPIES OF DOCUMENTS. Secure shall have received, to the extent
requested by Secure, copies of all documents and instruments listed in any
of the Schedules to this Agreement.

(j) EMPLOYMENT AGREEMENTS. Secure shall have entered into an
employment agreement with each of Gerald L. Hilton, John R. Muir,
William H. Bosen, Robert Bosen and Thomas J. Brady in the form attached
hereto as Exhibit BDD, with such changes thereto in the case of each such
person as may be mutually acceptable to such person and Secure.

(k) NO LEGAL ACTIONS. No court or governmental authority of
competent jurisdiction shall have issued an order, not subsequently
vacated, restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement, and no governmental agency
shall have instituted an action or proceeding which shall not have been
previously dismissed seeking to restrain, enjoin or prohibit the
consummation of the transactions contemplated by this Agreement.

(l) ESCROW AGREEMENT. The Escrow Agreement shall have been executed
and delivered by all parties thereto.

(m) ENIGMA DISSENTERS' RIGHTS. The holders of no more than three
percent (3%) of the outstanding Enigma Common Shares shall have a right
under Section 1300 of the CGCL to require the corporation to purchase their
shares for cash.

(n) TAX OPINION. Secure shall have received the opinion of Faegre &
Benson LLP, counsel to Secure, based upon certain assumptions and factual
representations of Enigma, Secure and Merger Sub and certain shareholders
of Enigma reasonably requested by such counsel, to the effect that the
Merger will be treated for federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code.

(o) PERMIT; COMPLIANCE WITH SECTION 3(A)(10) OF THE SECURITIES ACT.
The California Commissioner shall have issued a permit under Section 25121
of the CGCL (following a hearing upon the fairness of the terms and
conditions of the Merger, conducted pursuant to Section 25142 of the CGCL)
for the issuance of the Secure Common Shares to be issued in the Merger,
and all applicable requirements of Section 3(a)(10) of the Securities Act
shall have been satisfied.

7.2 CONDITIONS TO OBLIGATION OF ENIGMA TO CLOSE. The obligation of
Enigma to effect the closing of the transactions contemplated by this Agreement
is subject to the satisfaction prior to or at the Closing of the following
conditions:

(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Secure and Merger Sub under this Agreement shall be true and
correct in all material respects as of the Closing Date with the same
effect as though made on and as of the Closing Date.

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(b) OBSERVANCE AND PERFORMANCE. Secure and Merger Sub shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed and complied with by
them prior to or as of the Closing Date.

(c) OFFICERS' CERTIFICATE. Secure shall have delivered to Enigma a
certificate, dated the Closing Date, executed by the Chief Executive
Officer or President and the Chief Financial Officer of Secure and
certifying to the satisfaction of the conditions specified in Sections
7.2(a) and (b) hereof.

(e) STOCKHOLDER APPROVAL. The issuance of the Secure Common Shares
pursuant to the terms of this Agreement and the amendment to the 1995
Omnibus Stock Plan shall have been approved by the affirmative requisite
vote of the stockholders of Secure. This Agreement and the Merger shall
have been approved by the requisite affirmative vote or consent of the
shareholders of Enigma.

(f) LEGAL OPINION. Enigma shall have received an opinion, dated the
Closing Date, from Faegre & Benson LLP, counsel to Secure and Merger Sub,
in substantially the form of Exhibit F hereto. In addition, the
shareholders of Enigma shall have received an opinion, dated the Closing
Date, from Faegre & Benson LLP with respect to (i) the due and valid
issuance of the securities being issued pursuant to this Agreement and (ii)
the enforceability of the third-party beneficiary provisions of Section
9.10.

(g) POOLING LETTERS. Ernst & Young LLP shall have issued to Secure a
letter, dated the Closing Date, to the effect that the Merger will qualify
as a pooling of interests for GAAP accounting purposes. In addition, Price
Waterhouse LLP shall have issued to Enigma a letter, dated the Closing
Date, to the effect that Enigma is an entity that would qualify as a party
to a pooling of interests for GAAP accounting purposes.

(h) TAX OPINION. Enigma shall have received the written opinion,
dated the Closing Date, of Wilson Sonsini Goodrich & Rosati, P.C., counsel
to Enigma, based upon certain assumptions and factual representations of
Enigma, Secure and Merger Sub and certain shareholders of Enigma reasonably
requested by such counsel, to the effect that the Merger will be treated
for federal income tax purposes as a tax-free reorganization within the
meaning of Section 368(a) of the Code.

(i) EMPLOYMENT AGREEMENTS. Each of Gerald L. Hilton, John R. Muir,
William H. Bosen, Robert Bosen and Thomas J. Brady and Secure shall have
entered into an employment agreement with Secure in the form attached hereto
as Exhibit D, with such changes thereto in the case of each such person as
may be mutually acceptable to such person and Secure.

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(k) ESCROW AGREEMENT. The Escrow Agreement shall have been executed
and delivered by all parties thereto.

(l) ELECTION OF DIRECTOR. Eric P. Rundquist shall have been elected as
a director of Secure.

(m) LISTING OF SHARES. The Secure Common Shares to be issued in
accordance with Article IV shall have been duly approved for listing on the
Nasdaq National Market.

ARTICLE VIII
TERMINATION

8.1 TERMINATION. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time whether before or after
approval of the Merger by the shareholders of Enigma or Secure:

(a) by mutual consent of the Boards of Directors of Secure and
Enigma;

(b) by either Secure or Enigma if (i) any of the conditions to their
respective obligations specified in Article V hereof have not been
satisfied or waived by October 31, 1996, or (ii) the Merger shall not have
been consummated by October 31, 1996; provided, however, that the right to
terminate this Agreement pursuant to this Section 8.1 shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or resulted in, the failure of any
of the conditions specified in Article V that are required to have been
satisfied prior to the Merger.

8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement by either Secure or Enigma, as provided above, this Agreement shall
thereafter become void and there shall be no liability on the part of any party
hereto or their respective directors, officers, shareholders or agents, except
as provided in Sections 6.7 and 9.2 hereof and except that any such termination
shall be without prejudice to the rights of any party hereto arising out of the
willful breach by any other party of any covenant or agreement contained in this
Agreement.

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ARTICLE IX
MISCELLANEOUS

9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The representations, warranties, covenants and agreements of Secure
and the Enigma in this Agreement shall survive the Effective Time until March 1,
1997; provided that the obligations of Secure and Enigma pursuant to Article IV
and Sections 6.8, 6.14, 6.15 and 6.18 of this Agreement shall survive
indefinitely (unless such obligations terminate sooner pursuant to their
specific terms).

9.2 EXPENSES. Whether or not the Merger is consummated, all costs
and expenses (including without limitation the fees and expenses of investment
bankers, brokers, attorneys and accountants) incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the party
incurring such costs and expenses.

9.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given, if given) by hand delivery, transmitted by
telegram, telex or telecopy or mailed by registered or certified mail, postage
prepaid, return receipt requested, as follows:

(a) If to Secure or Merger Sub to:

Secure Computing Corporation
2675 Long Lake Road
Roseville, Minnesota 55113
Attention: Kermit M. Beseke, CEO
Telephone: (612) 628-2722
Telecopy: (612) 628-2702

with copies to:

Secure Computing Corporation
2675 Long Lake Road
Roseville, Minnesota 55113
Attention: Timothy P. McGurran, CFO
Telephone: (612) 628-6262
Telecopy: (612) 628-2702

James E. Nicholson
Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Telephone: (612) 336-3203
Telecopy: (612) 336-3026

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(b) If to Enigma to:

Enigma Logic, Inc.
2151 Salvio
Suite 201
Concord, California 94520
Attention: Gerald L. Hilton
Telephone: (510) 827-5707
Telecopy: (510) 827-2593

with copies to:

Jeffrey D. Saper
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Telephone: (415) 493-9300
Telecopy: (415) 493-6811

Shareholder Representative
Eric P. Rundquist
c/o Eric Thomas, Inc.
513 Monterrey Avenue
Suite A
Los Gatos, California 95030
Telephone: (408) 399-5440
Telecopy: (408) 399-5442

9.4 AMENDMENTS. This Agreement may be amended by all the parties
hereto by action taken by their respective Board of Directors at any time
before or after approval thereof by the shareholders of Enigma or the
stockholders of Secure, but, after such approval, no amendment shall be made
which by law requires further approval by such shareholders or stockholders
without such further approval. This Agreement may not be amended, modified
or supplemented except by written agreement of the parties hereto.

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9.5 WAIVER. At any time prior to the Effective Time, Secure or
Enigma may (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any
of the obligations of the other party or any of the conditions to its own
obligations contained herein to the extent permitted by law. Any agreement on
the part of Secure and Enigma to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of Secure and
Enigma, respectively. Any such agreement on the part of Enigma shall also be
binding upon the shareholders of Enigma.

9.6 BROKERS. Enigma, on the one hand, and Secure and Merger Sub on
the other, each represent and warrant to the others that no broker, finder or
investment banker engaged by them is entitled to any brokerage, finder's or
other fee or commission, in connection with the transactions contemplated
hereby, other than obligations of Secure to Robertson, Stephens & Company, L.P.,
for which Secure is responsible, and obligations of Enigma to Piper Jaffray Inc.
for which Enigma is responsible.

9.7 PUBLICITY. No party other than Secure shall make any public
announcement or issue any press release concerning the transactions contemplated
by this Agreement, and any public announcement or press release by Secure shall
require the prior approval of Enigma both as to the making of such announcement
or release and as to the form and content thereof, except to the extent that
Secure is advised by counsel, in good faith, that such announcement or release
is required as a matter of law and full opportunity for prior consultation is
afforded to Enigma to the extent practicable.

9.8 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

9.9 NONASSIGNABILITY. This Agreement shall not be assigned by
operation of law or otherwise except as contemplated by Section 1.1 hereof..

9.10 PARTIES IN INTEREST; THIRD PARTY BENEFICIARIES. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto
and their successors and permitted assigns, and nothing in this Agreement,
expressed or implied, is intended to confer upon any other person any rights
or remedies of any nature under or by reason of this Agreement.
Notwithstanding the foregoing, the parties agree that holders of Enigma
Common Shares shall be third party beneficiaries of (a) the obligations of
Secure contained in Article IV hereof, (b) the representations and warranties
of Secure contained in Section 5.2 hereof, as qualified by the Secure
Schedule of Exceptions and the other Secure Schedules delivered with the
Merger Agreement and any updates to the Secure Schedule of Exceptions and the
other Secure Schedules delivered by Secure to Enigma at or prior to the
Closing, and (c) the covenants of Secure contained in Article VI hereof;
provided, however, that holders of Enigma Common Shares shall be third party
beneficiaries thereof only to the extent that any claim or claims aggregate
not less than $1,000,000 (the "Indemnification Basket"), and then only with
respect to claims in excess of such amount. In the event that any claim or
claims under this Section 9.10 exceed in the aggregate the Indemnification
Basket, then the Indemnification Basket shall be allocated pro rata, based
upon Enigma Common Shares held on the Closing Date by holders of Enigma
Common Shares making such claim or claims, and holders of Enigma Common
Shares making such claim or claims shall

B-39

<PAGE>

be entitled to recover the amount of any claim or claims
in excess of the pro rata amount of the Indemnification Basket applicable to
such holder. Notwithstanding the foregoing, the Indemnification Basket shall
not apply to any claim or claims based upon (i) the obligations of Secure
pursuant to Article IV, (ii) the representations and warranties of Secure
contained in Section 5.2(e) hereof and (iii) the covenants of Secure contained
in Article VI hereof. Any claim against Secure under this Section 9.10 or
otherwise arising under or relating to this Agreement, other than with respect
to the obligations of Secure pursuant to Article IV or Section 6.8, 6.14, 6.15
or 6.18 of this Agreement, must be asserted in a written notice to Secure given
in accordance with Section 9.3 on or prior to March 1, 1997. Secure shall have
no liability with respect to any such claim unless it has been given such notice
of such claim on or prior to March 1, 1997.

9.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed to constitute an original and shall
become effective when one or more counterparts have been signed by each of the
parties hereto.

9.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA
APPLICABLE TO CONTRACTS EXECUTED AND FULLY PERFORMED WITHIN THE STATE OF
MINNESOTA. SECURE, MERGER SUB AND ENIGMA EACH HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY MINNESOTA STATE OR FEDERAL COURT SITTING IN
THE CITY OF MINNEAPOLIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, AND SECURE, MERGER SUB AND ENIGMA EACH HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH MINNESOTA STATE COURT OR SUCH FEDERAL COURT. SECURE, MERGER
SUB AND ENIGMA EACH HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, (i) THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OR PROCEEDING AND (ii) ANY RIGHT TO A TRIAL BY JURY. SECURE,
MERGER SUB AND ENIGMA EACH HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF COPIES
OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY
SUCH ACTION OR PROCEEDING BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR
BY DELIVERING A COPY OF SUCH PROCESS TO SECURE, MERGER SUB OR ENIGMA, AS THE
CASE MAY BE, AT THE RESPECTIVE ADDRESS SPECIFIED IN SECTION 9.3 OR BY ANY OTHER
METHOD PROVIDED BY LAW. SECURE, MERGER SUB AND ENIGMA EACH AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR BY ANY OTHER MANNER
PROVIDED BY LAW. ENIGMA HEREBY APPOINTS CT CORPORATION SYSTEM WITH AN ADDRESS
ON THE DATE HEREOF AT THE CORPORATION TRUST

B-40

<PAGE>

COMPANY, NORWEST MIDLAND BANK BUILDING, MINNEAPOLIS, MINNESOTA 55402, AS ITS
AGENT TO RECEIVE PROCESS IN ALL ACTIONS OR PROCEEDINGS RELATED HERETO.

9.13 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable.

9.14 REMEDIES. Nothing contained herein is intended to or shall be
construed so as to limit the remedies which any party may have against the
others in the event of a breach by any party of any representation, warranty,
covenant or agreement made under or pursuant to this Agreement, it being
intended that any remedies shall be cumulative and not exclusive.

9.15 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules attached hereto, constitutes the entire agreement among the parties
hereto and, other than the Bilateral Limited Non-Disclosure Agreement dated May
22, 1996 between Secure and Enigma, which shall continue until the Closing,
supersedes all prior agreements and understandings oral or written, among the
parties hereto with respect to the subject matter hereof and thereof.

B-41

<PAGE>

IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of Secure, Merger Sub and Enigma on
the date first above written.

SECURE COMPUTING CORPORATION

By: /s/ KERMIT M. BESEKE
_____________________________________________
President and Chief Executive Officer

OWL ACQUISITION, INC.

By: /s/ KERMIT M. BESEKE
_____________________________________________
President

ENIGMA LOGIC, INC.

By: /s/ GERALD L. HILTON
_____________________________________________
President and Chief Executive Officer

B-42

<PAGE>
APPENDIX C
ROBERTSON
STEPHENS &
COMPANY
May 28, 1996

PRIVILEGED AND CONFIDENTIAL
Board of Directors
Secure Computing Corporation
2675 Long Lake Road
Roseville, MN 55113

Members of the Board:

You have asked our opinion with respect to the fairness to Secure Computing
Corporation ("Secure"), from a financial point of view and as of the date
hereof, of the Exchange Ratio (as defined below) in the proposed amalgamation of
Border Network Technologies Inc. ("Border") and a wholly-owned subsidiary of
Secure (the "Amalgamation") and the subsequent reorganization of capital (the
"Reorganization") of the corporation resulting from the Amalgamation ("New
Border"), pusuant to the Acquisition and Pre-Amalgamation Agreement, dated as of
May 28, 1996 (the "Agreement"). Under the terms of the Agreement, a wholly-owned
subsidiary of Secure will amalgamate with Border, and upon consummation of the
Amalgamation, New Border will become, in effect, a wholly-owned subsidiary of
Secure. As a result of the Amalgamation and the Reorganization, each holder of
Border common stock and equivalents will receive 0.500 (the "Exchange Ratio")
exchangeable non-voting shares or equivalents of New Border. Such exchangeable
shares are exchangeable into shares of Secure common stock on a one-for-one
basis. The Amalgamation is intended to be accounted for as a "pooling of
interests." The terms and conditions of the Amalgamation are set out more fully
in the Agreement.

For purposes of this opinion we have: (i) reviewed financial information of
Secure and Border furnished to us by both companies, including certain internal
financial analyses and forecasts prepared by the management of Secure and
Border; (ii) reviewed publicly available information; (iii) held discussions
with the management of Secure and Border concerning the businesses, past and
current business operations, financial condition and future prospects of both
companies; (iv) reviewed a final draft of the Agreement dated May 24, 1996; (v)
reviewed the stock price and trading history of Secure; (vi) reviewed the
contribution by each company to pro forma combined revenue, gross profit,
operating income, pre-tax income and net income; (vii) reviewed the valuations
of publicly traded companies which we deemed comparable to Secure and Border;
(viii) compared the financial terms of the Amalgamation with other transactions
which we deemed relevent; (ix) analyzed the pro forma earnings per share of the
combined company; (x) prepared a discounted cash flow analysis of Border; and
(xi) made such other studies and inquiries, and reviewed such other data, as we
deemed relevant.

555 CALIFORNIA STREET SAN FRANCISCO 94104 415-781-9700
INVESTMENT BANKERS MEMBER OF ALL MAJOR EXCHANGES
A LIMITED LIABILITY COMPANY

C-1
<PAGE>
Board of Directors
Secure Computing Corporation
May 28, 1996
Page Two

We have not independently verified any of the foregoing information and have
relied on all such information being complete and accurate in all material
respects. Furthermore, we have not made any independent appraisal of the
properties or assets and liabilities of Secure or Border, nor have we been
furnished with any such evaluations or appraisals. With respect to the financial
and operating forecasts (and the assumptions and bases therefor) of Secure and
Border which we have reviewed, we have assumed that such forecasts have been
reasonably prepared in good faith on the basis of reasonable assumptions and
reflect the best available estimates and judgments of such respective
managements as to the likely future financial performance of both companies.
Without independent investigation, we have also assumed that the Amalgamation
will qualify for "pooling of interests" accounting treatment. While we believe
that our review, as described within, is an adequate basis for the opinion that
we express, this opinion is necessarily based upon market, economic and other
conditions that exist and can be evaluated as of the date of this letter, and on
information available to us as of the date hereof.

Robertson, Stephens & Company has provided certain investment banking
services to Secure from time to time, including acting as an underwriter for the
initial public offering of shares of the common stock of Secure. In addition,
Robertson, Stephens & Company maintains a market in shares of the common stock
of Secure. Furthermore, Robertson, Stephens & Company has acted as financial
advisor to Secure in connection with the Amalgamation for which our fee is due
and payable contingent upon the closing of the Amalgamation.

This opinion is for the use of the Board of Directors only and does not
constitute a recommendation to Secure's stockholders as to how they should vote
at the stockholders meeting to be held in connection with the Amalgamation. We
consent to the inclusion of this opinion in the Registration Statement and/or
Proxy Statement (or Canadian equivalent) which may be prepared, filed, and/or
distributed in connection with the Amalgamation. This opinion is not to be used
otherwise without Robertson, Stephens & Company consent.

Based upon and subject to the foregoing considerations, it is our opinion
that, as of the date hereof, the Exchange Ratio is fair to Secure and its
stockholders from a financial point of view.

Very truly yours,
ROBERTSON, STEPHENS & COMPANY L.L.C.
By: ROBERTSON, STEPHENS & COMPANY
GROUP, L.L.C.

C-2
<PAGE>
ROBERTSON
STEPHENS &
COMPANY
June 25, 1996

PRIVILEGED AND CONFIDENTIAL
Board of Directors
Secure Computing Corporation
2675 Long Lake Road
Roseville, MN 55113

Members of the Board:

Under the terms of the Agreement, Merger Sub will merge with and into
Enigma, and upon consummation of the Merger, Enigma will become a wholly-owned
subsidiary of Secure. In the Merger, each share of Enigma common stock will be
converted into the right to receive 0.112715 (the "Exchange Ratio") shares of
Secure common stock. The Merger is intended to qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, and to be accounted for as a "pooling of interests." The
terms and conditions of the Merger are set out more fully in the Agreement. In
addition, we understand that Secure has entered into an agreement (the
"Amalgamation Agreement") to acquire Border Network Technologies Inc. ("Border")
by means of an amalgamation and reorganization of capital (collectively, the
"Amalgamation") in which each share of Border common stock or equivalents will
receive 0.500 shares of a Secure common stock equivalent. Comsummation of the
Merger is not a condition precedent to consummation of the Amalgamation, and
consummation of the Amalgamation is not a condition precedent to consummation of
the Merger.

For purposes of this opinion we have: (i) reviewed financial information of
Secure, Border and Enigma furnished to us by Secure and Enigma, including
certain internal financial analyses and forecasts prepared by the managements of
Secure and Enigma, and a pro forma financial forecast for the combined company
resulting from the combination of Secure and Border prepared by the management
of Secure; (ii) reviewed publicly available information; (iii) held discussions
with the managements of Secure and Enigma concerning the businesses, past and
current business operations, financial condition and future prospects of the
companies; (iv) reviewed the Amalgamation Agreement and a draft of the Agreement
dated June 23, 1996; (v) reviewed the stock price and trading history of Secure;
(vi) reviewed the contribution by Secure and Enigma, on the one hand, and
Secure, Border and Enigma, on the other hand, to pro forma combined revenue,
gross profit, operating income, pre-tax income and net income; (vii) reviewed
the valuations of publicly traded companies which we deemed comparable to
Secure, Border and Enigma; (viii) compared the financial terms of the Merger
with other transactions which we deemed relevent; (ix) analyzed the pro forma
earnings per share of a combined company comprised of Secure and Enigma and of
Secure, Border and Enigma; (x) prepared a discounted cash flow analysis of
Enigma; and (xi) made such other studies and inquiries, and reviewed such other
data, as we deemed relevant.

555 CALIFORNIA STREET SAN FRANCISCO 94104 415-781-9700
INVESTMENT BANKERS MEMBER OF ALL MAJOR EXCHANGES
A LIMITED LIABILITY COMPANY

C-3
<PAGE>
We have not independently verified any of the foregoing information and have
relied on all such information being complete and accurate in all material
respects. Furthermore, we have not made any independent appraisal of the
properties of assets and liabilities of Secure, Border or Enigma, nor have we
been furnished with any such evaluations or appraisals. With respect to the
financial and operating forecasts (and the assumptions and bases therefor) of
Secure, Border and Enigma which we have reviewed, we have assumed that such
forecasts have been reasonably prepared in good faith on the basis of reasonable
assumptions and reflect the best available estimates and judgments of the
managements of Secure and Enigma as to the likely future financial performance
of the companies. Without independent investigation, we have also assumed that
each of the Merger and the Amalgamation will qualify for "pooling of interests"
accounting treatment. While we believe that our review, as described within, is
an adequate basis for the opinion that we express, this opinion is necessarily
based upon market, economic and other conditions that exist and can be evaluated
as of the date of this letter, and on information available to us as of the date
hereof.

Robertson, Stephens & Company has provided certain investment banking
services to Secure from time to time, including acting as an underwriter for the
initial public offering of shares of the common stock of Secure. In addition,
Robertson, Stephens & Company maintains a market in shares of the common stock
of Secure. Furthermore, Robertson, Stephens & Company has acted as financial
advisor to Secure in connection with the Merger and the Amalgamation for which
portions of our respective fees are due and payable contingent upon the closing
of the Merger and the Amalgamation, respectively.

This opinion is for the use of the Board of Directors only and does not
constitute a recommendation to Secure's stockholders as to how they should vote
at the stockholders meeting to be held in connection with the Merger. We consent
to the inclusion of this opinion in the Registration Statement and/or Proxy
Statement that may be prepared, filed, and/or distributed in connection with the
Merger. This opinion is not to be used otherwise without the consent of
Robertson, Stephens & Company.

Based upon and subject to the foregoing considerations, it is our opinion
that, as of the date hereof, the Exchange Ratio is fair to Secure and its
stockholders from a financial point of view.

Very truly yours,
ROBERTSON, STEPHENS & COMPANY L.L.C.
By: ROBERTSON, STEPHENS & COMPANY
GROUP, L.L.C.

C-4
<PAGE>

APPENDIX D

Amendment to Secure Computing Corporation
Amended and Restated 1995 Omnibus Stock Plan

10. SUBSTITUTION OPTIONS. Options may be granted under this Plan from
time to time in substitution for stock options held by employees of other
corporations who are about to become Employees of the Company or a subsidiary of
the Company, or whose employer is about to become a subsidiary of the Company,
as the result of a merger or consolidation of the Company or a subsidiary of the
Company with another corporation, the acquisition by the Company or a subsidiary
of the Company of all or substantially all the assets of another corporation or
the acquisition by the Company or a subsidiary of the Company of at least 50% of
the issued and outstanding stock of another corporation. The terms and
conditions of the substitute Options so granted may vary from the terms and
conditions set forth in this Plan to such extent as the Board (or the Committee)
at the time of the grant may deem appropriate to conform, in whole or in part,
to the provisions of the stock options in substitution for which they are
granted, but with respect to stock options which are Incentive Stock Options, no
such variation shall be permitted which affects the status of any such
substitute Option as an "incentive stock option" under Section 422 of the Code.

D-1

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
SECURE COMPUTING CORPORATION THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2675 Long Lake Road The undersigned hereby appoints Kermit M. Beseke and Stephen M.
Roseville, Minnesota 55113 Puricelli, and each of them, as Proxies, each with the power to
appoint his substitute, and hereby authorizes such Proxies to
represent and to vote, as designated below, all the shares of Common
Stock of Secure Computing Corporation held of record by the
undersigned on July 26, 1996, at the Special Meeting of Stockholders
to be held on August 28, 1996, or any adjournment thereof.
</TABLE>

<TABLE>
<S> <C>
PROXY
1. AUTHORIZE SHARES OF COMMON STOCK FOR ISSUANCE IN CONNECTION WITH THE ACQUISITION OF BORDER NETWORK TECHNOLOGIES INC.
/ / FOR / / AGAINST / / ABSTAIN
2. AUTHORIZE SHARES OF COMMON STOCK FOR ISSUANCE IN CONNECTION WITH THE ACQUISITION OF ENIGMA LOGIC, INC.
/ / FOR / / AGAINST / / ABSTAIN
3. ELECTION OF DIRECTORS. Nominees to the Board of Directors are Glenn G. Mackintosh and Eric P. Rundquist, for a term to
expire in 1999; Robert Forbes, for a term to expire in 1998; and Ervin F. Kamm, Jr. and Adam Adamou, for a term to expire
in 1997. (The election of Messrs. Mackintosh, Adamou and Forbes is effective for a term commencing on the date of
effectiveness of the acquisition of Border Network Technologies Inc. and the election of Mr. Rundquist is effective for a
term commencing on the date of effectiveness of the acquisition of Enigma Logic, Inc.)
</TABLE>

<TABLE>
<C> <C>
/ / FOR ALL NOMINEES LISTED ABOVE / / WITHHOLD AUTHORITY
(except as marked to the contrarty below) to vote for all nominees listed above

</TABLE>

(INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below).

-------------------------------------------------------------------------

<TABLE>
<S> <C>
4. APPROVAL OF AMENDMENTS TO THE SECURE COMPUTING CORPORATION AMENDED AND RESTATED 1995 OMNIBUS STOCK PLAN
/ / FOR / / AGAINST / / ABSTAIN
(PLEASE DATE AND SIGN THE REVERSE SIDE)
</TABLE>

<PAGE>
[LOGO]

<TABLE>
<S> <C>
(CONTINUED FROM OTHER SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. THE
PROXIES ARE AUTHORIZED TO VOTE IN THEIR
DISCRETION WITH RESPECT TO OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE
MEETING.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.

-----------------------------------------
Signature

-----------------------------------------
Signature if held jointly

-----------------------------------------
Dated:
-------------------------------------------
PLEASE MARK, SIGN DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE
-------------------------------------------

</TABLE>

SECURE COMPUTING CORPORATION
SPECIAL MEETING OF STOCKHOLDERS
Faegre & Benson LLP
Norwest Center, 23rd Floor

90 South Seventh Street
Minneapolis, MN 55402

AUGUST 28, 1996
10:00 A.M.

<PAGE>

SECURE COMPUTING CORPORATION
AMENDED AND RESTATED
1995 OMNIBUS STOCK PLAN

1. AMENDMENT OF EXISTING PLANS; PURPOSE. This Secure Computing
Corporation Amended and Restated 1995 Omnibus Stock Plan (the "Plan") amends and
restates in their entirety the Secure Computing Corporation 1989 Incentive Stock
Option Plan and the Secure Computing Corporation 1994 Nonqualified Stock Option
Plan (the "Prior Plans"). The purpose of the Plan is to motivate key personnel,
including non-employee directors, to produce a superior return to the
stockholders of Secure Computing Corporation by offering such personnel an
opportunity to realize Stock appreciation, by facilitating Stock ownership and
by rewarding them for achieving a high level of corporate financial performance.
The Plan is also intended to facilitate recruiting and retaining key personnel
of outstanding ability by providing an attractive capital accumulation
opportunity.

2. DEFINITIONS AND RULES OF CONSTRUCTION. The capitalized terms used in
this Plan have the meanings, and certain rules of construction are, set forth in
the list of defined terms attached to this Plan as EXHIBIT A.

3. ADMINISTRATION.

3.1 AUTHORITY OF COMMITTEE. The Committee shall administer the Plan.
Solely for purposes of determining and administering Awards to Employees
who are not then subject to the reporting requirements of Section 16 of the
Exchange Act, the Committee may delegate all or any portion of its
authority under the Plan to persons who are not Disinterested Persons. The
Committee shall have exclusive power to make Awards, to determine when and
to whom Awards will be granted, the form of each Award, the amount of each
Award, and any other terms or conditions of each Award. Each Award shall
be subject to an Agreement authorized by the Committee. The Committee's
interpretation of the Plan and of any Awards made under the Plan shall be
final and binding on all persons with an interest therein. The Committee
shall have the power to establish regulations to administer the Plan and to
change such regulations.

3.2 AWARDS TO OUTSIDE DIRECTORS. Notwithstanding any contrary
provisions of the Plan, the granting, terms, conditions and eligibility
requirements of Awards granted to Outside Directors under Section 9.3 of
the Plan are governed solely by the provisions of the Plan pertaining
thereto, and the Committee shall have no discretion with respect to the
granting of such Awards or to alter or amend any terms, conditions or
eligibility requirements of such Awards to Outside Directors.

3.3 INDEMNIFICATION. To the full extent permitted by law, (i) no
member of the Committee or any person to whom the Committee delegates
authority under the Plan shall be liable for any action or determination
taken or made in good faith with respect to the Plan or any Award made
under the Plan, and (ii) the members of the Committee and each

1
<PAGE>

person to whom the Committee delegates authority under the Plan shall be
entitled to indemnification by the Company with regard to such actions and
determinations.

4. SHARES AVAILABLE UNDER THE PLAN.

4.1 SHARES AVAILABLE. The number of Shares available for
distribution under the Plan shall not exceed 3,944,131 (subject to
adjustment pursuant to Section 17 hereof). Any Shares subject to the terms
and conditions of an Award under this Plan which are not used because the
terms and conditions of the Award are not met may again be used for an
Award under the Plan. However, Shares with respect to which a Stock
Appreciation Right has been exercised (in cash or in Stock) may not again
be awarded under this Plan.

4.2 CONDITIONAL ISSUANCES. If the Plan is amended at any time
subject to stockholder approval, then the Committee may, in accordance with
the terms and conditions of the Plan, grant Awards on a conditional basis,
subject to such approval by the stockholders of the Company not later than
the next annual meeting of the stockholders of the Company following the
date of such conditional grant. Any Award granted on a conditional basis
shall not be exercisable unless and until the amendment to the Plan is
approved by the stockholders of the Company. If such an amendment is not
approved by the stockholders at the next annual meeting of stockholders of
the Company following the conditional grant, then the conditional grant
shall be canceled.

5. ELIGIBILITY. Except as otherwise provided in Section 9.3 hereof, the
granting of Awards to Employees is solely at the discretion of the Committee.

6. GENERAL TERMS OF AWARDS.

6.1 AMOUNT OF AWARD. Each Agreement shall set forth the number of
Shares of Restricted Stock, other Stock or Performance Units subject to
such Agreement, or the number of Shares to which the Option subject to such
Agreement applies or with respect to which payment upon the exercise of the
Stock Appreciation Right subject to such Agreement is to be determined, as
the case may be. The Maximum Annual Employee Grant shall not exceed
250,000 Shares (subject to adjustment pursuant to Section 16 hereof).

6.2 TERM. Each Agreement, other than those relating solely to Awards
of Stock without restrictions, shall set forth the Term of the Option,
Stock Appreciation Right or Restricted Stock or the Performance Cycle for
the Performance Units, as the case may be. An Agreement may permit
acceleration of the expiration of the applicable Term upon such terms and
conditions as shall be set forth in the Agreement, which may, but need not,
include without limitation acceleration resulting from the occurrence of an
Event or in the event of the Participant's death or Retirement.
Acceleration of the Performance Cycle of Performance Units shall be subject
to Section 12.2.

6.3 TRANSFERABILITY. During the lifetime of a Participant to whom an
Award is granted, only such Participant (or such Participant's legal
representative) may exercise an

2
<PAGE>

Option or Stock Appreciation Right, or receive payment with respect to an
Award of Performance Units. No Award of Restricted Stock (prior to the
expiration of the restrictions), Options, Stock Appreciation Rights or
Performance Units may be sold, assigned, transferred, exchanged or
otherwise encumbered other than pursuant to a qualified domestic relations
order as defined in the Code or Title 1 of the Employee Retirement Income
Security Act ("ERISA") or the rules thereunder, and any attempt to do so
shall be of no effect. Notwithstanding the immediately preceding sentence,
an Agreement may provide that the Award subject to the Agreement shall be
transferable to a Successor in the event of a Participant's death.

6.4 TERMINATION OF EMPLOYMENT. For any Participant who is an
employee of the Company, no Option or Stock Appreciation Right may be
exercised by the Participant, all Restricted Stock held by the Participant
shall be forfeited and no payment with respect to Performance Units for
which the applicable Performance Cycle has not been completed shall be made
(i) after the 15th day following the day the Participant's employment by
the Company ceases if such cessation of employment is for a reason other
than death, Retirement, or Total and Permanent Disability, or (ii) three
months after Participant's employment by the Company ceases if such
cessation of employment is because of Retirement, death, or Total and
Permanent Disability, or (iii) if applicable, the date of breach by a
Participant of any provision of the Key Employment Agreement or of the
Secure Computing Corporation Employment Agreement by and between the
Company and Participant, except as, and to the extent, provided in Section
9.3 or in the Agreement applicable to that Award. An Award may be
exercised by, or paid to, the Successor of a Participant following the
death of such Participant to the extent, and during the period of time, if
any, provided in the applicable Agreement.

7. RESTRICTED STOCK AWARDS. An Award of Restricted Stock under the
Plan shall consist of Shares subject to restrictions on transfer and
conditions of forfeiture, which restrictions and conditions shall be
included in the applicable Agreement. Except as otherwise provided in the
applicable Agreement, each Stock certificate issued in respect to an Award
of Restricted Stock shall either be deposited with the Company or its
designee, together with an assignment separate from such certificate, in
blank, signed by the Participant, or bear such legends with respect to the
restricted nature of the Restricted Stock evidenced thereby as shall be
provided for in the applicable Agreement. The Agreement shall describe the
terms and conditions by which the restrictions upon awarded Restricted
Stock shall lapse. Upon the lapse of the restrictions, stock certificates
free of restrictive legends, if any, relating to such restrictions shall be
issued to the Participant or his Successor. A Participant with a
Restricted Stock Award shall have all the other rights of a stockholder
including, but not limited to, the right to receive dividends and the right
to vote the Shares of Restricted Stock.

8. STOCK AWARDS. Awards of Stock without restrictions may be made.

3
<PAGE>

9. STOCK OPTIONS.

9.1 TERMS OF ALL OPTIONS. An Option shall be granted pursuant to an
Agreement as either an Incentive Stock Option or a Non-Statutory Stock
Option. Only Non-Statutory Stock Options may be granted to Employees who
are not employees of the Company or an Affiliate. The purchase price of
each Share subject to an Option shall be determined by the Committee and
set forth in the Agreement, but shall not be less than 50% of the Fair
Market Value of a Share as of the date the Option is granted. The purchase
price of the Shares with respect to which an Option is exercised shall be
payable in full at the time of exercise, provided that to the extent
permitted by law, the Agreement may permit some or all Participants to
simultaneously exercise Options and sell the Shares thereby acquired
pursuant to a brokerage or similar relationship and use the proceeds from
such sale as payment of the purchase price of such Shares. The purchase
price may be payable in cash, in Stock having a Fair Market Value as of the
date the Option is exercised equal to the purchase price of the Stock being
purchased pursuant to the Option, or a combination thereof, as determined
by the Committee and provided in the Agreement. Each Option shall be
exercisable in whole or in part on the terms provided in the Agreement. In
no event shall any Option be exercisable at any time after its expiration
date. When an Option is no longer exercisable, it shall be deemed to have
lapsed or terminated.

9.2 INCENTIVE STOCK OPTIONS. In addition to the other terms and
conditions applicable to all Options:

(i) the aggregate Fair Market Value (determined as of the date
the Option is granted) of the Shares with respect to which Incentive
Stock Options held by an individual first become exercisable in any
calendar year (under this Plan and all other incentive stock option
plans of the Company and its Affiliates) shall not exceed $100,000 (or
such other limit as may be required by the Code) if such limitation is
necessary to qualify the Option as an Incentive Stock Option;

(ii) the purchase price of Shares covered by Incentive Stock
Options must not be less than 100% of the Fair Market Value of the
Shares on the date of grant;

(iii) an Incentive Stock Option shall not be exercisable more
than 10 years after the date of grant (or such other limit as may be
required by the Code) if such limitation is necessary to qualify the
Option as an Incentive Stock Option; and

(iv) if the Participant owns, or is deemed under Section 424(d)
of the Code to own, stock of the Company or of any Affiliate
possessing more than ten percent (10%) of the total combined voting
power of all classes of stock therein at the time the Incentive Stock
Option is granted:

(a) the purchase price of the Shares covered by the
Incentive Stock Option must not be less than 110% of the Fair
Market Value of Shares on the date of grant; and

4
<PAGE>

(b) the Term of the Incentive Stock Option must not be
greater than five years from the date of grant.

(v) the Agreement covering an Incentive Stock Option shall
contain such other terms and provisions which the Committee determines
necessary to qualify such Option as an Incentive Stock Option.

9.3 OUTSIDE DIRECTOR OPTIONS.

(i) Beginning with the Annual Meeting of Stockholders to be held
during calendar year 1996 and for every Annual Meeting of Stockholders
thereafter during the term of this Plan, each person serving as an
Outside Director of the Company immediately following such Annual
Meeting shall be granted, by virtue of serving as an Outside Director
of the Company, a Non-Statutory Stock Option. The date of such Annual
Meeting shall be the date of grant for options granted pursuant to
this Section 9.3(i). The number of Shares covered by each such option
shall be 4,375 (subject to adjustment pursuant to Section 17 hereof).
Each person who is elected to be an Outside Director between Annual
Meetings of Stockholders shall also be granted a Non-Statutory Stock
Option.. The date such person is elected to be an Outside Director of
the Company (the "Date of Election") by the Board shall be the date of
grant for such option granted pursuant to this subsection 9.3(i). The
number of Shares covered by each such option shall be 4,375 (subject
to adjustment pursuant to Section 17 hereof) multiplied by a fraction,
the numerator of which shall be 12 minus the number of whole 30-day
months that have elapsed from the date of the most recent Annual
Meeting of Stockholders to the Date of Election of such Outside
Director, and the denominator of which shall be 12.

(ii) Director Options shall vest and become exercisable on the
date of the Annual Meeting next following the grant of Director
Options. Notwithstanding the foregoing, Director Options shall vest
and become immediately exercisable in full upon the occurrence of any
Event or upon the death of an Outside Director. Director Options
shall expire at the 10-year anniversary of the date of grant.

(iii) The purchase price of each Share subject to a Director
Option pursuant to this Section 9.3 shall be 100% of the Fair Market
Value of a Share as of the date of grant. Notwithstanding anything to
the contrary stated in this Plan, for purposes of this Section 9.3 and
the definition of Fair Market Value in Exhibit A attached hereto, each
Director Option shall be deemed conclusively to have been granted
prior to close of the applicable securities exchange or system on the
date of grant. An Outside Director may exercise a Director Option
using as payment any form of consideration provided for in Section 9.1
hereof, which form of payment shall be within the sole discretion of
the Outside Director, notwithstanding anything stated in Section 9.1
hereof.

5
<PAGE>

(iv) Director Options shall be evidenced by an agreement signed
on behalf of the Company by an officer thereof which only incorporates
by reference the terms of this Plan.

(v) Unless the Director Option shall have expired, in the event
of an Outside Director's death, the Director Option granted to such
Outside Director shall be transferable to the beneficiary, if any,
designated by the Outside Director in writing to the Company prior to
the Outside Director's death and such beneficiary shall succeed to the
rights of the Outside Director to the extent permitted by law. If no
such designation of a beneficiary has been made, the Outside
Director's legal representative shall succeed to the Director Option,
which shall be transferable by will or pursuant to the laws of descent
and distribution.

11. STOCK APPRECIATION RIGHTS. An Award of a Stock Appreciation Right
shall entitle the Participant, subject to terms and conditions determined by the
Committee, to receive upon exercise of the Stock Appreciation Right all or a
portion of the excess of (i) the Fair Market Value of a specified number of
Shares as of the date of exercise of the Stock Appreciation Right over (ii) a
specified price which shall not be less than 100% of the Fair Market Value of
such Shares as of the date of grant of the Stock Appreciation Right. A Stock
Appreciation Right may be granted in connection with a previously or
contemporaneously granted Option, or independent of any Option. If issued in
connection with an Option, the Committee may impose a condition that exercise of
a Stock Appreciation Right cancels the Option with which it is connected and
exercise of the connected Option cancels the Stock Appreciation Right. Each
Stock Appreciation Right may be exercisable in whole or in part on the terms
provided in the Agreement. Notwithstanding anything to the contrary stated in
the Plan, no Stock Appreciation Right shall be exercisable prior to six months
from the date of grant except in the event of the death or Total and Permanent
Disability of the Participant. No Stock Appreciation Right shall be exercisable
at any time after its expiration date. When a Stock Appreciation Right is no
longer exercisable, it shall be deemed to have lapsed or terminated. Upon
exercise of a Stock Appreciation Right, payment to the Participant (or to his
Successor) shall be made at such time or times as shall be provided in the
Agreement in the form of

6
<PAGE>

cash, Stock or a combination of cash and Stock as determined by the Committee
and provided in the Agreement. The Agreement may provide for a limitation upon
the amount or percentage of the total appreciation on which payment (whether in
cash and/or Stock) may be made in the event of the exercise of a Stock
Appreciation Right.

12. PERFORMANCE UNITS.

12.1 INITIAL AWARD. An Award of Performance Units under the Plan
shall entitle the Participant (or a Successor) to future payments of cash,
Stock or a combination of cash and Stock, as determined by the Committee
and provided in the Agreement, based upon the achievement of
pre-established performance targets. Such performance targets may, but
need not, include without limitation targets relating to one or more of
corporate, group, unit, Affiliate or individual performance. With respect
to those Employees who are "covered employees" within the meaning of
Section 162(m) of the Code and the regulations thereunder, such performance
targets shall consist of one or any combination of two or more of revenue,
revenue per employee, earnings before income tax (profit before taxes),
earnings before interest and income tax, net earnings (profits after tax),
earnings per employee, tangible, controllable or total asset turnover,
earnings per share, operating income, total shareholder return, market
share, return on equity, before- or after-tax return on net assets,
distribution expense, inventory turnover, or economic value added, and any
such targets may relate to one or any combination of two or more of
corporate, group, unit, division, Affiliate or individual performance. The
Agreement may establish that a portion of a full or maximum amount of a
Participant's Award will be paid for performance which exceeds the minimum
target but falls below the maximum target applicable to such Award. The
Agreement shall also provide for the timing of such payment. Following the
conclusion or acceleration of each Performance Cycle, the Committee shall
determine the extent to which (i) performance targets have been attained,
(ii) any other terms and conditions with respect to an Award relating to
such Performance Cycle have been satisfied and (iii) payment is due with
respect to an Award of Performance Units.

12.2 ACCELERATION AND ADJUSTMENT. The Agreement may permit an
acceleration of the Performance Cycle and an adjustment of performance
targets and payments with respect to some or all of the Performance Units
awarded to a Participant, upon such terms and conditions as shall be set
forth in the Agreement, upon the occurrence of certain events, which may
but need not include without limitation an Event, a Fundamental Change, a
recapitalization, a change in the accounting practices of the Company, a
change in the Participant's title or employment responsibilities, the
Participant's death or Retirement or, with respect to payments in Stock
with respect to Performance Units, a reclassification, stock dividend,
stock split or stock combination as provided in Section 16.

13. EFFECTIVE DATE OF THE PLAN.

13.1 EFFECTIVE DATE. The Plan shall become effective as of September
15, 1995, provided that the Plan is approved and ratified by the
affirmative vote of the holders of a majority of the outstanding Shares of
Stock present or represented and entitled to vote in

<PAGE>

person or by proxy at a meeting of the stockholders of the Company no later
than October 31, 1995. The Plan shall govern all options issued and
outstanding under each of the Prior Plans for all purposes and shall govern
all Agreements respecting options issued and outstanding under each of the
Prior Plans for all purposes.

13.2 DURATION OF THE PLAN. The Plan shall remain in effect until all
Stock subject to it shall be distributed or until all Awards have expired
or lapsed, or the Plan is terminated pursuant to Section 15. No Award of
an Incentive Stock Option shall be made more than 10 years after the
Effective Date (or such other limit as may be required by the Code) if such
limitation is necessary to qualify the Option as an Incentive Stock Option.
The date and time of approval by the Committee of the granting of an Award
shall be considered the date and time at which such Award is made or
granted.

14. RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan shall confer upon
any Participant the right to continue in the employment of the Company or any
Affiliate or affect any right which the Company or any Affiliate may have to
terminate the employment of the Participant with or without cause.

15. TAX WITHHOLDING. The Company shall have the right to withhold from
any cash payment under the Plan to a Participant or other person an amount
sufficient to cover any required withholding taxes. The Company shall have the
right to require a Participant or other person receiving Stock under the Plan to
pay the Company a cash amount sufficient to cover any required withholding
taxes. In lieu of all or any part of such a cash payment from a person
receiving Stock under the Plan, the Committee may permit the individual to elect
to cover all or any part of the required withholdings, and to cover any
additional withholdings up to the amount needed to cover the individual's full
FICA and Medicare, and federal, state and local income tax with respect to
income arising from payment of the Award, through a reduction of the number of
Shares delivered to him or a subsequent return to the Company of Shares held by
the Participant or other person, in each case valued in the same manner as used
in computing the withholding taxes under the applicable laws. Unless such
limitations were waived by the Committee, such elections are subject to the
following limitations if, and to the extent, such limitations are necessary to
comply with Exchange Act Rule 16b-3 or any successor provision:

a. TIME OF ELECTION AND EXERCISE. Except as set forth in paragraph
15(a)(3) below, any such election (and the exercise of the related option)
by a Participant who is then subject to the reporting requirements of
Section 16 of the Exchange Act or any successor provision ("Section 16") or
his Successor may be made only if the conditions set forth in clauses (1)
and (2) below are satisfied:

(1)(A) The election may be made during the period beginning on
the third business day following the date of public release of the
Company's quarterly or annual financial statements and ending on the
twelfth business day following such date of public release, or

(B) The election may be made at least six months prior to the
date the Award is paid to him.

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<PAGE>

(2) An election by a Participant or his Successor may not be
made within six months of the date of grant of the Award to which the
payment relates; provided, however, that said restriction does not
apply in the event death or Total and Permanent Disability of the
Participant occurs prior to such election and during said six month
period.

(3) Notwithstanding the foregoing, a Participant subject to
Section 16 who tenders previously owned Shares to the Company in
payment of the purchase price of Shares in connection with exercise of
an Option may also tender previously owned Shares to the Company in
satisfaction of any tax withholding obligations in connection with
such Option exercise without regard to the time periods set forth in
clauses (1) and (2) above.

The foregoing restrictions do not apply to any Participant who is
not subject to the reporting requirements of Section 16 at the time of
the election.

b. COMMITTEE APPROVAL. Any such election by a Participant then
subject to the reporting requirements of Section 16 or his Successor is
irrevocable and is subject to approval by the Committee. The Committee's
approval may be granted in advance but is subject to revocation by the
Committee at any time.

16. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN. The Board may at
any time terminate, suspend or modify the Plan; provided, however, that the
Board shall not amend Section 9.3 hereof more than once every six months, other
than to comport with changes in the Code, ERISA or the rules thereunder.
Amendments are subject to approval of the stockholders of the Company only if
such approval is necessary to maintain the Plan in compliance with the
requirements of Exchange Act Rule 16b-3, Code Section 422, their successor
provisions or any other applicable law or regulation. No termination,
suspension, or modification of the Plan will materially and adversely affect any
right acquired by any Participant (or his legal representative) or any Successor
under an Award granted before the date of termination, suspension, or
modification, unless otherwise agreed to by the Participant in the Agreement or
otherwise or required as a matter of law; but it will be conclusively presumed
that any adjustment for changes in capitalization provided for in Section 11.2
or Section 16 does not adversely affect any right.

17. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. Appropriate adjustments in
the aggregate number and type of Shares available for Awards under the Plan, in
the Maximum Annual Employee Grant, in the number and type of Shares subject to
Director Options thereafter issued and in the number and type of Shares and
amount of cash subject to Awards then outstanding, in the Option price as to any
outstanding Options and, subject to Section 12.2, in outstanding Performance
Units and payments with respect to outstanding Performance Units may be made by
the Committee in its sole discretion to give effect to adjustments made in the
number or type of Shares of the Company through a Fundamental Change (subject to
Section 18), recapitalization, reclassification, stock dividend, stock split,
stock combination or other relevant change, provided that fractional Shares
shall be rounded to the nearest whole share.

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<PAGE>

18. FUNDAMENTAL CHANGE. In the event of a proposed Fundamental Change,
the Committee may, but shall not be obligated to:

a. if the Fundamental Change is a merger or consolidation or
statutory share exchange, make appropriate provision for the protection of
the outstanding Options and Stock Appreciation Rights by the substitution
of options, stock appreciation rights and appropriate voting common stock
of the corporation surviving any merger or consolidation or, if
appropriate, the parent corporation of the Company or such surviving
corporation to be issuable upon the exercise of Options or used to
calculate payments upon the exercise of Stock Appreciation Rights, in lieu
of options, stock appreciation rights and capital stock of the Company; or

b. at least 30 days prior to the occurrence of the Fundamental
Change, declare, and provide written notice to each holder of an Option or
Stock Appreciation Right of the declaration, that each outstanding Option
and Stock Appreciation Right, whether or not then exercisable, shall be
canceled at the time of, or immediately prior to the occurrence of the
Fundamental Change in exchange for payment to each holder of an Option or
Stock Appreciation Right, within ten days after the Fundamental Change, of
cash equal to (i) for each Share covered by the canceled Option, the
amount, if any, by which the Fair Market Value (as hereinafter defined in
this Section) per Share exceeds the exercise price per Share covered by
such Option or (ii) for each Stock Appreciation Right, the price determined
pursuant to Section 10, except that Fair Market Value of the Shares as of
the date of exercise of the Stock Appreciation Right, as used in clause (i)
of Section 10, shall be deemed to mean Fair Market Value for each Share
with respect to which the Stock Appreciation Right is calculated determined
in the manner hereinafter referred to in this Section. At the time of the
declaration provided for in the immediately preceding sentence, each Stock
Appreciation Right that has been outstanding for at least six months and
each Option shall immediately become exercisable in full and each person
holding an Option or a Stock Appreciation Right shall have the right,
during the period preceding the time of cancellation of the Option or Stock
Appreciation Right, to exercise his Option as to all or any part of the
Shares covered thereby or his Stock Appreciation Right in whole or in part,
as the case may be. In the event of a declaration pursuant to this Section
17(b), each outstanding Option and Stock Appreciation Right granted
pursuant to the Plan that shall not have been exercised prior to the
Fundamental Change shall be canceled at the time of, or immediately prior
to, the Fundamental Change, as provided in the declaration.
Notwithstanding the foregoing, no person holding an Option or a Stock
Appreciation Right shall be entitled to the payment provided for in this
Section 18(b) if such Option or Stock Appreciation Right shall have expired
pursuant to the Agreement. For purposes of this Section only, "Fair Market
Value" per Share shall mean the cash plus the fair market value, as
determined in good faith by the Committee, of the non-cash consideration to
be received per Share by the stockholders of the Company upon the
occurrence of the Fundamental Change, notwithstanding anything to the
contrary provided in the Plan.

19. UNFUNDED PLAN. The Plan shall be unfunded and the Company shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan.

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<PAGE>

20. OTHER BENEFIT AND COMPENSATION PROGRAMS. Payments and other benefits
received by a Participant under an Award made pursuant to the Plan shall not be
deemed a part of a Participant's regular, recurring compensation for purposes of
the termination, indemnity or severance pay law of any country and shall not be
included in, nor have any effect on, the determination of benefits under any
other employee benefit plan, contract or similar arrangement provided by the
Company or an Affiliate unless expressly so provided by such other plan,
contract or arrangement, or unless the Committee expressly determines that an
Award or portion of an Award should be included to accurately reflect
competitive compensation practices or to recognize that an Award has been made
in lieu of a portion of competitive cash compensation.

21. BENEFICIARY UPON PARTICIPANT'S DEATH. To the extent that the transfer
of a Participant's Award at his death is permitted under an Agreement, (i) a
Participant's Award shall be transferable at his death to the beneficiary, if
any, designated on forms prescribed by and filed with the Committee and (ii)
upon the death of the Participant, such beneficiary shall succeed to the rights
of the Participant to the extent permitted by law. If no such designation of a
beneficiary has been made, the Participant's legal representative shall succeed
to the Awards which shall be transferable by will or pursuant to laws of descent
and distribution to the extent permitted under an Agreement.

22. GOVERNING LAW. To the extent that Federal laws do not otherwise
control, the Plan and all determinations made and actions taken pursuant to the
Plan shall be governed by the laws of Delaware and construed accordingly.

11
<PAGE>

EXHIBIT A

SECURE COMPUTING CORPORATION
AMENDED AND RESTATED
1995 OMNIBUS STOCK PLAN

DEFINED TERMS AND RULES OF CONSTRUCTION

1. DEFINITIONS.

Set forth below are the meanings of certain terms used in this Plan.

a. "Affiliate" means any corporation that is a "parent corporation"
or "subsidiary corporation" of the Company, as those terms are defined in
Section 424(e) and (f) of the Code, or any successor provision.

b. "Agreement" means a written contract entered into between the
Company or an Affiliate and a Participant containing the terms and
conditions of an Award in such form and not inconsistent with this Plan as
the Committee shall approve from time to time, together with all amendments
thereto, which amendments may be unilaterally made by the Company (with the
approval of the Committee) unless such amendments are deemed by the
Committee to be materially adverse to the Participant and are not required
as a matter of law.

c. "Award" means a grant made under this Plan (including Awards made
under the Prior Plans) in the form of Restricted Stock, Options, Stock
Appreciation Rights, Performance Units or Stock.

d. "Board" means the Board of Directors of the Company.

e. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

f. "Committee" means three or more Disinterested Persons designated
by the Board to administer the Plan under Section 3.

g. "Company" means Secure Computing Corporation, a Delaware
corporation, or any successor to substantially all of its businesses.

h. "Director" means a director of the Company.

i. "Director Fees" means the annual retainer fees paid to a
Director.

j. "Director Option" means a Non-Statutory Stock Option granted to
an Outside Director under Section 9.3 hereof.

A-1
<PAGE>

k. "Disinterested Person" means a member of the Board who is
considered a disinterested person within the meaning of Exchange Act Rule
16b-3 or any successor definition.

l. "Effective Date" means the date specified in Section 13.1 hereof.

m. "Employee" means any salaried employee, officer, director,
contractor or advisor to or representative of the Company or any Affiliate
thereof, whether or not such person is an employee of the Company within
the meaning of the Code; PROVIDED, HOWEVER, that salaried employees of the
Company or its Affiliates within the meaning of the Code (including any
such employee who is also an officer or director of the Company or any
Affiliate thereof) shall be the only persons eligible to receive Options
intended to constitute Incentive Stock Options. References in this Plan to
"employment" and related terms shall mean the providing of services in the
capacity as director, contractor or other advisor to or representative of
the Company.

n. "Event" means any of the following; provided, however, that no
Event shall be deemed to have occurred unless and until a majority of the
directors constituting the Incumbent Board (as defined below) shall have
declared that an Event has occurred:

(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of
beneficial ownership (within the meaning of Exchange Act Rule 13d-3)
of 20% (except for acquisitions by any individual, entity or group
that, prior to the effectiveness of this Plan, owns 20 % or more of
any class of capital stock of the Company) or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of the Board (the "Outstanding Company
Voting Securities"); provided, however, that the following
acquisitions shall not constitute an Event:

(A) any acquisition of voting securities of the Company
directly from the Company,

(B) any acquisition of voting securities of the Company by
the Company or any of its wholly owned Subsidiaries,

(C) any acquisition of voting securities of the Company by
any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its Subsidiaries, or

(D) any acquisition by any corporation with respect to
which, immediately following such acquisition, more than 60% of
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally
in the election of directors is then

A-2
<PAGE>

beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such acquisition in substantially the same
proportions as was their ownership, immediately prior to such
acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be;

(2) Individuals who, as of the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director of the Board subsequent to the Effective Date
whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest which was (or, if
threatened, would have been) subject to Exchange Act Rule 14a-11;

(3) Approval by the stockholders of the Company of a
reorganization, merger, consolidation or statutory exchange of
Outstanding Company Voting Securities, unless immediately following
such reorganization, merger, consolidation or exchange, all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such reorganization, merger, consolidation or exchange beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such reorganization, merger, consolidation or exchange
in substantially the same proportions as was their ownership,
immediately prior to such reorganization, merger, consolidation or
exchange, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be; or

(4) Approval by the stockholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the
Company, other than to a corporation with respect to which,
immediately following such sale or other disposition, more than 60%
of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same

A-3
<PAGE>

proportion as was their ownership, immediately prior to such sale or
other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.

Notwithstanding the above, an Event shall not be deemed to occur with
respect to a recipient of an Award if the acquisition of the 20% or greater
interest referred to in paragraph (1) is by a group, acting in concert,
that includes that recipient or if at least 40% of the then outstanding
common stock or combined voting power of the then outstanding voting
securities (or voting equity interests) of the surviving corporation or of
any corporation (or other entity) acquiring all or substantially all of the
assets of the Company shall be beneficially owned, directly or indirectly,
immediately after a reorganization, merger, consolidation, statutory share
exchange or sale or other disposition of assets referred to in paragraphs
(3) or (4) by a group, acting in concert, that includes that recipient.
Furthermore, the merger of the Company with and into its wholly owned
subsidiary, SCC of Delaware, Inc., a Delaware corporation (to be renamed
Secure Computing Corporation) shall not be deemed to be an Event.

o. "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.

p. "Fair Market Value" as of any date means, unless otherwise
expressly provided in the Plan:

(i) the closing price of a Share on the date immediately
preceding that date or, if no sale of Shares shall have occurred on
that date, on the next preceding day on which a sale of Shares
occurred,

(A) on the composite tape for New York Stock Exchange
listed shares, or

(B) if the Shares are not quoted on the composite tape for
New York Stock Exchange listed shares, on the principal United
States Securities Exchange registered under the Exchange Act on
which the Shares are listed, or

(ii) if clause (i) is inapplicable, the mean between the closing
"bid" and the closing "asked" quotation of a Share on the date
immediately preceding that date, or, if no closing bid or asked
quotation is made on that date, on the next preceding day on which a
quotation is made, on the NASDAQ System or any system then in use, or

(iii) if clauses (i) and (ii) are inapplicable, what the
Committee determines in good faith to be 100% of the fair market value
of a Share on that date.

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<PAGE>

However, if the applicable securities exchange or system has closed for the
day at the time the event occurs that triggers a determination of Fair
Market Value, whether the grant of an Award, the exercise of an Option or
Stock Appreciation Right or otherwise, all references in this paragraph to
the "date immediately preceding that date" shall be deemed to be references
to "that date". In the case of an Incentive Stock Option, if such
determination of Fair Market Value is not consistent with the then current
regulations of the Secretary of the Treasury, Fair Market Value shall be
determined in accordance with said regulations. The determination of Fair
Market Value shall be subject to adjustment as provided in Section 17.

q. "Fundamental Change" shall mean a dissolution or liquidation of
the Company, a sale of substantially all of the assets of the Company, a
merger or consolidation of the Company with or into any other corporation,
regardless of whether the Company is the surviving corporation, or a
statutory share exchange involving capital stock of the Company.

r. "Incentive Stock Option" means any Option designated as such and
granted in accordance with the requirements of Code Section 422 or any
successor to said section.

s. "Maximum Annual Employee Grant" means the maximum number of
Shares subject to Options that may be awarded to any one Employee in any
fiscal year of the Company.

t. "Non-Statutory Stock Option" means an Option other than an
Incentive Stock Option.

u. "Option" means a right to purchase Stock, including both
Non-Statutory Stock Options and Incentive Stock Options.

v. "Outside Director" means a Director who is not an employee of the
Company or any Affiliate.

w. "Participant" means an Employee or an Outside Director to whom an
Award is made.

x. "Performance Cycle" means the period of time as specified in an
Agreement over which Performance Units are to be earned.

y. "Performance Units" means an Award made pursuant to Section 12.

z. "Plan" means this Secure Computing Corporation Amended and
Restated 1995 Omnibus Stock Plan, as amended from time to time.

aa. "Prior Plans" means the Secure Computing Corporation 1994
Nonqualified Stock Option Plan and the Secure Computing Corporation 1989
Incentive Stock Option Plan.

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bb. "Restricted Stock" means Stock granted under Section 7 (but not
including Stock granted under the Prior Plans) so long as such Stock
remains subject to such restrictions.

cc. "Retirement" as applied to a Participant, means (i) until such
time as the Company adopts an employee pension benefit plan (as that term
is defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974), termination of employment with the Company at any time upon or
after attaining age 65; (ii) after adoption by the Company of an employee
pension benefit plan, termination of employment with the Company at a time
when the Participant is eligible for normal retirement under such a plan,
as amended from time to time, or any successor plan thereto.

dd. "Share" means a share of Stock.

ee. "Stock" means the common stock, $.01 par value per share (as such
par value may be adjusted from time to time), of the Company.

ff. "Stock Appreciation Right" means an Award granted under Section
10.

gg. "Subsidiary" means a "subsidiary corporation", as that term is
defined in Code Section 424(f) or any successor provision.

hh. "Successor" means the legal representative of the estate of a
deceased Participant or the person or persons who may, by bequest or
inheritance, or pursuant to the terms of an Award or of forms submitted by
the Participant to the Committee pursuant to Section 21, acquire the right
to exercise an Option or Stock Appreciation Right or to receive cash or
Shares issuable in satisfaction of an Award in the event of a Participant's
death.

ii. "Term" means the period during which an Option or Stock
Appreciation Right may be exercised or the period during which the
restrictions placed on Restricted Stock are in effect.

jj. "Total and Permanent Disability" as applied to a Participant,
means that the Participant (i) has established to the satisfaction of the
Company that the Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than 12 months
and (ii) has satisfied any requirement imposed by the Committee.

2. GENDER AND NUMBER.

Except when otherwise indicated by context, reference to the masculine
gender shall include, when used, the feminine gender and any term used in the
singular shall also include the plural.

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