UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarterly Period Ended September 30, 1996
or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period From _______________ to
________________.
Commission file number 0-27074
SECURE COMPUTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-1637226
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2675 Long Lake Road
Roseville, Minnesota 55113
(Address of principal executive offices) (Zip code)
(612) 628-2700
Registrant's telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date: Common Stock, $.01 par
value -- 14,933,887 issued and outstanding as of November 5, 1996.
SECURE COMPUTING CORPORATION
QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets
(Unaudited) as of September 30, 1996 and
December 31, 1995 3
Condensed Consolidated Statements of
Operations (Unaudited) for the three
months ended September 30, 1996
and 1995 and the nine months ended
September 30, 1996 and 1995 4
Condensed Consolidated Statements of
Cash Flows (Unaudited) for the nine
months ended September 30, 1996 and
1995 5
Notes to the Condensed Consolidated Financial
Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations. 7-9
PART II. OTHER INFORMATION 10-11
SIGNATURES 12
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PART 1. Financial Information
SECURE COMPUTING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
9/30/96 12/31/95
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 21,288,000 $ 32,924,000
Accounts receivable, net 9,747,000 5,750,000
Other current assets 3,270,000 1,792,000
------------ ------------
Total current assets 34,305,000 40,466,000
PROPERTY AND EQUIPMENT, AT COST 9,368,000 5,896,000
Less accumulated depreciation and amortization (4,353,000) (3,050,000)
------------ ------------
5,015,000 2,846,000
OTHER ASSETS 1,255,000 949,000
------------ ------------
$ 40,575,000 $ 44,261,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other accrued liabilities $ 7,145,000 $ 4,709,000
Accrued acquisition costs 866,000 --
Deferred revenue 1,387,000 1,465,000
------------ ------------
Total current liabilities 9,398,000 6,174,000
STOCKHOLDER DEBT -- 1,879,000
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01; 2,000,000 shares
authorized, none issued and outstanding -- --
Common Stock, par value $.01; 25,000,000 shares
authorized; issued and outstanding - September 30,
1996--14,866,585 and December 31, 1995--
12,542,196 149,000 125,000
Additional paid-in capital 64,411,000 50,116,000
Accumulated deficit (33,383,000) (14,033,000)
------------ ------------
Total stockholders' equity 31,177,000 36,208,000
------------ ------------
$ 40,575,000 $ 44,261,000
============ ============
See accompanying notes to condensed consolidated financial statements.
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SECURE COMPUTING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended September 30, 1996 and 1995 and
for the nine months ended September 30, 1996 and 1995
(Unaudited)
Three months ended Nine months ended
9/30/96 9/30/95 9/30/96 9/30/95
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Products and services $ 6,904,000 $ 3,302,000 $ 17,927,000 $ 8,465,000
Government contracts 3,923,000 3,750,000 13,322,000 10,397,000
------------ ------------ ------------ ------------
10,827,000 7,052,000 31,249,000 18,862,000
Cost of revenue 4,894,000 3,970,000 14,378,000 10,248,000
------------ ------------ ------------ ------------
Gross profit 5,933,000 3,082,000 16,871,000 8,614,000
Operating expenses:
Selling and marketing 4,952,000 1,399,000 12,242,000 3,226,000
Research and development 2,540,000 1,215,000 7,260,000 3,683,000
General and administrative 1,603,000 938,000 4,810,000 2,366,000
Acquisition costs -- -- 13,069,000 --
------------ ------------ ------------ ------------
9,095,000 3,552,000 37,381,000 9,275,000
------------ ------------ ------------ ------------
Operating loss (3,162,000) (470,000) (20,510,000) (661,000)
Net interest income (expense) 302,000 (43,000) 1,130,000 (129,000)
------------ ------------ ------------ ------------
Loss before income taxes (2,860,000) (513,000) (19,380,000) (790,000)
Income taxes -- -- -- --
------------ ------------ ------------ ------------
Net loss $ (2,860,000) $ (513,000) $(19,380,000) $ (790,000)
============ ============ ============ ============
Net loss per share $ (.19) $ (.05) $ (1.39) $ (.08)
============ ============ ============ ============
Weighted average shares outstanding 14,838,000 10,065,000 13,961,000 10,064,000
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
See accompanying notes to condensed consolidated financial statements.
SECURE COMPUTING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine-months ended September 30, 1996 and 1995
(Unaudited)
9/30/96 9/30/95
------------ ------------
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES ($15,315,000) $ (1,049,000)
INVESTING ACTIVITIES
Cash paid in purchase of Webster Network Strategies,
Inc. (759,000) --
Cash paid to purchase remaining interest in Border
Network Technologies Europe Ltd. (989,000) --
Purchase of property and equipment (3,451,000) (1,372,000)
Increase in intangibles and other assets (338,000) (127,000)
------------ ------------
Net cash used in investing activities (5,537,000) (1,499,000)
FINANCING ACTIVITIES
Payments on long-term debt (1,896,000) (187,000)
Proceeds from issuance of Preferred Stock -- 1,661,000
Proceeds from issuance of Common Stock 11,112,000 382,000
------------ ------------
Net cash provided by (used in) financing activities 9,216,000 1,856,000
------------ ------------
Increase (decrease) in cash and cash equivalents (11,636,000) (692,000)
Cash and cash equivalents beginning of period 32,924,000 1,264,000
------------ ------------
Cash and cash equivalents at end of period $ 21,288,000 $ 572,000
============ ============
NONCASH TRANSACTIONS
Common Stock issued in purchase of Webster Network
Strategies, Inc. $ 2,601,000
============
Common Stock issued to purchase remaining interest in
Border Network Technologies Europe Ltd. $ 331,000
============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
SECURE COMPUTING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have been
prepared by Secure Computing Corporation (the "Company") without audit
and reflect all adjustments (consisting only of normal and recurring
adjustments and accruals) which are, in the opinion of management,
necessary to present a fair statement of the results for the interim
periods presented. The statements have been prepared in accordance with
the regulations of the Securities and Exchange Commission, but omit
certain information and footnote disclosures necessary to present the
statements in accordance with generally accepted accounting principles.
The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full
fiscal year. These condensed financial statements should be read in
conjunction with the Financial Statements and footnotes thereto
included as an exhibit to the Company's Annual 10-K Report for the year
ended December 31, 1995, the Definitive Proxy Statement dated August 5,
1996, Form 8-K dated August 28, 1996 and Form 8-K/A dated November 12,
1996, all previously filed with the Securities and Exchange Commission.
2. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation. The financial
statements for all periods presented have been restated to reflect the
pooling of interests of the Company and its recently acquired
subsidiaries, Secure Computing Canada Ltd. (formerly Border Network
Technologies Inc.) and Enigma Logic, Inc.
3. NET LOSS PER SHARE
Net loss per share for the three months ended September 30, 1995 and
the nine months ended September 30, 1995 are computed using the
weighted average number of common stock and common stock equivalents
outstanding during the periods after giving effect to additional shares
as calculated under the rules of the Securities and Exchange Commission
Staff Accounting Bulletin No. 83 and to the conversion of all preferred
stock as of the beginning of the periods. Net loss per share for the
three months ended September 30, 1996 and the nine months ended
September 30, 1996 are computed using the weighted average number of
common stock outstanding during the periods and does not include common
stock equivalents, as they would be anti-dilutive.
4. ACQUISITIONS
On August 28, 1996, the Company completed its acquisition of Enigma
Logic, Inc., a California based developer of identification and
authentication software and products, in exchange for approximately
2,060,000 shares of the Company's Common Stock and the conversion of
options to purchase approximately 630,000 shares of the Company's
Common Stock.
On August 29, 1996, the Company completed its acquisition of Canadian
based Border Network Technologies Inc., a network security software
provider, in exchange for approximately 6,000,000 shares of the
Company's Common Stock and the conversion of options to purchase
approximately 530,000 shares of the Company's Common Stock.
SECURE COMPUTING CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
REVENUE. The Company's revenue increased by 53.5 percent to $10,827,000 for the
third quarter of 1996 up from $7,052,000 in the same period of 1995. For the
nine months ended September 30, 1996, revenue increased 65.7 percent to
$31,249,000 from $18,862,000 in 1995. The increase resulted from higher revenue
in both products and services and government contracts revenue. Products and
services revenue was $6,904,000 and $17,927,000 for the quarter and nine months
ended September 30, 1996, respectively, an increase of 109.1 and 111.8 percent
over the same periods in 1995, and was attributable to increased sales of
firewall products and related services. Government contracts revenue was
$3,923,000 and $13,322,000 for the quarter and nine months ended September 30,
1996, respectively, an increase of 4.6 and 28.1 percent over the same periods in
1995, and reflects the Company's increased efforts on the Secure Network Server
program for the National Security Association. The Company expects government
contracts revenue to remain steady and products and services revenue to rise in
the fourth quarter.
GROSS PROFIT. Gross profit as a percentage of revenue increased from 43.7
percent in the third quarter of 1995 to 54.8 percent in 1996. Gross profit
percentage also increased in the nine-month period ended September 30, 1996 to
54.0 percent from 45.7 percent in the same period of 1995. The increases
resulted mainly from products and services revenue, which carry higher margins
than government contracts, increasing as a percentage of the revenue mix. The
Company believes, with the leveling in government contracts revenue and
increases 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 254.0 percent
to $4,952,000 in the third quarter of 1996, up from $1,399,000 in the same
period of 1995. Selling and marketing expenses also increased in the nine-month
period ended September 30, 1996 to $12,242,000, up from $3,226,000 in the same
period of 1995. As a percentage of revenue, expenses were 45.7 and 39.2 percent
for the three-month and nine-month periods ended September 30, 1996 compared to
19.8 and 17.1 percent in 1995. The increase resulted primarily from expenses
associated with the Company's increased order activity, a stronger marketing
presence needed due to competitive pressures and personnel additions made to
position the Company for future growth. The Company expects selling and
marketing expenses to remain at high levels in the fourth quarter of 1996.
RESEARCH AND DEVELOPMENT. Research and development expenses increased by 109.1
percent to $2,540,000 in the third quarter of 1996, up from $1,215,000 in the
same period of 1995. Research and development expenses also increased in the
first nine months of 1996 to $7,260,000, up from $3,683,000 in the same period
of 1995. As a percentage of revenue, research and development expenses were 23.5
and 23.2 percent for the three-month and nine-month periods ended September 30,
1996, compared to 17.2 and 19.5 percent in 1995. The increase resulted primarily
from the Company's continued development investments in new and existing
products, including Sidewinder version 3.0 and Borderware Firewall Server 4.0.
The Company expects spending on research and development projects to remain at
similar levels in the fourth quarter for enhancements on current products, as
well as development of new products including a Windows NT perimeter firewall.
GENERAL AND ADMINISTRATIVE. As a percentage of revenue, general and
administrative expenses were 14.8 percent for the third quarter of 1996,
compared to 13.3 percent for the third quarter of 1995, and 15.4 percent for the
first nine months of 1996, compared to 12.5 percent for the first nine months of
1995. The Company expects the quarterly amount of general and administrative
expenses as a percentage of revenue will decrease during the fourth quarter of
1996 and into 1997.
ACQUISITION COSTS. Certain acquisition costs were recognized in the second
quarter of 1996 relating to the Webster Network Strategies, Inc. ("Webster"),
Border Network Technologies Inc. ("Border") and Enigma Logic, Inc. ("Enigma")
acquisitions. Purchased technology of $4,110,000 was expensed in connection with
the Webster acquisition in accordance with purchase accounting rules. Also
$8,959,000 of acquisition costs were recorded for investment banking and
professional fees, and other accruals for the Border and Enigma acquisitions in
accordance with pooling rules.
NET INTEREST INCOME (EXPENSE). The difference in net interest income (expense)
between the periods reflects interest earned in 1996 by the Company on cash and
cash equivalents generated from its initial public offering in November 1995 and
sales of Common Stock in early 1996.
INCOME TAXES. The Company recognized no income tax expense for either of the
periods in both 1996 and 1995. Management believes it is more likely than not
that deferred tax assets, which total $1,373,000 at September 30, 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.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents decreased by approximately $11.6 million
from December 31, 1995 to September 30, 1996. The decrease resulted from the use
of cash to fund operations, purchase capital equipment, repay stockholder debt
and make acquisitions. As of September 30, 1996, the Company had working capital
of $24.9 million. The Company anticipates using available cash to fund growth in
operations, invest in capital equipment and to acquire businesses or licensed
technology or products related to the Company's line of business.
Capital additions in the first nine months of 1996 were $3.5 million and were
primarily made up of computer equipment, office furniture and leasehold
improvements. The Company expects to invest another $1 million throughout the
remainder of 1996 mainly for computer equipment and facilities and business
systems upgrades. The Company used $800,000 of cash in its acquisition of
Webster and $1 million of cash to purchase the remaining interest in Border
Network Technologies Europe that it did not own prior to May 1996.
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.
ACQUISITIONS
In August 1996, the Company completed its acquisitions of Canadian based Border,
a network security software provider, in exchange for approximately 6,000,000
shares of Common Stock and the conversion of options to purchase approximately
530,000 shares of the Company's Common Stock and Enigma, a California based
developer of identification and authentication software and products, in
exchange for approximately 2,060,000 shares of Common Stock and the conversion
of options to purchase approximately 630,000 shares of the Company's Common
Stock.
FORWARD LOOKING STATEMENTS
Certain statements made above, which are summarized below, are forward-looking
statements that involve risks and uncertainties, and actual results may be
materially different. Factors that could cause actual results to differ include
those identified below:
* GOVERNMENT CONTRACTS REVENUE TO REMAIN STEADY AND PRODUCTS AND SERVICES
REVENUE TO RISE IN THE FOURTH QUARTER-- Meeting this expectation depends
upon the Company's ability to achieve a higher level of products and
services revenue, which may not occur for a variety of reasons, including
general market conditions for the Company's products and services,
development and acceptance of new products offered by the Company, and
introduction of products by competitors. In addition, this expectation
depends upon the successful integration of the acquisitions described
above, which may not occur. If such integration did not occur as
anticipated, revenues from products and services could be expected to
decrease.
* MARGINS FOR THE REMAINDER OF THE YEAR SHOULD TREND HIGHER -- This
expectation may be adversely impacted by presently unanticipated higher
expenses, price cutting pressures or lower products and services revenue
within the total revenue mix.
* SELLING AND MARKETING EXPENSES TO REMAIN AT HIGH LEVELS IN THE FOURTH
QUARTER OF 1996 -- This expectation may be impacted by current plans for a
full scale product marketing and branding campaign being curtailed or
delayed or decreased products and services revenue resulting in lower
selling expense.
* RESEARCH AND DEVELOPMENT EXPENSES TO REMAIN AT SIMILAR LEVELS IN THE
FOURTH QUARTER -- This expectation depends on the Company maintaining the
current anticipated level of product development, which may not occur due
to unexpected increases in such costs or because of a need to accelerate or
begin new product development.
* QUARTERLY AMOUNTS OF GENERAL AND ADMINISTRATIVE EXPENSES AS A PERCENTAGE
OF REVENUE WILL DECREASE DURING THE FOURTH QUARTER OF 1996 AND INTO 1997--
Meeting this expectation depends upon the Company's ability to control
costs and achieving a higher level of revenue, which may not occur for a
variety of reasons, including general market conditions for the Company's
products and services, development and acceptance of new products offered
by the Company, and introduction of products by competitors. In addition,
this expectation depends upon the successful integration of the
acquisitions described above, which may not occur. If such integration did
not occur as anticipated, general and administrative expenses would be
expected to rise as a percentage of revenue.
* MANAGEMENT BELIEVES IT IS MORE LIKELY THAN NOT THAT DEFERRED TAX ASSETS
WILL BE REALIZED -- This expectation depends mainly on the Company
maintaining its existing government contract business. If these contracts
were lost or adjusted downward, deferred tax assets would be expected to be
written down with a corresponding charge to income tax expense recorded.
* 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 -- This
expectation depends mainly on the Company maintaining its expected working
capital and capital expenditure requirements over the next year. In the
event these requirements increase, the Company may require additional cash
and cash equivalents over the next 12 months.
SECURE COMPUTING CORPORATION
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Special Meeting of Stockholders of the Company was held on
August 28, 1996. At such meeting, the following matters were
voted on:
1. The five individuals listed below were elected to the
Company's Board of Directors with each receiving 5,164,707
shareholder votes.
a. Glenn G. Mackintosh
b. Eric P. Rundquist
c. Robert Forbes
d. Ervin F. Kamm, Jr.
e. Adam Adamou
The following members of the Company's Board of Directors are
serving terms which continued after the meeting:
a. Kermit M. Beseke
b. Stephen M. Puricelli
c. Dennis J. Shaughnessy
d. Timothy H. Hanson
2. The issuance of Common Stock of the Company in connection
with the acquisition of Border Network Technologies, Inc. was
authorized with 5,128,634 votes cast for the motion, 19,001
votes cast against the motion, 2,790 votes abstaining and
20,166 broker non-votes.
3. The issuance of Common Stock of the Company in connection
with the acquisition of Enigma Logic, Inc. was authorized with
5,129,885 votes cast for the motion, 17,740 votes case against
the motion, 2,800 votes abstaining and 20,166 broker
non-votes.
4. Amendments to the Secure Computing Corporation Amended and
Restated 1995 Omnibus Stock Plan were approved with 4,540,362
votes cast for the motion, 605,976 votes cast against the
motion, 4,087 votes abstaining and 20,166 broker non-votes.
For further information respecting all such matters reference
is made to the Company's definitive proxy statement dated
August 5, 1996 (File No. 0-27074).
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following exhibits are filed as part of this Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1996:
4.1 Secure Computing Corporation Amended and Restated 1995 Omnibus
Stock Plan(1)
10.1 Acquisition and Pre-Amalgamation Agreement among Secure
Computing Corporation, EDGE Acquisition Inc. and Border
Network Technologies Inc. dated as of May 28, 1996(2)
10.2 Agreement and Plan of Merger among Secure Computing
Corporation, Owl Acquisition, Inc. and Enigma Logic, Inc.
dated as of June 24, 1996(3)
10.3 Employment Ageement between the Company and Christine Hughes
dated November 8, 1996, including the letter agreement dated
November 7, 1996
10.4 Employment Agreement between the Company and Jeffrey H. Waxman
dated as of November 4, 1996
10.5 Employment Agreement between the Company and James Boyle dated
October 7, 1996
10.6 Employment Agreement between the Company and Glenn G.
Mackintosh dated August 29, 1996
10.7 Employment Agreement between the Company and Donald Whitbeck
dated August 29, 1996
10.8 Employment Agreement between the Company and Timothy P.
McGurran dated August 27, 1996
27.1 Financial Data Schedule
Copies of Exhibits will be furnished upon request and payment of the
Company's reasonable expenses in furnishing the Exhibits.
(b) REPORTS ON FORM 8-K
8-K dated August 28, 1996 and 8-K/A dated November 12, 1996
(File No. 0-27074).
- --------------------------------------------------------------------------------
(1) Incorporated by reference to the like numbered Exhibit to the Company's
Registration Statement on Form S-8 (File No. 333-11451).
(2) Incorporated by reference to Appendix A of the Company's Definitive Proxy
Statement dated August 5, 1996 and filed August 7, 1996 with the Securities
and Exchange Commission (File No. 0-27074).
(3) Incorporated by reference to Appendix B of the Company's Definitive Proxy
Statement dated August 5, 1996 and filed August 7, 1996 with the Securities
and Exchange Commission (File No. 0-27074).
SECURE COMPUTING CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SECURE COMPUTING CORPORATION
DATE: November 13, 1996 By: \s\ Timothy P. McGurran
------------------------------------
Timothy P. McGurran,
Vice President of Finance, Treasurer
and Chief Financial Officer
(Duly authorized officer and
Principal Financial Officer)
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
4.1 Secure Computing Corporation Amended and Restated 1995
Omnibus Stock Plan(1)
10.1 Acquisition and Pre-Amalgamation Agreement among
Secure Computing Corporation, EDGE Acquisition Inc.
and Border Network Technologies Inc. dated as of
May 28, 1996(2)
10.2 Agreement and Plan of Merger among Secure Computing
Corporation, Owl Acquisition, Inc. and
Enigma Logic, Inc. dated as of June 24, 1996(3)
10.3 Employment Agreement between the Company and Christine
Hughes dated November 8, 1996, including the letter FILED
agreement dated November 7, 1996 ELECTRONICALLY
10.4 Employment Agreement between the Company and FILED
Jeffrey H. Waxman dated as of November 4, 1996 ELECTRONICALLY
10.5 Employment Agreement between the Company and FILED
James Boyle dated October 7, 1996 ELECTRONICALLY
10.6 Employment Agreement between the Company and Glenn FILED
G. Mackintosh dated August 29, 1996 ELECTRONICALLY
10.7 Employment Agreement between the Company and Donald FILED
Whitbeck dated August 29, 1996 ELECTRONICALLY
10.8 Employment Agreement between the Company and Timothy FILED
P. McGurran dated August 27, 1996 ELECTRONICALLY
27.1 Financial Data Schedule FILED
ELECTRONICALLY
- --------------------------------------------------------------------------------
(1) Incorporated by reference to the like numbered Exhibit to the Company's
Registration Statement on Form S-8 (File No. 333-11451).
(2) Incorporated by reference to Appendix A of the Company's Definitive Proxy
Statement dated August 5, 1996 and filed August 7, 1996 with the Securities
and Exchange Commission (File No. 0-27074).
(3) Incorporated by reference to Appendix B of the Company's Definitive Proxy
Statement dated August 5, 1996 and filed August 7, 1996 with the Securities
and Exchange Commission (File No. 0-27074).
SECURE COMPUTING CORPORATION [letterhead]
November 7, 1996
Ms. Christine Hughes
24115 Hillview Road
Los Altos Hills, CA 94024
Dear Ms. Hughes:
We are pleased to offer you a full-time position as the Vice President of
Markting, at a starting salary of $18,333.00 per month. In 1997 you will also
participate in the Management Incentive Plan at the 50 percent maximum pay out
level. You will be recommended to the Board of Directors to receive stock
options in the amount of 200,000 shares. You will be located at our Concord
facility and will report to Jeff Waxman. We are convinced that you will be an
asset to our organization as well as an integral part of our SCC team.
In addition to ISO and Non-qualified options, Jeff will present a plan for an
additional performance option plan based on increase in the value of SCC stock
over the next three years. This plan will be conditional upon stockholder
approval of the amendment of the Omnibus Stock Plan.
Enclosed is a copy of our Drug Free Workplace Policy and our standard Employee
Agreement. Please sign and return your Employee Agreement form prior to your
first day of employment. Enclosed is a pre-addressed envelope for your use.
In keeping with our policy of providing a healthy work environment, smoking is
prohibited at all of our facilities. As an employee, you will be expected to
comply with this policy.
We think that we can provide you with a stimulating environment in which you can
do challenging work and I look forward to working with you.
Please contact me at (612) 628-2809 if you have any questions.
Sincerely,
/s/ Stan Abrahansom
Stan Abrahansom
Human Resources Manager
Accepted:
/s/ Christine Hughes
Christine Hughes
SECURE COMPUTING CORPORATION EMPLOYMENT AGREEMENT
(EFFECTIVE IF AND WHEN HIRED)
Name: Christine Hughes Social Security No.:
In consideration of my employment by Secure Computing Corporation, I agree that:
(1) Secure Computing Corporation policies and handbooks which may from time to
time be applicable to me shall be a guide regarding my employment but shall not
constitute or imply an agreement between me and Secure Computing Corporation nor
shall any representations made to me individually, before or during my
employment, which are not made in writing and authorized by Secure Computing
Corporation, constitute an agreement.
(2) Except as required in the performance of my duties for Secure Computing
Corporation, or as authorized by it in writing, I will not during the course of
employment by Secure Computing Corporation or at any time thereafter use or
disclose to others proprietary or trade secret information of Secure Computing
Corporation or others, including but not limited to customer furnished
information which has been provided to Secure Computing Corporation with
restrictions on its use or further disclosure, and CLASSIFIED INFORMATION OF THE
UNITED STATES. Secure Computing Corporation proprietary or trade secret
information is information used or useful in the conduct of Secure Computing
Corporation business which is not generally known to the public or in a relevant
industry, such as, but not limited to, information relating to its research,
development, manufacturing, purchasing, finances, acquisition activity,
accounting, engineering, marketing, merchandising, selling and present and
prospective customers (including listing of, proposals to, agreements with, and
relationships with such customers).
(3) I hereby certify, that in the performance of my duties and responsibilities
for Secure Computing Corporation, I will not disclose, publish, or use any
confidential information, proprietary data, or trade secrets that I may have
obtained from my previous employer(s) or association(s).
(4) I will return to Secure Computing Corporation and stop using upon request or
upon termination of my employment, all papers, notebooks, reports, manuals,
computer files, software, vehicles, tools, keys and entry cards, identification
cards or badges, credit authorization, apparatus, computer use identifiers,
passwords and other property furnished to me by Secure Computing Corporation, or
which was prepared or made in whole or in part by me in connection with my
employment by Secure Computing Corporation.
(5) While employed by Secure Computing Corporation, I will not engage in any
business or service similar to Secure Computing Corporation's business, nor
design, assemble, manufacture, distribute, research, or develop products for any
person, firm, or corporation other than Secure Computing Corporation which are
the same or similar to those manufactured or provided by Secure Computing
Corporation.
(6) I will promptly disclose to Secure Computing Corporation all product,
process, hardware and software inventions, designs, computer programs and
related documentation, other works of authorship and mask works (hereafter
Developments) relating to its business which I made individually or jointly with
others, while I am employed by it or within a period of six (6) months following
termination of my employment. (See back side of agreement for listing prior
Developments to which this agreement does not apply.) I hereby assign and agree
to assign all my interest in such Developments to Secure Computing Corporation,
and upon the request and at the expense of Secure Computing Corporation, do all
other acts reasonably necessary to assist it in obtaining and enforcing rights
in Developments in any and all countries; provided, however, this paragraph (5)
shall not apply to Developments for which no equipment, supplies, facility or
trade secret information of Secure Computing Corporation was used and which is
developed entirely on my own time and (1) which does not relate (a) directly to
Secure Computing Corporation's business or (b) to Secure Computing Corporation's
actual or demonstrably anticipated research or development, or (2) which does
not result from any work performed by me for Secure Computing Corporation, I
acknowledge that the obligation of this paragraph (5) shall be in effect whether
or not I receive or am considered for the award of any additional compensation
for the Development.
(7) The wages or salary and any other benefits which I receive during my
employment by Secure Computing Corporation shall be my full compensation for
this agreement.
I ACKNOWLEDGE THAT I HAVE READ THIS AGREEMENT, I understand that to the extent
applicable it remains in effect following the cessation of my employment with
Secure Computing Corporation, is binding on my heirs and that it may be
transferred by Secure Computing Corporation to any of its successors or
assignees.
Date: 11/08/96 Signature: /s/ Christine Hughes
Secure Computing Corporation
2675 Long Lake Road
Roseville, MN 55113
November 4, 1996
Employment Agreement
Secure Computing Corporation, a Delaware corporation (the "Company"),
and Jeffrey H. Waxman agree as follows:
1. Positions and Responsibilities
1.1. You shall serve in the executive capacity as President and
Chief Executive Officer and perform the duties customarily
associated with such capacity from time to time and at such
place or places as the Company shall designate or as shall be
appropriate and necessary in connection with such employment.
1.2. You will, to the best of your ability, devote your full time
and best efforts to the performance of your duties hereunder
and the business and affairs of the Company.
1.3. You will duly, punctually and faithfully perform and observe
any and all rules and regulations which the Company may now or
shall hereafter establish governing the conduct of its
business.
1.4. You have been elected a director of the Company and will be
considered for election as Chairman of the Board when that
position becomes open.
2. Term of Employment
2.1. The term of your employment agreement shall commence on
November 4, 1996 and terminate in two years, subject to
automatic renewal for successive one-year terms unless either
party shall have notified the other in writing not less than
30 days prior to the then current expiration date of this
Agreement of such party's determination not to renew this
Agreement.
2.2. The Company shall have the right, on written notice to you,
(a) to terminate your employment immediately at any time
for cause, or
(b) to terminate your employment at any time after
November 4, 1996, or to not renew this Agreement at
any time, without cause provided the Company shall be
obligated in either case to pay to you as severance
pay an amount equal to one year's base salary (or, if
greater than one year, base salary for the remainder
of the period from the date of termination to November
4, 1998) less applicable taxes and other required
withholdings and any amount you may owe to the
Company, payable in full immediately upon such
termination.
2.3. For purposes of Section 2.2, you may be terminated for cause
if, in the reasonable determination of the Company's Board of
Directors, you are convicted of any felony or of any crime
involving moral turpitude, or participate in fraud against the
Company, or intentionally damage any property of the Company,
or wrongfully disclose any trade secrets or other confidential
information of the Company to any of its competitors, or
materially breach Section 4 of this Agreement or any
provisions of the Proprietary Information Agreement (as
defined in Section 6 hereof) between you and the Company.
3. Compensation; Stock Options; Relocation
3.1. The Company shall pay to you for the services to be rendered
hereunder a base salary at an annual rate of $325,000, subject
to increase in accordance with the policies of the Company, as
determined by its Board of Directors from time to time,
payable in installments in accordance with Company policy.
(a) The Compensation Committee of the Board of Directors
will review the base salary from time to time, no less
frequently than annually, and may in its sole
discretion adjust the base salary upward, but not
downward, to reflect performance, appropriate industry
guideline data and other factors.
(b) If certain performance goals established from time to
time by the Board of Directors of the Company are met,
you will be entitled to a cash performance bonus of
75% of base salary, with respect to each fiscal year,
prorated for the remainder of fiscal 1996. The amount
of such bonus percentage may be increased but not
decreased by the Board of Directors of the Company.
3.2. You shall also be entitled to all rights and benefits for
which you shall be eligible under deferred bonus, pension,
group insurance, profit-sharing or other Company benefits
which may be in force from time to time and provided for the
Company's executives generally. In addition, you shall be
entitled to a monthly car allowance of up to $1,000, paid
separately and not subject to withholding taxes to the extent
permitted by law.
3.3. You will be reimbursed for reasonable expenses incurred on
behalf of the Company upon presentation of appropriate
receipts.
3.4. Stock Options
(a) At the present time Secure's Omnibus Stock Plan, under
which options have been granted to you, provides that
the maximum number of shares of Secure Common Stock
subject to options that may be awarded to any one
employee in any fiscal year shall not exceed 250,000.
The Board of Directors of Secure has approved an
amendment to the Omnibus Stock Plan that would
increase such number from 250,000 to 750,000,
conditional upon stockholder approval at the next
annual or special meeting of stockholders. The Board
of Directors of Secure agrees that it will recommend
approval of such amendment and will solicit proxies
for stockholder approval of such amendment.
Accordingly, as provided more specifically below,
options in excess of 250,000 shares have been approved
conditional upon the obtaining of stockholder approval
of the amendment to the Omnibus Stock Plan.
(b) You have been granted a non-statutory option to
purchase 450,000 shares of Secure Common Stock, which
is conditional with regard to 200,000 shares upon
stockholder approval of the amendment to the Omnibus
Stock Plan referred to above. The purchase price per
share is $9.75. The option vests over three years at a
rate of one-third per year on each of November 4,
1997, 1998 and 1999, i.e. 150,000 per year (of which
66,666, 66,667 and 66,667 shares vesting on November
4, 1997, 1998 and 1988, respectively, are conditional
upon stockholder approval of the amendment to the
Omnibus Stock Plan referred to above). Such option
will also immediately vest in full upon the
declaration of an "Event" as set forth in Secure's
Omnibus Stock Plan; provided, however, that such
option shall continue to be conditioned upon
stockholder approval as noted above with regard to
200,000 shares if such approval shall not have been
obtained prior to the occurrence of such Event.
(c) You have also been granted a non-statutory option to
purchase up to an additional 300,000 shares of Secure
Common Stock at a purchase price per share equal to
$9.75. Such option is conditional upon stockholder
approval of the amendment to the Omnibus Stock Plan
referred to above. The vesting of such option is
conditioned upon the occurrence of the following
events:
(i) If, on or before November 4, 1997, the
closing price of a share of Secure Common
Stock is $19.75 or more and maintains or
exceeds such price for a period of 20
consecutive business days, then the option
shall vest as to 100,000 shares of Secure
Common Stock.
(ii) If, on or before November 4, 1998, the
closing price of a share of Secure Common
Stock is $29.75 or more and maintains or
exceeds such price for a period of 20
consecutive business days, then the option
shall vest as to 100,000 shares of Secure
Common Stock.
(iii) If, on or before November 4, 1999, the
closing price of a share of Secure Common
Stock is $39.75 or more and maintains or
exceeds such price for a period of 20
consecutive business days, then the option
shall vest as to 100,000 shares of Secure
Common Stock.
To the extent that any such event shall not have occurred
within the applicable time periods set forth above, then such
option shall immediately terminate with respect to the
applicable number of shares which have not vested. The per
share price targets are subject to appropriate adjustments for
stock splits and other changes in the capitalization of
Secure, as set forth in the Omnibus Stock Plan.
The Company will pay for your direct relocation expenses,
including the cost of moving your household goods and closing
costs for the sale of your present home and the purchase of a
new home, such as real estate brokers' commissions, together
with an additional amount of cash sufficient to pay any
personal income taxes payable as a result of the Company's
payment of your direct relocation expenses. You agree that,
within 18 months of the date of this Agreement, you will
relocate your residence to the general vicinity of the
Company's corporate headquarters. In the interim, the Company
will also provide you a furnished apartment, or suitable
living quarters, in the general vicinity of the Company's
corporate headquarters.
4. Other Activities During Employment
4.1. Except as stated herein or with the prior written consent of
the Company's Board of Directors, you will not during the term
of this Agreement undertake or engage in any other employment,
occupation or business enterprise other than ones in which you
are a passive investor.
4.2. Except as permitted by Section 4.3, you will not acquire,
assume or participate in, directly or indirectly, any
position, investment or interest adverse or antagonistic to
the Company, its business or prospects, financial or
otherwise, or take any action toward or looking toward any of
the foregoing.
4.3. During the term of your employment by the Company except on
behalf of the Company or its subsidiaries, you will not
directly or indirectly, whether as an officer, director,
stockholder, partner, proprietor, associate, representative,
consultant, or otherwise, become or be interested in any
other person, corporation, firm, partnership or other entity
whatsoever which manufactures, markets, sells, distributes
or provides consulting services concerning products or
services which compete with those of the Company or any of
its subsidiaries. However, nothing in this Section 4.3 shall
preclude you from holding less than one percent of the
outstanding capital stock of any corporation required to
file periodic reports with the Securities and Exchange
Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the securities of which
are listed on any securities exchange, quoted on the
National Association of Securities Dealers Automated
Quotation System or traded in the over-the-counter market.
During the term of your employment with the Company you will
also not directly or indirectly intentionally solicit,
endeavor to entice away from the Company, or any of its
subsidiaries, or otherwise interfere with the relationship
of the Company, or any of its subsidiaries with, any person
who is employed by or otherwise engaged to perform services
for the Company, or any of its subsidiaries (including, but
not limited to, any independent sales representatives or
organizations), or any person or entity who is, or was
within the then most recent 12-month period, a customer or
client of the Company, or any of its subsidiaries, whether
for your own account or for the account of any other person,
corporation, firm, partnership or other entity whatsoever.
5. Former Employment
5.1. You represent and warrant that your employment by the Company
will not conflict with and will not be constrained by any
prior employment or consulting agreement or relationship. You
represent and warrant that you do not possess confidential
information arising out of prior employment which, in your
best judgment, would be utilized in connection with your
employment by the Company in the absence of Section 5.2.
5.2. If, in spite of the second sentence of Section 5.1, you should
find that confidential information belonging to any former
employer might be usable in connection with the Company's
business, you will not intentionally disclose to the Company
or use on behalf of the Company any confidential information
belonging to any of your former employers; but during your
employment by the Company you will use in the performance of
your duties all information which is generally known and used
by persons with training and experience comparable to your own
and all information which is common knowledge in the industry
or otherwise legally in the public domain.
6. Proprietary Information and Inventions You agree to be bound by the
provisions of the Proprietary Information Agreement dated the date of
this Agreement between you and the Company (the "Proprietary
Information Agreement").
7. Post-Employment Consultation
7.1. Upon the termination or expiration of your employment with the
Company pursuant to Section 2.1 or 2.2 above or otherwise, the
Company shall have the option to retain you as a consultant by
notifying you of its desire to so retain you within seven days
of such termination or expiration in writing mailed to you at
your last address as it appears in the Company's records. If
you are so retained, you shall, during the period for
retention notify the Company of any change in address and each
subsequent employment (stating the name of and address of the
employer and the nature of your position) or business activity
in which you engage during such 30 days.
7.2. If the Company retains you as a consultant, you shall during
the period of such retention hold your self available to
render consulting services in your area of expertise or
special competence for up to 60 days for not more than 80
hours per month, for which the Company shall pay you an
amount equal to 50% of your monthly base salary (in addition
to any severance payment to which you would be entitled
under Section 2.2(b)) obtained under Section 3 at the time
of termination of your employment, whether or not you shall
be called upon to render any services in any such month.
Additionally, if you are retained as a consultant, during
the consulting period, the Company will continue to provide
you with the Company's basic medical, dental, vision and
life insurance coverage in place at that time. Any
out-of-pocket expenses including travel, food, lodging and
associated costs which your consulting activities for the
Company may require will be reimbursed against receipts and
vouchers therefor in accordance with the Company's policies
in force from time to time.
7.3. During any period in which you are retained by the Company as
a consultant, the Company may terminate your status as a
consultant by giving you seven days' written notice, during
which seven-day period you shall continue to receive your
monthly consulting fee but shall not be obligated to render or
hold yourself available to render any consulting services
during such period. Thereafter the Company shall have no
further liability for consulting fees. All other prohibitions
of the Proprietary Information Agreement shall survive
termination of your status as a consultant to the extent
provided in such Proprietary Information Agreement.
8. Post Employment Activities
8.1. In the event and for so long as you are retained as a
consultant by the Company pursuant to Section 7 following
the termination or expiration of your employment with the
Company hereunder, absent the Company's prior written
approval upon instructions of its Board of Directors, you
will not directly or indirectly engage in activities
(similar or reasonably related to those in which you shall
have engaged hereunder during the two years immediately
preceding the termination or expiration of your employment
with the Company) for, nor render services (similar or
reasonably related to those which you shall have rendered
hereunder during such two years) to, any firm or business
organization whether now existing or hereafter established,
which manufactures, markets, sells, distributes or provides
products or services which compete with those of the Company
or any of its subsidiaries on the date of termination of
your employment, nor shall you engage in such activities nor
render such services to any other person or entity engaged
or about to become engaged in such activities to, for or on
behalf of any such firm or business organization, or employ
any person to engage in any activity which, were it done by
you, would violate any provision of the Proprietary
Information Agreement or Section 8 hereof.
8.2. The Company upon instruction of its Board of Directors may
give you written approval to engage personally in any activity
or render services referred to in Section 8.1 if it secures
written assurances (satisfactory to the Company in its sole
discretion) from you and from the prospective employer that
the integrity of the Proprietary Information Agreement will
not in any way be jeopardized by such activities, provided the
burden of so establishing the foregoing to the satisfaction of
the Company shall be upon you and your prospective
employer(s).
8.3. In the event and for so long as you are retained as a
consultant by the Company pursuant to Section 7 following the
termination or expiration of your employment with the Company,
the provisions of Section 4.3 shall be applicable to you and
you shall comply therewith.
9. Survival Your duties under the Proprietary Information Agreement and
Section 8 shall survive termination of your employment with the Company
to the extent provided under such Proprietary Information Agreement or
Section 8 hereof.
10. Assignment This Agreement and the rights and obligations of the
parties hereto shall bind and inure to the benefit of any successor or
successors of the Company by way of reorganization, or merger and any
assignee of all or substantially all or its business and properties,
but, except as to any such successor or assignee of the Company,
neither this Agreement nor any rights or benefits hereunder may be
assigned by the Company or by you.
11. Interpretation In case any one or more of the provisions
contained in the agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect the other provision of
this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained
herein. If, moreover, any one or more of the provisions contained in
this Agreement shall for any reason be held to be excessively broad as
to duration, geographical scope, activity or subject, it shall be
construed by limiting and reducing it so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.
12. Notices Any notice which the Company is required or may desire to
give to you shall be given by personal delivery or registered or
certified mail, return receipt requested, addressed to you at the
address of record with the Company, or at such other place as you may
from time to time designate in writing. Any notice which you are
required or may desire to give to the Company hereunder shall be given
by personal delivery or by registered or certified mail, return receipt
requested, addressed to the Company at its principal office, or at such
other office as the Company may from time to time designate in writing,
to the attention of the Chairman of the Compensation Committee. The
date of personal delivery or the date of mailing such notice shall be
deemed to be the date of delivery thereof.
13. Waiver If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provisions of
this Agreement.
14. Complete Agreement; Amendments The foregoing, together with a
Proprietary Information Agreement between you and the Company, is the
entire agreement of the parties with respect to the subject matter
hereof and supersedes all prior understandings, including without
limitation that certain draft of offer letter dated October 22, 1996
between the parties which you have executed. This Agreement may not be
amended, supplemented, canceled or discharged except by written
instrument executed by both parties hereto.
15. Applicable Law This agreement has been negotiated in, and shall
be governed by the laws of, the State of Minnesota, without giving
effect to conflict of law principles.
16. Heading The heading of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof
nor to affect the meaning thereof.
SECURE COMPUTING CORPORATION
By: /s/ Stephen M. Puricelli
--------------------------------
Stephen M. Puricelli
Chairman, Compensation Committee
Accepted and agreed as of the
4th day of November, 1996
/s/ Jeffrey H. Waxman
- ---------------------
Jeffrey H. Waxman
Secure Computing Corporation
2675 Long Lake Road
Roseville, MN 55113
October 7, 1996
Employment Agreement
Secure Computing Corporation, a Delaware corporation (the "Company"),
and James Boyle agree as follows:
1. Position and Responsibilities
1.1 You shall serve in the executive capacity as Vice President & General
Manager of the Government Division and perform the duties customarily associated
with such capacity from time to time and at such place or places as the Company
shall designate or as shall be appropriate and necessary in connection with such
employment.
1.2 You will, to the best of your ability, devote your full time and best
efforts to the performance of your duties hereunder and the business and affairs
of the Company.
1.3 You will duly, punctually and faithfully perform and observe any and
all rules and regulations which the Company may now or shall hereafter establish
governing the conduct of its business.
2. Term of Employment
2.1 The term of your employment agreement shall commence on October 7,
1996 and terminate in three years. Your employment may be terminated sooner at
any time by the Company as provided in Section 2.2 or by you upon 30 days
written notice.
2.2 The Company shall have the right, on written notice to you, to
terminate your employment
(a) immediately at any time for cause, or
(b) at any time after October 7, 1996 without cause provided
the Company shall be obligated to pay to you as severance pay
an amount equal to six month's basic salary less applicable
taxes and other required withholdings and any amount you may
owe to the Company, payable in full immediately upon such
termination.
2.3 For purposes of Section 2.2, you may be terminated for cause if, in
the reasonable determination of the Company's Board of Directors, you are
convicted of any felony or of any crime involving moral turpitude, or
participate in fraud against the Company, or intentionally damage any property
of the Company, or wrongfully disclose any trade secrets or other confidential
information of the Company to any of its competitors, or materially breach
Section 4 of this Agreement or any provision of the Proprietary Information
Agreement (as defined in Section 6 hereof) between you and the Company.
3. Compensation; Stock Options
3.1 The Company shall pay to you for the services to be rendered
hereunder a basic salary at an annual rate of $120,000, subject to increase in
accordance with the policies of the Company, as determined by its Board of
Directors from time to time, payable in installments in accordance with Company
policy.
(a) The Compensation Committee of the Board of Directors will
review the base salary from time to time, no less frequently
than annually, and may in its sole discretion adjust the base
salary upward, but not downward, to reflect performance,
appropriate industry guideline data and other factors.
(b) If certain performance goals established from time to time
by the Board of Directors of the company are met, you will be
entitled to a performance bonus of 35% of base salary,
following each anniversary of the date hereof. The amount of
such bonus percentage may be increased, but not decreased by
the Board of Directors of the Company.
3.2 You shall also be entitled to all rights and benefits for which you
shall be eligible under deferred bonus, pension, group insurance, profit-sharing
or other Company benefits which may be in force from time to time and provided
for the Company's employees generally.
3.3 You will be reimbursed for reasonable expenses incurred on behalf of
the Company upon presentation of appropriate receipts.
3.4 You will be granted stock options per the Company's Amended and
Restated 1995 Omnibus Stock Plan to purchase 35,000 shares of Company Common
Stock at the exercise price of $13.50 per share. These options will vest
one-third each year beginning with the first anniversary of this agreement.
If your employment terminates prior to the first anniversary of this
agreement, any unvested stock options will be forfeited to the Company.
4. Other Activities During Employment
4.1 Except as stated herein or with the prior written consent of the
Company's Board of Directors, you will not during the term of this Agreement
undertake or engage in any other employment, occupation or business enterprise
other than ones in which you are a passive investor.
4.2 Except as permitted by Section 4.3, you will not acquire, assume or
participate in, directly or indirectly, any position, investment or interest
adverse or antagonistic to the Company, its business or prospects, financial or
otherwise, or take any action toward or looking toward any of the foregoing.
4.3 During the term of your employment by the Company except on behalf of
the Company or its subsidiaries, you will not directly or indirectly, whether as
an officer, director, stockholder, partner, proprietor, associate,
representative, consultant, or otherwise, become or be interested in any other
person, corporation, firm, partnership or other entity whatsoever which
manufactures, markets, sells, distributes or provides consulting services
concerning products or services which compete with those of the Company. You may
own, as a passive investor, securities of any such corporation which are listed
for trading on a national stock exchange or traded in the over-the-counter
market, quotations of which are published in an established business journal, so
long as your holdings in any one such corporation shall not in the aggregate
constitute more than 1% of the voting stock of such corporation.
5. Former Employment
5.1 You represent and warrant that your employment by the Company will
not conflict with and will not be constrained by any prior employment or
consulting agreement or relationship. You represent and warrant that you do not
possess confidential information arising out of prior employment which, in your
best judgment, would be utilized in connection with your employment by the
Company in the absence of Section 5.2.
5.2 If, in spite of the second sentence of Section 5.1, you should find
that confidential information belonging to any former employer might be usable
in connection with the Company's business, you will not intentionally disclose
to the Company or use on behalf of the Company any confidential information
belonging to any of your former employers; but during your employment by the
Company you will use in the performance of your duties all information which is
generally known and used by persons with trainings and experience comparable to
your own and all information which is common knowledge in the industry or
otherwise legally in the public domain.
6. Proprietary Information and Inventions You agree to be bound by the
provisions of the Proprietary Information Agreement dated the date of this
Agreement between you and the Company (the "Proprietary Information Agreement").
7. Post-Employment Consultation
7.1 Upon the termination or expiration of your employment with the
Company pursuant to Section 2.1 or 2.2 above or otherwise, the Company shall
have the option to retain you as a consultant by notifying you of its desire to
so retain you within 7 days of such termination or expiration in writing mailed
to you at your last address as it appears in the Company's records. If you are
so retained, you shall, during the period for retention notify the Company of
any change in address and each subsequent employment (stating the name of and
address of the employer and the nature of your position) or business activity in
which you engage during such 30 days.
7.2 If the Company retains you as a consultant, you shall during the
period of such retention hold your self available to render consulting services
in your area of expertise or special competence for up to sixty (60) days for
not more than eighty (80) hours per month, for which the Company shall pay you
an amount equal to 50% of your monthly basic salary obtained under Section 3 at
the time of termination of your employment, whether or not you shall be called
upon to render any services in any such month. Additionally, if you are retained
as a consultant, during the consulting period, the Company will continue to
provide you with the Company's basic medical, dental, vision and life insurance
coverage in place at that time. Any out-of-pocket expenses including travel,
food, lodging and associated costs which your consulting activities for the
Company may require will be reimbursed against receipts and vouchers therefore
in accordance with the Company's policies in force from time to time.
7.3 During any period in which you are retained by the Company as a
consultant, the Company may terminate your status as a consultant by giving you
7 days' written notice, during which 7-day period you shall continue to receive
your monthly consulting fee but shall not be obligated to render or hold
yourself available to render any consulting services during such period.
Thereafter the Company shall have no further liability for consulting fees. All
other prohibitions of the Proprietary Information Agreement shall survive
termination of your status as a consultant to the extent provided in such
Proprietary Information Agreement.
8. Post Employment Activities
8.1 In the event and for so long as you are retained as a consultant by
the Company pursuant to Section 7 following the termination or expiration of
your employment with the Company hereunder, absent the Company's prior written
approval upon instructions of its Board of Directors, you will not, directly or
indirectly engage in activities (similar or reasonably related to those in which
you shall have engaged hereunder during the two year immediately preceding the
termination or expiration of your employment with the Company) for, nor render
services (similar or reasonable related to those which you shall have rendered
hereunder during such two years) to, any firm or business organization whether
now existing or hereafter established, which manufactures, markets, sells,
distributes or provides products or services which compete with those of the
Company on the date of termination of your employment, nor shall you engage in
such activities nor render such services to any other person or entity engaged
or about to become engaged in such activities to, for or on behalf of any such
firm or business organization, or employ any person to engage in any activity
which, were it done by you, would violate any provision of the Proprietary
Information Agreement or Section 8 hereof.
8.2 The Company upon instruction of its Board of Directors may give you
written approval to engage personally in any activity or render services
referred to in Section 8.1 if it secures written assurances (satisfactory to the
Company in its sole discretion) from you and from the prospective employer that
the integrity of the Proprietary Information Agreement will not in any way be
jeopardized by such activities, provided the burden of so establishing the
foregoing to the satisfaction of the Company shall be upon you and your
prospective employer(s).
8.3 In the event and for so long as you are retained as a consultant by
the Company pursuant to Section 7 following the termination or expiration of
your employment with the Company, the provisions of Section 4.3 shall be
applicable to you and you shall comply therewith.
9. Survival Your duties under the Proprietary Information Agreement and
Section 8 shall survive termination of your employment with the company to the
extent provided under such Proprietary Information Agreement or Section 8
hereof.
10. Assignment This Agreement and the rights and obligations of the parties
hereto shall bind and inure to the benefit of any successor or successors of the
Company by way of reorganization, or merger and any assignee of all or
substantially all of its business and properties, but, except as to any such
successor or assignee of the Company, neither this Agreement nor any rights or
benefits hereunder may be assigned by the Company or by you.
11. Interpretation In case any one or more of the provisions contained in
the Agreement shall, for any reason, be held to be invalid, illegal or
unenforceability in any respect, such invalidity, illegality or unenforceable
shall not affect the other provision of this Agreement, and this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein. If, moreover, any one or more of the provisions contained
in this Agreement shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, it shall be construed by
limiting and reducing it so as to be enforceable to the extent compatible with
the applicable law as it shall then appear.
12. Notices Any notice which the Company is required or may desire to give to
you shall be given by personal delivery or registered or certified mail, return
receipt requested, addressed to you at the address of record with the Company,
or at such other place as you may from time to time designate in writing. Any
notice which you are required or may desire to give to the Company hereunder
shall be given by personal delivery or by registered or certified mail, return
receipt requested, addressed to the Company as its principal office, or at such
other office as the Company may from time to time designate in writing. The date
of personal delivery or the date of mailing such notice shall be deemed to be
the date of delivery thereof.
13. Waiver If either party should waive any breach of any provisions of this
Agreement, he or it shall not thereby be deemed to have waived any preceding or
succeeding breach of the same or any other provisions of this Agreement.
14. Complete Agreement; Amendments The foregoing, together with a
Proprietary Information Agreement between you and the Company, is the entire
agreement of the parties with respect to the subject matter hereof. This
Agreement may not be amended, supplemented, cancelled or discharged except by
written instrument executed by both parties hereto.
15. Applicable Law This agreement has been negotiated in, and shall be
governed by the laws of, the State of Minnesota.
16. Heading The heading of the sections hereof are inserted for convenience
only and shall not be deemed to constitute a part hereof nor to affect the
meaning thereof.
SECURE COMPUTING CORPORATION
By: ______________________________
Kermit M. Beseke
Accepted and agreed this:
_____ day of _____________________, 1996;
- -------------------------------------
James Boyle
EMPLOYMENT AGREEMENT
This Agreement is made as of _____________, 1996 by and
between Secure Computing Corporation, a Delaware corporation (the "Company"),
and Glenn Mackintosh (the "Executive").
W I T N E S S E T H :
WHEREAS the Company desires to employ Executive in accordance
with the terms and conditions stated in this Agreement; and
WHEREAS Executive desires to accept that employment
pursuant to the terms and conditions of this Agreement;
NOW THEREFORE, in consideration of the covenants and
agreements contained herein, the parties hereto agree as follows:
I. EMPLOYMENT
1.1 Employment As Executive. The Company hereby agrees to employ
Executive as Vice President and General Manager of the Firewall Division,
reporting directly to the Chief Executive Officer of the Company, commencing the
date hereof and continuing until the earlier of (i) the third anniversary of the
date hereof, or (ii) the date his employment terminates pursuant to Article III
hereof. Executive accepts such employment pursuant to the terms of this
Agreement. Executive shall perform such duties and responsibilities as may be
determined from time to time by the Board of Directors of the Company. Executive
shall relocate (the "Relocation") from Toronto, Ontario to the Minneapolis-St.
Paul, Minnesota metropolitan area (the "Twin Cities").
1.2 Exclusive Services. Executive agrees to devote his full working
time, attention and energy to performing his duties and responsibilities to the
Company under this Agreement during the term of this Agreement.
II. COMPENSATION, BENEFITS AND PERQUISITES
2.1 Base Salary. During the period this Agreement is in effect, the
Company shall pay Executive a base salary at a rate equal to U.S. $125,000 per
year. The base salary shall be payable bi-weekly. The Board of Directors of the
Company will review the base salary from time to time, no less frequently than
annually, and may in its sole discretion adjust it upward, but not downward, to
reflect performance, appropriate industry guideline data and other factors.
2.2 Relocation. The Company will reimburse Executive for all reasonable
documented expenses relating to the Relocation; provided that such expenses
shall not include any costs, fees, losses or expenses associated with the sale
or purchase of a residence, except that the Company will pay a customary real
estate brokerage commission on the sale of Executive's present primary residence
and closing costs associated with the purchase of Executive's new residence. The
Company will also cover all reasonable documented expenses relating to trips
that Executive and his significant other take from Toronto to the Twin Cities
for house hunting and other purposes related to the Relocation. The Company will
also cover the cost of temporary housing in the Twin Cities as needed; provided,
however, that the terms of such temporary housing, including the duration of
time therefor, are authorized and approved in writing by the Chief Executive
Officer of the Company.
2.3 Bonuses. If certain performance goals established from time to time
by the Board of Directors of the Company are met, the Executive will be entitled
to a performance bonus of 35% of base salary following each anniversary of the
date hereof. The amount of such bonus may be increased, but not decreased, by
the Board of Directors of the Company.
2.4 Stock Options. The Compensation Committee of the Board of Directors
of the Company has granted to the Executive, subject to completion of the
amalgamation of Border Network Technologies Inc. with a subsidiary of the
Company and the execution and delivery of this Agreement, an option to purchase
shares of common stock, par value $0.01 per share, of the Company ("Shares") as
follows: a non-statutory stock option under the Company's 1995 Omnibus Stock
Plan (the "Plan") to purchase 40,000 Shares at an exercise price of U.S. $27.00
per share. Such option shall vest and become exercisable as to one-third of such
shares on each of the first, second and third anniversaries of the date hereof.
Additional awards under the Plan may be made to the Executive in the discretion
of the Compensation Committee.
2.5 Vacations. Executive shall be entitled to vacation in accordance
with policies of the Company; provided that Executive shall be entitled to not
less than three weeks of paid vacation, increasing consistent with Company
policy.
2.6 Employee Benefits. Executive shall be entitled to the benefits and
perquisites which the Company generally provides to its other employees under
the applicable Company plans and policies, and to future benefits and
perquisites made generally available to employees of the Company. Executive's
participation in such benefit plans shall be on the same basis as applies to
other employees of the Company. Executive shall pay any contributions which are
generally required of employees to receive any such benefits.
2.7 Employment Taxes and Withholding. Executive recognizes that the
compensation, benefits and other amounts provided by the Company under this
Agreement may be subject to United States and/or Canadian federal, state,
provincial or local income taxes. It is expressly understood and agreed that all
such taxes shall be the responsibility of the Executive. To the extent that
United States and/or Canadian federal, state, provincial or local law requires
withholding of taxes on compensation, benefits or other amounts provided under
this Agreement, the Company shall withhold the necessary amounts from the
amounts payable to Executive under this Agreement.
2.8 Legal Limits on Benefits. The parties recognize that the Internal
Revenue Code of 1986, as amended, the Income Tax Act (Canada), and other laws
and regulations place limits on the benefits the Company can provide for its
employees. The benefits for Executive under this Agreement shall be reduced to
the extent necessary to comply with any such laws and regulations currently in
effect or enacted in the future, including any reductions that may be necessary
to preserve the tax-favored status of a benefit, to preserve the Company's tax
deduction for the costs of a benefit, or to avoid the imposition of excise taxes
on the Company or Executive.
2.9 Company Responsibility for Insured Benefits. In this Article II,
the Company is agreeing to provide certain benefits which are provided in the
form of premiums of insurance coverage. The Company is not itself promising to
pay the benefit an insurance company is obligated to pay under the policy the
insurance company has issued. If an insurance company becomes insolvent and
cannot pay benefits it owes to Executive or his beneficiaries under the
insurance policy, neither Executive nor his personal representative or
beneficiary shall have any claim for benefits against the Company.
2.10 Expenses. During the term of his employment hereunder, Executive
shall be entitled to receive prompt reimbursement from the Company (in
accordance with the policies and procedures in effect for the Company's
employees) for all reasonable travel and other expenses incurred by him in
connection with his services hereunder.
III. TERMINATION OF EXECUTIVE'S EMPLOYMENT
3.1 Termination of Employment.
(a) Executive's employment under this Agreement may be
terminated by the Company at any time for any reason; provided,
however, that (i) if Executive's employment is terminated by the
Company prior to the first anniversary of the date hereof for a reason
other than for cause, he shall be entitled to continue to receive his
base salary under Section 2.1 for the remainder of the period through
the second anniversary of the date hereof, and (ii) if Executive's
employment is terminated by the Company after the first anniversary of
the date hereof for a reason other than for cause, he shall be entitled
to continue to receive his base salary under Section 2.1 for the
remainder of the period ending on the first anniversary of the date of
termination of Executive's employment hereunder.
(b) Executive's employment under this Agreement may be
terminated by Executive at any time for any reason.
(c) The termination shall be effective as of the date
specified by the party initiating the termination in a written notice
delivered to the other party, which date shall not be earlier than the
date such notice is delivered to the other party. This Agreement shall
terminate in its entirety immediately upon the death of Executive.
Except as expressly provided to the contrary in this section or
applicable law, Executive's rights to pay and benefits shall cease on
the date his employment under this Agreement terminates.
3.2 Cause. For purposes of this Article III, "cause" shall mean only
the following: (i) indictment or conviction of a felony; (ii) theft or
embezzlement of Company property or commission of similar acts involving moral
turpitude; (iii) if Executive fails to relocate within a reasonable time as
provided in Section 1.1, recognizing that the Relocation involves an
international move; or (iv) the willful failure by Executive to substantially
perform his material duties under this Agreement as determined by the Board of
Directors (excluding nonperformance resulting from Executive's disability) which
willful failure is not cured within thirty (30) days after written notice from
the Chief Executive Officer of the Company specifying the act of willful
nonperformance or within such longer period (but no longer than ninety (90) days
in any event) as is reasonably required to cure such willful nonperformance.
3.3 Disability. If Executive has become disabled from performing his
duties under this Agreement and the disability has continued for a period of
more than ninety (90) days, the Board of Directors of the Company may, in its
discretion, determine that Executive will not return to work and terminate his
employment under this Agreement. Upon any such termination for disability,
Executive shall be entitled to such disability, medical, life insurance, and
other benefits as may be provided generally for disabled employees of the
Company during the period he remains disabled.
IV. NON-COMPETITION; CONFIDENTIALITY AND TRADE SECRETS; INVENTIONS
4.1 Agreement Not to Compete. Executive agrees that, on or before the
date which is the later of (i) two years from the date of this Agreement, and
(ii) one year after the date Executive's employment terminates, he will not,
unless he receives the prior approval of the Board of Directors of the Company,
directly or indirectly engage in any of the following actions:
(a) Own an interest in (except as provided below), manage,
operate, join, control, lend money or render financial or other
assistance to, or participate in or be connected with, as an officer,
employee, partner, stockholder, proprietor, consultant or otherwise,
any business or entity whose products or services or proposed products
or services compete or would compete directly or indirectly with those
of the Company, or any of its subsidiaries (a "Competitive
Corporation"). However, nothing in this subsection (a) shall preclude
Executive from holding less than one percent of the outstanding capital
stock of any Competitive Corporation required to file periodic reports
with the Securities and Exchange Commission under Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, the securities of
which are listed on any securities exchange, quoted on the National
Association of Securities Dealers Automated Quotation System or traded
in the over-the-counter market or any Competitive Corporation which is
a "reporting issuer" as defined in the Securities Act (Ontario) or
other similar provincial securities legislation.
(b) Intentionally solicit, endeavor to entice away from the
Company, or any its subsidiaries, or otherwise interfere with the
relationship of the Company, or any of its subsidiaries with, any
person who is employed by or otherwise engaged to perform services for
the Company, or any of its subsidiaries (including, but not limited to,
any independent sales representatives or organizations), or any person
or entity who is, or was within the then most recent 12-month period, a
customer or client of the Company, or any of its subsidiaries, whether
for Executive's own account or for the account of any other individual,
partnership, firm, corporation or other business organization.
If the scope of the restrictions in this section are determined by a court of
competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be construed or
rewritten (blue-lined) so as to be enforceable to the maximum extent permitted
by law, and Executive hereby consents, to the extent he may lawfully do so, to
the judicial modification of the scope of such restrictions in any proceeding
brought to enforce them.
4.2 Non-Disclosure of Information.
(a) The Executive agrees that, except as required in the
performance of his duties for the Company, or as authorized by the
Company in writing or as required by law, he will not during the course
of employment by the Company or at any time thereafter use or disclose
to others proprietary or trade secret information of the Company, or
others, including but not limited to customer furnished information
which has been provided to the Company with restrictions on its use or
further disclosure, and classified information of the United States.
Proprietary or trade secret information of the Company is information
used or useful in the conduct of the business of the Company which is
not generally known to the public or in a relevant industry, such as,
but not limited to, information regarding the Company's research,
development, manufacturing, purchasing, finances, acquisition activity,
accounting, engineering, marketing, merchandising, selling and present
and prospective customers (including listing of, proposals to,
agreements with, and relationships with such customers).
(b) The Executive agrees that in the performance of his duties
and responsibilities for the Company, he will not disclose, publish or
use any confidential information, proprietary data, or trade secrets
that he may have obtained from any previous employer or association.
(c) The Executive agrees that he will return to the Company
and stop using upon request or upon termination of his employment, all
papers, notebooks, reports, manuals, computer files, software,
vehicles, tool, keys and entry cards, identification cards or badges,
credit authorization, apparatus, computer user identifiers, passwords
and other property furnished to him by the Company, or which was
prepared or made in whole or in part by him in connection with his
employment by the Company.
4.3 Inventions. Executive agrees that he will promptly disclose to the
Company all product, process, hardware and software inventions, designs,
computer programs and related documentation, other works of authorship and mask
works ("Developments") relating to the business of the Company which he made
individually, or jointly with others, while employed by the Company or within a
period of six months following termination of his employment. The Executive
hereby assigns and agrees to assign all interest in such Developments to the
Company, and upon the request and at the expense of the Company, do all other
acts reasonably necessary to assist it in obtaining and enforcing rights in
Developments in any and all countries; provided, however, this Section 4.3 shall
not apply to Developments for which no equipment, supplies, facility or trade
secret information of the Company was used and which is developed entirely on
the Executive's own time and (a) which does not relate (i) directly to the
business of the Company or (ii) to the actual or demonstrably anticipated
research or development of the Company, or (b) which does not result from any
work performed by the Executive for the Company. The Executive acknowledges and
agrees that the provisions of this Section 4.3 shall apply whether or not the
Executive receives or is considered for the award of any additional compensation
for any Development. This Section 4.3 does not apply to Developments in which
the Executive claims an interest which were made before his employment with the
Company. Attached hereto as Attachment I is a list identifying such Developments
made before the date hereof.
4.4 Remedies. Executive acknowledges that the Company's remedy at law
for any breach or threatened breach by Executive of the provisions of Section
4.1, 4.2 or 4.3 will be inadequate. Therefore, the Company shall be entitled to
injunctive and other equitable relief to enforce such provisions, in addition to
any other remedies that may be available to the Company under this Agreement or
applicable law.
V. MISCELLANEOUS
5.1 Amendment. This Agreement may be amended only in writing, signed by
both parties.
5.2 Entire Agreement. This Agreement contains the entire understanding
of the parties with regard to all matters contained herein. There are no other
agreements, conditions or representations, oral or written, expressed or
implied, with regard thereto. This Agreement supersedes all prior agreements
relating to the employment of Executive by the Company.
5.3 Company Policies and Handbooks. Any policies or handbooks of the
Company which may from time to time be applicable to the Executive shall be a
guide regarding the Executive's employment but shall not constitute or imply an
agreement between the Executive and the Company nor shall any representations
made to the Executive, before or during his employment, which are not made in
writing and authorized by the Company, constitute an agreement.
5.4 Assignment. The Company may in its sole discretion assign this
Agreement to any entity which succeeds to some or all of the business of the
Company through merger, consolidation, a sale of some or all of the assets of
the Company, or any similar transaction. Executive acknowledges that the
services to be rendered by him are unique and personal. Accordingly, Executive
may not assign any of his rights or obligations under this Agreement.
5.5 Successors. Subject to Section 5.4, the provisions of this
Agreement shall be binding upon the parties hereto, upon any successor to or
assign of the Company, and upon Executive's heirs and the personal
representative of Executive or Executive's estate.
5.6 Notices. Any notice required to be given under this Agreement shall
be in writing and shall be delivered either in person or by certified or
registered mail, return receipt requested. Any notice by mail shall be addressed
as follows:
If to the Company, to:
Secure Computing Corporation
2675 Long Lake Road
Roseville, Minnesota 55113
USA
Attention: Chief Executive Officer
If to Executive, to:
Glenn Mackintosh
95 Prince Arthur Street
Suite 701
Toronto, Ontario M5R 3P6
Canada
or to such other addresses as either party may designate in writing to the other
party from time to time.
5.7 Waiver of Breach. Any waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement. No waiver by the Company
shall be valid unless in writing and signed by the Chief Executive Officer of
the Company.
5.8 Severability. If any one or more of the provisions (or portions
thereof) of this Agreement shall for any reason be held by a final determination
of a court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions (or portions of the provisions) of this Agreement, and the
invalid, illegal or unenforceable provisions shall be deemed replaced by a
provision that is valid, legal and enforceable and that comes closest to
expressing the intention of the parties hereto.
5.9 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. EXCEPT TO
THE EXTENT MANDATORILY GOVERNED BY ONTARIO LAW, EXECUTIVE HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY MINNESOTA STATE OR FEDERAL COURT SITTING IN
THE CITY OF MINNEAPOLIS, HENNEPIN COUNTY, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, AND EXECUTIVE 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. EXECUTIVE HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT HE MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. EACH
OF THE COMPANY AND EXECUTIVE 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 OF A COPY OF SUCH PROCESS TO OF THE COMPANY OR EXECUTIVE, AS THE CASE
MAY BE, AT THE RESPECTIVE ADDRESS SPECIFIED IN SECTION 5.6 OR BY ANY OTHER
METHOD PROVIDED BY LAW. EACH OF THE COMPANY AND EXECUTIVE 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.
5.10 Headings. The headings of articles and sections herein are
included solely for convenience and reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
5.11 Counterparts. This Agreement may be executed by the parties hereto
in counterparts, each of which shall be deemed to be an original, but all such
counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date set forth above.
EXECUTIVE
_________________________________________________
Glenn Mackintosh
SECURE COMPUTING CORPORATION
By _____________________________________________
President and Chief Executive Officer
ATTACHMENT I
PRE-EMPLOYMENT INVENTIONS AND WRITINGS
NONE
EMPLOYMENT AGREEMENT
This Agreement is made as of August 29, 1996 by and between
Secure Computing Corporation, a Delaware corporation (the "Company"), and Donald
Whitbeck (the "Executive").
W I T N E S S E T H :
WHEREAS the Company desires to employ Executive in accordance
with the terms and conditions stated in this Agreement; and
WHEREAS Executive desires to accept that employment pursuant
to the terms and conditions of this Agreement;
NOW THEREFORE, in consideration of the covenants and
agreements contained herein, the parties hereto agree as follows:
I. EMPLOYMENT
1.1 Employment As Executive. The Company hereby agrees to employ
Executive as Vice President of Marketing and Sales of the Company and its
subsidiaries, commencing the date hereof and continuing until the earlier of (i)
the third anniversary of the date hereof, or (ii) the date his employment
terminates pursuant to Article III hereof. Executive accepts such employment
pursuant to the terms of this Agreement. Executive shall perform such duties and
responsibilities as may be determined from time to time by the Board of
Directors of the Company.
1.2 Exclusive Services. Executive agrees to devote his full working
time, attention and energy to performing his duties and responsibilities to the
Company under this Agreement during the term of this Agreement.
II. COMPENSATION, BENEFITS AND PERQUISITES
2.1 Base Salary. During the period this Agreement is in effect, the
Company shall pay Executive a base salary at a rate equal to U.S. $100,000 per
year. The base salary shall be payable bi-weekly. The Board of Directors of the
Company will review the base salary from time to time, no less frequently than
annually, and may in its sole discretion adjust it upward, but not downward, to
reflect performance, appropriate industry guideline data and other factors.
2.2 Commissions. The Executive will be entitled to commissions based
upon a commission schedule that provides an annualized commission, paid
quarterly, equal to 40% of base salary in the event that consolidated revenues
of the Company equal the amount set forth in the Company's then current budget
plan approved by the Board of Directors of the Company in its discretion; such
commissions paid to Executive shall be proportionately increased or decreased
based upon the percentage of the Company's Board approved budget plan that has
been achieved. The annual commission payment schedule is expressed as follows:
Actual Revenues
Commission Payment = Base Salary X .4 -------------------
X Budgeted Revenues
The formula for calculating amount of such annual commission payment may be
increased, but not decreased, by the Board of Directors of the Company.
2.3 Stock Options. The Compensation Committee of the Board of Directors
of the Company has granted to the Executive, subject to completion of the merger
of amalgamation of Border Network Technologies Inc. with a subsidiary of the
Company and the execution and delivery of this Agreement, an option to purchase
shares of common stock, par value $0.01 per share, of the Company ("Shares") as
follows: a non-statutory stock option under the Company's 1995 Omnibus Stock
Plan (the "Plan") to purchase 25,000 Shares at an exercise price of U.S. $27.00
per share. Such option shall vest and become exercisable as to one-third of such
shares on each of the first, second and third anniversaries of the date hereof.
Additional awards under the Plan may be made to the Executive in the discretion
of the Compensation Committee.
2.4 Vacations. Executive shall be entitled to vacation in accordance
with policies of the Company; provided that Executive shall be entitled to not
less than three weeks of paid vacation, increasing consistent with Company
policy.
2.5 Employee Benefits. Executive shall be entitled to the benefits and
perquisites which the Company generally provides to its other employees under
the applicable Company plans and policies, and to future benefits and
perquisites made generally available to employees of the Company. Executive's
participation in such benefit plans shall be on the same basis as applies to
other employees of the Company. Executive shall pay any contributions which are
generally required of employees to receive any such benefits.
2.6 Employment Taxes and Withholding. Executive recognizes that the
compensation, benefits and other amounts provided by the Company under this
Agreement may be subject to United States and/or Canadian federal, state,
provincial or local income taxes. It is expressly understood and agreed that all
such taxes shall be the responsibility of the Executive. To the extent that
United States and/or Canadian federal, state, provincial or local law requires
withholding of taxes on compensation, benefits or other amounts provided under
this Agreement, the Company shall withhold the necessary amounts from the
amounts payable to Executive under this Agreement.
2.7 Legal Limits on Benefits. The parties recognize that the Internal
Revenue Code of 1986, as amended, the Income Tax Act (Canada), and other laws
and regulations place limits on the benefits the Company can provide for its
employees. The benefits for Executive under this Agreement shall be reduced to
the extent necessary to comply with any such laws and regulations currently in
effect or enacted in the future, including any reductions that may be necessary
to preserve the tax-favored status of a benefit, to preserve the Company's tax
deduction for the costs of a benefit, or to avoid the imposition of excise taxes
on the Company or Executive.
2.8 Company Responsibility for Insured Benefits. In this Article II,
the Company is agreeing to provide certain benefits which are provided in the
form of premiums of insurance coverage. The Company is not itself promising to
pay the benefit an insurance company is obligated to pay under the policy the
insurance company has issued. If an insurance company becomes insolvent and
cannot pay benefits it owes to Executive or his beneficiaries under the
insurance policy, neither Executive nor his personal representative or
beneficiary shall have any claim for benefits against the Company.
2.9 Expenses. During the term of his employment hereunder, Executive
shall be entitled to receive prompt reimbursement from the Company (in
accordance with the policies and procedures in effect for the Company's
employees) for all reasonable travel and other expenses incurred by him in
connection with his services hereunder.
III. TERMINATION OF EXECUTIVE'S EMPLOYMENT
3.1 Termination of Employment.
(a) Executive's employment under this Agreement may be
terminated by the Company at any time for any reason; provided,
however, that (i) if Executive's employment is terminated by the
Company prior to the first anniversary of the date hereof for a reason
other than for cause, he shall be entitled to continue to receive his
base salary under Section 2.1 for the remainder of the period through
the second anniversary of the date hereof, and (ii) if Executive's
employment is terminated by the Company after the first anniversary of
the date hereof for a reason other than for cause, he shall be entitled
to continue to receive his base salary under Section 2.1 for the
remainder of the period ending on the first anniversary of the date of
termination of Executive's employment hereunder. Executive shall also
be entitled to be paid a pro-rated commission payment, calculated in
accordance with Section 2.2, for the fiscal quarter in which such
termination occurs.
(b) Executive's employment under this Agreement may be
terminated by Executive at any time for any reason.
(c) The termination shall be effective as of the date
specified by the party initiating the termination in a written notice
delivered to the other party, which date shall not be earlier than the
date such notice is delivered to the other party. This Agreement shall
terminate in its entirety immediately upon the death of Executive.
Except as expressly provided to the contrary in this section or
applicable law, Executive's rights to pay and benefits shall cease on
the date his employment under this Agreement terminates.
3.2 Cause. For purposes of this Article III, "cause" shall mean only
the following: (i) indictment or conviction of a felony; (ii) theft or
embezzlement of Company property or commission of similar acts involving moral
turpitude; or (iii) the willful failure by Executive to substantially perform
his material duties under this Agreement (excluding nonperformance resulting
from Executive's disability) which willful failure is not cured within thirty
(30) days after written notice from the Chief Executive Officer of the Company
specifying the act of willful nonperformance or within such longer period (but
no longer than ninety (90) days in any event) as is reasonably required to cure
such willful nonperformance.
3.3 Disability. If Executive has become disabled from performing his
duties under this Agreement and the disability has continued for a period of
more than ninety (90) days, the Board of Directors of the Company may, in its
discretion, determine that Executive will not return to work and terminate his
employment under this Agreement. Upon any such termination for disability,
Executive shall be entitled to such disability, medical, life insurance, and
other benefits as may be provided generally for disabled employees of the
Company during the period he remains disabled.
IV. NON-COMPETITION; CONFIDENTIALITY AND TRADE SECRETS; INVENTIONS
4.1 Agreement Not to Compete. Executive agrees that, on or before the
date which is the later of (i) two years from the date of this Agreement, and
(ii) one year after the date Executive's employment terminates, he will not,
unless he receives the prior approval of the Board of Directors of the Company,
directly or indirectly engage in any of the following actions:
(a) Own an interest in (except as provided below), manage,
operate, join, control, lend money or render financial or other
assistance to, or participate in or be connected with, as an officer,
employee, partner, stockholder, proprietor, consultant or otherwise,
any business or entity whose products or services or proposed products
or services compete or would compete directly or indirectly with those
of the Company, or any of its subsidiaries (a "Competitive
Corporation"). However, nothing in this subsection (a) shall preclude
Executive from holding less than one percent of the outstanding capital
stock of any Competitive Corporation required to file periodic reports
with the Securities and Exchange Commission under Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, the securities of
which are listed on any securities exchange, quoted on the National
Association of Securities Dealers Automated Quotation System or traded
in the over-the-counter market or any Competitive Corporation which is
a "reporting issuer" as defined in the Securities Act (Ontario) or
other similar provincial securities legislation.
(b) Intentionally solicit, endeavor to entice away from the
Company, or any its subsidiaries, or otherwise interfere with the
relationship of the Company, or any of its subsidiaries with, any
person who is employed by or otherwise engaged to perform services for
the Company, or any of its subsidiaries (including, but not limited to,
any independent sales representatives or organizations), or any person
or entity who is, or was within the then most recent 12-month period, a
customer or client of the Company, or any of its subsidiaries, whether
for Executive's own account or for the account of any other individual,
partnership, firm, corporation or other business organization.
If the scope of the restrictions in this section are determined by a court of
competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be construed or
rewritten (blue-lined) so as to be enforceable to the maximum extent permitted
by law, and Executive hereby consents, to the extent he may lawfully do so, to
the judicial modification of the scope of such restrictions in any proceeding
brought to enforce them.
4.2 Non-Disclosure of Information.
(a) The Executive agrees that, except as required in the
performance of his duties for the Company, or as authorized by the
Company in writing or as required by law, he will not during the course
of employment by the Company or at any time thereafter use or disclose
to others proprietary or trade secret information of the Company, or
others, including but not limited to customer furnished information
which has been provided to the Company with restrictions on its use or
further disclosure, and classified information of the United States.
Proprietary or trade secret information of the Company is information
used or useful in the conduct of the business of the Company which is
not generally known to the public or in a relevant industry, such as,
but not limited to, information regarding the Company's research,
development, manufacturing, purchasing, finances, acquisition activity,
accounting, engineering, marketing, merchandising, selling and present
and prospective customers (including listing of, proposals to,
agreements with, and relationships with such customers).
(b) The Executive agrees that in the performance of his duties
and responsibilities for the Company, he will not disclose, publish or
use any confidential information, proprietary data, or trade secrets
that he may have obtained from any previous employer or association.
(c) The Executive agrees that he will return to the Company
and stop using upon request or upon termination of his employment, all
papers, notebooks, reports, manuals, computer files, software,
vehicles, tool, keys and entry cards, identification cards or badges,
credit authorization, apparatus, computer user identifiers, passwords
and other property furnished to him by the Company, or which was
prepared or made in whole or in part by him in connection with his
employment by the Company.
4.3 Inventions. Executive agrees that he will promptly disclose to the
Company all product, process, hardware and software inventions, designs,
computer programs and related documentation, other works of authorship and mask
works ("Developments") relating to the business of the Company which he made
individually, or jointly with others, while employed by the Company or within a
period of six months following termination of his employment. The Executive
hereby assigns and agrees to assign all interest in such Developments to the
Company, and upon the request and at the expense of the Company, do all other
acts reasonably necessary to assist it in obtaining and enforcing rights in
Developments in any and all countries; provided, however, this Section 4.3 shall
not apply to Developments for which no equipment, supplies, facility or trade
secret information of the Company was used and which is developed entirely on
the Executive's own time and (a) which does not relate (i) directly to the
business of the Company or (ii) to the actual or demonstrably anticipated
research or development of the Company, or (b) which does not result from any
work performed by the Executive for the Company. The Executive acknowledges and
agrees that the provisions of this Section 4.3 shall apply whether or not the
Executive receives or is considered for the award of any additional compensation
for any Development. This Section 4.3 does not apply to Developments in which
the Executive claims an interest which were made before his employment with the
Company. Attached hereto as Attachment I is a list identifying such Developments
made before the date hereof.
4.4 Remedies. Executive acknowledges that the Company's remedy at law
for any breach or threatened breach by Executive of the provisions of Section
4.1, 4.2 or 4.3 will be inadequate. Therefore, the Company shall be entitled to
injunctive and other equitable relief to enforce such provisions, in addition to
any other remedies that may be available to the Company under this Agreement or
applicable law.
V. MISCELLANEOUS
5.1 Amendment. This Agreement may be amended only in writing, signed
by both parties.
5.2 Entire Agreement. This Agreement contains the entire understanding
of the parties with regard to all matters contained herein. There are no other
agreements, conditions or representations, oral or written, expressed or
implied, with regard thereto. This Agreement supersedes all prior agreements
relating to the employment of Executive by the Company.
5.3 Company Policies and Handbooks. Any policies or handbooks of the
Company which may from time to time be applicable to the Executive shall be a
guide regarding the Executive's employment but shall not constitute or imply an
agreement between the Executive and the Company nor shall any representations
made to the Executive, before or during his employment, which are not made in
writing and authorized by the Company, constitute an agreement.
5.4 Assignment. The Company may in its sole discretion assign this
Agreement to any entity which succeeds to some or all of the business of the
Company through merger, consolidation, a sale of some or all of the assets of
the Company, or any similar transaction. Executive acknowledges that the
services to be rendered by him are unique and personal. Accordingly, Executive
may not assign any of his rights or obligations under this Agreement.
5.5 Successors. Subject to Section 5.4, the provisions of this
Agreement shall be binding upon the parties hereto, upon any successor to or
assign of the Company, and upon Executive's heirs and the personal
representative of Executive or Executive's estate.
5.6 Notices. Any notice required to be given under this Agreement shall
be in writing and shall be delivered either in person or by certified or
registered mail, return receipt requested. Any notice by mail shall be addressed
as follows:
If to the Company, to:
Secure Computing Corporation
2675 Long Lake Road
Roseville, Minnesota 55113
USA
Attention: Chief Executive Officer
If to Executive, to:
Donald Whitbeck
c/o Border Network Technologies Inc.
20 Toronto Street, Suite 400
Toronto, Ontario M5C 2B8
Canada
or to such other addresses as either party may designate in writing to the other
party from time to time.
5.7 Waiver of Breach. Any waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement. No waiver by the Company
shall be valid unless in writing and signed by the Chief Executive Officer of
the Company.
5.8 Severability. If any one or more of the provisions (or portions
thereof) of this Agreement shall for any reason be held by a final determination
of a court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions (or portions of the provisions) of this Agreement, and the
invalid, illegal or unenforceable provisions shall be deemed replaced by a
provision that is valid, legal and enforceable and that comes closest to
expressing the intention of the parties hereto.
5.9 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. EXCEPT TO
THE EXTENT MANDATORILY GOVERNED BY ONTARIO LAW, EXECUTIVE HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY MINNESOTA STATE OR FEDERAL COURT SITTING IN
THE CITY OF MINNEAPOLIS, HENNEPIN COUNTY, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, AND EXECUTIVE 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. EXECUTIVE HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT HE MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. EACH
OF THE COMPANY AND EXECUTIVE 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 OF A COPY OF SUCH PROCESS TO OF THE COMPANY OR EXECUTIVE, AS THE CASE
MAY BE, AT THE RESPECTIVE ADDRESS SPECIFIED IN SECTION 5.6 OR BY ANY OTHER
METHOD PROVIDED BY LAW. EACH OF THE COMPANY AND EXECUTIVE 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.
5.10 Headings. The headings of articles and sections herein are
included solely for convenience and reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
5.11 Counterparts. This Agreement may be executed by the parties hereto
in counterparts, each of which shall be deemed to be an original, but all such
counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date set forth above.
EXECUTIVE
_________________________________________
Donald Whitbeck
SECURE COMPUTING CORPORATION
By _____________________________________
President and Chief Executive Officer
ATTACHMENT I
PRE-EMPLOYMENT INVENTIONS AND WRITINGS
NONE
Secure Computing Corporation
2675 Long Lake Road
Roseville, MN 55113
August 27, 1996
Employment Agreement
Secure Computing Corporation, a Delaware corporation (the "Company"),
and Timothy P. McGurran agree as follows:
1. Position and Responsibilities
1.1 You shall serve in the executive capacity as Vice President of
Finance, Treasurer & Chief Financial Officer, and perform the duties customarily
associated with such capacity from time to time and at such place or places as
the Company shall designate or as shall be appropriate and necessary in
connection with such employment.
1.2 You will, to the best of your ability, devote your full time and best
efforts to the performance of your duties hereunder and the business and affairs
of the Company.
1.3 You will duly, punctually and faithfully perform and observe any and
all rules and regulations which the Company may now or shall hereafter establish
governing the conduct of its business.
2. Term of Employment
2.1 The term of your employment agreement shall commence on August 26,
1996 and terminate in three years. Your employment may be terminated sooner at
any time by the Company as provided in Section 2.2 or by you upon 30 days
written notice.
2.2 The Company shall have the right, on written notice to you, to
terminate your employment
(a) immediately at any time for cause, or
(b) at any time after August 27, 1996 without cause provided
the Company shall be obligated to pay to you as severance pay
an amount equal to twelve month's basic salary less applicable
taxes and other required withholdings and any amount you may
owe to the Company, payable in full immediately upon such
termination.
2.3 For purposes of Section 2.2, you may be terminated for cause if, in
the reasonable determination of the Company's Board of Directors, you are
convicted of any felony or of any crime involving moral turpitude, or
participate in fraud against the Company, or wrongfully disclose any trade
secrets or other confidential information of the Company to any of its
competitors, or materially breach Section 4 of this Agreement or any provision
of the Proprietary Information Agreement (as defined in Section 6 hereof)
between you and the Company.
3. Compensation
3.1 The Company shall pay to you for the services to be rendered
hereunder a basic salary at an annual rate of $125,000 subject to increase in
accordance with the policies of the Company, as determined by its Board of
Directors from time to time, payable in installments in accordance with Company
policy.
(a) The Compensation Committee of the Board of Directors will
review the base salary from time to time, no less frequently
than annually, and may in its sole discretion adjust the base
salary upward, but not downward, to reflect performance,
appropriate industry guideline data and other factors.
(b) If certain performance goals established from time to time
by the Board of Directors of the company are met, you will be
entitled to a performance bonus of 35% of base salary,
following each anniversary of the date hereof. The amount of
such bonus percentage may be increased, but not decreased by
the Board of Directors of the Company.
3.2 You shall also be entitled to all rights and benefits for which you
shall be eligible under deferred bonus, pension, group insurance, profit-sharing
or other Company benefits which may be in force from time to time and provided
for the Company's employees generally.
3.3 You will be reimbursed for reasonable expenses incurred on behalf of
the Company upon presentation of appropriate receipts.
4. Other Activities During Employment
4.1 Except as stated herein or with the prior written consent of the
Company's Board of Directors, you will not during the term of this Agreement
undertake or engage in any other employment, occupation or business enterprise
other than ones in which you are a passive investor. However, you may continue
to teach classes in the Becker CPA/CMA Review Course.
4.2 Except as permitted by Section 4.3, you will not acquire, assume or
participate in, directly or indirectly, any position, investment or interest
adverse or antagonistic to the Company, its business or prospects, financial or
otherwise, or take any action toward or looking toward any of the foregoing.
4.3 During the term of your employment by the Company except on behalf of
the Company or its subsidiaries, you will not directly or indirectly, whether as
an officer, director, stockholder, partner, proprietor, associate,
representative, consultant, or otherwise, become or be interested in any other
person, corporation, firm, partnership or other entity whatsoever which
manufactures, markets, sells, distributes or provides consulting services
concerning products or services which compete with those of the Company. You may
own, as a passive investor, securities of any such corporation which are listed
for trading on a national stock exchange or traded in the over-the-counter
market, quotations of which are published in an established business journal, so
long as your holdings in any one such corporation shall not in the aggregate
constitute more than 1% of the voting stock of such corporation.
5. Former Employment
5.1 You represent and warrant that your employment by the Company will
not conflict with and will not be constrained by any prior employment or
consulting agreement or relationship. You represent and warrant that you do not
possess confidential information arising out of prior employment which, in your
best judgment, would be utilized in connection with your employment by the
Company in the absence of Section 5.2.
5.2 If, in spite of the second sentence of Section 5.1, you should find
that confidential information belonging to any former employer might be usable
in connection with the Company's business, you will not intentionally disclose
to the Company or use on behalf of the Company any confidential information
belonging to any of your former employers; but during your employment by the
Company you will use in the performance of your duties all information which is
generally known and used by persons with trainings and experience comparable to
your own and all information which is common knowledge in the industry or
otherwise legally in the public domain.
6. Proprietary Information and Inventions You agree to be bound by the
provisions of the Proprietary Information Agreement dated the date of this
Agreement between you and the Company (the "Proprietary Information Agreement").
7. Post-Employment Consultation
7.1 Upon the termination or expiration of your employment with the
Company pursuant to Section 2.1 or 2.2 above or otherwise, the Company shall
have the option to retain you as a consultant by notifying you of its desire to
so retain you within 7 days of such termination or expiration in writing mailed
to you at your last address as it appears in the Company's records. If you are
so retained, you shall, during the period for retention notify the Company of
any change in address and each subsequent employment (stating the name of and
address of the employer and the nature of your position) or business activity in
which you engage during such 30 days.
7.2 If the Company retains you as a consultant, you shall during the
period of such retention hold your self available to render consulting services
in your area of expertise or special competence for up to sixty (60) days for
not more than thirty-four (34) hours per month, for which the Company shall pay
you an amount equal to 50% of your monthly basic salary obtained under Section 3
at the time of termination of your employment, whether or not you shall be
called upon to render any services in any such month. Additionally, if you are
retained as a consultant, during the consulting period, the Company will
continue to provide you with the Company's basic medical, dental, vision and
life insurance coverage in place at that time. Any out-of-pocket expenses
including travel, food, lodging and associated costs which your consulting
activities for the Company may require will be reimbursed against receipts and
vouchers therefore in accordance with the Company's policies in force from time
to time.
7.3 During any period in which you are retained by the Company as a
consultant, the Company may terminate your status as a consultant by giving you
7 days' written notice, during which 7-day period you shall continue to receive
your monthly consulting fee but shall not be obligated to render or hold
yourself available to render any consulting services during such period.
Thereafter the Company shall have no further liability for consulting fees. All
other prohibitions of the Proprietary Information Agreement shall survive
termination of your status as a consultant to the extent provided in such
Proprietary Information Agreement.
8. Post Employment Activities
8.1 In the event and for so long as you are retained as a consultant by
the Company pursuant to Section 7 following the termination or expiration of
your employment with the Company hereunder, absent the Company's prior written
approval upon instructions of its Board of Directors, you will not, directly or
indirectly engage in activities (similar or reasonably related to those in which
you shall have engaged hereunder during the two year immediately preceding the
termination or expiration of your employment with the Company) for, nor render
services (similar or reasonable related to those which you shall have rendered
hereunder during such two years) to, any firm or business organization whether
now existing or hereafter established, which manufactures, markets, sells,
distributes or provides products or services which compete with those of the
Company on the date of termination of your employment, nor shall you engage in
such activities nor render such services to any other person or entity engaged
or about to become engaged in such activities to, for or on behalf of any such
firm or business organization, or employ any person to engage in any activity
which, were it done by you, would violate any provision of the Proprietary
Information Agreement or Section 8 hereof.
8.2 The Company upon instruction of its Board of Directors may give you
written approval to engage personally in any activity or render services
referred to in Section 8.1 if it secures written assurances (satisfactory to the
Company in its sole discretion) from you and from the prospective employer that
the integrity of the Proprietary Information Agreement will not in any way be
jeopardized by such activities, provided the burden of so establishing the
foregoing to the satisfaction of the Company shall be upon you and your
prospective employer(s).
8.3 In the event and for so long as you are retained as a consultant by
the Company pursuant to Section 7 following the termination or expiration of
your employment with the Company, the provisions of Section 4.3 shall be
applicable to you and you shall comply therewith.
9. Survival Your duties under the Proprietary Information Agreement and Section
8 shall survive termination of your employment with the company to the extent
provided under such Proprietary Information Agreement or Section 8 hereof.
10. Assignment This Agreement and the rights and obligations of the parties
hereto shall bind and inure to the benefit of any successor or successors of the
Company by way of reorganization, or merger and any assignee of all or
substantially all of its business and properties, but, except as to any such
successor or assignee of the Company, neither this Agreement nor any rights or
benefits hereunder may be assigned by the Company or by you.
11. Interpretation In case any one or more of the provisions contained in the
Agreement shall, for any reason, be held to be invalid, illegal or
unenforceability in any respect, such invalidity, illegality or unenforceable
shall not affect the other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If, moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing it so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.
12. Notices Any notice which the Company is required or may desire to give to
you shall be given by personal delivery or registered or certified mail, return
receipt requested, addressed to you at the address of record with the Company,
or at such other place as you may from time to time designate in writing. Any
notice which you are required or may desire to give to the Company hereunder
shall be given by personal delivery or by registered or certified mail, return
receipt requested, addressed to the Company as its principal office, or at such
other office as the Company may from time to time designate in writing. The date
of personal delivery or the date of mailing such notice shall be deemed to be
the date of delivery thereof.
13. Waiver If either party should waive any breach of any provisions of this
Agreement, he or it shall not thereby be deemed to have waived any preceding or
succeeding breach of the same or any other provisions of this Agreement.
14. Complete Agreement; Amendments The foregoing, together with a Proprietary
Information Agreement between you and the Company, is the entire agreement of
the parties with respect to the subject matter hereof. This Agreement may not be
amended, supplemented, canceled or discharged except by written instrument
executed by both parties hereto.
15. Applicable Law This agreement has been negotiated in, and shall be
governed by the laws of, the State of Minnesota.
16. Heading The heading of the sections hereof are inserted for convenience
only and shall not be deemed to constitute a part hereof nor to affect the
meaning thereof.
SECURE COMPUTING CORPORATION
By: ______________________________
Kermit M. Beseke
Accepted and agreed this
_____ day of _____________________, 1996;
_________________________________________
Timothy P. McGurran
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