UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 28, 1996
SECURE COMPUTING CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-27074 52-1637226
(State or other jurisdiction) (Commission File Number) (IRS Employer
of incorporation Identification No.)
2675 LONG LAKE ROAD
ROSEVILLE, MINNESOTA 55113
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 628-2700
Item 2. Acquisition or Disposition of Assets.
On August 28, 1996, Owl Acquisition, Inc., a California
corporation and a wholly owned subsidiary of Secure Computing Corporation (the
"Company") merged with and into Enigma Logic, Inc., a California corporation
("Enigma"). In connection with the acquisition, which will be accounted for as a
pooling of interests, the Company issued a total of 2,062,472 shares of its
Common Stock. In addition, the Company issued options covering in the aggregate
627,446 shares of its Common Stock in substitution of previously outstanding
options to acquire shares of Enigma's common stock.
On August 29, 1996, Secure Computing Canada Ltd., an Ontario
corporation and a wholly owned subsidiary of the Company ("Secure Canada"), and
Border Network Technologies Inc., an Ontario corporation ("Border"), were
amalgamated under Ontario law. Each outstanding share of Border common stock was
exchanged for a share of Class B stock of Secure Canada. Immediately following
the amalgamation, with the exception of one holder, all of the holders of
options for Class B stock of Secure Canada entered into Stock Option Assumption
Agreements with the Company, pursuant to which the Company agreed to issue
options covering in the aggregate 587,000 shares of its common stock in
substitution of such holders' options to acquire an aggregate of 1,174,000
shares of the Class B stock of Secure Canada. Immediately following execution of
the Stock Option Assumption Agreements, Secure Canada, pursuant to a
reorganization of capital, exchanged each share of its Class B stock for .50 of
an exchangeable nonvoting share of Secure Canada, which shares are in turn
exchangeable for the Company's Common Stock (the "Exchangeable Shares") and
exchanged the sole outstanding option for 1,000 shares of Class B stock for an
option for 500 Exchangeable Shares. The Company has reserved a total of
5,996,906 shares of its Common Stock for issuance upon conversion of the
outstanding Exchangeable Shares and upon exercise of the outstanding option to
acquire Exchangeable Shares. The acquisition is expected to be accounted for as
a pooling of interests.
For further information on the Enigma and Border transactions,
reference is made to the Current Report on Form 8-K of the Company dated July
12, 1996 (File No. 0-27074) and the definitive Proxy Statement of the Company
dated August 5, 1996 and filed with the Securities and Exchange Commission
August 7, 1996. (File No. 0-27074) Further reference is made to the financial
information of (i) Border for the fiscal year ended December 31, 1994 attached
to this report; (ii) Enigma and Border incorporated by reference in this Report;
and (iii) the Pro Forma combined financial information for the Company, Enigma
and Border for the years ended December 31, 1994 and 1995 incorporated by
reference in this Report.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
(1) The following financial information is incorporated by
reference to the Company's Proxy Statement dated August 5,
1996, filed with the Securities and Exchange Commission on
August 7, 1996. (File No. 0-27074).
(i) Financial Statements of Enigma Logic, Inc.
Report of Independent Public Accountants
Audited Financial Statements
Balance Sheet as of December 31, 1994 and 1995
Statements of Operations for the years ended
December 31, 1994 and 1995
Statement of Shareholders' Deficit Operations for
the years ended December 31, 1994 and 1995
Statement of Cash Flows for the years ended
December 31, 1994 and 1995
Notes to Financial Statements
(ii) Consolidated Financial Statements of Border Network
Technologies Inc.
Report of Independent Public Accountants
Audited Financial Statements
Consolidated Balance Sheet as of December 31,
1994 and 1995
Consolidated Statements of Operations and
Retained Earnings for the years ended December
31, 1994 and 1995
Consolidated Statement of Changes in Financial
Position for the years ended December 31, 1994
and 1995
Notes to Financial Statements
(2) Border Network Technologies Inc. Financial Statements,
December 31, 1994
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Auditors' Report F-1
Balance Sheet as of December 31, 1994 F-2
Statement of Loss and deficit for the Period January 13, 1994
to December 31, 1994 F-3
Statement of Changes in Financial Position for the Period from
January 13, 1994 to December 31, 1994 F-4
Notes to Financial Statements F-5
</TABLE>
(3) Financial Statements of Enigma Logic, Inc. for the periods
ending June 30, 1995 and 1996 and Consolidated Financial
Statements of Border Network Technologies Inc. for the periods
ending June 30, 1995 and 1996 will be filed as soon as
practicable, and in any event not later than November 11,
1996.
(b) Pro Forma Combined Financial Information of Secure Computing
Corporation, Enigma Logic, Inc. and Border Network Technologies, Inc.
(1) Pro forma combined Statements of Operations for the years
ended December 31, 1994 and 1995 are incorporated by reference
to the Company's Proxy Statement dated August 5, 1996, filed
with the Securities and Exchange Commission on August 7, 1996
(File No. 0-27074).
(2) Pro forma financial information for the periods ended June 30,
1995 and 1996 will be filed as soon as practicable, and in any
event not later than November 11, 1996.
(c) Exhibits
2.1 Agreement and Plan of Merger Among Secure Computing
Corporation, Owl Acquisition, Inc. and Enigma Logic, Inc.
dated as of June 24, 196, as amended as of July 31, 1996(1)
2.2 Acquisition and Pre-Amalgamation Agreement Among Secure
Computing Corporation, Edge Acquisition Inc. and Border
Network Technologies Inc. dated as of May 28, 1996, as amended
as of July 31, 1996(2)
2.3 Amalgamation Agreement dated as of August 29, 1996 among
Secure Computing Corporation, Edge Acquisition Inc. and Border
Network Technologies Inc.
4.1 Certificate of the Powers, Designations, Preferences and
Rights of the Series A Preferred Stock
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Price Waterhouse Chartered Accountants
99.1 Press Release of Secure Computing Corporation dated August 28,
1996.
99.2 Press Release of Secure Computing Corporation dated August 29,
1996.
- ---------------------
(1) Incorporated by reference to Appendix B the Registrant's definitive
Proxy Statement dated August 5, 1996 and filed with the Securities and
Exchange Commission on August 7, 1996. (File No. 0-27074)
(2) Incorporated by reference to Appendix A the Registrant's definitive
Proxy Statement dated August 5, 1996 and filed with the Securities and
Exchange Commission on August 7, 1996. (File No. 0-27074)
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: September 12, 1996 By: /s/ Timothy P. McGurran
--------------------------------
Timothy P. McGurran
Vice President of Finance,
Treasurer and
Chief Financial Officer
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EXHIBIT INDEX
No. Exhibit No. Page
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2.1 Agreement and Plan of Merger Among Secure Computing Corporation, Owl
Acquisition, Inc. and Enigma Logic, Inc. dated as of June 24, 196, as
amended as of July 31, 1996(1)
2.2 Acquisition and Pre-Amalgamation Agreement Among Secure Computing
Corporation, Edge Acquisition Inc. and Border Network Technologies Inc.
dated as of May 28, 1996, as amended as of July 31, 1996(2)
2.3 Amalgamation Agreement dated as of August 29, 1996 among Secure
Computing Corporation, Edge Acquisition Inc. and Border Network
Technologies Inc.
4.1 Certificate of the Powers, Designations, Preferences and Rights of the
Series A Preferred Stock
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Price Waterhouse Chartered Accountants
99.1 Press Release of Secure Computing Corporation dated August 28, 1996.
99.2 Press Release of Secure Computing Corporation dated August 29, 1996.
</TABLE>
- ---------------------
(1) Incorporated by reference to Appendix B the Registrant's definitive
Proxy Statement dated August 5, 1996 and filed with the Securities and
Exchange Commission on August 7, 1996. (File No. 0-27074)
(2) Incorporated by reference to Appendix A the Registrant's definitive
Proxy Statement dated August 5, 1996 and filed with the Securities and
Exchange Commission on August 7, 1996. (File No. 0-27074)
BORDER NETWORK TECHNOLOGIES INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1994
AUDITORS' REPORT
TO THE SHAREHOLDERS
BORDER NETWORK TECHNOLOGIES INC.
We have audited the balance sheet of Border Network Technologies Inc. as at
December 31, 1994 and the statements of loss and deficit and changes in
financial position for the period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1994 and the
results of its operations and the changes in its financial position for the
period then ended in accordance with generally accepted accounting principles.
Mississauga, Ontario /s/ McClurkin Ahier Dick & Company
October 2, 1995 CHARTERED ACCOUNTANTS
57 Queen Street South, Mississauga, Ontario L5M 1K5
Tel: (905) 858-4147 Fax: (905) 858-1162
BORDER NETWORK TECHNOLOGIES INC.
BALANCE SHEET
AS AT DECEMBER 31, 1994
1994
---------
ASSETS
CURRENT
Cash $ 18,367
Accounts receivable 140,203
Income taxes 40,000
Prepaid expenses 9,600
---------
208,170
CAPITAL, note 3 3,865
---------
$ 212,035
=========
LIABILITIES
CURRENT
Accounts payable $ 93,681
Deferred revenue 2,720
Current portion of long term debt 80,000
---------
176,401
LONG TERM DEBT, note 4 10,000
---------
186,401
---------
SHARE CAPITAL AND DEFICIT
SHARE CAPITAL, note 5 38,000
DEFICIT (12,366)
---------
25,634
---------
$ 212,035
=========
SEE ACCOMPANYING NOTES
Approved on behalf of the Board:
- --------------------------------- ---------------------------------
Director Director
BORDER NETWORK TECHNOLOGIES INC.
STATEMENT OF LOSS AND DEFICIT
FOR THE PERIOD JANUARY 13, 1994 TO DECEMBER 31, 1994
1994
---------
SALES $ 187,374
COST OF SALES 8,358
---------
GROSS PROFIT 179,016
---------
OTHER INCOME
Warranty 680
---------
179,696
---------
EXPENSES
Advertising and promotion 332
Amortization 555
Automotive 193
Engineering 7,606
Interest and bank charges 70
Interest on long term debt 2,000
Marketing 80,861
Office 18,368
Professional fees 4,950
Salaries 66,802
Software license fees 3,452
Telephone and fax 4,360
Travel 2,513
---------
192,062
---------
LOSS FOR THE PERIOD AND DEFICIT, END OF PERIOD $ (12,366)
=========
BORDER NETWORK TECHNOLOGIES INC.
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE PERIOD FROM JANUARY 13, 1994 TO DECEMBER 31, 1994
1994
---------
CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
Operations
Loss for the period $ (12,366)
Item not involving cash
Amortization 555
---------
(11,811)
Changes in non-cash working capital
balances
Accounts receivable (140,203)
Accounts payable 93,681
Income taxes (40,000)
Deferred revenue 2,720
Prepaid expenses (9,600)
---------
(105,213)
---------
INVESTING ACTIVITIES
Purchase of capital assets (4,420)
---------
FINANCING ACTIVITIES
Issuance of common shares 38,000
Long term debt 90,000
---------
128,000
---------
CASH, END OF PERIOD $ 18,367
=========
BORDER NETWORK TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- -------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
(a) Revenue Recognition
(i) Sale of Products and Consulting
Revenues from contracting activities involving the design,
manufacture and installation of equipment and software are
recorded on the completed contract method based upon
substantial completion. Any foreseeable losses on contracts
are charged to operations at the time they become evident.
(ii) Warranty
Revenue from warranty contracts is deferred and taken into
income over the term of the warranty.
(b) Capital Assets
Capital assets are recorded at cost. Amortization is provided on the
diminishing balance basis at the following rates:
Computer equipment - 30%
Office furniture and equipment - 20%
(c) Investment Tax Credits
Investment tax credits are accounted for using the cost-reduction
method. Under this method, investment tax credits are deducted from the
related asset or expenditure.
- -------------------------------------------------------------------------------
2. RELATED PARTY TRANSACTIONS
- -------------------------------------------------------------------------------
Sales to a shareholder during the period totalled $ 116,671 and at year end the
amount included in accounts receivable was $96,358.
- -------------------------------------------------------------------------------
3. CAPITAL ASSETS 1994
- -------------------------------------------------------------------------------
Accumulated
Cost Amortization
------ ------------
Computer equipment $2,269 $340
Office furniture and equipment 2,151 215
----- ----
$4,420 $555
------ ----
Cost less accumulated
amortization $3,865
======
- -------------------------------------------------------------------------------
4. LONG TERM DEBT 1994
- -------------------------------------------------------------------------------
Due to shareholder, bearing interest at prime plus 2%,
repayable commencing January 31 1995 in monthly
principal amounts of $4,167 $50,000
Due to shareholder, bearing interest at prime plus 2%,
repayable April 1, 1995 30,000
Due to individuals related to a shareholder, bearing interest
at 50%, due July 1, 1996 10,000
-------
90,000
less current portion 80,000
-------
$10,000
=======
- -------------------------------------------------------------------------------
5. SHARE CAPITAL 1994
- -------------------------------------------------------------------------------
Authorized
Unlimited number common shares
Issued
100 common shares $ 38,000
========
- -------------------------------------------------------------------------------
6. INCOME TAXES
- -------------------------------------------------------------------------------
The Company has incurred tax losses of $52,000 expiring 2004, the benefit of
which has not been reflected in these financial statements.
- -------------------------------------------------------------------------------
7. COMMITMENTS
- -------------------------------------------------------------------------------
Subsequent to the year end, the Company has entered into a premises lease at an
annual rental as follows -
September 1, 1995 to August 31, 1996 - $ 95,124
September 1, 1996 to August 31, 1997 - 110,978
September 1, 1997 to August 31, 1998 - 110,978
Subsequent to the year end, the Company has entered into a phone system lease
commencing June, 1995 expiring January, 1999 in the monthly amount of $608.
EXHIBIT 2.3
AMALGAMATION AGREEMENT
AMALGAMATION AGREEMENT (the "Agreement"), dated as of August 29, 1996,
among Secure Computing Corporation, a Delaware corporation ("Secure"), Secure
Computing Canada Ltd., an Ontario corporation and a direct wholly-owned
subsidiary of Secure ("Amalgamation Sub") and Border Network Technologies Inc.,
an Ontario corporation ("Border").
RECITALS
WHEREAS Amalgamation Sub and Border have agreed to amalgamate and
continue as one corporation pursuant to the BUSINESS CORPORATIONS ACT (Ontario)
upon the terms and conditions hereinafter set out;
NOW, THEREFORE, in consideration of the mutual warranties, covenants
and agreements set forth herein, Secure, Amalgamation Sub and Border hereby
agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. IN this Agreement unless there is something in the
subject matter or context inconsistent therewith, the following terms shall have
the respective meanings set out below and grammatical variations of such terms
shall have corresponding meanings:
(a) "ACQUISITION AND PRE-AMALGAMATION AGREEMENT" means the acquisition
and pre-amalgamation agreement among Secure, Amalgamation Sub and Border dated
as of May 28, 1996, as amended by Amendment No. 1 to the Acquisition and
Pre-Amalgamation Agreement dated as of July 31, 1996 between such parties,
providing for, among other things, the Amalgamation;
(b) "AMALGAMATION" means the amalgamation of Amalgamation Sub and
Border pursuant to subsection 2.1(a)
(c) "AMALGAMATION RESOLUTION" means the special resolution passed by
the holders of Border Shares at the Meeting;
(d) "AMALGAMATION SUB" means Secure Computing Canada Ltd., a
corporation incorporated under the OCBA;
(e) "BORDER" means Border Network Technologies Inc., a corporation
subsisting under the OCBA;
(f) "BORDER SHARES" means the common shares in the capital of Border;
(g) "BUSINESS DAY" means any day other than a Saturday, Sunday or a day
when banks are not open for business in either or both of Minneapolis, Minnesota
and Toronto, Ontario;
(h) "CLASS A SHARES" has the meaning ascribed thereto in clause 2.1
(a)(iv)(A);
(i) "CLASS B SHARES" has the meaning ascribed thereto in clause 2.1
(a)(iv)(B);
(j) "CORPORATION" means the corporation continuing from the
Amalgamation;
(k) "DISSENT PROCEDURES" has the meaning set out in section 3.1;
(l) "DISSENTING SHAREHOLDER" means a holder of Border Shares
("Dissenting Shares") who dissents in respect of the Amalgamation in strict
compliance with the Dissent Procedures;
(m) "EFFECTIVE DATE" means the date shown on the certificate of
amalgamation issued by the Director under the OBCA giving effect to the
Amalgamation;
(n) "MEETING" means the Special Meeting of the shareholders of Border
to be held to consider the Amalgamation;
(o) "NASDAQ" means the Nasdaq National Market;
(p) "OCBA" means the BUSINESS CORPORATIONS ACT (Ontario) R.S.O. 1990,
c.B. 16, as amended;
(q) "SECURE" means Secure Computing Corporation, a body corporate
existing under the laws of the State of Delaware; and
(r) "SECURE COMMON SHARES" means the shares of common stock in the
capital of Secure.
1.2 SECTIONS AND HEADINGS. The division of this Agreement into sections
and the insertion of headings are for reference purposes only and shall not
affect the interpretation of this Agreement. Unless otherwise indicated, any
reference in this Agreement to a section or an Appendix refers to the specified
section of or Appendix to this Agreement.
1.3 NUMBER, GENDER AND PERSONS. In this Agreement, unless the context
otherwise requires, words importing the singular number include the plural and
vice versa, words importing any gender include all genders and words importing
persons include individuals, corporations, partnerships, associations, trusts,
unincorporated organizations, governmental bodies and other legal or business
entities of any kind.
1.4 INTERPRETATION NOT AFFECTED BY HEADINGS. The division of this
Agreement into Articles, sections and other parts and the insertion of headings
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.5 DATE OF ANY ACTION. In the event that any date on or by which any
action is required or permitted to be taken hereunder is not a Business Day,
such action shall be required or permitted to be taken on or by the next
succeeding day which is a Business Day.
1.6 TIME. All times expressed herein are local time (Toronto, Ontario)
unless otherwise stipulated herein.
1.7 CURRENCY. Unless otherwise expressly stated herein, all references
to currency in this Agreement are to Canadian dollars, being lawful money of
Canada, and the sign "$" without more shall mean Canadian dollars.
1.8 STATUTORY REFERENCES. Any reference in this Agreement to a statute
includes all regulations made thereunder, all amendments to such statute or
regulations in force from time to time, and any statute or regulation that
supplements or supersedes such statute or regulations.
ARTICLE 2
AMALGAMATION
2.1 AMALGAMATION. (a) Amalgamation Sub and Border hereby agree to
amalgamate to form the Corporation and shall continue as one corporation under
the OBCA upon the terms and conditions of this Agreement and upon the Effective
Date, unless and until otherwise determined in the manner required by law, by
the Corporation, its directors or shareholders, the following provisions shall
apply to the Corporation:
(i) NAME. The name of the Corporation shall be Secure Computing Canada
Ltd.,
(ii) REGISTERED OFFICE. The registered office of the Corporation shall
be located in the City of Toronto in the Province of Ontario. The address of the
registered office of the Corporation shall be 20 Toronto Street, Suite 400,
Toronto, Ontario M5C 2B8;
(iii) BUSINESS AND POWERS. There shall be no restrictions on the
business the Corporation may carry on or on the powers it may exercise;
(iv) AUTHORIZED SHARE CAPITAL. The Corporation shall be authorized to
issue:
(A) an unlimited number of Class A voting shares (the
"Class A Shares"); and
(B) an unlimited number of Class B non-voting shares (the
"Class B Shares");
(v) SHARE PROVISIONS. The Class A Shares and the Class B Shares shall
have attached thereto the rights, privileges, restrictions and conditions
respectively set out in Appendix A hereto;
(vi) SHARE RESTRICTIONS. There shall be no restrictions on the issue,
transfer or ownership of shares of the Corporation;
(vii) NUMBER OF DIRECTORS. The number of directors of the Corporation
shall be such number not less than one and not more than ten as the shareholders
of the Corporation may from time to time determine by special resolution or, if
empowered to do so by special resolution, as the directors of the Corporation
may from time to time determine;
(vii) INITIAL DIRECTORS AND OFFICERS. The directors and officers of the
Corporation shall be:
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Canadian
Name Title Residence Address Resident
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Robert Forbes Director 88 Bloor Street East Yes
Suite 3010
Toronto, Ontario
M4W 3G9
Kermit M. Beseke Director and President 8040 Demontreville Court No
Lake Elmo, Minnesota
U.S.A. 55042
Timothy P. McGurran Treasurer 11240 218th Street North No
Scandia, Minnesota
U.S.A. 55703
Steven M. Maurer Secretary 6092 Scenic Drive No
Minnetonka, Minnesota
U.S.A. 55345
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(ix) BY-LAWS. The by-laws of the Corporation shall be the
by-laws of Amalgamation Sub in effect immediately prior to the
Amalgamation;
(x) FISCAL YEAR. The fiscal year of the Corporation shall end
on December 31 of each year; and
(xi) EFFECT. The Amalgamation shall be effective on the
Effective Date and the effect of the Amalgamation shall be as provided
in section 179 of the OBCA.
(b) Upon the Amalgamation, each common share of Amalgamation Sub
outstanding immediately prior to the Amalgamation shall be exchanged for one
Class A Share and each certificate representing such common shares shall
continue to evidence ownership of Class A Shares.
(c) Upon the Amalgamation, each Border Share outstanding immediately
prior to the Amalgamation, other than those held by Dissenting Shareholders
shall be exchanged for one Class B Share and the name of each holder thereof
shall be added to the register of holders of Class B Shares accordingly.
Certificates representing Class B Shares shall not be issued.
(d) Upon the Amalgamation, each option to acquire Border Shares
outstanding immediately prior to the Amalgamation shall be exchanged for an
option to acquire the same number of Class B Shares on the same terms and
conditions.
(e) Upon the Amalgamation, each special warrant of Border outstanding
immediately prior to the Amalgamation, each of which entitles the holder to
acquire one Border Share, shall be exchanged for one special warrant of the
Corporation, each of which shall entitle the holder to acquire one Class B Share
on the same terms and conditions.
(f) Upon the Amalgamation, each broker warrant of Border outstanding
immediately prior to the Amalgamation, each of which entitles the holder to
acquire one compension option exercisable for one Border Share at a price of
$5.50 per Border Share, shall be exchanged for one broker warrant of the
Corporation, each of which shall entitle the holder to acquire one compensation
option exercisable for one Class B Share at a price of $5.50 per Class B Share
on the same terms and conditions.
2.2 STATED CAPITAL. For purposes of the OBCA:
(a) the stated capital attributable to the Class A Shares issued on the
Amalgamation will be equal to the stated capital of the common shares of
Amalgamation Sub immediately before the Amalgamation;
(b) the stated capital attributable to the Class B Shares issued on the
Amalgamation will be the aggregate of the stated capital of the Border Shares
that are exchanged for Class B Shares on the Amalgamation.
ARTICLE 3
RIGHTS OF DISSENT
3.1 RIGHTS OF DISSENT. (a) Holders of Border Shares my exercise rights
of dissent with respect to such shares pursuant to and in the manner set forth
in section 185 of the OBCA and this section 3.1 (the "Dissent Procedures") in
connection with the Amalgamation and holders who duly exercise such rights of
dissent and who:
(i) are ultimately entitled to be paid fair value for
their Border Shares shall be deemed to have transferred such
Border Shares to the Corporation for cancellation on the
Effective Date; or
(ii) are ultimately not entitled, for any reason, to
be paid fair value for their Border Shares shall be deemed to
have participated in the Amalgamation on the same basis as any
non-dissenting holder of Border Shares and shall receive Class
B Shares on the basis determined in accordance with subsection
2.1(c),
but in no case shall the Corporation be required to recognize such
holders as holders of Border Shares on and after the Effective Date,
and the names of such holders of Border Shares shall be deleted from
the registers of holders of Border Shares on the Effective Date.
(b) Border shall give Secure (i) prompt notice of any written demand of
a right of dissent, withdrawals of such demand and any other instruments served
pursuant to the OBCA and received by Border and (ii) the opportunity to
participate in all negotiations and proceedings with respect to such rights.
Border shall not, except with the prior written consent of Secure, voluntarily
make any payment with respect to any such rights or offer to settle or settle
any such rights. An amount equal to the amount of all payments to be made by the
Corporation pursuant to the exercise of such dissenters' rights shall be
advanced or contributed by Secure to the Corporation in such manner as Secure
may determine.
ARTICLE 4
TERMINATION
4.1 TERMINATION. This Agreement may be terminated and the Amalgamation
abandoned at any time prior to the Effective Date, whether before or after
approval of the Amalgamation by the shareholders of Border or Amalgamation Sub:
(a) by mutual consent of the Boards of Directors of Secure and
Border;
(b) by either Secure or Border if the Acquisition and
Pre-Amalgamation Agreement is terminated.
4.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement by either Secure or Border, as provided above, this Agreement shall
thereafter become void and there shall be no liability on the part of any party
hereto or their respective directors, officers, shareholders or agents.
ARTICLE 5
MISCELLANEOUS
5.1 EXPENSES. Whether or not the Amalgamation is consummated, all costs
and expenses (including without limitation the fees and expenses of investment
bankers, brokers, attorneys and accountants) incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the party
incurring such costs and expenses.
5.2 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given, if given) by hand delivery, transmitted by
telegram, telex or telecopy or mailed by registered or certified mail, postage
prepaid, return receipt requested, as follows:
(a) If to Secure or Amalgamation Sub to:
Secure Computing Corporation
2675 Long Lake Road
Roseville, Minnesota 55113
U.S.A.
Attention: Kermit M. Beseke, CEO
Telephone: (612) 628-2722
Telecopy: (612) 628-2702
with copies to:
Secure Computing Corporation
2675 Long Lake Road
Roseville, Minnesota 55113
U.S.A.
Attention: Timothy McGurran, CFO
Telephone: (612) 628-2700
Telecopy: (612) 628-2702
James E. Nicholson
Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
U.S.A.
Telephone: (612) 336-3203
Telecopy: (612) 336-3026
(b) If to Border to:
Border Network Technologies Inc.
20 Toronto Street, Suite 406
Toronto, Ontario M5C 2B8
CANADA
Attention: Glenn Mackintosh
Telephone: (416) 368-7157
Telecopy: (416) 368-6223
with a copy to:
James E. Kofman
Osler, Hoskin & Harcourt
P.O. Box 50
1 First Canadian Place
Toronto, Ontario M5X 1B8
CANADA
Telephone: (416) 862-6420
Telecopy: (416) 862-6666
or to such other address as the person to whom notice is given has previously
furnished to the other parties in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
5.3 AMENDMENTS. This Agreement may be amended by all the parties hereto
by action taken by their respective Boards of Directors at any time before or
after approval thereof by the shareholders of Border or the stockholders of
Secure, but, after such approval, no amendment shall be made which by law
requires further approval by such shareholders or stockholders without such
further approval. This Agreement may not be amended, modified or supplemented
except by written agreement of the parties hereto.
5.4 NONASSIGNABILITY. This Agreement shall not be assigned except by
operation of law.
5.5 PARTIES IN INTEREST. This Agreement shall be binding upon and enure
solely to the benefit of the parties hereto and their successors and permitted
assigns, and nothing in this Agreement, expressed or implied, is intended to
confer upon any other person any rights or remedies of any nature under or by
reason of this Agreement.
5.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed to constitute an original and shall
become effective when one or more counterparts have been signed by each of the
parties hereto.
5.7 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the Province of Ontario, without
regard to its conflicts of law rules.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of Secure, Amalgamation Sub and Border on the
date first above written.
SECURE COMPUTING CORPORATION
By: /s/ Kermit M. Beseke
------------------------------------------
SECURE COMPUTING CANADA LTD.
By: /s/ Timothy McGurran
------------------------------------------
BORDER NETWORK TECHNOLOGIES INC.
By: /s/ Steven Lamb
------------------------------------------
By: /s/ Adam Adamou
------------------------------------------
APPENDIX A TO AMALGAMATION AGREEMENT
PROVISIONS ATTACHING TO CLASS A SHARES
The Class A voting shares in the capital of the Corporation shall have
attached thereto the following rights, privileges, restrictions and conditions:
DIVIDENDS
Subject to the prior rights of the holders of any shares ranking senior
to the Class A Shares with respect to priority in the payment of dividends, the
holders of Class A Shares shall be entitled to receive dividends and the
Corporation shall pay dividends thereon, as and when declared by the of
directors of the Corporation out of moneys properly applicable to the payment of
dividends, in such amount and in such form as the board of directors may from
time to time determine and all dividends which the directors may declare on the
Class A Shares shall be declared and paid in equal amounts per share on all
Class A Shares at the time outstanding; and, subject as aforesaid, the board of
directors of the Corporation may in their discretion declare dividends on the
Class A Shares without declaring dividends on any other class of shares.
DISSOLUTION
In the event of the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of winding up
its affairs, subject to the prior rights of the holders of any other shares
ranking senior to the Class A Shares with respect to priority in the
distribution of assets upon dissolution, liquidation or winding-up, the holders
of the Class A Shares shall be entitled to receive the remaining property and
assets of the Corporation rateably with the holders of the Class B Shares.
VOTING RIGHTS
The holders of the Class A Shares shall be entitled to receive notice
of and to attend all meetings of the shareholders of the Corporation and shall
have one vote for each share held at all meetings of the shareholders of the
Corporation, except for meetings at which only holders of another specified
class or series of shares of the Corporation are entitled to vote separately as
a class or series.
(ii)
PROVISIONS ATTACHING TO CLASS B SHARES
The Class B non-voting shares in the capital of the
Corporation shall have attached thereto the following rights, privileges,
restrictions and conditions:
DIVIDENDS
Subject to the prior rights of the holders of any shares ranking senior
to the Class B Shares with respect to priority in the payment of dividends, the
holders of Class B Shares shall be entitled to receive dividends and the
Corporation shall pay dividends thereon, as and when declared by the board of
directors of the Corporation out of moneys properly applicable to the payment of
dividends, in such amount and in such form as the board of directors may from
time to time determine and all dividends which the directors may declare on the
Class B Shares shall be declared and paid in equal amounts per share on all
Class B Shares at the time outstanding; and, subject as aforesaid, the board of
directors of the Corporation may in their discretion declare dividends on the
Class B Shares without declaring dividends on any of the Class A Shares.
DISSOLUTION
In the event of the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of winding up
its affairs, subject to the prior rights of the holders of any other shares
ranking senior to the Class B Shares with respect to priority in the
distribution of assets upon dissolution, liquidation or winding-up, the holders
of the Class B Shares shall be entitled to receive the remaining property and
assets of the Corporation rateably with the holders of the Class A Shares.
VOTING RIGHTS
Except where specifically provided by the OBCA, the holders of the
Class B Shares: (a) shall not be entitled to receive notice of or to attend
meetings of the shareholders of the Corporation; and (b) shall not be entitled
to vote at any meeting of shareholders of the Corporation; but the holders of
the Class B Shares shall be entitled to notice of meetings of shareholders
called for the purpose of authorizing the dissolution of the Corporation or the
sale, lease or exchange of all or substantially all of the property of the
Corporation other than in the ordinary course of business of the Corporation as
contemplated by subsection 184(3) of the OBCA. Notwithstanding the foregoing,
the holders of Class B Shares shall not be entitled to vote, separately as a
class or otherwise, in the case of an amendment referred to in subsections
170(1)(a),(b) or (e) of the OBCA.
EXHIBIT 4.1
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
SERIES A PREFERRED STOCK
($.01 PAR VALUE)
OF
SECURE COMPUTING CORPORATION
------------------
PURSUANT TO SECTION 151(G) OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
------------------
THE UNDERSIGNED, being, respectively, the President and Chief Executive
Officer and the Secretary of Secure Computing Corporation, a Delaware
corporation (the "Company"), DO HEREBY CERTIFY that, pursuant to the provisions
of Section 151(g) of the General Corporation Law of the State of Delaware the
following resolutions were duly adopted by the Board of Directors of the Company
and pursuant to authority conferred upon the Board of Directors by the
provisions of the Amended and Restated Certificate of Incorporation of the
Company (the "Certificate of Incorporation"), the Board of Directors of the
Company, at a meeting duly held on May 22, 1996, adopted resolutions providing
for the issuance of a series of its preferred stock and fixing the relative
powers, preferences, rights, qualifications, limitations and restrictions of
such stock. These resolutions are as follows:
"RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of the Certificate of
Incorporation, the issuance of a series of preferred stock, par value $.01 per
share, which shall consist of one of the 2,000,000 shares of preferred stock
which the Company now has authority to issue, be, and the same hereby is,
authorized, and the Board hereby fixes the powers, designations, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof, of the share of such
series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Certificate of
Incorporation which may be applicable to the preferred stock of this series) as
follows:
I. AUTHORIZED NUMBER AND DESIGNATION. One share of the preferred stock,
$.01 par value per share, of the Company is hereby constituted as a series of
the preferred stock designated Series A Preferred Stock, $.01 par value (the
"Series A Preferred").
II. DIVIDENDS. The holder of Series A Preferred shall not to be
entitled to receive any dividends declared and paid by the Company.
III. VOTING RIGHTS. Except as otherwise required by law or the
Certificate of Incorporation, (i) the holder of record of the share of Series A
Preferred shall have a number of votes equal to the number of votes that the
holders of the outstanding Exchangeable Non-Voting Shares ("Exchangeable
Shares") of Secure Computing Canada Ltd., an Ontario corporation and subsidiary
of the Company ("Continuing Corporation"), from time to time, which are not
owned by the Company, any of its subsidiaries or any person directly or
indirectly controlled by or under common control of the Company would be
entitled to if all such Exchangeable Shares were exchanged by the holders
thereof for shares of the Common Stock of the Company pursuant to the terms of
the Exchangeable Shares, in each case for the election of directors and on all
matters submitted to a vote of the stockholders of the Company, and (ii) in
respect of all matters concerning the voting of shares, the Series A Preferred
and the Common Stock of the Company shall vote as a single class.
IV. LIQUIDATION PREFERENCE. Upon any liquidation, dissolution or
winding up the Company, whether voluntary or involuntary, and subject to any
prior rights of holders of shares of preferred stock ranking senior to the
Series A Preferred, the holder of the share of Series A Preferred shall be paid
an amount equal to $1.00, together with payment to any class of stock ranking
equally with the Series A Preferred, and before payment shall be made to holders
of any stock ranking on liquidation junior to the Series A Preferred (such
amount payable with respect to the Series A Preferred being referred to as the
"Series A Preferred Liquidation Preference Payment").
V. OTHER PROVISIONS. (a) Pursuant to the terms of that certain
Acquisition and Pre-Amalgamation Agreement, dated as of May 28, 1996 and
Amendment No. 1 to Acquisition and Pre-Amalgamation Agreement, dated as of July
31, 1996, by and among the Company, Edge Acquisition Inc., an Ontario
corporation, and, Border Network Technologies Inc., an Ontario corporation, one
share of Series A Preferred is being issued to the trustee (the "Trustee") under
the Voting and Exchange Trust Agreement, dated as of August 29, 1996 by and
among the Company, Continuing Corporation and the Trustee.
(b) The holder of the share of Series A Preferred is entitled to
exercise the voting rights attendant thereto in such manner as such holder
desires.
(c) At such time as the Series A Preferred has no votes attached to it
because there are no Exchangeable Shares of Continuing Corporation outstanding
which are not owned by the Company, any of its subsidiaries or any person
directly or indirectly controlled by or under common control of the Company, and
there are no shares of stock, debt, options or other agreements of Continuing
Corporation which could give rise to the issuance of any Exchangeable Shares of
Continuing Corporation to any person (other than the Company, and of its
subsidiaries or any person directly or indirectly controlled or under common
control of the Company), the Series A Preferred shall be canceled."
IN WITNESS WHEREOF, this Certificate has been signed by Kermit M.
Beseke, President and Chief Executive Officer and attested to by James E.
Nicholson, Secretary of the Company, all as of the 29th day of August, 1996.
SECURE COMPUTING CORPORATION
By: /s/ Kermit M. Beseke
Kermit M. Beseke
President and Chief Executive Officer
Attest:
By: /s/ James E. Nicholson
James E. Nicholson
Secretary
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Current Report on Form 8-K of our report
dated March 1, 1996, relating to the financial statements of Enigma Logic, Inc.,
incorporated at Item 7(a)(1)(i) by reference to the Proxy Statement dated
August 5, 1996, (File No. 0-27074).
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
San Jose, CA
September 12, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Form 8-K of Secure
Computing Corporation of our report dated March 29, 1996 relating to the
consolidated financial statements of Border Network Technologies Inc. for the
year ended December 31, 1995, which appears in the Proxy Statement of Secure
Computing Corporation dated August 5, 1996, which is incorporated by reference
in the Current Report on Form 8-K of Secure Computing Corporation dated
September 12, 1996.
/s/ Price Waterhouse
Chartered Accountants
Toronto, Ontario
September 12, 1996
EXHIBIT 99.1
( BW)(SECURE-COMPUTING) (SCUR) SECURE COMPUTING COMPLETES
ACQUISITION, ANNOUNCES NEW ORGANIZATION
ST. PAUL, Minn.--(BUSINESS WIRE)--Aug. 28, 1996--Secure Computing
Corporation (Nasdaq: SCUR) today announced that it has completed its acquisition
of Enigma Logic and expects to close its acquisition of Border Network
Technologies tomorrow. The company also announced its new organizational
structure. The new Secure Computing is now the second largest public company in
the computer network security market, which the Yankee Group, a leading industry
research firm, predicts will grow to $5.5 billion by the year 2000. The company
markets the broadest product offering of any network security company and has
the largest international distribution channel.
"We are on course to be the global leader in enabling safe, secure and
productive commerce over the Internet," said Kermit Beseke, chairman and CEO of
Secure Computing. "Our mission is driven by two fundamentals: providing a
comprehensive, scalable network security solution and enabling electronic
commerce. We're building and acquiring the resources necessary to accomplish
this mission."
Under the terms of the Enigma acquisition, the company issued
approximately 2.7 million shares of stock and options for all outstanding shares
and options of Enigma Logic. Secure Computing has shareholder approval to issue
5.6 million shares, options and warrants for all outstanding shares, options and
warrants of Border, which is scheduled to close on August 29. Both transactions
are tax-free reorganizations and will be accounted for as a pooling of
interests.
Structure and Organization
Simultaneously with announcing the closing, the company said it has
implemented a new organization united under the Secure Computing name, with
Beseke as chairman and CEO of the organization. The company's new organization
includes four key business units supported by a single sales and marketing group
and a highly centralized finance and administration group.
-- The Firewall business unit is responsible for developing firewall
products providing network perimeter security. The division will incorporate
development teams located in St. Paul and the Toronto area that will jointly
develop products under the Sidewinder(TM) and BorderWare(TM) trademarks.
-- The Enigma business unit will develop software products for access
control and network accounting, including SafeWord(TM) products for
identification and authentication. This unit gives Secure Computing a California
presence and will continue to be located in Concord, California.
-- The Webster business unit, Naples, Florida, is responsible for
advancing Internet applications focused on enhancing the productivity of
Internet users. These include server-based products for filtering and monitoring
access to the World Wide Web and Usenet Newsgroup listings. Secure Computing
closed its acquisition of Webster in May.
-- The Government business unit, with offices in St. Paul and Reston,
Virginia, will address the network security needs of national, state and local
governments, including projects such as the current $15 million contract with
the National Security Administration.
-- The Sales and Marketing group includes the company's worldwide
indirect sales network of distributors and resellers, as well as a small direct
sales team for strategic and OEM accounts.
Readying Product for Channel Distribution
Beseke said that although these new business units have separate profit
and loss responsibilities, they are working together to integrate their
products. "By the end of this quarter, the products of the four united Secure
Computing companies will interoperate," said Beseke. "This will give our channel
a total solution offering.
"We are delivering enterprise solutions. That requires not only a full
suite of products for large and mid-sized enterprises, but also different
distribution and support strategies. We intend to serve organizations primarily
through our indirect channel, while our larger North American and government
customers will continue to get the same direct support they've always had."
Expands Global Distribution
The company also said it intends to leverage its large, international
indirect sales and distribution channel of more than 30 distributors and more
than 1,500 reseller locations. To further strengthen its ability to support its
distributors in Asia/Pacific and Europe, Secure Computing announced that it is
opening offices in Kuala Lumpur, Malaysia, and in Amsterdam. These offices will
provide marketing, selling and customer support to their respective geographic
regions.
Headquartered in St. Paul, Minn., Secure Computing markets a powerful
suite of network security solutions, including its BorderWare Firewall Server
and its award-winning Sidewinder Enterprise Security Server, which together
comprise a family of Internet firewalls; WebTrack, a best-of-breed software
solution for monitoring and filtering Internet access and content; SafeWord, a
family of network identification, authentication and accounting products; and
information security consulting services. Secure Computing has more than 2,000
customers worldwide, ranging from small companies to Fortune 500 companies to
government agencies.
For more information, please visit the following Web sites: Secure
Computing, www.sctc.com; Border Network Technologies, www.border.com; Webster
Network Strategies, www.webster.com; Enigma Logic, www.safeword.com.
--30--
CONTACT: Padilla Speer Beardsley Inc.
224 Franklin Avenue West
Minneapolis, Minnesota 55404
Marian Briggs/Bob Brin
612/871-8877
E-mail: [email protected]
[email protected]
or
Secure Computing Corporation
2675 Long Lake Road
Roseville, Minnesota 55113
Tim McGurran
612/628-6262
E-mail: [email protected]
[email protected]
EXHIBIT 99.2
(Secure Computing Corporation letterhead)
2675 Long Lake Road
Roseville, MN 55113
U.S.A.
Phone: (612) 628-2700
Fax: (612) 628-2701
EEO/AA
( BW)(SECURE-COMPUTING)(SCUR) SECURE COMPUTING COMPLETES ACQUISITION OF BORDER
NETWORK TECHNOLOGIES
ST. PAUL, Minn.--(BUSINESS WIRE)--Aug. 29, 1996--Secure Computing
Corporation (Nasdaq: SCUR) today announced that it has completed its acquisition
of Border Network Technologies. Under the terms of the acquisition, Secure
Computing issued 6.6 million shares, options and warrants for all outstanding
shares, options and warrants of Border. The transaction is a tax-free
reorganization and will be accounted for as a pooling of interests.
Kermit Beseke, chairman and CEO of Secure Computing, stated, "With the
completion of this acquisition and the acquisition of Enigma Logic announced
yesterday, Secure Computing is the second largest public company in the computer
network security market. We are on course to be the global leader in enabling,
safe, secure and productive commerce over the Internet."
Headquartered in St. Paul, Minn., Secure Computing markets a powerful
suite of network security solutions, including its BorderWare(TM) Firewall
Server and its award-winning Sidewinder(TM) Enterprise Security Server, which
together comprise a family of Internet firewalls; WebTrack, a best-of-breed
software solution for monitoring and filtering Internet access and content;
SafeWord(TM), a family of network identification, authentication and accounting
products; and information security consulting services. Secure Computing has
more than 2,000 customers worldwide, ranging from small companies to Fortune 500
companies to government agencies.
For more information, please visit the following Web sites: Secure
Computing, www.sctc.com; Border Network Technologies, www.border.com; Webster
Network Strategies, www.webster.com; Enigma Logic, www.safeword.com.
--30--
CONTACT: FROM
Padilla Speer Beardsley Inc.
224 Franklin Avenue West
Minneapolis, Minnesota 55404
Marian Briggs/Bob Brin
(612)871-8877
E-mail: [email protected]
[email protected]
FOR:
Secure Computing Corporation
2675 Long Lake Road
Roseville, Minnesota 55113
Tim McGurran
(612)628-6262
E-mail: [email protected]
