AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 4, 1999
REGISTRATION NO. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SECURE COMPUTING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 7371 52-1637226
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
CODE NUMBER)
ONE ALMADEN BLVD., SUITE 400
SAN JOSE, CALIFORNIA 95113
(408) 918-6100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JEFFREY WAXMAN
CHIEF EXECUTIVE OFFICER
SECURE COMPUTING CORPORATION
ONE ALMADEN BLVD., SUITE 400
SAN JOSE, CALIFORNIA 95113
(408) 918-6100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
JEFFREY D. SAPER, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEES
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED AMOUNT OF
AMOUNT TO BE OFFERING PRICE MAXIMUM REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED(2) PER SHARE(1) OFFERING PRICE(1) FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value(3) 8,475,042 $4.125 $34,959,548 $9,719
</TABLE>
(1) These figures are estimates made solely for the purpose of calculating the
registration fee, based on the average of the high and low sales prices of
the common stock as reported on the Nasdaq National Market on April 30,
1999 in accordance with Rule 457 under the Securities Act of 1933.
(2) Includes 3,352,699 shares of common stock which may be offered pursuant to
this Registration Statement issuable upon conversion of 16,000 shares of
Series C Convertible preferred stock (the "Series C Preferred") and upon
exercise of warrants to purchase up to 174,464 shares of common stock (the
"Warrants"). The number of shares of common stock included in this
Registration Statement is based on the sum of the number of shares subject
to the Warrants plus approximately 293% of the estimated number of shares
of common stock issuable in connection with the conversion of the Series C
Preferred (based on an assumed conversion price of $4.131 which is the
average closing bid price of the common stock reported on the Nasdaq
National Market for the five (5) consecutive trading days ending April 27,
1999) less 1,534,422 shares of common stock previously registered under
Registration Statement No. 333-61585 on Form S-3. Because of the
possibility of antidilution adjustments to the conversion price of the
Series C Preferred (which is based on the market price of the common
stock), the number of shares of common stock issuable upon such conversion
or exercise and subject to this Registration Statement is indeterminate.
(3) Pursuant to Rule 429, 1,534,422 shares of common stock having an aggregate
initial offering price of $17,454,050 are being carried forward from
Registration Statement No. 333-61585. A filing fee of $5,149 was
previously paid with respect to the carried forward portion of such
earlier registration statement. 456,572 shares of common stock were
previously sold pursuant to such earlier registration statement.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
PURSUANT TO RULE 429, THE PROSPECTUS HEREIN ALSO RELATES TO 1,534,422
SHARES OF COMMON STOCK HAVING AN AGGREGATE OFFERING PRICE OF $17,454,050 THAT
HAVE NOT BEEN SOLD UNDER REGISTRATION STATEMENT NO. 333-61585 ON FORM S-3.
================================================================================
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY __, 1999
PROSPECTUS
10,009,464 SHARES
SECURE COMPUTING CORPORATION
---------------
COMMON STOCK
($0.001 PAR VALUE)
---------------
The selling stockholders may sell up to 10,009,464 shares of common
stock. We will not receive any of the proceeds from the shares of common stock
sold by the selling stockholders.
Our common stock is traded on the Nasdaq National Market under the
symbol "SCUR." On April 30, 1999, the last reported sale price for the common
stock on the Nasdaq National Market was $4.063 per share.
INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON
PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
This prospectus is dated May __, 1999
<PAGE>
SUMMARY
PROSPECTUS
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the Securities and Exchange Commission (the "Commission") utilizing a
"shelf" registration process. Under this shelf process, the selling stockholders
may, from time to time, sell shares of common stock ("common stock") of Secure
Computing Corporation described in this prospectus in one or more offerings up
to a total of 10,009,464 shares.
OFFICES AND PLACE OF INCORPORATION
Secure Computing Corporation ("Secure Computing," "we," "us" or "our")
designs, develops, markets and sells a comprehensive offering of interoperable,
standards-based products for end-to-end network solutions, including firewalls,
Web filters, authentication, extranet access control and security related
professional services. Our principal executive offices are located at One
Almaden Blvd., Suite 400, San Jose, California 95113. Our telephone number is
(408) 918-6100.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Commission, in accordance with the Securities Exchange Act of 1934. You may read
and copy our reports, proxy statements and other information filed by us at the
public reference facilities of the Commission in Washington, D.C., New York, New
York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for
further information about the public reference rooms. Our reports, proxy
statements and other information filed with the Commission are available to the
public over the Internet at the Commission's World Wide Web site at
http://www.sec.gov.
The Commission allows us to "incorporate by reference" the information
we filed with them, which means that we can disclose important information by
referring you to those documents. The information incorporated by reference is
considered to be a part of this prospectus, and information that we file later
with the Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
by us with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act until our offering is complete:
* Annual Report on Form 10-K for the fiscal year ended December
31, 1998, and
* The description of our common stock contained in Form 8-A
filed with the Commission on August 8, 1997, and any amendment
or report filed for the purpose of updating such description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Chief Financial Officer
Secure Computing Corporation
One Almaden Blvd., Suite 400
San Jose, California 95113
(408) 918-6100
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
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RISK FACTORS
This prospectus contains forward-looking statements. These statements
relate to future events or our future product development or financial
performance. In some cases you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," or "continue" or the negative
of such terms and other comparable terminology. These statements reflect only
management's current expectations. Actual events or results may differ
materially. In evaluating these statements, you should consider various factors,
including the risks outlined below. These factors may cause our actual results
to differ materially from any forward-looking statements. We are not undertaking
any obligation to update any forward-looking statements contained in this
prospectus to reflect any future events or developments.
You should carefully consider the following risks, together with the
other information contained in this prospectus and in the prospectus supplement
before making an investment decision. The risks and uncertainties described
below are not the only risks and uncertainties we face. Additional risks and
uncertainties not presently known to us or that we currently think are
immaterial may also impair our business operations. If any of the events or
circumstances described in the following risks actually occurs, our business,
financial condition, or results of operations could be materially harmed. In
such case, the trading price of our common stock could decline, and you may lose
all or a part of your investment.
THE COMMON STOCK SOLD IN THIS OFFERING MAY SIGNIFICANTLY INCREASE THE
SUPPLY OF OUR COMMON STOCK ON THE PUBLIC MARKET, WHICH MAY CAUSE OUR STOCK PRICE
TO DECLINE.
The conversion of the Series C preferred stock and sale of the common
stock into the public market could materially adversely affect the market price
of the common stock. Substantially all of the shares of our common stock are
eligible for immediate and unrestricted sale in the public market at any time.
Once the registration statement of which this prospectus forms a part is
declared effective, all shares of common stock issuable upon conversion of the
Series C preferred stock and exercise of the warrants will be eligible for
immediate and unrestricted resale into the public market. The presence of these
additional shares of common stock in the public market may further depress the
stock price.
OUR PREFERRED STOCK FINANCING MAY RESULT IN SUBSTANTIAL DILUTION TO
HOLDERS OF OUR COMMON STOCK.
The agreements with the purchasers of the Series C preferred stock and
warrants contain terms and covenants that could result in substantial dilution
to our stockholders. If our common stock trades at a price less than $19.0035
per share, then the Series C preferred stock will be convertible into shares of
our common stock at variable rates based on future trading prices of the common
stock and events that may occur in the future. The number of shares of common
stock that may ultimately be issued upon conversion is therefore presently
indeterminable and could fluctuate significantly. Also, the warrants are subject
to anti-dilution protection and thus may result in the issuance of more shares
than originally anticipated if we issue securities at less than market value or
the applicable exercise price. These factors may result in substantial future
dilution to the holders of our common stock.
OUR MARKET IS HIGHLY COMPETITIVE WITH RAPIDLY CHANGING TECHNOLOGY.
Our principal products are enterprise network and data security
products. The market for enterprise network and data security products is highly
competitive and changes rapidly. In particular, rapid development of
enterprise-wide and remote computing, the Internet, intranets and extranets has
enhanced the ability of users to access proprietary information and resources
and has in recent years increased demand for enterprise network and data
security. If sales of our products declines because of competition,
technological change, the public's perception of the need for our products,
developments in the hardware and software environments in which our products
operate, general economic conditions or other factors, our business would
suffer.
We believe that the principal competitive factors affecting the market
for enterprise network and data security products include technical features,
ease of use, quality/reliability, level of security, customer service and
support, distribution channels and price. Our competitors and potential
competitors include organizations that provide or may seek to provide enterprise
network and data security products based upon approaches similar to and
different from those employed by us, and could in the future include operating
systems or network suppliers not currently offering competitive enterprise-wide
security products. Ultimately, the market for enterprise network and data
security products may be dominated by approaches other than ours.
Certain of our competitors and potential competitors have significantly
greater financial, marketing, technical and other competitive resources than we
have. As a result, they may be able to leverage an installed customer base
and/or other existing or future enterprise-wide products, adapt more quickly to
new or emerging technologies and changes in customer requirements, or devote
greater resources to the promotion and sale of their products than we can.
Competition could increase if new companies enter the market or if existing
competitors expand their product lines. Any reduction in our gross margins
resulting from competitive factors could materially harm our business.
To compete successfully we must enhance our existing products and
develop and introduce new products in a timely manner. If we fail to introduce
new products on a timely basis, our business and results of operations could be
adversely affected. The rate of new product introductions is substantial, and
security products have relatively short product life cycles. Our customer
requirements and preferences change rapidly. If the market adopts as industry
standards solutions other than those employed by us, our sales and business will
be harmed.
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<PAGE>
In the future, vendors of hardware and of operating system or other
software may continue to enhance their products or bundle separate products to
include functions that are currently provided primarily by network security
software. If network security functions become standard features of computer
hardware or of operation system software or other software, our products may
become obsolete and unmarketable, particularly if the quality of such network
security features was comparable to that of the our products. Furthermore, even
if the network security and/or management functions provided as standard
features by hardware providers or operating systems or other software is more
limited than that of our products, our customers might accept such functionality
in lieu of purchasing additional software. Our business would suffer materially
if we were then unable to develop new network security and management products
to further enhance operating systems or other software and to replace any
obsolete products.
Our sales also depend upon a robust industry and infrastructure for
providing access to public switched networks, such as the Internet. If the
infrastructure or complementary products necessary to make these networks into
viable commercial marketplaces are not developed, or, if developed, these
networks do not become and continue to be viable commercial marketplaces, our
sales could suffer.
WE ARE DEPENDENT UPON SALES OF NETWORK AND SECURITY PRODUCTS, AND DO
NOT EXPECT TO MATERIALLY DIVERSIFY OUR BUSINESS IN THE FORESEEABLE FUTURE.
Substantially all of our revenue comes from sales of enterprise
network and data security products, and related services and we expect this will
continue for the foreseeable future. As a result, if for any reason our sales of
these products and services are impeded, or we face difficulties or delay in
diversifying our product offerings to lessen our dependency on those products,
it could have an adverse effect on our business and results of operations.
A NUMBER OF FACTORS COULD CAUSE A DECLINE IN OUR STOCK PRICE.
The price of our common stock has fluctuated widely in response to
quarter to quarter variations in operating results, announcements of
technological innovations or new products by us or our competitors, developments
with respect to patents or proprietary rights, general conditions in the
information security systems industry, changes in earnings estimates by
analysts, or other events or factors. In addition, the stock market has
experienced extreme price and volume fluctuations, which have particularly
affected the market prices of many technology companies and which have often
been unrelated to the operating performance of such companies. Our sales or
operating results in future quarters may be below the expectations of public
market securities analysts and investors. In such event, the price of our common
stock would likely decline, perhaps substantially. Factors specific to us or
broad market fluctuations may cause a decline in the market price of our common
stock.
OUR QUARTERLY FINANCIAL RESULTS HAVE FLUCTUATED HISTORICALLY AND MAY
CAUSE A DECLINE IN THE PRICE OF OUR STOCK.
Our operating results have fluctuated significantly and we believe that
our operating results will continue to fluctuate in the future. As a rule,
revenues, operating income and net income have been higher in the fourth quarter
of each year than in the first quarter of the following year. We believe that
fourth quarter revenues are positively impacted by the end of year budgeting
cycles of some large corporate customers. Revenues also tend to be lower in the
summer months, particularly in Europe, when businesses often take holidays
resulting in deferred purchasing patterns. Quarterly revenues and operating
results depend on the volume and timing of orders received, which may be
affected by large individual transactions and which sometimes are difficult to
predict. Historically we have recognized a substantial portion of our license
revenues in the last week of each quarter. We expect that this will continue for
the foreseeable future as the portion of revenues from indirect distribution
channels increases.
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<PAGE>
As a result, our inability to control the quarterly fluctuations of our business
could significantly harm our business and the price of our common stock.
Our quarterly operating results may vary significantly depending on a
number of factors, including the timing of the introduction or enhancement of
products by us or our competitors, the size, timing and shipment of individual
orders, market acceptance of new products, changes in the our operating
expenses, personnel changes, mix of products sold, changes in product pricing,
development of our direct and indirect distribution channels and general
economic conditions.
THE SALES CYCLE FOR OUR PRODUCTS IS LONG AND WE MAY INCUR SUBSTANTIAL
EXPENSES FOR SALES THAT DO NOT OCCUR WHEN ANTICIPATED.
Sales of our products generally involve a significant commitment of
capital by customers, with the attendant delays frequently associated with large
capital expenditures. For these and other reasons, the sales cycle for our
products is typically lengthy and subject to a number of significant risks over
which we have little or no control. We are often required to ship products
shortly after we receives orders and consequently, order backlog at the
beginning of any period has in the past represented only a small portion of that
period's expected revenue. As a result, our product revenue in any period is
substantially dependent on orders booked and shipped in that period. We
typically plan our production and inventory levels based on internal forecasts
of customer demand, which are highly unpredictable and can fluctuate
substantially. If revenue falls significantly below anticipated levels, our
business would be seriously harmed. In addition, our operating expenses are
based on anticipated revenue levels and a high percentage of our expenses are
generally fixed in the short term. Based on these factors, a small fluctuation
in the timing of sales can cause operating results to vary significantly from
period to period.
IF OUR PRODUCTS DO NOT FUNCTION PROPERLY OR ARE NOT PROPERLY DESIGNED,
WE MAY INCUR LIABILITY OR OTHER HARM.
Customers rely on our information security products to prevent
unauthorized access to their networks and data transmissions. If our products
malfunction or are not properly designed we could face tort or warranty claims.
Although we seek to reduce the risk of such losses by attempting to negotiate
warranty disclaimers and liability limitation clauses in our sales agreements
and by maintaining product liability insurance, these measures may ultimately
prove ineffective in limiting our liability for such damages. If we are found
liable for damages resulting from security breaches such liability could be
substantial and could seriously harm our business.
A well publicized actual or perceived breach of enterprise network or
data security could heighten awareness of computer abuse and result in an
increased demand for security products, including our products. Similarly, the
market's perception of our products and business and our business and results of
operations could be harmed by an actual or perceived breach of enterprise
network or data security at one of our customers, regardless of whether such
breach is attributable to our products.
Software products may contain undetected errors or bugs when first
introduced or as new versions are released, and software products or media may
contain undetected viruses. Errors or bugs may also be present in software
licensed by us from third parties and incorporated into our products. Errors,
bugs or viruses in our products may result in loss of or delay in market
acceptance, recalls of hardware products incorporating the software or loss of
data. Delays or difficulties associated with new product introductions or
product enhancements could seriously harm our business.
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<PAGE>
THE SERIES C CONVERTIBLE PREFERRED STOCK CONFERS RIGHTS THAT MAY HARM
US.
In June 1998, we raised $16.0 million by issuing a newly designated
Series C convertible preferred stock. The Series C preferred stock is
convertible into shares of our common stock based on the trading prices of the
common stock during future periods that are described in the financing
agreement.
While the issuance of the Series C preferred stock in this transaction
provided us with additional working capital, our agreements with the purchasers
of the Series C preferred stock contain covenants that could impair our ability
to engage in various corporate transactions in the future, including financing
transactions and certain transactions involving a change-in-control or
acquisition of us, or that could otherwise disadvantage us and the holders of
our common stock. In particular, any "leveraged buy-out," and certain
consolidations, mergers or other business combinations with or into another
entity that has a trading volume equal to less than 90% of our average daily
trading volume over a specified 90-day period, will give rise to a right of
redemption in the holders of the Series C preferred stock. These provisions may
make an acquisition of us more difficult and expensive and could discourage some
potential acquirers. Certain covenants we made in connection with the issuance
of the Series C preferred stock may also limit our ability to obtain additional
financing by, for example, providing the holders of Series C preferred stock
certain rights of first offer. In addition, certain protective provisions in the
Certificate of Designation prohibit us, without the consent of holders of
two-thirds of the outstanding Series C preferred stock, from:
* increasing our authorized preferred stock,
* issuing securities with a liquidation preference which is
senior to or pari-passu with the Series C preferred stock
(other than debt securities which are not convertible into or
exchangeable for common stock or any other equity or
convertible security), or
* creating any new class or series of capital stock having a
liquidation preference senior to or pari-passu with the Series
C preferred stock.
The financing agreements pursuant to which the Series C preferred stock
was issued also include certain penalty provisions that are triggered if we fail
to satisfy certain obligations. In particular, the holders of the Series C
preferred stock shall have the right to require us to redeem all or any portion
of the Series C preferred stock at a price equal to the greater of:
* 125% of the $1,000 stated price of each share of Series C
preferred stock and
* an amount determined by dividing the stated price by the
Conversion Price (as defined in the Series C Certificate of
Designation) and multiplying the resulting quotient by the
average closing bid price for the common stock on the five (5)
days preceding the date of redemption.
These redemption obligations arise upon certain events, including
breach by us of representations and warranties and covenants, including the
failure to maintain the effectiveness of the registration statement covering the
common stock issuable upon conversion of the Series C preferred stock. If the
holders of Series C preferred stock become entitled to have their Series C
preferred stock redeemed, we may not be able to fund such redemption, and even
if funding is available, the substantial payment required to fund such
redemption could have an adverse effect on our business and financial condition.
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A DECLINE IN INTERNATIONAL SALES COULD HARM OUR BUSINESS.
International sales are a substantial portion of our business. Although
almost all of our sales are payable in U.S. dollars, a severe economic decline
in one of our major foreign markets could make it difficult for customers from
those countries to pay us. Such failure to pay could have an adverse effect on
our operations and financial condition. In 1998, twenty-nine percent (29%) of
our total product and services sales came from international sales.
In addition, we face a number of risks inherent in doing business in
international markets, including, among others:
* unexpected changes in regulatory requirements;
* potentially adverse tax consequences;
* export controls relating to encryption technology;
* tariffs and other trade barriers;
* difficulties in staffing and managing foreign operations;
* changing economic conditions;
* exposures to different legal standards;
* burdens of complying with a variety of foreign laws;
* fluctuations in currency exchange rates; and
* seasonal reductions in business activity during the summer
months in Europe and certain other parts of the world.
If any of these risks occur, our business could suffer.
IF OUR CUSTOMERS AND THIRD-PARTY EQUIPMENT FAIL TO BE YEAR 2000
COMPLIANT, OUR BUSINESS MAY SUFFER.
The following information constitutes a "Year 2000 Readiness
Disclosure" for purposes of the Year 2000 Information and Readiness Disclosure
Act.
Many currently installed computer systems and software products are
programmed to use only two digit dates rather than four. This could result in
system and processing failures of date-related data because computer programs
that have time sensitive software may recognize a date using "00" as the year
1900 rather than 2000. We believe that our products and systems sold after
December 31, 1998 are Year 2000 compliant. We have completed preparation and
testing of our products and systems, and have verified compliance of third party
computer software that we use. However, we have not verified Year 2000
compliance of certain semiconductors embedded in other (third-party) equipment
that we use, nor have we established the costs and risks associated with such
external equipment.
Failure of such third-party equipment to operate properly with regard
to the Year 2000 and thereafter could require us to incur unanticipated expenses
to remedy any problems, which could have a material adverse effect on our
business, operating results and financial condition. The business, operating
results and financial condition of
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our customers could be adversely affected to the extent that they utilize
third-party software and other products which are not Year 2000 compliant.
Further, the purchasing patterns of customers or potential customers
may be affected by Year 2000 issues as companies expend significant resources to
correct their current systems for Year 2000 compliance. These expenditures may
result in reduced funds available to purchase products and services such as
those offered by us, which could have an adverse effect on our business and
results of operations.
WE ARE DEPENDENT ON DISTRIBUTORS AND RESELLERS TO SELL OUR PRODUCTS.
As our revenues grow, our receivables balances increase. In turn, we
are subject to increased general credit risks. Although our management provides
for a bad debt reserve, this reserve may not accurately reflect subsequent
credit write-offs which could have an adverse effect on our financial condition
and operating results. We have taken and may from time to time take various
forms of action to manage our receivables including selling our receivables at a
discount and granting customer discounts.
We recognize product revenues at the time of shipment in instances
where we have evidence of a contract, the fee charged is fixed and determinable
and collection is probable. We have entered into customer support and
maintenance agreements with various customers. We recognize the obligations
either ratably as the obligations are fulfilled or upon completion of
performance. Revenue generated through distributors and resellers with a right
of return for stock balancing and rotation is reduced by a reserve for estimated
returns. These reserves are based on estimates made by our management and are
based on historical and known trends. These reserves may not accurately reflect
subsequent product returns.
Although our sales to distributors and resellers are final, these
customers generally are permitted to return stock, but are typically required to
place offsetting orders of equal value. We increasingly rely on resellers and
distributors to market and support our products. These increased sales to
resellers and distributors will likely increase our days sales outstanding as
collection terms generally are longer than the collection terms of other
customers. Our agreements with distributors are not exclusive and may be
terminated by us or the distributors without cause. Our distributors may not
continue to represent our products.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW
COULD MAKE A THIRD-PARTY ACQUISITION OF US DIFFICULT.
Our Board of Directors may issue up to 2,000,000 shares of preferred
stock and may determine the price, rights, preferences, privileges and
restrictions, including voting rights, of those shares without any further vote
or action by its stockholders. The Board may authorize the issuance of preferred
stock with voting or conversion rights that could adversely affect the voting
power or other rights of the holders of our common stock. The issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could make it more difficult
for a third party to acquire a majority of our outstanding voting stock.
Further, certain provisions of Delaware law, our Certificate of Incorporation
and Bylaws, such as a classified board, and certain provisions of our Share
Rights Agreement could delay or make more difficult a merger, tender offer,
proxy contest or other takeover attempts. While such provisions are intended to
enable our Board to maximize stockholder value, they may have the effect of
discouraging takeovers which could be in the best interest of certain
stockholders. There is no assurance that such provisions will not have an
adverse effect on the market value of the Company's common stock.
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<PAGE>
WE HAVE ENTERED INTO A NUMBER OF GOVERNMENT CONTRACTS WHICH MAY BE
TERMINATED OR RENEGOTIATED BY THE GOVERNMENT AGENCIES.
Our government contract revenues for cost-plus-fixed-fee contracts are
recognized on the basis of costs incurred during the period plus the fee earned.
Award fees are recognized based upon the percentage of completion and forecasted
profit. A provision is made for the estimated loss, if any, on government
contracts. Under our government contracts, we bear the risk that increased or
unexpected costs required to perform specified services may reduce the amount of
our fee. In addition, recoverable expenses billed by us are subject to review
and audit by the Defense Contract Audit Agency, which could result in amounts
previously billed being renegotiated. These contracts are generally also
terminable at the convenience of the applicable government agency. If a contract
is terminated, we typically would be reimbursed for our costs to the termination
date plus the cost of an orderly termination, and paid a portion of the fee. The
Defense Contract Audit Agency could disallow the costs claimed by us under our
government contracts.
A substantial portion of our basic research efforts are funded by
government contracts. If those contracts were terminated for any reason, it
could reduce our new product stream which could have an adverse effect on our
results of operations.
THE ABILITY TO ATTRACT AND RETAIN HIGHLY QUALIFIED PERSONNEL TO DEVELOP
OUR PRODUCTS AND MANAGE OUR BUSINESS IS EXTREMELY IMPORTANT AND OUR FAILURE TO
DO SO COULD HARM OUR BUSINESS.
We believe our success depends significantly upon a number of key
technical and management employees. We may be unable to achieve our revenue and
operating performance objectives unless we can attract and retain technically
qualified and highly skilled engineers, sales, consulting, technical, marketing
and management personnel. Such personnel are particularly important to our
research and development efforts, and to our growing professional service
business, where we employ a large number of technical personnel holding advanced
degrees and special professional certification. Competition for such personnel
is intense and we expect it to remain so for the foreseeable future. We may not
be successful in retaining our existing key personnel and in attracting and
retaining the personnel we require. Our failure to retain and increase our key
employee population could harm our business and results of operations. Further,
additions of new and departures of existing personnel, particularly in key
positions, can be disruptive and can result in further departures of our
personnel, which could in turn harm our business and results of operation.
WE HAVE LIMITED SOURCES FOR SUPPLY OF CERTAIN COMPONENTS OF OUR
PRODUCTS.
We currently purchase certain components of our products from limited
sources. Our business would suffer if the supply of such components was
interrupted.
LEGAL PROCEEDINGS
On April 2, 9, 12, 14 and 20, 1999, purported class action complaints
were filed in the United States District Court for the Northern District of
California by Myron Goldstein, Herbert Silverberg, William Preiner, Charles
McInnis, and George H. Rosenquist and Melvin Freedenberg, respectively, against
the Company, and certain of its officers and directors. Each complaint alleges
that defendants made false and misleading statements about the Company's
business condition and prospects during a purported class period of November 10,
1998 - March 31, 1999, and asserts claims for violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. Each complaint
seeks damages of an unspecified amount.
There has been no discovery to date and no trial is scheduled in any of
these actions. The Company believes that it has meritorious defenses to these
actions and intends to defend them vigorously. Failure by the Company to obtain
a favorable resolution of the claims set forth in the actions could have a
material adverse effect on the Company's business, results of operations and
financial condition. Currently, the amount of such material adverse effect
cannot be reasonably estimated.
-9-
<PAGE>
There has been no discovery to date and no trial is scheduled in any of
these actions. The Company believes that it has meritorious defenses to these
actions and intends to defend them vigorously. Failure by the Company to obtain
a favorable resolution of the claims set forth in the actions could have a
material adverse effect on the Company's business, results of operations and
financial condition. Currently, the amount of such material adverse effect
cannot be reasonably estimated.
On August 26, 1998, a purported class action complaint was filed in the
Delaware Chancery Court in and for New Castle County by Rosalyn Golaine against
the Company, certain of its present officers, present directors, and former
directors (the "Golaine Action"), alleging that the provisions of the July 24,
1997 shareholder rights plan (the "Plan") permitting only those directors who
voted for the Plan (or their designated successors) to redeem the Rights granted
therein, violates Delaware law. The complaint in the Golaine Action seeks
injunctive relief and damages of an unspecified amount.
The Company has amended the Plan which will render moot the
injunctive relief requested. In November, 1998, the defendants moved to dismiss
the Golaine Action. On March 22, 1999, the parties submitted a proposed
settlement of the Golaine Action for court approval. The proposed settlement
would require the Company to pay up to $100,000 in attorney fees and the costs
of notifying the class of the proposed settlement. A hearing on the proposed
settlement has been scheduled for June 8, 1999.
SELLING STOCKHOLDERS
The Selling Stockholders received or will receive the shares offered by
this prospectus upon conversion of shares of our Series C preferred stock or
exercise of warrants to purchase common stock. No Selling Stockholder holds
shares of our common stock other than those offered pursuant to this Prospectus.
The following table sets forth the aggregate number of shares of common
stock held by each Selling Stockholder and offered by each Selling Stockholder
and the percentage of all shares of common stock held by such Selling
Stockholder after giving effect to the offering (based on 17,435,571 shares of
common stock outstanding as of April 29, 1999). The share numbers set forth in
the table below include an aggregate of 174,464 shares of common issuable upon
the exercise price of the Warrants held by the Selling Stockholders, and an
estimated 3,352,699 shares issuable upon conversion of the shares of Series C
preferred stock held by the Selling Stockholders. The estimated number of shares
issuable upon conversion of the shares of Series C Preferred is based on an
estimated conversion price of $4.131 per share of common stock, which would have
been the applicable conversion price of the Series C Preferred had all shares of
Series C Preferred been converted into common stock on April 28, 1999 (based on
the lower of: (a) of the average closing bid price for the common stock on the
Nasdaq National Market for the five (5) trading day period ended April 27, 1999,
and (b) the average of the closing bid prices for the common stock for the
fifteen (15) day period ended April 27, 1999). The actual number of shares of
common stock issuable upon conversion of Series C Preferred currently is
indeterminable, is subject to adjustment and could be materially less or more
than such estimated number depending on factors which we cannot predict at this
time, including, among other factors, the future market price of our common
stock. Other than their ownership of our securities, none of the Selling
Stockholders has had any material relationship with us within the past three
years. Because of the possibility of antidilution adjustments to the conversion
price of the preferred stock (which is based on the market price of the common
stock), or that the number of shares of common stock outstanding increases due
to a stock split or dividend, the number of shares of common stock issuable upon
such conversion or exercise and subject to this Registration Statement is
indeterminate.
-10-
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NUMBER OF SHARES COMMON STOCK
BENEFICIALLY OWNED PRIOR NUMBER OF OWNED AFTER
NAME OF SELLING STOCKHOLDER TO OFFERING SHARES OFFERED OFFERING
--------------------------- ----------- -------------- -----------
<S> <C> <C> <C>
Marshall Capital Management, Inc. 915,730(1) 915,730 *
CC Investments, LDC 915,730(2) 915,730 *
</TABLE>
- ---------------------------
(*) Less than 1%.
1. Includes 915,730 shares of common stock issuable upon conversion of Series
C preferred stock. Under the terms of the Series C preferred stock and the
warrants, no holder thereof can convert any portion of such Series C
preferred stock or exercise any warrants if such conversion or exercise
would increase such holder's beneficial ownership of common stock to an
amount in excess of 4.99%. Absent such limitations at a $4.131 per share
conversion price the Series C preferred stock held by Marshall Capital
Management, Inc. would have been convertible into 1,609,780 shares of
common stock which, when added to the 87,232 shares issuable upon exercise
of warrants, would have represented 8.8% of the shares of common stock.
Marshall Capital Management, Inc. is an indirect, wholly owned subsidiary
of Credit Suisse First Boston Group, which is a publicly held Swiss
financial services company.
2. Includes 915,730 shares of common stock issuable upon conversion of Series
C preferred stock. Under the terms of the Series C preferred stock and the
warrants, no holder thereof can convert any portion of such Series C
preferred stock or exercise any warrants if such conversion or exercise
would increase such holder's beneficial ownership of common stock to in
excess of 4.99%. Absent such limitations at a $4.131 per share conversion
price the Series C preferred stock held by CC Investments, LDC would have
been convertible into 1,742,919 shares of common stock which, when added
to the 87,232 shares issuable upon exercise of warrants, would have
represented 9.5% of the shares of common stock. Pursuant to a management
agreement, Castle Creek Partners LLC may be deemed to beneficially own the
securities held by CC Investments LDC. Castle Creek Partners LLC disclaims
such beneficial ownership. John Ziegelman and Daniel Asher, as managing
members of Castle Creek Partners LLC, may be deemed to be beneficial
owners of such securities. Messrs. Asher and Ziegelman disclaim such
beneficial ownership.
-11-
<PAGE>
PLAN OF DISTRIBUTION
The Selling Stockholders may sell the common stock:
* through one or more underwriters or dealers for
public offering and sale,
* directly to investors, or
* through agents.
The Selling Stockholders may distribute the common stock from time to
time in one or more transactions at a fixed price or prices, which may be
changed from time to time:
* at market prices prevailing at the times of sale,
* at prices related to such prevailing market prices,
or
* at negotiated prices.
We will not receive any proceeds from the sale of the common stock.
The distribution of the common stock may be effected in one or more of
the following methods:
* ordinary brokers' transactions, which may include
long or short sales,
* transactions involving cross or block trades, or
otherwise on the Nasdaq National Market,
* purchases by brokers, dealers or underwriters as
principal and resale by such purchasers for their own
accounts pursuant to this Prospectus,
* "at the market" to or through market makers or into
an existing market for the common stock,
* in other ways not involving market makers or
established trading markets, including direct sales
to purchasers or sales effected through agents,
* through transactions in options, swaps or other
derivatives (whether exchange-listed or otherwise),
* pursuant to Rule 144 under the Securities Act, or
* any combination of the foregoing, or by any other
legally available means.
In addition, the Selling Stockholders or their successors in interest
may enter into hedging transactions with broker-dealers who may engage in short
sales of common stock in the course of hedging the positions they assume with
the Selling Stockholders. The Selling Stockholders or their successors in
interest may also enter into option or other transactions with broker-dealers
that require the delivery by such broker-dealers of the common stock, which
common stock may be resold thereafter pursuant to this Prospectus. In connection
with any sales, the Selling Stockholders and any brokers or dealers
participating in such sales may be deemed to be underwriters within the meaning
of the Securities Act.
-12-
<PAGE>
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Stockholders and/or purchasers of the
shares offered hereby (and, if it acts as agent for the purchaser of such
shares, from such purchaser). Usual and customary brokerage fees will be paid by
the Selling Stockholders. Broker-dealers may agree with the Selling Stockholders
to sell a specified number of shares at a stipulated price per share, and, to
the extent such a broker-dealer is unable to do so acting as agent for a Selling
Stockholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to such Selling Stockholder. Broker-dealers
who acquire shares as principal may thereafter resell such shares from time to
time in transactions (which may involve cross and block transactions and which
may involve sales to and through other broker-dealers, including transactions of
the nature described above) in the over-the-counter market, in negotiated
transactions or otherwise at market prices prevailing at the time of sale or at
negotiated prices, and in connection with such resales may pay to or receive
from the purchasers of such shares commissions computed as described above.
We have advised the Selling Stockholders that Regulation M promulgated
under the Securities Exchange Act, may apply to its sales in the market, have
furnished the Selling Stockholders with a copy of this regulation and have
informed the Selling Stockholder of the need for delivery of copies of this
Prospectus. The Selling Stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act. Any
commissions paid or any discounts or concessions allowed to any such
broker-dealers, and any profits received on the resale of such shares, may be
deemed to be underwriting discounts and commissions under the Securities Act if
any such broker-dealers purchase shares as principal. We have agreed to
indemnify the Selling Stockholders against certain liabilities, including
liabilities under the Securities Act.
We are required by the Series C preferred stock financing agreements to
register for resale by the selling stockholders and keep registered at least
200%, of the aggregate number of shares of common stock into which the Series C
preferred stock is convertible and for which the warrants are exercisable. We
have agreed to and are paying the costs and fees of registering the common
stock. The Selling Stockholders will pay any brokerage commissions, discounts or
other expenses relating to the sale of the common stock.
Any securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this Prospectus.
There can be no assurance that the Selling Stockholders will sell any
or all of the shares of common stock offered by them hereunder.
LEGAL MATTERS
The validity of the issuance of the common stock offered by this
Prospectus will be passed upon for us by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California.
EXPERTS
The consolidated financial statements and schedule of Secure Computing
Corporation appearing in Secure Computing Corporation's Annual Report (Form
10-K) for the year ended December 31, 1998 have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein by Reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such report given
on the authority of such firm as experts in accounting and auditing.
-13-
<PAGE>
================================================================================
-----------------
TABLE OF CONTENTS
-----------------
Page
----
Available Information....................................................
Incorporation of Certain Documents by
Reference..............................................................
The Company..............................................................
Risk Factors.............................................................
Selling Stockholders.....................................................
Plan of Distribution.....................................................
Indemnification..........................................................
Legal Matters............................................................
Experts..................................................................
================================================================================
10,009,464 SHARES
[SECURE COMPUTING
CORPORATION]
COMMON STOCK
-----------------
PROSPECTUS
-----------------
MAY __, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth costs and expenses of the sale and
distribution of the securities being registered. All amounts except Securities
and Exchange Commission and Nasdaq Stock Market Listing fees are estimates.
Registration Statement--Securities and Exchange Commission $ 10,143
Accounting fees........................................... 4,500
Legal fees ............................................... 15,000
Miscellaneous............................................. 357
Total..................................................... $ 30,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Certificate of Incorporation limits, to the maximum extent
permitted by Delaware law, the personal liability of directors for monetary
damages for breach of their fiduciary duties as a director. Our Bylaws provide
that we will indemnify our officers and directors and may indemnify our
employees and other agents to the fullest extent permitted by Delaware law. We
have entered into indemnification agreements with our officers and directors
containing provisions which are in some respects broader than the specific
indemnification provisions contained in the Delaware General Corporation Law.
The indemnification agreements require us, among other things to indemnify such
officers and directors against certain liabilities that may arise by reason of
their status or service as directors or officers (other than liabilities arising
from willful misconduct of a culpable nature), to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified, and to obtain directors' and officers' insurance, if available on
reasonable terms. We believe that these agreements are necessary to attract and
retain qualified persons as directors and officers.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made a party to
an action by reason of that fact that he or she was a director, officer,
employee or agent of the corporation or was serving at the request of the
corporation against expenses actually and reasonably incurred by him or her in
connection with such action if he or she acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and with respect to any criminal action, had no reasonable cause
to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
ITEM 16. EXHIBITS
Exhibit
Number
------
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.4 Consent of Wilson Sonsini Goodrich & Rosati (included in
Exhibit 5.1).
24.1 Power of Attorney (contained on page II-4 hereof).
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(a) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b), if in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(c) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement; provided,
however, that the undertakings set forth in paragraphs (a) and (b) above shall
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act") that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. in the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this Registration
Statement as of the time it was declared effective. For the purpose of
determining any liability under the Securities Act of 1933, each post-effective
amendment
II-3
<PAGE>
that contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Secure Computing Corporation, a corporation organized and existing
under the laws of the State of Delaware, certifies that it has reasonable cause
to believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Jose, State of
California, on the 3rd day of May, 1999.
SECURE COMPUTING CORPORATION
By: /s/ Jeffrey Waxman
---------------------------------------
Jeffrey Waxman, Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Jeffrey Waxman and Timothy McGurran,
jointly and severally, his or her attorneys-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign any amendment to
this Registration Statement on Form S-3, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitute or substitutes, may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on April 22, 1999 by the following
persons on behalf of the Registrant and in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- ----------------------------------------------- --------------
<S> <C> <C>
/s/ Jeffrey Waxman Chief Executive Officer (Principal Executive April 22, 1999
- --------------------------------- Officer) and Chairman of the Board of Directors
(Jeffrey Waxman)
/s/ Timothy McGurran Senior Vice President of Operations and Chief April 22, 1999
- --------------------------------- Financial Officer (Principal Financial and
(Timothy McGurran) Accounting Officer)
/s/ Steven M. Puricelli Director April 22, 1999
- ---------------------------------
(Steven M. Puricellli)
/s/ Eric P. Rundquist Director April 22, 1999
- ---------------------------------
(Eric P. Rundquist)
/s/ Robert J. Frankenberg Director April 22, 1999
- ---------------------------------
(Robert J. Frankenberg)
/s/ Alexander Zakupowsky, Jr. Director April 22, 1999
- ---------------------------------
(Alexander Zakupowsky, Jr.)
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
- ------
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Wilson Sonsini Goodrich & Rosati (included in
Exhibit 5.1).
24.1 Power of Attorney (contained on Page II-4).
- -----------------------------------
II-6
EXHIBIT 5.1
May 3, 1999
Secure Computing Corporation
One Almaden Blvd., Suite 400
San Jose, California 95113
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be
filed by you with the Securities and Exchange Commission on or about April 29,
1999 (the "Registration Statement") in connection with the registration under
the Securities Act of 1933, as amended, of a total of 8,475,042 shares of your
common stock (the "Shares"), to be offered for sale for the benefit of certain
selling stockholders. The Shares are issuable upon the conversion of the
Company's Series C preferred stock (the "Series C Preferred") and upon the
exercise of Warrants (the "Warrants"), in each case as further described in the
Registration Statement. The Shares may be offered and sold from time to time on
the Nasdaq National Market at prevailing prices or as otherwise described in the
Registration Statement. As your legal counsel, we have examined the proceedings
taken or proposed to be taken by you in connection with the sale and issuance of
the Series C Preferred, the Warrants and the Shares.
It is our opinion that upon conclusion of the proceedings being
taken or contemplated by us, as your counsel, to be taken prior to the issuance
of the Shares, the Shares, when issued in the manner described in the
Registration Statement, will be legally and validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement, including the prospectus constituting a part thereof,
and further consent to the use of our name wherever it appears in the
Registration Statement and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Secure Computing
Corporation for the registration of 8,475,042 shares of its common stock and
to the incorporation by reference therein of our report dated January 29, 1999,
with respect to the consolidated financial statements and schedule of Secure
Computing Corporation included in its Annual Report on Form 10-K for the year
ended December 31, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Minneapolis, Minnesota
April 29, 1998
