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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 5, 1997
REGISTRATION NO. 333-*****
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CYBERGUARD CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
FLORIDA 65-510339
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2000 WEST COMMERCIAL BOULEVARD, SUITE 200
FORT LAUDERDALE, FLORIDA 33309
(954) 958-3900
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
----------------------
ROBERT L. CARBERRY
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
CYBERGUARD CORPORATION
2000 WEST COMMERCIAL BOULEVARD, SUITE 200
FORT LAUDERDALE, FLORIDA 33309
(954) 958-3900
(Name, Address Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
Copies to:
D. RONALD SURBEY, ESQ.
HOLLAND & KNIGHT LLP
1 EAST BROWARD BOULEVARD
FORT LAUDERDALE, FL 33301
(954) 468-7953
TELECOPIER NO. (954) 463-2030
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement and
from time to time thereafter.
If the only securities being registered on this form are 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, 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, 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.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS TO BE OFFERING AGGREGATE REGISTRATION AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SHARE OFFERING PRICE(2) FEE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 15,000 9.90 148,500 $45
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</TABLE>
(1) This Registration Statement also relates to the Rights to purchase
fractional shares of Preferred Stock of the Registrant which are
attached to all shares of common stock outstanding as of, and issued
subsequent to, September 29, 1994, pursuant to the terms of the
Registrant's Rights Agreement, dated as of September 29, 1994. Until
the occurrence of certain prescribed events, the Rights are not
exercisable, are evidenced by the certificates of common stock and will
be transferred with and only with such stock.
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED NOVEMBER 5, 1997
PROSPECTUS
15,000 SHARES
CYBERGUARD CORPORATION
COMMON STOCK
All 15,000 shares (the "Shares") of common stock, par value $.01 per
share ("Common Stock") of CyberGuard Corporation (the "Company") are being
offered by the Selling Shareholders named herein. See "Selling Shareholders" and
"Plan of Distribution." The Company will not receive any of the proceeds of
sales of Common Stock offered hereby. See "Use of Proceeds."
The Shares are included for quotation on the Nasdaq National Market
System under the symbol "CYBG." On November 4, 1997, the last reported sale
price of the Common Stock as reported by the Nasdaq National Market was $7.75
per share.
THE SHARES OFFERED HEREBY REPRESENT A HIGH DEGREE OF RISK. INVESTORS
SHOULD CAREFULLY CONSIDER CERTAIN RISKS AND OTHER CONSIDERATIONS RELATING TO THE
COMMON STOCK AND THE COMPANY. SEE "RISK FACTORS" COMMENCING ON PAGE 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The Shares may be sold from time to time by the Selling Shareholders or
their pledgees or donees. Such sales may be made in the over-the-counter market
or in negotiated transactions, at prices and on terms then prevailing or at
prices related to the then current market price or at negotiated prices. The
Shares may be sold by means of (a) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus
and/or (b) ordinary brokerage transactions and transactions in which the broker
solicits purchasers. In effecting sales, brokers or dealers engaged by the
Selling Shareholders may arrange for other brokers or dealers to participate.
Brokers or dealers will receive commissions or discounts from the Selling
Shareholders in amounts to be negotiated immediately prior to the sale, which
amounts will not be greater than that normally paid in connection with ordinary
trading transactions . See "Plan of Distribution."
THE DATE OF THIS PROSPECTUS IS NOVEMBER _, 1997.
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No person has been authorized in connection with any offering made
hereby to give any information or to make any representations other than those
contained in this Prospectus or any Prospectus Supplement, and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company, the Selling Shareholders, or any underwriter, dealer
or agent. This Prospectus or any Prospectus Supplement does not constitute an
offer to sell or the solicitation of an offer to buy any securities other than
the securities to which it relates or any offer to sell or the solicitation of
an offer to buy such securities in any circumstances in which such offer or
solicitation is unlawful. Neither the delivery of this Prospectus or any
Prospectus Supplement nor any sale hereunder or thereunder shall, under any
circumstances, create any implication that the information contained herein or
therein is correct as of any time subsequent to the date hereof and thereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Copies of such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following Regional Offices of the Commission: Seven World Trade Center, 13th
Floor, New York, NY 10048 and Citicorp Center, 500 West Madison Street (Suite
1400), Chicago, Illinois 60661. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a Worldwide
Web site at http://www.sec.gov which contains reports, proxy statements and
other information regarding registrants, such as the Company, that file
electronically with the Commission. The Common Stock is traded on the NASDAQ NMS
(Symbol: CYBG). In addition, material filed by the Company can be inspected at
the offices of NASDAQ NMS, Reports Section, 1735 K Street N.W., Washington, D.C.
20006.
This Prospectus constitutes part of a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") and does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the securities offered hereby, reference is made to
the Registration Statement and to the exhibits and schedules thereto. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed with the Commission by
the Company pursuant to the Exchange Act (Commission File No. 0-24544) are
incorporated by reference in this Prospectus: (i) Annual Report on Form 10-K for
the fiscal year ended June 30, 1997; as amended by Amendment No. 1 to the
Company's Annual Report on Form 10-K/A filed on October 23, 1997; (ii)
Amendment No. 2 to the Company's Annual Report on Form 10-K/A filed on October
29, 1997; and (iii) the description of the Common Stock contained in the
Company's Registration Statement on Form 10.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock made hereby shall
be deemed to be incorporated by reference in the Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, upon written or oral
request of such person to CyberGuard Corporation, 2000 West Commercial
Boulevard, Suite 200, Fort Lauderdale, Florida 33309 (telephone (954) 958-3900),
Attention: Investor Relations, a copy of any or all documents referred to above
(other than exhibits to such documents) that have been incorporated by reference
in this Prospectus.
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FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements that involve risks
and uncertainties. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in
"Risk Factors--Limited Operating History in the Commercial Network Security
Market; Unpredictability of Operating Results; --Liquidity and Capital
Requirements; Possible Need for Additional Financing; --Dependence on Principal
Product; Uncertainty of Product Acceptance; --Competition; --Recent and
Potential Acquisitions; --Dependence on the Internet and Intranets; --Changes in
Technology and Industry Standards; Significant Research and Development
Expenditures; and --Dependence on Resellers; Need to Establish Collaborative
Marketing Arrangements."
RISK FACTORS
Investment in the Shares offered hereby involves a high degree of risk.
In addition to the other information contained in this Prospectus and
incorporated by reference herein, prospective investors should consider
carefully the following factors in evaluating the Company before purchasing any
Shares.
LIMITED OPERATING HISTORY IN THE COMMERCIAL NETWORK SECURITY MARKET;
UNPREDICTABILITY OF OPERATING RESULTS
Although the Company has been developing network security products
since 1989, the Company has operated in the commercial network security market
only since October 1994. In view of, among other things, the risks and
uncertainties inherent in the Company's business that are described in this
Prospectus and the information incorporated herein by reference, there is no
assurance that the Company will be profitable in future years. The Company's
results of operations may become increasingly unpredictable from quarter to
quarter as a result of numerous other factors, including market acceptance of
the Company's products, fluctuations in the development and growth of the
commercial network security industry in general, the timing of orders and
shipments of products, the introduction of new products by the Company, or the
introduction or the announcement of competitive products. In addition, a
substantial portion of the Company's sales occurs during the last few weeks of
each quarter; therefore, any delays in orders or shipments are more likely to
result in revenue not being recognized until the following quarter. The
Company's current and planned expense levels are based in part on its
expectations of future sales and, as a result, net income for a given period
could be disproportionately affected by any reduction in sales. There can be no
assurance that the Company will be able to achieve significant sales of products
in the future or that the level of sales in the future will not decrease from
past levels. There can be no assurance that in future quarters the Company's
sales or operating results will meet the expectations of stock market securities
analysts and investors.
LIQUIDITY AND CAPITAL REQUIREMENTS; POSSIBLE NEED FOR ADDITIONAL FINANCING
At present, funds generated from the Company's operations are
insufficient to satisfy the Company's current cash requirements, which have
increased since the April 1997 TradeWave Acquisition described below. See "Risk
Factors--Recent and Potential Acquisitions." Although, the Company anticipates
that the cash it generates from operations, as well as the cash from other
sources described below, will be sufficient to fund its anticipated operations
for fiscal year 1998, the future liquidity of the Company will be affected by
numerous factors, including sales volumes, gross margins, the levels of
selling, general and administrative expenses required to fully implement
product sales to commercial customers, levels of required capital expenditures
and access to external sources of financing. The Company expects expenditures
to increase commensurate with increased development and marketing of CyberGuard
Firewalls and other network security products.
Following the June 1996 sale to Concurrent Computer Corporation ("Concurrent")
of the Company's real-time computer business (the "Real-time Sale"), the
Company has relied on the sale of its holdings in Concurrent common and
preferred stock received as consideration in the Real-time Sale. As of the date
hereof, the Company retains no shares of Concurrent common stock and
approximately 130,000 shares of Concurrent preferred stock for future sale.
Although there is currently no public market for Concurrent preferred stock,
and it is not anticipated that a trading market will ever develop, the
preferred stock is convertible into common stock of Concurrent that trades on
the Nasdaq National Market. Accordingly, it remains possible for the Company to
sell its remaining holdings of Concurrent securities, although the value of
such holdings is expected to fluctuate in value based on factors which are
substantially similar to the factors that influence the price of the Concurrent
common stock. There can be no assurance that the Company will be able to sell
Concurrent securities at favorable prices or that the funds generated from
such sales will of themselves be sufficient to fund the Company's ongoing cash
requirements. The timing of such sales and the price at which such stock may be
sold may be affected by other factors beyond the Company's control, such as the
absence of a trading market of such stock, the value of the underlying
Concurrent common stock, and changes in the business, operations or prospects
of Concurrent.
On May 15, 1997, the Company entered into a Private Securities
Subscription Agreement (the "Subscription Agreement") pursuant to which the
purchaser thereunder agreed to purchase, and the Company agreed to sell, up to
$7,500,000 (up to a maximum of 1,470,085 shares of Common Stock) at a negotiated
price based on the average per-share closing bid price as reported by Bloomberg,
L.P. ("Closing Bid Price") over a period preceding a "call for proceeds" by the
Company. Pursuant to the Subscription Agreement, the Company must make a call
for all of the
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proceeds by November 15, 1998 or issue to the purchaser warrants with respect to
a maximum of 170,000 shares of the Company's common stock at an exercise price
equal to the market price of common stock on such date. The Subscription
Agreement places a number of constraints on the Company's ability to call for
proceeds. Among other things (i) the average amount of each call for proceeds
(other than the first call for proceeds) may not be more than 1.5 times the
Trading Volume (as defined below); (ii) there must be at least 15 business days
between the dates that the Company calls for proceeds (except that if the
Closing Bid Price is below $8.00 on the date of the Company's first call for
proceeds and such call for proceeds exceeds 1.5 times the Trading Volume, there
must be at least 40 business days between the date the Company makes the first
call for proceeds and the next succeeding call for proceeds); and (iii) the
Company may call for proceeds only when the closing bid price on the day of the
call is equal to or greater than the average Closing Bid Price over the five
trading days immediately preceding the Company's call for proceeds. The "Trading
Volume," for purposes of the Subscription Agreement, means the average closing
bid price and the average daily trading volume of the 20 day period preceding
each call for proceeds, in each case as reported by Bloomberg, L.P. The issuance
of Common Stock, and possibly warrants to purchase Common Stock, pursuant to the
Subscription Agreement could result in dilution of the interests of existing and
future security holders. To date the Company has sold pursuant to the
Subscription Agreement 464,524 shares of Common Stock in exchange for proceeds
of $3,917,057. There can be no assurance that the Company will make the minimum
calls for proceeds under the Subscription Agreement, that the various conditions
to closing following each call for proceeds will be met, or that the funds
received by the Company pursuant to the Subscription Agreement will be adequate
to fund the Company's ongoing cash requirements.
The future liquidity of the Company will be affected by numerous
factors, including sales volumes, gross margins, the levels of selling, general
and administrative expenses required to fully implement product sales to
commercial customers, levels of required capital expenditures and access to
external sources of financing. The Company expects expenditures to increase
commensurate with increased development and marketing of CyberGuard Firewalls
and other network security products. The Company may elect to sell the remaining
Preferred Stock of Concurrent that the Company received in the Real-time Sale.
The timing of such sale and the price at which such stock may be sold may be
affected by other factors beyond the Company's control, such as the absence of a
trading market of such stock, the value of the underlying Concurrent common
stock, and changes in the business, operations or prospects of Concurrent.
The Company is currently exploring the possibility of a line of credit
with a commercial lender that will utilize certain current and intangible assets
as collateral. Any line of credit is likely to be subject to financial
covenants,restrictions on indebtedness, asset dispositions, and investments and
corporate transactions, all of which may affect the operating flexibility of the
Company and subject the Company's assets to seizure upon default. These
limitations and conditions may affect the Company's flexibility in generating
cash through sales of Concurrent securities and may require the Company to seek
alternative sources of cash, including other borrowings and equity sales. In the
event that the Company requires financing from additional outside sources, there
can be no assurance that such additional financing will be available to the
Company on acceptable terms, or at all. Any additional financing may involve
dilution of the interests of the Company's then existing shareholders. If
adequate funds are not available, the Company may be required to curtail certain
activities, including product development, marketing and sales activities.
DEPENDENCE ON PRINCIPAL PRODUCT; UNCERTAINTY OF PRODUCT ACCEPTANCE
Sales of the Company's CyberGuard Firewall in the commercial network
security market account for a substantial portion of the Company's sales, and
the Company expects the portion of its sales attributable to the CyberGuard
Firewall to increase. As a result, any factor adversely affecting sales of this
product could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company's future success
depends on the continued adoption of the Company's CyberGuard Firewall and other
network security products by users. The market acceptance of the Company's
products is difficult to estimate due in large measure to the recent emergence
of the market for network security products and the effect of a number of new
products, applications or product enhancements that have been introduced into
the market. Competitive products are currently available that have comparable or
more favorable price characteristics and that may be perceived to have
comparable performance characteristics. There can be no assurance that the
Company's products, particularly its CyberGuard Firewall, will continue to
achieve acceptance in the network security market, and the failure of the
Company's products to achieve such continued market acceptance could have a
material adverse effect on the Company's business, operating results and
financial condition. Moreover, the Company anticipates that its existing
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and new competitors will introduce additional competitive products, particularly
if demand for enterprise-wide network security products increases, which could
reduce future market acceptance of the Company's products.
As the network security industry continues to evolve, the Company's
future financial performance will depend in part on the successful development,
introduction and market acceptance of new products, applications and product
enhancements. There can be no assurance that the Company will be able to develop
new products or that such products will satisfy evolving user preferences and
achieve market acceptance or, if market acceptance is achieved, that the Company
will be able to maintain such acceptance for a significant period of time. Any
significant delay in the introduction of the Company's future products could
result in loss of market share and could have a material adverse effect on the
Company's business, financial condition and results of operations.
RISKS ASSOCIATED WITH NETWORK SECURITY MARKET
The market for the Company's products is only beginning to emerge. The
rapid development of the Internet, corporate intranets and enterprise-wide
computing has increased the vulnerability of proprietary information to access
by unauthorized persons and has in recent years increased demand for computer
and network security products. However, there is no assurance that demand for
network security products will continue at current levels or increase. Moreover,
because the market for network security products is only beginning to develop,
it is difficult to assess the size of this market and the product features and
prices, the optimal distribution strategy and the competitive environment that
will develop in this market. Declines in demand for network security products,
whether as a result of technological change, the public's perception of the need
for network security products, developments in the hardware and software
environments in which these products operate, general economic conditions or
other factors, could have a material adverse effect on the Company's business,
financial condition and results of operations.
COMPETITION
The market for network security products and services is intensely
competitive, rapidly evolving and characterized by frequent technological
change. The Company expects competition to persist and intensify in the future.
The Company's principal current competitors include, Check Point Software
Technologies Ltd ("Check Point"), Raptor Systems, Inc., Secure Computing
Corporation, and Trusted Information Systems, Inc. In addition, companies such
as Digital Equipment Corporation, International Business Machines, McAfee
Associates, Inc., and Sun Microsystems, Inc. sell products with similar features
and functions that could be considered competitors of the Company. Several other
companies offering other network and other computer-related products, including
Microsoft Corporation, are expected to enter the commercial network security
market in the near future. Many of the Company's current and potential
competitors have greater name recognition, larger installed customer bases and
significantly greater financial, technical or marketing resources than the
Company. As a result, they may be able to adapt more quickly to new or emerging
technologies or changes in customer requirements or to devote greater resources
to the promotion and sale of their products than the Company. In addition,
certain of the Company's competitors may determine, for strategic reasons, to
consolidate, substantially lower the price of their network security products or
bundle their products with other products, such as hardware products or other
enterprise software products. In addition, current and potential competitors
have established or may establish financial or strategic relationships among
themselves, with existing or potential customers, resellers or other third
parties. Competition could increase if new companies enter the market or if
existing competitors expand their product lines. An increase in competition
could result in price reductions and loss of market share for the Company. Such
competition and any resulting reduction in pricing and gross margins could have
a material adverse effect on the Company's business, financial condition and
results of operations.
There can be no assurance that the Company's competitors will not
develop network security products using approaches substantially similar to or
different from the Company's that may be more effective than the Company's
current or future products or that the Company's technologies and products would
not be rendered obsolete by such developments. At present, the CyberGuard
Firewall is the only commercially available firewall built on integrated secure
operating system and secure networking software components that are rated as
high as B1 by the National Computer Security Center ("NCSC") and E-3 in the
United Kingdom against the Information Technology Security Evaluation Criteria
("ITSEC"). However, certain of the Company's competitors have also submitted, or
could submit, their commercial network firewall products for evaluation by the
NCSC and against the ITSEC, and certain of these products could receive B1 and
E-3 or higher ratings upon completion of these processes. Competitors may also
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employ litigation or the threat of litigation relating to patents and other
intellectual property to gain a competitive advantage.
DEPENDENCE ON THE INTERNET AND INTRANETS
The Company's products are designed primarily for computer network
environments, such as the Internet and certain enterprise-wide networks that are
based upon the Transmission Control Protocol/Internet Protocol ("TCP/IP")
network protocol. Accordingly, sales of the Company's current products will
depend in large part upon a robust industry and infrastructure for providing
Internet access and carrying Internet traffic. Because global commerce and the
exchange of information on the Internet and other similar open wide area
networks are new and evolving, it is difficult to predict with any assurance
whether the complementary products or other factors necessary to make the
Internet a viable commercial marketplace will be developed. The failure of the
Internet to become a viable commercial marketplace could have a material adverse
effect on the Company's business, financial condition and results of operations.
Additionally, the Company plans to continue to develop products for use by
customers with TCP/IP-based enterprise-wide intranet applications. The failure
of the TCP/IP protocol to gain wide acceptance as an enterprise-wide network
protocol could have a material adverse effect on the Company's business,
financial condition and results of operations.
RECENT AND POTENTIAL ACQUISITIONS
In the normal course of its business, the Company evaluates potential
acquisitions of businesses, products and technologies that could complement or
expand the Company's network security business. For example, on April 9, 1997,
the Company purchased (the "TradeWave Acquisition") substantially all the assets
of TradeWave Corporation, a Delaware corporation ("TradeWave"). TradeWave is
based in Austin, Texas and is engaged in the design, production and marketing of
a suite of software products that enable businesses to design and implement
public-key security network security systems for use across TCP/IP-based
networks. In the event the Company were to identify another appropriate
acquisition candidate, there is no assurance that the Company would be able to
successfully negotiate the terms of any such acquisition, finance such
acquisition and integrate such acquired business, products or technologies into
the Company's existing business and operations. Furthermore, the integration of
an acquired business could cause a diversion of management time and resources.
The TradeWave Acquisition, for example, is expected to result in considerable
demands on the Company for cash, managerial support and technological
assistance. See "-- Liquidity and Capital Requirements; Possible Need for
Additional Financing." There can be no assurance that a given acquisition, when
consummated, including without limitation the TradeWave Acquisition, will not
materially adversely affect the Company's business, financial condition and
results of operations. If the Company proceeds with one or more significant
acquisitions in which the consideration consists of cash, a substantial portion
of the Company's available cash could be used to consummate the acquisitions. If
the Company consummates one or more significant acquisitions in which the
consideration consists of stock, or is financed with the proceeds of the
issuance of stock, stockholders of the Company could suffer a significant
dilution of their interests in the Company. See "Use of Proceeds."
INTERNATIONAL SALES RISKS
For the fiscal year ended June 30, 1997, the nine months ended June 30,
1996 and the fiscal year ended September 30, 1995, approximately 58%, 45.5% and
31%, respectively, of the Company's sales for security products were
attributable to sales outside the United States. The Company expects to continue
to expand its marketing efforts abroad. International sales are subject to
certain risks, such as currency fluctuations, that could make the Company's
products less competitive in foreign markets and contribute to fluctuations in
the Company's operating results. Other risks affecting international sales
include political instability, difficulties in staffing and managing
international operations, potential insolvency of international resellers,
longer receivable collection periods and difficulty in collecting accounts
receivable. In addition, the laws of certain countries do not protect the
Company's products and intellectual property rights to the same extent as the
laws of the United States. There can be no assurance that these factors would
not have a material adverse effect on the Company's business, financial
condition and results of operations.
CHANGES IN TECHNOLOGY AND INDUSTRY STANDARDS; SIGNIFICANT RESEARCH AND
DEVELOPMENT EXPENDITURES
The network security industry is characterized by rapid changes,
including evolving industry standards, frequent new product introductions,
continuing advances in technology and changes in customer requirements and
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preferences. The introduction of new technologies could render the Company's
existing products obsolete or unmarketable. Advances in techniques employed by
individuals and entities seeking to gain unauthorized access to networks could
expose the Company's existing products to new and unexpected attacks and require
accelerated development of new products. There can be no assurance that the
Company will be able to counter challenges to its current products, that the
Company's future product offerings will keep pace with technological changes
implemented by competitors or persons seeking to breach network security, that
the Company will be able to establish and maintain any strategic technical
alliances necessary to achieve a competitive advantage or that the Company will
be successful in developing and marketing products for any future technology.
The development cycle for the Company's new products may be significantly longer
than the Company's historical product development cycle or significantly longer
than anticipated, resulting in higher development costs or a loss in market
share. Failure to develop and introduce new products and product enhancements on
a timely basis could have a material adverse effect on the Company's business,
financial condition and results of operations. Moreover, the costs of developing
new products, and related sales and marketing expenses, are expected to be
significant before such products are in a position to deliver significant sales
or cash flow to the Company. There can be no assurance that new product
introduction will be executed without materially and adversely affecting the
Company's business, financial condition and results of operations.
DEPENDENCE ON RESELLERS; NEED TO ESTABLISH COLLABORATIVE MARKETING ARRANGEMENTS
In marketing its products, the Company depends substantially, and
expects to increase its dependence, upon the performance of indirect sales
channels, including systems integrators and value added resellers (or "VARs"),
over which the Company does not have complete authority. The Company's
relationships with most of its resellers have been established within the last
two years, and the Company is unable to predict with accuracy the extent to
which its resellers will be successful in marketing and selling the Company's
products. Moreover, the Company's future success will depend in part on its
ability to establish collaborative marketing relationships in other indirect
sales channels. There can be no assurance that the Company's existing or
contemplated collaborative relationships will be commercially successful, that
the Company will be able to negotiate additional collaborative relationships,
that such additional collaborations will be available to the Company on
acceptable terms or that any such relationships, if established, will be
commercially successful. In addition, there can be no assurance that parties
with whom the Company has established collaborative relationships will not
pursue alternative technologies or develop alternative products in addition to
or in lieu of the Company's products either on their own or with others,
including the Company's competitors. The loss of any of the Company's major
resellers, either to competitive products offered by other companies or to
products developed internally by the resellers, could have a material adverse
effect on the Company's business, financial condition or results of operations.
If the Company is successful in expanding its network of indirect sales
channels, the Company will need to add substantially to its pre-sales, field
support, and marketing staffs in order to support the sales activities of an
expanded distribution network. There can be no assurance that such internal
expansion will be successfully completed, that the cost of such expansion will
not exceed the sales generated thereby, or that the Company's sales and
marketing organization will successfully compete against the more extensive and
well-funded sales and marketing operations of many of the Company's current and
future competitors.
RISK OF ERRORS OR FAILURES
Products as complex as those offered by the Company may contain
undetected errors when first introduced or when new versions are released. The
Company has in the past discovered software errors in certain of its product
offerings after their introduction and has experienced delays in revenue
recognition during the period required to correct these errors. There can be no
assurance that errors will not be found in new products or releases after
commencement of commercial shipments by the Company. A computer break-in or
other disruption experienced by one of the Company's customers, if caused by
errors or failures in the Company's products, could result in product recalls
and liability under the Company's warranties or otherwise. A well publicized
actual or perceived breach of network security at a customer site could
adversely affect the market's perception of the Company or its products.
Alleviating such problems could require significant expenditures of capital and
resources by the Company, could cause interruptions, delays or cessation of
service to the Company's customers and could have a material adverse effect on
the Company's business, financial condition and results of operations. The
Company attempts to limit its liability to customers, including liability
arising from a failure of the security features contained in the Company's
products, through contractual limitations of warranties and remedies. However,
some courts have held similar contractual limitations of liability, or the
"shrinkwrap licenses" in which they are often embodied, to be
7
<PAGE> 9
unenforceable. Accordingly, there can be no assurance that such limitations will
be enforced. Moreover, to the extent such limitations are enforced as to
licensees, there can be no assurance that they will be enforceable as to other
users of the Company's products or as against parties who have an interest in
data stored on networks that might be compromised by a failure of the Company's
product. While the Company currently has product liability insurance to protect
against these risks, there can be no assurance that such insurance will cover
all losses from failures of the Company's products or will continue to be
available to the Company on commercially reasonable terms or at all.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends in large part on its ability to attract
and retain highly qualified engineering, management and marketing personnel.
Although the Company maintains key man life insurance on the Company's Chief
Executive Officer, the loss of the services of the Company's Chief Executive
Officer or other key employees of the Company could have a material adverse
effect on the Company. Competition for such personnel is intense and there can
be no assurance that the Company will be able to attract and retain all
personnel necessary for the development and operation of its business. The loss
of the services of key personnel could have a material adverse effect on the
Company's business, financial condition and results of operations.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS; RISK OF
LITIGATION
The Company relies upon license agreements with customers, trademark,
copyright and trade secret laws, and employee conflict of interest and
third-party non-disclosure agreements and other methods to protect its
proprietary rights. Although the Company's wholly owned subsidiary, TradeWave
Corporation, has certain patents and has filed a patent application with respect
to certain proprietary technology, the Company currently does not hold any
patents in its own right and has no pending patent applications to cover any
aspects of its technology. The Company intends to file patent applications in
relevant jurisdictions to protect aspects of its technology; however, there can
be no assurance that any future patent applications will be granted or that any
future patents will not be challenged, invalidated or circumvented or that the
rights granted thereunder will provide competitive advantages to the Company.
There can also be no assurance that the Company's conflict of interest or
non-disclosure agreements will provide meaningful protection of the Company's
proprietary information. Further, the Company may be subject to additional risk
as it enters into transactions in countries where intellectual property laws are
not well developed or are poorly enforced. The Company's inability to maintain a
competitive advantage based on proprietary rights could have a material adverse
effect on the Company's business, financial condition and results of operations.
As the number of network security products in the industry increases
and the functionality of these products further overlaps, software developers
and publishers may increasingly become subject to infringement claims. There can
be no assurance that others will not independently develop similar technologies
or duplicate any technology developed by the Company or that the Company's
technology will not infringe upon patents or other rights owned by others. For
example, during the first quarter of calendar 1997 a competitor of the Company
announced that it had been awarded a patent by the U.S. Patent and Trademark
Office covering elements of its firewall product. In response to this
announcement, the Company sought the counsel of its patent advisors and has
received the preliminary written confirmation from its patent counsel that the
CyberGuard Firewall does not infringe the competitor's patent. There can be no
assurance, however, that the competitor or other third parties will not assert
infringement claims against the Company in the future with respect to current or
future products. Although the Company is not currently the subject of any
intellectual property litigation, there has been substantial litigation
regarding patent, copyright, trademark and other intellectual property rights
involving computer software companies. Any claims or litigation, with or without
merit, could be costly and could result in a diversion of management's
attention, which could have a material adverse effect on the Company's business,
financial condition and results of operations. Adverse determinations in such
claims or litigation could also have a material adverse effect on the Company's
business, financial condition and results of operations.
8
<PAGE> 10
EFFECT OF GOVERNMENT REGULATION OF TECHNOLOGY EXPORTS
The Company's international sales and operations are subject to
governmental export requirements and could be subject to risks such as the
imposition of further governmental controls, denial or revocation of export
licensure status, restrictions on the export of critical technology, trade
restrictions and changes in tariffs. In particular, because of governmental
controls on the exportation of encryption technology, the Company may be unable
to export its most robust network security products. As a result, foreign
competitors that face less stringent controls on their products may be able to
compete more effectively than the Company in the global network security market.
There can be no assurance that these factors would not have a material adverse
effect on the Company's business, financial condition and results of operations.
SHARES ELIGIBLE FOR FUTURE SALE
No assurance can be given as to the effect, if any, that future sales
of shares of Common Stock, or the availability of shares of Common Stock for
future sales, will have on the market price of the Common Stock from time to
time. Future sales of shares of Common Stock (including shares issued upon
exercise of stock options), or the possibility that such sales could occur,
could adversely affect the prevailing market price of the Common Stock and could
also impair the Company's ability to raise capital through an offering of its
equity securities. As of October 31, 1997, there were 8,025,557 shares of Common
Stock outstanding, substantially all of which will be immediately tradable
without restriction under the Securities Act of 1933, as amended (the
"Securities Act"). Approximately 1,963,022 additional shares of Common Stock are
issuable upon exercise of currently outstanding options, and 215,000 shares are
issuable upon the exercise of outstanding warrants to purchase Common Stock.
Approximately 73,795 shares of Common Stock or options thereon are available for
future issuance under the Company's Stock Incentive Plan. The information
provided in this paragraph does not include the shares that may be issued by the
Company under the Subscription Agreement. See "--Liquidity and Capital
Requirements; Possible Need for Additional Financing."
ABSENCE OF DIVIDENDS
The Company does not intend to pay any cash dividends for the
foreseeable future. The Company intends to follow a policy of retaining
earnings, if any, to finance the development and expansion of its business.
ANTI-TAKEOVER PROVISIONS
The Company's Articles of Incorporation and By-laws contain certain
anti-takeover provisions that could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company. These provisions
include a staggered Board of Directors, certain super-majority voting
requirements with respect to removal of directors and amendments of the Articles
of Incorporation and By-laws, requirements concerning the filling of board
vacancies, adoption of Florida's Control Share Acquisition Act, elimination of
shareholder action by written consent, creation of a class of "blank check"
preferred stock and an increase in the percentage of shareholder votes required
to call a special meeting of shareholders. The Company also has adopted and
implemented a Shareholder Rights Agreement that will expire by its terms on
September 20, 2004 pursuant to which each share of Common Stock has attached to
it a right to purchase a share of preferred stock under certain circumstances.
These provisions and agreements are intended to encourage a person interested in
acquiring the Company to negotiate with, and to obtain the approval of, the
Board of Directors in connection with such a transaction. However, certain of
these provisions and agreements may discourage a future acquisition of the
Company, including an acquisition in which shareholders might otherwise receive
a premium for their shares. As a result, shareholders who might desire to
participate in such a transaction may not have the opportunity to do so.
USE OF PROCEEDS
All proceeds from the sale of the Shares offered hereby will go to the
Selling Shareholders. The Company will not receive any proceeds from the sale of
Shares registered hereunder.
9
<PAGE> 11
SELLING SHAREHOLDERS
The Selling Shareholders are as follows. Except as otherwise noted, the
address for each Selling Shareholder is 3 Harbor Drive, Suite 211, Sausalito, Ca
94965
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SELLING NUMBER OF SHARES OWNED PRIOR TO NUMBER OF SHARES OWNED AFTER THE
SHAREHOLDER(1) THE OFFERING OFFERING
<S> <C> <C>
Harlan P. Kleiman 10,825 --
Robert K. Schacter 2,458 --
Thomas J. Griesel 116 --
Timothy H. Holmes 146 --
170 Montcito
San Raphael, CA 94902
Elizabeth M. Tracy 1,455 --
</TABLE>
(1) Represents, in each case, (i) shares issuable upon exercise of
currently exercisable warrants to purchase Common Stock and
(ii) less than 1% of the issued and outstanding stock of the
Company.
The Selling Shareholders are each affiliated with Shoreline Pacific
Institutional Finance, a division of Financial West Group ("Shoreline Pacific").
The Company engaged Shoreline Pacific as placement agent in connection with the
Subscription Agreement. In consideration for its services, Shoreline Pacific
received cash compensation of $375,000 and warrants (the "Shoreline Warrants")
expiring on November 15, 2000 to purchase an aggregate of 15,000 shares of
Common Stock of the Company at an exercise price of $9.90 per share. The
Shoreline Warrants are those held by the Selling Shareholders. The Common Stock
offered hereby represents shares issuable upon exercise of the Shoreline
Warrants.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Shareholders or
their pledgees or donees. Such sales may be made in the over-the-counter market
or in negotiated transactions, at prices and on terms then prevailing or at
prices related to the then current market price or at negotiated prices. The
Shares may be sold by means of (a) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus
and/or (b) ordinary brokerage transactions and transactions in which the broker
solicits purchasers. In effecting sales, brokers or dealers engaged by the
Selling Shareholders may arrange for other brokers or dealers to participate.
Brokers or dealers will receive commissions or discounts from the Selling
Shareholders in amounts to be negotiated immediately prior to the sale, which
amounts will not be greater than that normally paid in connection with ordinary
trading transactions.
EXPERTS
The consolidated financial statements of CyberGuard Corporation
(formerly known as Harris Computer Systems Corporation) as of June 30, 1997 and
1996, and for the year ended June 30, 1997, the nine months ended June 30, 1996,
and the year ended September 30, 1995, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
the Company by the law firm of Holland & Knight LLP, One East Broward Boulevard,
Suite 1300, Fort Lauderdale, Florida 33301.
10
<PAGE> 12
===============================================================================
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OR PROJECTIONS OF FUTURE PERFORMANCE
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND ANY SUCH OTHER INFORMATION,
PROJECTIONS OR REPRESENTATIONS IF GIVEN OR MADE MUST NOT BE RELIED UPON AS
HAVING BEEN SO AUTHORIZED. THE DELIVERY OF THIS PROSPECTUS OF ANY SALE HEREUNDER
AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information....................................2
Incorporation of Certain Information by Reference........2
Forward-Looking Statements...............................3
Risk Factors.............................................3
Use of Proceeds..........................................9
The Selling Shareholders................................10
Plan of Distribution....................................10
Experts.................................................10
Legal Matters...........................................10
</TABLE>
===============================================================================
===============================================================================
15,000 SHARES
CYBERGUARD CORPORATION
COMMON STOCK
----------
PROSPECTUS
----------
NOVEMBER _, 1997
===============================================================================
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth expenses and costs expected to be incurred in
connection with the issuance and distribution of the common stock being
registered and payable by the Company. All amounts are estimated except for the
SEC registration fee and the Nasdaq fees.
<TABLE>
<S> <C>
SEC Registration Fee.............................................. $ 45
Nasdaq fees.......................................................
Legal fees and expenses........................................... 1,000
Accounting fees and expenses...................................... 4,000
Blue Sky fees and expenses........................................ 500
Miscellaneous..................................................... 1,000
------
Total........................................................ $6,545
======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Florida Business Corporation Act ("FBCA") and the Company's
Articles of Incorporation provide that in certain cases, each officer and
director of the Company shall be indemnified by the Company against certain
costs, expenses and liabilities which he or she may incur in his or her capacity
as such.
The Company's Articles provide:
To the fullest extent permitted by the Florida Business Corporation
Act, the Corporation shall indemnify, or advance expenses to, any
person made, or threatened to be made, a party to any action, suit or
proceeding by reason of the fact that such person (i) is or was a
director of the Corporation; (ii) is or was serving at the request of
the Corporation as a director of another corporation; (iii) is or was
an officer of the Corporation, provided that such person is or was at
the time a director of the Corporation; or (iv) is or was serving at
the request of the Corporation as an officer of another corporation,
provided that such person is or was at the time a director of the
Corporation or a director of such other corporation, serving at the
request of the Corporation. Unless otherwise expressly prohibited by
the Florida Business Corporation Act, and except as otherwise provided
in the previous sentence, the Board of Directors of the Corporation
shall have the sole and exclusive discretion, on such terms and
conditions as it shall determine, to indemnify, or advance expenses to,
any person made, or threatened to be made, a party to any action, suit
or proceeding by reason of the fact that such person is or was an
officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as an officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise. No person falling within the purview of this paragraph may
apply for indemnification or advancement of expenses to any court of
competent jurisdiction.
The Company's officers and directors (collectively "Indemnitees") are
each party to an indemnification agreement (collectively "Indemnification
Agreements"). The Indemnification Agreements obligate the Company to indemnify
and hold harmless each Indemnitee to the fullest extent permitted by the
Articles of Incorporation and the By-laws of the Company and the FBCA for all
expenses, including attorney's fees and taxes, in connection with any
threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), to which an
Indemnitee was, is, or is threatened to be made a party by reason of facts which
include his being or having been a director, officer, employee or agent of the
Company. The indemnification Agreements exclude indemnification where (i)
indemnification would be prohibited by applicable law, (ii) the Indemnitee
derived an improper personal benefit, (iii) (in the case of a stockholders'
derivative suit) the Indemnitee engaged in willful misconduct or conscious
disregard for the best interests of the Company (iv) it is determined that the
Indemnitee violated a criminal law (subject to certain exceptions), or (v) it is
determined that the Indemnitee violated the Securities Act of 1933, as amended
or Section 16(b) of the Securities Exchange Act of 1934, as amended. securities
laws. The Indemnification Agreements
<PAGE> 14
provide for the advancement of expenses of a Proceeding, including advancements
to pay for reasonable attorney's fees,. upon the receipt of an undertaking to
repay such advances if its is ultimately determined that indemnification in
unavailable under the Indemnification Agreements.
FBCA 607.0850 "Indemnification of officers, directors, employees and
agents," provides:
(1) A corporation shall have power to indemnify any person who
was or is a party to any proceeding (other than an action by, or in the
right of, the corporation), by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise against liability incurred in connection
with such proceeding, including any appeal thereof, if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any proceeding by judgment,
order, settlement, or conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interests of the
corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(2) A corporation shall have power to indemnify any person,
who was or is a party to any proceeding by or in the right of the
corporation to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not exceeding, in the judgment
of the board of directors, the estimated expense of litigating the
proceeding to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such proceeding, including
any appeal thereof. Such indemnification shall be authorized if such
person acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the corporation, except
that no indemnification shall be made under this subsection in respect
of any claim, issue, or matter as to which such person shall have been
adjudged to be liable unless, and only to the extent that, the court in
which such proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent
of a corporation has been successful on the merits or otherwise in
defense of any proceeding referred to in subsection (1) or subsection
(2), or in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith.
(4) Any indemnification under subsection (1) or subsection
(2), unless pursuant to a determination by a court, shall be made by
the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee,
or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsection (1) or
subsection (2). Such determination shall be made:
(a) By the board of directors by a majority vote of a
quorum consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if
obtainable, by majority vote of a committee duly designated by the
board of directors (in which directors who are parties may participate)
consisting solely of two or more directors not at the time parties to
the proceeding;
(c) By independent legal counsel;
1. Selected by the board of directors
prescribed in paragraph (a) or the committee prescribed in paragraph
(b); or
<PAGE> 15
2. If a quorum of the directors cannot be
obtained for paragraph (1) and the committee cannot be designated under
paragraph (b), selected by majority vote of the full board of directors
(in which directors who are parties may participate); or
(d) By the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such
proceeding or, if no such quorum is obtainable, by a majority vote of
shareholders who were not parties to such proceeding.
(5) Evaluation of the reasonableness of expenses and
authorization of indemnification shall be made in the same manner as
the determination that indemnification is permissible. However, if the
determination of permissibility is made by independent legal counsel,
persons specified by paragraph (4)(c) shall evaluate the reasonableness
of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a
civil or criminal proceeding may be paid by the corporation in advance
of the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if he is ultimately found not to be entitled to indemnification
by the corporation pursuant to this section. Expenses incurred by other
employees and agents may be paid in advance upon such terms or
conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided
pursuant to this section are not exclusive, and a corporation may make
any other or further indemnification or advancement of expenses of any
of its directors, officers, employees, or agents, under any bylaw,
agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office. However, indemnification
or advancement of expenses shall not be made to or on behalf of any
director, officer, employee, or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were
material to the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the
director, officer, employee, or agent had reasonable cause to believe
his conduct was lawful or had no reasonable cause to believe his
conduct was unlawful;
(b) A transaction from which the director, officer,
employee, or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under
which the liability provisions of s. 607.0834 are applicable; or
(d) Willful misconduct or a conscious disregard for
the best interests of the corporation in a proceeding by or in the
right of the corporation to procure a judgment in its favor or in a
proceeding by or in the right of a shareholder.
(8) Indemnification and advancement of expenses as provided in
this section shall continue as, unless otherwise provided when
authorized or ratified, to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of such a person, unless otherwise
provided when authorized or ratified.
(9) Unless the corporation's articles of incorporation provide
otherwise, notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary determination of the board or
of the shareholders in the specific case, a director, officer,
employee, or agent of the corporation who is or was a party to a
proceeding may apply for indemnification or advancement of expenses, or
both, to the court conducting the proceeding, to the circuit court, or
to another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice that it considers
necessary, may order indemnification and advancement of expenses,
including expenses incurred in seeking court-ordered indemnification or
advancement of expenses, if it determines that:
<PAGE> 16
(a) The director, officer, employee, or agent is
entitled to mandatory indemnification under subsection (3), in which
case the court shall also order the corporation to pay the director
reasonable expenses incurred in obtaining court-ordered indemnification
or advancement of expenses;
(b) The director, officer, employee, or agent is
entitled to indemnification or advancement of expenses, or both, by
virtue of the exercise by the corporation of its power pursuant to
subsection (7); or
(c) The director, officer, employee, or agent is
fairly and reasonably entitled to indemnification or advancement of
expenses, or both, in view of all the relevant circumstances,
regardless of whether such person met the standard of conduct set forth
in subsection (1), subsection (2), or subsection (7).
(10) For purposes of this section, the term "corporation"
includes, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director,
officer, employee, or agent of a constituent corporation, or is or was
serving at the request of a constituent corporation as a director,
officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, is in the same position under this
section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(11) For purposes of this section;
(a) The term "other enterprises" includes employee
benefit plans;
(b) The term "expenses" includes counsel fees,
including those for appeal;
(c) The term "liability" includes obligations to pay
a judgment, settlement, penalty, fine (including an excise tax assessed
with respect to any employee benefit plan), and expenses actually and
reasonably incurred with respect to a proceeding;
(d) The term "proceeding" includes any threatened,
pending, or completed action, suit, or other type of proceeding,
whether civil, criminal, administrative, or investigative and whether
formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the
corporation" includes any service as a director, officer, employee, or
agent of the corporation that imposes duties on such persons, including
duties relating to an employee benefit plan and its participants or
beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in good faith
and in a manner he reasonably believes to be in the best interests of
the participants and beneficiaries of an employee benefit plan.
(12) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
ITEM 16. EXHIBITS
The following documents are filed as exhibits to this registration
statement:
<PAGE> 17
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
4.01 Form of Common Stock Certificate*
4.02 Form of Stockholder Rights Plan**
4.03 Form of Warrant
5.01 Opinion of Holland & Knight LLP
23.01 Consent of KPMG Peat Marwick LLP, Independent Certified Public
Accountants.
23.02 Consent of Holland & Knight (included in Exhibit 5).
24.01 Power of Attorney (included on signature page of this Registration
Statement).
* Incorporated by reference to Exhibit 4.01 to Amendment No. 1 to the
Company's Registration Statement on Form S-3/A (Reg. No. 333-04407)
filed June 21, 1996.
** Incorporated by reference to Post-Effective Amendment No. 1 to the
Company's Registration Statement on Form 10, dated September 29, 1994,
File No. 0-24544.
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 to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the 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.
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.
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 Act
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 Act and will be governed by the final adjudication of
such issue.
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds 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 Fort Lauderdale, State of Florida on November 5,
1997.
CYBERGUARD CORPORATION
By: /s/ Robert L. Carberry
----------------------------------------
Robert L. Carberry
Chairman, President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert L. Carberry and Patrick O.
Wheeler, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and revocation, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to sign any
Registration Statement (and any and all amendments thereto) related to this
Registration Statement and filed pursuant to Rule 462(b) promulgated by the
Securities and Exchange Commission, and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement was signed by the persons in the capacities and on the
date indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Robert L. Carberry President, Chairman and Chief Executive November 5, 1997
- ------------------------------ Officer (Principal Executive Officer) and
Robert L. Carberry Director
/s/ Patrick O. Wheeler Vice-President Finance and Chief November 5, 1997
- ------------------------------ Financial Officer (Principal Financial and
Patrick O. Wheeler Principal Accounting Officer)
/s/ C. Shelton James Director November 5, 1997
- ------------------------------
C. Shelton James
/s/ Richard P. Rifenburgh Director November 5, 1997
- ------------------------------
Richard P. Rifenburgh
/s/ Michael F. Maguire Director November 5, 1997
- ------------------------------
Michael F. Maguire
/s/ Leland R. Reiswig, Jr. Director November 5, 1997
- ------------------------------
Leland R. Reiswig, Jr.
/s/ David R. Proctor Director November 5, 1997
- ------------------------------
David R. Proctor
</TABLE>
<PAGE> 19
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
4.01 Form of Common Stock Certificate*
4.02 Form of Stockholder Rights Plan**
4.03 Form of Warrant
5.01 Opinion of Holland & Knight LLP
23.01 Consent of KPMG Peat Marwick LLP, Independent Certified Public
Accountants.
23.02 Consent of Holland & Knight (included in Exhibit 5).
24.01 Power of Attorney (included on signature page of this Registration
Statement)
- ------------------------
* Incorporated by reference to Exhibit 4.01 to Amendment No.1
to the Company's Registration Statement on Form 5-3/A
(Reg. No. 333-04407) filed June 21, 1996.
** Incorporated by reference to Post-Effective Amendment No.1
to the Company's Registration Statement on Form 10, dated
September 29, 1994, File No. 0-24544.
<PAGE> 1
Exhibit 4.03
NEITHER THIS WARRANT CERTIFICATE NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON
THE EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT").
THIS WARRANT CERTIFICATE AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
Dated May 15, 1997
to Purchase [No.] Shares of Common Stock of
CYBERGUARD CORPORATION
Cyberguard Corporation, a Florida corporation (the "Company"), hereby
certifies that [NAME OF HOLDER], his or her permissible transferees, designees,
successors and assigns (collectively, the "Holder"), for value received, is
entitled to purchase from the Company at any time commencing on May 15, 1997 and
terminating on May 15, 2000 up to [NO.] (#) shares (the "Shares") of the
Company's common stock (the "Common Stock"), at $9.90 per Share (the "Exercise
Price").
1. Exercise of Warrants.
(a) Mechanics of Exercise. Upon presentation and surrender of
this Common Stock Purchase Warrant Certificate ("Warrant Certificate" or
"Certificate"), with the attached Election to Purchase form duly completed, at
the principal office of the Company at 2101 West Cypress Creek Road, Ft.
Lauderdale, Florida 33309, together with a check payable to the Company in the
amount of the Exercise Price multiplied by the number of Shares being purchased,
the Company or the Company's Transfer Agent as the case may be, shall deliver to
the Holder hereof, certificates of Common Stock which in the aggregate represent
the number of Shares being purchased; provided, however, that the Holder may
elect to utilize the cashless exercise provisions set forth below in lieu of
tendering the Exercise Price in cash. This Warrant Certificate may be exercised
in full or in part. In the event of a partial exercise, upon surrender hereof,
the Company will deliver to the Holder a new Warrant Certificate or Certificates
of like tenor and dated the date hereof entitling the Holder to purchase the
number of Shares represented by this Certificate which have not been exercised
and entitling the Holder to receive registration rights with respect to such
Shares.
(b) Cashless Exercise. Notwithstanding the foregoing provision
regarding payment of the Exercise Price in cash, the Holder may elect to receive
a reduced number of Shares in lieu of tendering the Exercise Price in cash. In
such case, the number of Shares to be issued to the Holder shall be computed
using the following formula:
X = Y(A-B)
A
where: X = the number of Shares to be issued to the Holder;
<PAGE> 2
Y = the number of Shares to be exercised under this Warrant
Certificate;
A = the Market Value (defined below) of one share of Common
Stock; and
B = the Exercise Price.
As used herein, "Market Value" refers to the closing bid price of the Common
Stock (as reported by Bloomberg, L.P.) on the day before the Election to
Purchase and this Warrant Certificate are duly surrendered to the Company for a
full or partial exercise hereof. Notwithstanding the foregoing definition, if
the Common Stock is not listed on a national securities exchange or quoted in
the Nasdaq System at the time said Election to Purchase is submitted to the
Company in the foregoing manner, the Market Value of the Common Stock shall be
as determined in good faith by the Board of Directors of the Company, unless the
Company shall become subject to a merger, acquisition, or other consolidation
pursuant to which the Company is not the surviving entity, in which case the
Market Value of the Common Stock shall be deemed to be the value received by the
Company's common shareholders pursuant to the Company's acquisition.
2. Exchange and Transfer. At any time prior to the full exercise
hereof, this Certificate may be exchanged upon presentation and surrender to the
Company for another Certificate or Certificates of like tenor in the name of the
Holder. The replacement Certificate(s) shall be exercisable for the aggregate
number of Shares as the Certificate or Certificates surrendered.
3. Rights and Obligations of the Holder of this Certificate. The Holder
of this Certificate shall not, by virtue hereof, be entitled to any rights of a
stockholder in the Company, either at law or in equity; provided, however, that
in the event any certificate representing shares of Common Stock or other
securities is issued to the Holder upon exercise of some or all of the Warrants,
such Holder shall be deemed for all purposes to have become the holder of record
of such Common Stock on the date on which this Certificate, together with a duly
completed Election to Purchase form, was surrendered and payment of the
aggregate Exercise Price was made, irrespective of the date of delivery of such
share certificate.
4. Adjustments.
(a) Stock Dividends, Reclassifications, Recapitalizations,
Etc. In the event the Company: (i) pays a dividend in Common Stock or makes a
distribution in Common Stock, (ii) subdivides its outstanding Common Stock into
a greater number of shares, or (iii) combines its outstanding Common Stock into
a smaller number of shares (including a recapitalization in connection with a
consolidation or merger in which the Company is the continuing corporation),
then (1) the Exercise Price on the record date of such division or the effective
date of such action shall be adjusted by multiplying such Exercise Price by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately before such event and the denominator of which is the
number of shares of Common Stock outstanding immediately after such event, and
(2) the number of shares of Common Stock for which this Warrant Certificate may
be exercised immediately before such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the Exercise Price immediately
before such event and the denominator of which is the Exercise Price immediately
after such event.
(b) Consolidations, Mergers. In the event of any consolidation
or merger of the Company with or into another corporation (other than any
<PAGE> 3
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares or other stock or other securities or property), or the sale or transfer
of the property of the Company as an entirety or substantially as an entirety,
there shall be deliverable upon exercise of this Certificate (in lieu of the
number of shares of Common Stock theretofore deliverable) the number of shares
of stock or other securities or property to which a holder of the number of
shares of Common Stock which would otherwise have been deliverable upon the
exercise of this Warrant Certificate would have been entitled upon such action
if this Warrant Certificate had been exercised immediately prior to such action.
(c) Other Adjustments. If the event of any other transaction
of the type contemplated by this Section 4, but not expressly provided for by
the provisions hereof, the Board of Directors of the Company will make
appropriate adjustment in the Exercise Price so as to equitably protect the
rights of the Holder.
(d) No Impairment of Holder's Rights. The Company will not, by
amendment of its certificate of incorporation or bylaws or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant Certificate, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all action as may be necessary or appropriate in order to
protect the rights of the Holder against dilution or other impairment.
5. Company's Representations.
(a) The Company covenants and agrees that all shares of Common
Stock issuable upon exercise of this Warrant Certificate will, upon delivery, be
duly and validly authorized and issued, fully-paid and non-assessable.
(b) The Company covenants and agrees that it will at all times
reserve and keep available an authorized number of shares of its Common Stock
and other applicable securities sufficient to permit the exercise in full of all
outstanding options, warrants and rights, including this Warrant Certificate.
6. Registration Rights. In the event the Company files a Registration
Statement with the Securities and Exchange Commission for registration of any
shares of the Common Stock, the Company agrees to include the number of shares
of Common Stock represented by this Warrant Certificate in any such Registration
Statement.
7. Issuance of Certificates. Within three (3) days of receipt of a duly
completed Election to Purchase form, together with this Certificate and payment
of the Exercise Price, if applicable, the Company, at its expense, will cause to
be issued in the name of and delivered to the holder of this Warrant, a
certificate or certificates for the number of fully paid and non-assessable
Shares of Common Stock to which that holder shall be entitled on such exercise.
In lieu of issuance of a fractional share upon any exercise hereunder, the
Company will pay the cash value of that fractional share, calculated on the
basis of the Exercise Price. Prior to registration of the shares of Common Stock
underlying this Warrant Certificate, all such certificates shall bear a
restrictive legend to the effect that the Shares represented by such certificate
have not been registered under the 1933 Act, and that the Shares may not be sold
or transferred in the absence of such registration or an exemption therefrom,
<PAGE> 4
such legend to be substantially in the form of the bold-face language appearing
at the top of Page 1 of this Warrant Certificate.
8. Disposition of Warrants or Shares. The Holder of this Warrant
Certificate, each transferee hereof, and any holder and transferee of any
Shares, by its acceptance thereof, agrees that no public distribution of
Warrants or Shares will be made in violation of the provisions of the 1933 Act.
Furthermore, it shall be a condition to the transfer of the Warrants that any
transferee thereof deliver to the Company its written agreement to accept and be
bound by all of the terms and conditions contained in this Warrant Certificate.
9. Notices. Except as otherwise specified herein to the contrary, all
notices, requests, demands and other communications required or desired to be
given hereunder shall only be effective if given in writing by certified or
registered U.S. mail with return receipt requested and postage prepaid; by
private overnight delivery service (e.g. Federal Express); by facsimile
transmission (if no original documents or instruments must accompany the
notice); or by personal delivery. Any such notice shall be deemed to have been
given (a) on the business day immediately following the mailing thereof, if
mailed by certified or registered U.S. mail as specified above; (b) on the
business day immediately following deposit with a private overnight delivery
service if sent by said service; (c) upon receipt of confirmation of
transmission if sent by facsimile transmission; or (d) upon personal delivery of
the notice. All such notices shall be sent to the following addresses (or to
such other address or addresses as a party may have advised the other in the
manner provided in this Section 9):
If to the Company:
Mr. Patrick Wheeler
Chief Financial Officer
Cyberguard Corporation
2101 West Cypress Creek Road
Ft. Lauderdale, FL 33309
Phone: (954) 973-5478
Fax: (954) 973-5160
If to the Holder:
[NAME]
c/o Shoreline Pacific
3 Harbor Drive, Suite 211
Sausalito, CA 94965
Phone: (415) 332-7800
Fax: (415) 332-7808
Notwithstanding the time of effectiveness of notices set forth in this Section,
an Election to Purchase shall not be deemed effectively given until it has been
duly completed and submitted to the Company together with the original Warrant
Certificate to be exercised and payment of the Exercise Price (if applicable) in
a manner set forth in this Section.
10. Governing Law. This Warrant Certificate and all rights and
obligations set forth hereunder shall be deemed to be made under and governed by
the laws of the State of California without giving effect to the conflicts of
laws provisions. The parties hereby irrevocably consent to the personal
<PAGE> 5
jurisdiction of and venue in any state or federal court located in the State of
California, County of San Francisco or Marin.
11. Successors and Assigns. This Warrant Certificate shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
12. Headings. The headings of various sections of this Warrant
Certificate have been inserted for reference only and shall not be a part of
this Certificate.
13. Severability. If any provision of this Warrant Certificate is held
to be unenforceable under applicable law, such provision shall be excluded from
this Warrant Certificate, and the balance hereof shall be interpreted as if such
provision were so excluded.
14. Lost Warrants. The Company covenants to the Holder that, upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant Certificate or any stock certificate
issued pursuant to the exercise hereof and, in the case of any such loss, theft
or destruction, upon receipt of an indemnity reasonably satisfactory to the
Company, or in the case of any such mutilation, upon surrender and cancellation
of such Warrant Certificate or stock certificate, the Company will make and
deliver a new Warrant Certificate or stock certificate of like tenor in lieu of
the lost, stolen, destroyed or mutilated Warrant Certificate or stock
certificate.
15. Modification and Waiver. This Warrant Certificate and any provision
hereof may be amended, waived, discharged or terminated only by an instrument in
writing signed by the Company and the Holder.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or by facsimile, by one of its officers thereunto
duly authorized.
Cyberguard Corporation:
Date:_________________ By:_________________________________
Patrick Wheeler
Chief Financial Officer
ELECTION TO PURCHASE
To Be Executed by the Holder
in Order to Exercise the Common Stock
Purchase Warrant Certificate
The undersigned Holder hereby elects to exercise _______ of the
Warrants represented by this Common Stock Warrant Certificate, and to purchase
the shares of Common Stock issuable upon the exercise of such Warrants, and
requests that certificates for securities be issued in the name of:
----------------------------------------------------------
<PAGE> 6
(Please type or print name and address)
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
(Social Security or Tax Identification Number)
and delivered to:
--------------------------------------------------------------
- ----------------------------------------------------------------------------- .
(Please type or print name and address if different from above)
If such number of Warrants shall not be all the Warrants evidenced by this
Common Stock Warrant Certificate, a new Common Stock Warrant Certificate for the
balance of such Warrants shall be registered in the name of, and delivered to,
the Holder at the address stated below.
In full payment of the purchase price with respect to the Warrants
exercised and transfer taxes, if any, the undersigned hereby: (check one)
1. tenders payment of $__________ by check, money order
or wire transfer payable in United States currency to
the order of Cyberguard Corporation; or
2. elects to utilize the cashless exercise provisions of
Section 1 of this Certificate in lieu of tendering a
cash payment to Cyberguard Corporation.
HOLDER:
Dated:___________________ By:_____________________________________
Name:
Title:
Common Stock Purchase Warrant Certificate
Page 6
Common Stock Purchase Warrant Certificate
Page 1
<PAGE> 1
EXHIBIT 5.01
November 5, 1997
CyberGuard Corporation
2000 West Commercial Boulevard
Suite 200
Fort Lauderdale, Florida 33309
RE: CYBERGUARD CORPORATION -- REGISTRATION STATEMENT ON FORM
S-3 (THE "REGISTRATION STATEMENT") -- OPINION RE LEGALITY
Gentlemen:
We have acted as counsel to CyberGuard Corporation, a Florida corporation
(the "Company"), in connection with the preparation of the above-referenced
Registration Statement filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), under
which the selling shareholder named therein (the "Selling Shareholder") intends
to offer and sell in a public offering, from time to time, an aggregate of up to
15,000 shares (the "Shares") of the Common Stock, $.01 par value per share, of
the Company ("Common Stock"). The Shares will be issued to the Selling
Shareholder upon exercise of certain warrants to purchase Common Stock (the
"Warrants").
In this connection, we have reviewed copies of the Articles of
Incorporation and Bylaws of the Company and the form of Warrants, and we have
examined such corporate documents and records and other certificates, and have
made such investigations of law, as we have deemed necessary in order to render
the opinion hereinafter set forth.
Based on and subject to the foregoing, we are of the opinion that the
Shares are duly authorized and, upon issuance in connection upon exercise of the
Warrants against payment of the exercise price therefor, will be, assuming no
change in the applicable law or pertinent facts, and assuming sufficient
authorized capital at the time of issuance, validly issued, fully paid and
non-assessable.
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the Registration Statement and to the use of this opinion as an
exhibit to the Registration Statement. In giving this consent, we do not hereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Steven Sonberg
Holland & Knight LLP
By: Steven Sonberg, Partner
<PAGE> 1
EXHIBIT 23.1
The Board of Directors
CyberGuard Corporation:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the registration statement.
KPMG Peat Marwick LLP
Miami, Florida
November 5, 1997
