The Board Of Directors Have Signed The Terms Of Merger Between SSH and ACR

THE BOARD OF DIRECTORS HAVE SIGNED THE TERMS OF MERGER BETWEEN SSH AND ACR

1. Overview of the merger SSH Communications Security Corp (hereinafter referred to as “SSH”) and Applied Computing Research (ACR) Oy (hereinafter referred to as “ACR”) have signed the terms of merger on March 8, 2004. According to these terms of merger, ACR (the company being acquired) shall merge to SSH (the acquiring company). The assets and liabilities of the company being acquired are transferred in the merger without liquidation procedure to the acquiring company.

With implementation of the merger, SSH shall issue for the current shareholders of ACR Mr. Tatu Yl? and Mr. Tero Kivinen 16,942,487 new shares of SSH as a consideration of the merger. The amount of these shares equals to the amount of shares of SSH currently owned by ACR. Within the implementation of the merger, the shares of SSH owned by ACR shall be transferred into possession of the SSH. The merger is planned to be implemented on October 31, 2004.

2. The objectives of the merger

ACR currently owns 61.09 percentages of the shares and votes of SSH. Therefore, ACR and SSH are forming a group wherein ACR is the parent company. The main reason and the objective of the merger is to dissolve and simplify the group structure.

Transparency is also pursued by dissolving the group structure. Furthermore, it is in the intention of the company to achieve clarity in the decision making by transferring some holding of the shares straight to those persons who have had (because of the holding of shares in the parent company) a significant de facto influence to the decision making of the company. The shares of SSH are publicly listed and traded on the main list of Helsinki Stock Exchange. It is important for the company and a development of its business to get the major shareholder Mr. Tatu Yl? to own as a private shareholder the shares of the company in the future. It is in the opinion of the now merging companies that this change of Mr. Yl?’s status as a shareholder shall implement to the practise those principles, which were aimed for by the Corporate Governance Guidelines for publicly listed companies (published on December 2003).

SSH’s scope of action shall be improved in the long run by dissolving the group structure. This measure shall improve SSH’s opportunities to derive new capital from the markets and to use its own shares as a consideration in possible transactions in the future. An implementation of straight personal ownership of the shares shall provide to the share markets and investors a better opportunity to follow changes in the ownerships of the major shareholders’.

3. The effects of the merger

ACR shall be dissolved in the merger and SSH shall cease to be a subsidiary belonging into the ACR group. With an implementation of the merger, SSH shall issue for the current shareholders of ACR Mr. Tatu Yl? and Mr. Tero Kivinen 16,942,487 new shares of SSH as a consideration of merger. Mr. Yl? shall receive 14,344,639 and Mr. Kivinen 2,597,848 new shares of SSH as a consideration of merger. Under these circumstances, the effects of the merger are that the group relation between ACR and SSH shall be dissolved and Mr. Yl? and Mr. Kivinen shall become direct shareholders of SSH with the amount of shares which equals to the current holding of ACR in SSH. There shall not be any changes to the ownerships of the other shareholders of SSH.

4. Proceeding and the schedule

The terms of the merger with all annexes shall be registered to the Trade Register and announced after the Boards of Directors of SSH and ACR have signed the terms.

The merger shall then be brought to the General Meetings of SSH and ACR for submission. From the part of SSH, this shall occur on the General Meeting of the Shareholders’ on April 27, 2004. In this General Meeting, the shareholders do have a possibility to make a stand on merger. The terms of merger with the annexes shall be displayed for public inspection in the head office of the company one (1) month before the meeting and thereon until the date of the meeting.

The companies shall, provided that the General Meetings of the Shareholders’ shall adopt the merger, request a permission from the Trade Register to implement the merger by an application. A compulsory period of public notice shall follow the filing of the mentioned application. It is expected that the companies shall then receive a permission to implement the merger. According to the terms of merger, the implementation of merger is expected to be happened on October 31, 2004.

5. Nullification of own shares related to the merger

Within the implementation of the merger SSH will receive into its possession a total of 16,942,487 own shares currently owned by ACR. The Board of Directors of SSH has decided to propose to the Annual General Meeting of shareholders that these shares shall be nullified. The proposal for the nullification is an appendix. The invitation to the general meeting and the other proposals of the Board shall be published later.

As a result of the merger and the nullification the number of shares of SSH shall not be increased, and therefore the merger does not affect to share of ownership of the other shareholders.

Helsinki, March 9, 2004

SSH COMMUNICATIONS SECURITY CORP

The Board of Directors

Arto Vainio
CEO

Further details: Arto Vainio, CEO tel. +358 20 500 7400
Johanna Lamminen, CFO tel. +358 20 500 7419
Kare Laukkanen, Director, IR tel. +358 20 500 7433

Distribution:
Helsinki Exchanges
Major media

APPENDIX

A PROPOSAL OF THE BOARD OF DIRECTORS FOR THE GENERAL MEETING OF THE SHAREHOLDERS, APRIL 27, 2004

NULLIFICATION OF THE OWN SHARES WHICH SHALL BE TRANSFERRED FROM THE COMPANY BEING ACQUIRED AND REDUCTION OF EQUITY IN CONNECTION WITH NULLIFICATION OF THE OWN SHARES

SSH Communications Security Corp shall own some of its own shares as a result of the merger between SSH Communications Security Corp and Applied Computing Research (ACR) Oy. The combined nominal value of these shares and the voting rights granted by them shall exceed five (5) percentages calculated from the share capital of the company and the voting rights related to the all shares of the company. Therefore, SSH Communications Security Corp has an obligation arising from the Finnish Companies Act (Chapter 7, Section 8) to transfer or nullify the majority of these shares during a period of three (3) years starting from the transfer of these shares to the company as a result of the merger. Because of essential income tax liabilities affected by possible transfer of the own shares, the Board of Directors considers, that it is reasonable to nullify these own shares without transferring them.

The Board of Directors shall propose, that the General Meeting should resolve to decrease the share capital and the premium fund without remuneration by nullifying 16,942,487 own shares which shall be transferred to SSH Communications Security Corp in connection with the merger. The share capital shall then be lowered by the combined value of the shares to be nullified (EUR 508,274.61) which amount shall be transferred to the premium fund. The shares, to be received within the merger and to be posted to the fixed assets (acquisition cost: EUR 1,642,511.53), shall be posted off by lowering of the premium fund.

The reason for the lowering of the share capital of the company is the nullification of the own shares which shall be acquired in the merger with Applied Computing Research (ACR) Oy. The nullification of the own shares shall make it possible to later acquire the own shares of the company.

After the transfer of the consideration of the merger, the persons belonging to the inner circle of SSH Communications Security Corp shall own 47.20 % (76.03 % of the voting power and shares issued for) of all shares of the company. After the nullification of the shares acquired within the merger, the persons belonging to the inner circle of the company shall own 76.03 % of all shares and votes. This information relating to the persons acquiring shares as the consideration in the merger are the following: before the nullification of the shares to be transferred within the merger 40.23 % of all shares of the company (64.81 % of the total voting power and the issued shares) and 64.81 % of the shares and the votes after the nullification of the mentioned shares. The aforementioned holdings of the persons belonging to the inner circle shall equal to the current situation. However, these above mentioned holdings may be changed because of possible new subscriptions subscribed for under the existing option rights and other changes in the share capital.

The reduction of the share capital shall not affect to the holdings of other shareholders of the company or to division of voting power in the company, because the shares to be nullified shall be in the possession of the company on the moment of the implementation of the proposed decision.

It is proposed that the resolution about the reduction of the fixed assets and the nullification of the own shares should be registered to the Trade Register within one (1) month after the resolution of the General Meeting so, that the resolution would concurrently be registered with the registration of the implementation of the merger between SSH Communications Corp and Applied Computing Research (ACR). It is not needed to acquire an approval under the Companies Act (Chapter 6, Section 2 and Chapter 12, Sections 3 and 3 a) for the lowering of the share capital and the premium fund by acting under this proposition, because the share capital shall be raised by an amount which equals to the lowered amount.

This decision to lower the share capital and other fixed assets of the company is conditional and will be carried out only with the following pre-conditions: 1) The merger of SSH Communications Security Corp and Applied Computing Research (ACR) Oy shall be implemented, and 2) there shall remain on the moment of the lowering of the share capital a full coverage to the fixed assets and other non-distributable assets as stipulated by the Companies Act (Paragraph 6, Section 4) after the implementation of the lowering of the share capital.

The lowering of the share capital and other fixes assets shall not affect to the rights arising from the options granted by the company and they shall not affect any changes to any terms of any option plan of the company.

Helsinki, March 8, 2004

THE BOARD OF DIRECTORS




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