SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
V-ONE Corporation
--------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11:
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2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing is calculated and state how it was determined):
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5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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3) Filing Party:
4) Date Filed:
[LOGO] V-ONE
Security For A Connected World
May 2, 2003
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend
the Annual Meeting of Shareholders of V-ONE Corporation ("Company"). The annual
meeting will be held at the Holiday Inn-Gaithersburg, 2 Montgomery Village
Avenue, Gaithersburg, Maryland 20879 on Thursday, June 5, 2003, at 10:00 a.m.
Gaithersburg, Maryland time.
At the meeting, you will be asked (i) to elect two directors each for a
three-year term expiring in 2006 and (ii) to approve an amendment to the
Company's certificate of incorporation, as amended and restated, to increase the
number of authorized shares of common stock of the Company from 50,000,000
shares to 75,000,000 shares. The Board of Directors has unanimously approved
these proposals and we urge you to vote in favor of these proposals and in
accordance with the Board's recommendation on such other matters as may be
submitted to you for a vote at the meeting.
Your vote is very important, regardless of the number of shares you
own. Please sign and return each proxy card that you receive in the postage-paid
return envelope, which is provided for your convenience. The return of your
proxy card will not prevent you from voting in person but will assure that your
vote is counted if you are unable to attend the annual meeting. We look forward
to seeing you on June 5.
Sincerely,
Margaret E. Grayson
Director, President,
Chief Executive Officer and
Principal Financial Officer
20300 Century Boulevard, Suite 200, Germantown, Maryland 20874 (301) 515-5200
V-ONE CORPORATION
20300 Century Boulevard, Suite 200 Germantown, Maryland 20874 (301) 515-5200
NOTICE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5, 2003
NOTICE IS HEREBY GIVEN that the 2003 Annual Meeting of Shareholders of
V-ONE Corporation ("Company") will be held on Thursday, June 5, 2003, at 10:00
a.m. Gaithersburg, Maryland time, at the Holiday Inn-Gaithersburg, 2 Montgomery
Village Avenue, Gaithersburg, Maryland 20879, for the following purposes:
1. To elect two directors each for a three-year term expiring in 2006;
2. To approve an amendment to the Company's certificate of
incorporation, as amended and restated, to increase the number of
authorized shares of common stock of the Company from 50,000,000
shares to 75,000,000 shares; and
3. To transact any other business as may properly come before the
annual meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 10,
2003 as the record date for the determination of shareholders entitled to notice
of and to vote at the annual meeting and at any adjournment thereof. A complete
list of shareholders of record of the Company on the record date will be
available for examination by any shareholder, for any purpose germane to the
annual meeting, during ordinary business hours, for the ten-day period prior to
the annual meeting, at the executive offices of the Company, 20300 Century
Boulevard, Suite 200, Germantown, Maryland 20874.
BY ORDER OF THE BOARD OF DIRECTORS
Joseph D. Gallagher
Secretary
Germantown, Maryland
May 2, 2003
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER
OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING, OR IN
PERSON, AT ANY TIME PRIOR TO ITS EXERCISE.
V-ONE CORPORATION
20300 Century Boulevard, Suite 200 Germantown, Maryland 20874 (301) 515-5200
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 5, 2003
The enclosed proxy is solicited by the Board of Directors of V-ONE
Corporation, a Delaware corporation ("Company"), for use at the Annual Meeting
of Shareholders on Thursday, June 5, 2003, and at any adjournment thereof. The
approximate date of mailing of this Proxy Statement and the form of proxy is May
2, 2003.
INFORMATION RELATING TO VOTING AT THE ANNUAL MEETING
The securities to be voted at the annual meeting consist of (i) shares
of common stock of the Company, $0.001 par value per share ("Common Stock"),
with each share entitling its record owner to one vote on each of the proposals
and on all other matters properly brought before the annual meeting, (ii) shares
of Series C Preferred Stock, $0.001 par value per share ("Series C Stock"), with
each share entitling its record owner to 10 votes on Proposal 2 and on all other
matters properly brought before the annual meeting, except with respect to the
election of directors for which record holders of Series C Stock are not
entitled to vote, and (iii) Series D Preferred Stock, $0.001 par value per share
("Series D Stock"), with each share entitling its record owner to one vote on
each of the proposals and on all other matters properly brought before the
annual meeting. The close of business on April 10, 2003 has been fixed by the
Board of Directors as the record date for determination of shareholders entitled
to notice of, and to vote at, the annual meeting. As of the record date, there
were 216 record holders of Common Stock and 26,755,551 shares of Common Stock
outstanding and eligible to be voted at the annual meeting, 4 record holders of
Series C Stock and 42,904 shares of Series C Stock outstanding and eligible to
be voted at the annual meeting and 19 record holders of Series D Stock and
3,021,000 shares of Series D Stock outstanding and eligible to be voted at the
annual meeting. The Common Stock, Series C Stock and Series D Stock
(collectively "Voting Stock") are the only outstanding voting securities of the
Company.
The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of Voting Stock entitled to vote at the
annual meeting is necessary to constitute a quorum at the annual meeting. If
less than a majority of the outstanding shares entitled to vote are present at
the annual meeting, either in person or by proxy, a majority of the shares so
represented may vote to adjourn the annual meeting from time to time without
further notice.
With respect to Proposal 1, directors receiving a plurality of votes
will be elected in the order of the number of votes received. There is no
cumulative voting in the election of directors. With respect to Proposal 2, the
vote required for approval shall be the affirmative vote of the holders of at
least a majority of the issued and outstanding shares of Common Stock entitled
to vote at the annual meeting. With respect to any other matter properly brought
before the annual meeting or any adjournment thereof, the vote required for
approval shall be the affirmative vote of a majority of the total number of
votes that those present at the annual meeting, in person or by proxy, are
entitled to cast.
All shares entitled to vote represented by a properly executed and
unrevoked proxy received in time for the annual meeting will be voted at the
annual meeting in accordance with the instructions given. In the absence of
instructions to the contrary, such shares will be voted FOR the proposal to
elect the designated nominees for director and FOR the proposal to amend the
certificate of incorporation, as amended and restated. If any other matters
properly come before the annual meeting, the persons named as proxies will vote
upon such matters as determined by a majority of the Board of Directors.
Under Delaware law, shares represented at the annual meeting (either by
properly executed proxies or in person) that reflect abstentions or "broker
non-votes" (i.e., shares held by a broker or nominee that are represented at the
annual meeting, but with respect to which such broker or nominee is not
empowered to vote on a particular proposal) will be counted as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions as to any proposal will have the same effect as votes
against the proposal. With respect to Proposal 1, broker non-votes will be
treated as unvoted for purposes of determining approval of such proposal (and
therefore will reduce the absolute number - although not the percentage - of
votes needed for approval) and will not be counted as votes for or against the
proposal. With respect to Proposal 2, however, broker non-votes will have the
same effect as votes against the proposal.
The cost of soliciting proxies will be borne by the Company. In
addition to use of the mails, proxies may be solicited personally or by
telephone or telegraph by officers, directors or employees of the Company who
will not be specially compensated for such solicitation activities. Arrangements
will also be made with brokerage houses and other custodians, nominees and
fiduciaries for forwarding solicitation materials to the beneficial owners of
shares held of record by such persons, and the Company will reimburse such
persons for their related reasonable expenses.
A shareholder may revoke his or her proxy at any time prior to its
exercise by (i) filing written notice thereof with Joseph D. Gallagher,
Secretary, V-ONE Corporation, 20300 Century Boulevard, Suite 200, Germantown,
Maryland 20874, (ii) submitting a duly executed proxy bearing a later date or
(iii) appearing at the annual meeting and giving the Secretary notice of his or
her intention to vote in person. Unless previously revoked or otherwise
instructed thereon, proxies will be voted at the annual meeting on the proposals
as described above.
STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The number of shares of Voting Stock held as of April 10, 2003 by each
holder of more than 5% of the outstanding Voting Stock of the Company, each
director of the Company, each nominee for reelection as a director, each
executive officer named in the Summary Compensation Table on page 7 of this
Proxy Statement and all directors and executive officers of the Company as a
group is set forth below. The names of the Company's directors and executive
officers named in the Summary Compensation Table appear in italics. Unless
otherwise indicated, all of the shares shown in the following table are shares
of Common Stock and are owned both of record and beneficially by the person
named. Unless otherwise indicated, the person named possesses sole voting and
investment power.
AMOUNT AND NATURE
NAME AND ADDRESS (1) OF BENEFICIAL OWNERSHIP (2) PERCENT OF CLASS (3)
-------------------- --------------------------- --------------------
James F. Chen 2,512,552 (4) 9.40%
Joseph Lupo 2,854,098 (5) 10.67%
758 Oneida Trail
Franklin Lakes, New Jersey 07417
Molly G. Bayley 117,500 (6) *
Christopher T. Brook 112,621 (7) *
Margaret E. Grayson** 782,606 (8) 2.93%
Heidi B. Heiden 322,500 (9) 1.21%
Douglas M. Hurt 54,860 (10) *
James T. Mcmanus 448,968 (11) 1.68%
Merle B. Miller 31,500 (12) *
Michael D. O'Dell** 117,500 (13) *
William E. Odom 386,566 (14) 1.45%
Directors and Executive Officers as a group 2,374,621 8.88%
(6) (7) (8) (9) (10)
(11) (12) (13) (14)
* Less than 1%.
** Nominee.
(1) Unless otherwise indicated, the mailing address of each shareholder is
c/o V-ONE Corporation, 20300 Century Boulevard, Suite 200, Germantown,
Maryland 20874.
(2) In accordance with Rule 13d-3 of the Securities Exchange Act of 1934
("Exchange Act"), a person is deemed to be the beneficial owner of a
security if he or she has or shares voting power or investment power
with respect to such security or has the right to acquire such
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ownership within 60 days. Each director, executive officer and
beneficial owner possesses sole voting and investment power with
respect to the shares of Voting Stock listed, except as otherwise
indicated. The number of shares beneficially owned by each director,
executive officer and beneficial owner is determined under rules
promulgated under the Exchange Act by the Securities and Exchange
Commission ("SEC"), and the information is not necessarily indicative
of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which the individual
currently has sole or shared voting power or investment power and also
any shares which the individual has the right to acquire by conversion
of preferred stock or notes into Common Stock, by exercise of options
or warrants to purchase Common Stock or otherwise, within 60 days after
April 10, 2003. As of April 10, 2003, the Company had 26,755,551 shares
of Common Stock outstanding.
(3) Number of shares of Voting Stock deemed outstanding includes shares
issuable upon exercise or conversion of stock options, warrants,
preferred stock or notes beneficially owned by the person in question
that are currently exercisable or convertible or become exercisable or
convertible within 60 days after April 10, 2003.
(4) Does not include 600,000 shares of Common Stock held in a family
limited partnership, the general partner of which is a corporation
controlled by Mr. Chen's daughter, Irene Chen. Does not include 71,110
shares of Common Stock registered in the name of Mary S. Chen as
Trustee under trusts for the benefit of Mr. Chen's children with
respect to which Mary S. Chen possesses voting and investment power.
(5) According to the most recent Schedule 13D filed with the SEC by Joseph
Lupo, represents 896,700 shares of Common Stock, 1,282,720 shares of
Series D Stock and warrants to purchase 256,544 shares of Common Stock
held in a Roth IRA account for the benefit of Mr. Lupo. Also represents
1,746 shares of Common Stock, 346,990 shares of Series D Stock and
warrants to purchase 69,398 shares of Common Stock held in a profit
sharing plan for the benefit of Mr. Lupo.
(6) Represents options to purchase 117,500 shares of Common Stock.
(7) Includes options to purchase 104,200 shares of Common Stock.
(8) Includes options to purchase 627,500 shares of Common Stock and
warrants to purchase 25,000 shares of Common Stock.
(9) Includes options to purchase 157,500 shares of Common Stock and
warrants to purchase 65,000 shares of Common Stock.
(10) Includes options to purchase 48,750 shares of Common Stock.
(11) Includes options to purchase 117,500 shares of Common Stock. Mr.
McManus resigned from the Board of Directors effective March 31, 2003.
(12) Represents options to purchase 31,500 shares of Common Stock.
(13) Represents options to purchase 117,500 shares of Common Stock.
(14) Includes options to purchase 274,166 shares of Common Stock and
warrants to purchase 70,000 shares of Common Stock. Does not include
20,000 shares of Common Stock held by General Odom's wife, Anne C.
Odom.
3
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's restated bylaws provide for a Board of Directors
consisting of up to seven members serving staggered terms. The terms of office
of Margaret E. Grayson and Michael D. O'Dell will expire at the annual meeting.
Margaret E. Grayson and Michael D. O'Dell have been nominated by the Board to
serve for three-year terms.
There are no arrangements or understandings between the Company and any
person pursuant to which such person has been elected as a director or selected
as a nominee.
If any nominee becomes unavailable for any reason, or if any other
vacancy in the class of directors to be elected at the annual meeting should
occur before the election, the shares represented by proxy will be voted for the
person, if any, who is designated by the Board to replace the nominee or to fill
such other vacancy on the Board. The Board has no reason to believe that the
nominees will be unavailable or that any other vacancy on the Board will occur.
The nominees have consented to be named and have indicated their intent to serve
if elected.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE NOMINEES FOR REELECTION
AS DIRECTORS SET FORTH ABOVE.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The directors of the Company are currently divided into three classes
that are elected on a staggered basis. Each director serves for a three-year
term and until his or her successor is duly elected and qualified. James T.
McManus, a director whose term expires in 2004, resigned his position on the
Board effective March 31, 2003. The current members of the Board are set forth
below:
DIRECTOR
OF THE
COMPANY TERM POSITION(S) CURRENTLY
NAME SINCE EXPIRES HELD WITH THE COMPANY
---- ----- ------- ---------------------
Molly G. Bayley (1) 2001 2004 Director
Margaret E. Grayson (2) 1999 2003 Director, President and Chief Executive
Officer
Heidi B. Heiden (1)(3) 2000 2005 Director
Michael D. O'Dell (1)(2) 2001 2003 Director
William E. Odom (3) 1996 2005 Chairman of the Board
(1) Member of the Audit Committee
(2) Nominee for reelection
(3) Member of the Compensation Committee
Biographical information regarding the directors of the Company is as
follows:
MOLLY G. BAYLEY (58) was appointed a director of the Company in March 2001 to
fill a vacancy on the Board. Since July 2002, Ms. Bayley has been an
international consultant to emerging capital markets. Previously, she was
Executive Vice President of X-Change Corporation (OTCBB: XCHC). From 1998
through 2000, Ms. Bayley served as Vice President of Exchange Relations for
OptiMark Technologies. From 1989 through 1997, she was an international
consultant on capital markets development in emerging markets. Also from 1993 to
1996, Ms. Bayley was Chief of Party and Regulatory Advisor for Arthur Andersen
in Manila, the Philippines. From 1984 through 1989, Ms. Bayley was Executive
Director of the Commodity Futures Trading Commission. From 1971 through 1984,
Ms. Bayley held various positions within Nasdaq, culminating as Vice President
of Nasdaq Operations. Ms. Bayley holds a B.A. in French from Wellesley College.
MARGARET E. GRAYSON (56) was elected President and CEO of the Company in
November 2000. She had served as the Company's Senior Vice President and Chief
Financial Officer since May 1999. Ms. Grayson was elected to the Board of
Directors in August 1999. Prior to joining V-ONE Corporation, Ms. Grayson served
as Vice President of Finance and Administration and Chief Financial Officer for
SPACEHAB, Inc. (Nasdaq: SPAB) from September 1994 to October 1998. Immediately
prior to joining SPAB, Ms. Grayson served as Chief Financial Officer for CD
Radio, Inc. in Washington, D.C., an early entrant in the satellite radio mobile
communications market. Previously, Ms. Grayson served as a senior executive and
4
consultant to high-technology start-up companies. Ms. Grayson holds an M.B.A.
from the University of South Florida and a B.S. in Accounting from the State
University of New York at Buffalo.
HEIDI B. HEIDEN (64) has been a director of V-ONE Corporation since June 2000.
In June 2001, Mr. Heiden retired from Zephion Networks, Inc., a private company,
where he had been Chairman and CEO since January 2001. Mr. Heiden became a
director of Nx Networks, Inc., a public company, in January 2001, and of
Broadview Networks, a private company, in January 2000. Mr. Heiden retired from
UUNET, Inc., an MCI WorldCom company, in January 1999, where he was Senior Vice
President of Operations and Technology. Mr. Heiden joined UUNET in September
1995. His professional career includes a five-year term as Senior Operating
Officer at Salomon Brothers in New York City. He also served as Senior Vice
President for the Wollongong Group. In the mid-1980's, Mr. Heiden was employed
at Trusted Information Systems, a computer and network security company. Prior
to entering the commercial arena, Mr. Heiden served in the United States Army
and led diverse technology programs. Mr. Heiden also created and ran the Defense
Data Network consisting of many worldwide computer networks that formed the
basis of what is now known as the Internet. Mr. Heiden sits on the Compensation
Committee of Nx Networks, Inc. Mr. Heiden is a graduate of West Point Military
Academy.
MICHAEL D. O'DELL (49) has been a director of V-ONE Corporation since January
2001. From 1997 until his appointment to the Company's Board, Mr. O'Dell served
as Senior Vice President and Chief Scientist for UUNET, Inc., an MCI WorldCom
company, where he was responsible for overall network architecture and technical
strategic direction for UUNET. Prior to joining UUNET in March 1993, Mr. O'Dell
was a senior technical staff member at Bellcore where he was chief engineer for
the "RBOC of the Future" project. Before joining Bellcore, Mr. O'Dell was chief
computer scientist and director of operating systems development for Prisma
Computers, a gallium-arsenide SPARC compatible supercomputer company. He served
eight years as founding editor-in-chief of Computing Systems, an international
refereed scholarly journal devoted to the pragmatics of computer systems
implementation experience. Mr. O'Dell holds both a bachelors and a masters
degree in computer science from the University of Oklahoma.
LIEUTENANT GENERAL WILLIAM E. ODOM, ARMY (RET) (70) was elected Chairman of the
Company's Board of Directors in November 2000, and has been a director of the
Company since June 1996. Since October 1988, General Odom has served as Director
of National Security Studies at the Hudson Institute. He has been an adjunct
professor at Yale University since January 1989. Prior to his retirement from
the military in 1988, General Odom held several military posts including
Director of the National Security Agency, Assistant Chief of Staff for
Intelligence for the Department of the Army, and Military Assistant to the
National Security Advisor in the Carter White House. He is Chairman of the Board
of American Science & Engineering. General Odom holds a M.A. and a Ph.D from
Columbia University and a B.S. from the United States Military Academy at West
Point.
COMPENSATION OF DIRECTORS
Each non-employee director is entitled to receive a $1,000 monthly
stipend and annual stock options to purchase 17,500 shares of Common Stock. The
Chairman of the Board is entitled to receive a $2,000 monthly stipend and annual
stock options to purchase 17,500 shares of Common Stock. On March 7, 2002, the
Board of Directors determined to defer cash compensation retroactive to January
2002 and until further notice. The Company also reimburses directors for travel
expenses incurred in connection with their attendance at meetings of the Board
and its committees.
BOARD OF DIRECTORS AND COMMITTEES
Meetings of the Board are held regularly each quarter and as required.
In 2002, the Board held 13 meetings and each member of the Board participated in
greater than 75% of these meetings and of the meetings of the committees on
which he or she serves.
The Board has established an Audit Committee to recommend the firm to
be appointed as independent public accountants to audit the Company's financial
statements and to perform services related to the audit, review the scope and
results of the audit with the independent accountants, review with management
and the independent accountants the Company's year-end operating results and
consider the adequacy of the internal accounting procedures. The Audit Committee
met separately once during 2002, and the full board, including the members of
the Audit Committee, met several times during the year to discuss the financial
position of the Company, provide recommendations and guidance to management and
evaluate strategies and financial opportunities and initiatives. In 2002, the
Audit Committee consisted of Molly G. Bayley, Heidi B. Heiden and Michael D.
O'Dell, none of whom is an employee of the Company. Mr. Heiden was appointed to
the Audit Committee on August 27, 2002.
The Board has also established a Compensation Committee. The
Compensation Committee reviews and recommends the compensation arrangements for
all directors and officers, approves such arrangements for other senior level
5
employees and administers and takes such other actions as may be required in
connection with certain compensation and incentive plans of the Company. In
2002, the Compensation Committee consisted of three independent directors: Mr.
Heiden, Mr. McManus and General Odom. Mr. McManus resigned from the Board of
Directors effective March 31, 2003. The Compensation Committee met once in 2002.
The Company currently has no standing nominating committee. A director
can be nominated by a member of the Board or by written notice to the Board not
less than 120 calendar days in advance of the anniversary date of the Company's
previous year's annual meeting of shareholders.
INFORMATION CONCERNING EXECUTIVE OFFICERS
The Company's executive officers are elected each year by the Board of
Directors, unless the Board determines, upon appointing an officer, that he or
she shall serve for a different term. Any executive officer may be removed at
any time, with or without cause, by the Board. Biographical information with
respect to Margaret E. Grayson is provided above. See "Information Concerning
the Board of Directors." Biographical information regarding the other executive
officers of the Company is as follows:
CHRISTOPHER T. BROOK (62) has been serving as Vice President of Engineering of
the Company since April 2001. He has been with V-ONE Corporation since February
1996, most recently as Vice President, Wireless. Prior to that, he was Vice
President of Product Development. Mr. Brook was with GE Information Services,
Inc. for approximately 27 years prior to joining the Company. While with GE, Mr.
Brook held a number of technology-related positions, most recently as Manager of
Emerging Technology. Mr. Brook graduated from Clifton College (Bristol, England)
with an emphasis in Classics.
DOUGLAS M. HURT (49) is Vice President, Sales & Marketing, and has 25 years
large account experience in commercial and government information technology
sales. Mr. Hurt joined V-ONE Corporation in February 1999 as Director of Federal
Sales, was promoted to Vice President of Federal Sales in October 2000, to Vice
President of U.S. Sales in October 2001 and to Vice President, Sales & Marketing
in April 2002. Prior to joining the Company, Mr. Hurt was a national sales
manager for Siemens Information and Communication Corporation from 1985 through
1999, with sales responsibility for selected Department of Defense, intelligence
and civil agencies. Mr. Hurt also held sales positions with Data General
Corporation (federal sales) and Burroughs Corporation (commercial sales). He
holds a B.S. in Business Administration, Marketing from Old Dominion University.
MERLE B. MILLER (48) is Vice President, Administration and Treasurer, and has
over 25 years experience in general accounting and management information
systems, as well as customer/supplier relationships. Ms. Miller joined V-ONE
Corporation in June 2000 as Director, Business Development and was promoted to
Vice President of Administration in October 2001. Prior to joining the Company,
from March 1999 to March 2000, Ms. Miller served as Director, Operations and
Finance with Zabacom, Inc., a start-up company. Prior to that, she was with
Hayes Microcomputer Products, Inc. (formerly Access Beyond, Inc./Penril
Datability Networks) for approximately 24 years. During her tenure with Hayes,
Ms. Miller held various positions in accounting and management information
systems, culminating as Accounting/MIS Manager.
6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid by the Company for
the last three fiscal years to its Chief Executive Officer and the Company's
other most highly compensated executive officers whose salary plus bonus
exceeded $100,000 during the year ended December 31, 2002 ("Named Executives").
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS
------
Name and Securities
Principal Position Year Salary ($) Bonus ($)(1) Underlying Options (#)
------------------ ---- ---------- ------------ ----------------------
Margaret E. Grayson 2002 $284,580 - 300,000 (2)
President and Chief 2001 $275,000 $96,276 400,000 (3)
Executive Officer 2000 $183,750 $92,414 305,000 (4)
Christopher T. Brook 2002 $145,626 - 100,000 (5)
Vice President 2001 $157,300 $13,147 20,000 (6)
Engineering 2000 $126,264 $27,449 27,400 (7)
Douglas M. Hurt (a) 2002 $142,386 - 100,000 (8)
Vice President 2001 $132,258 $7,500 20,000 (9)
Sales and Marketing 2000 $117,217 - 10,000 (10)
Mandy J. Schuyler (b) 2002 $133,059 - 100,000 (11)
Vice President 2001 $113,461 - 35,000 (12)
Business Development 2000 - - -
Merle B. Miller (c) 2002 $111,459 - 100,000 (13)
Vice President 2001 $101,597 $5,000 20,000 (14)
Administration 2000 $46,670 - 23,000 (15)
(a) Mr. Hurt was promoted to VP of Sales and Marketing in April 2002.
(b) Ms. Schuyler's employment with the Company began in April 2001. Ms.
Schuyler's employment terminated in November 2002.
(c) Ms. Miller was promoted to VP of Administration in October 2001 and
appointed Treasurer in June 2002.
(1) Includes bonus paid in cash, stock or taxes in 2002 unless otherwise
provided.
(2) Represents options to purchase 150,000 shares of Common Stock at an
exercise price of $.69 per share granted under the 1998 Incentive Stock
Plan ("1998 Plan") and options to purchase 150,000 shares of Common
Stock at an exercise price of $.25 per share granted under the 1996
Incentive Stock Plan ("1996 Plan"). These options vest as to 25% of the
shares on the first anniversary of the date of grant and as to an
additional 25% of the shares on the second, third and fourth
anniversaries of the date of grant. The options become fully vested in
the event of a change in control of the Company.
(3) Represents options to purchase 300,000 shares of Common Stock at an
exercise price of $.625 per share granted under the 1998 Plan and
options to purchase 100,000 shares of Common Stock at an exercise price
of $1.4062 per share granted under the 1996 Plan. These options vest as
to 25% of the shares on the first anniversary of the date of grant and
as to an additional 25% of the shares on the second, third and fourth
anniversaries of the date of grant. The options become fully vested in
the event of a change in control of the Company.
(4) Represents options to purchase 50,000 shares of Common Stock at an
exercise price of $2.375 per share, options to purchase 55,000 shares
of Common Stock at an exercise price of $1.25 per share and options to
purchase 200,000 shares of Common Stock at an exercise price of $1.094
per share, granted under the 1998 Plan. These options vest as to 25% of
the shares on the first anniversary of the date of grant and as to an
7
additional 25% of the shares on the second, third and fourth
anniversaries of the date of grant. The options become fully vested in
the event of a change in control of the Company.
(5) Represents options to purchase 50,000 shares of Common Stock at an
exercise price of $.69 per share granted under the 1998 Plan and
options to purchase 50,000 shares of Common Stock at an exercise price
of $.25 per share granted under the 1996 Plan. These options vest as to
25% of the shares on the first anniversary of the date of grant and as
to an additional 25% of the shares on the second, third and fourth
anniversaries of the date of grant. The options become fully vested in
the event of a change in control of the Company.
(6) Represents options to purchase 20,000 shares of Common Stock at an
exercise price of $1.4062 per share granted under the 1996 Plan. These
options vest as to 25% of the shares on the first anniversary of the
date of grant and as to an additional 25% of the shares on the second,
third and fourth anniversaries of the date of grant. The options become
fully vested in the event of a change in control of the Company.
(7) Represents options to purchase 15,400 shares of Common Stock at an
exercise price of $1.25 per share and options to purchase 12,000 shares
of Common Stock at an exercise price of $2.375 per share, granted under
the 1998 Plan. These options vest as to 25% of the shares on the first
anniversary of the date of grant and as to an additional 25% of the
shares on the second, third and fourth anniversaries of the date of
grant. The options become fully vested in the event of a change in
control of the Company.
(8) Represents options to purchase 50,000 shares of Common Stock at an
exercise price of $.69 per share granted under the 1998 Plan and
options to purchase 50,000 shares of Common Stock at an exercise price
of $.25 per share granted under the 1996 Plan. These options vest as to
25% of the shares on the first anniversary of the date of grant and as
to an additional 25% of the shares on the second, third and fourth
anniversaries of the date of grant. The options become fully vested in
the event of a change in control of the Company.
(9) Represents options to purchase 20,000 shares of Common Stock at an
exercise price of $1.4062 per share granted under the 1996 Plan. These
options vest as to 25% of the shares on the first anniversary of the
date of grant and as to an additional 25% of the shares on the second,
third and fourth anniversaries of the date of grant. The options become
fully vested in the event of a change in control of the Company.
(10) Represents options to purchase 5,000 shares of Common Stock at an
exercise price of $2.375 per share and options to purchase 5,000 shares
of Common Stock at an exercise price of $1.25 per share, granted under
the 1998 Plan. These options vest as to 25% of the shares on the first
anniversary of the date of grant and as to an additional 25% of the
shares on the second, third and fourth anniversaries of the date of
grant. The options become fully vested in the event of a change in
control of the Company.
(11) Represents options to purchase 50,000 shares of Common Stock at an
exercise price of $.69 per share granted under the 1998 Plan and
options to purchase 50,000 shares of Common Stock at an exercise price
of $.25 per share granted under the 1996 Plan. These options vest as to
25% of the shares on the first anniversary of the date of grant and as
to an additional 25% of the shares on the second, third and fourth
anniversaries of the date of grant. The options become fully vested in
the event of a change in control of the Company. These options
terminated on February 22, 2003.
(12) Represents options to purchase 35,000 shares of Common Stock at an
exercise price of $2.02 per share granted under the 1998 Plan. These
options vest as to 25% of the shares on the first anniversary of the
date of grant and as to an additional 25% of the shares on the second,
third and fourth anniversaries of the date of grant. The options become
fully vested in the event of a change in control of the Company. These
options terminated on February 22, 2003.
(13) Represents options to purchase 50,000 shares of Common Stock at an
exercise price of $.69 per share granted under the 1998 Plan and
options to purchase 50,000 shares of Common Stock at an exercise price
of $.25 per share granted under the 1996 Plan. These options vest as to
25% of the shares on the first anniversary of the date of grant and as
to an additional 25% of the shares on the second, third and fourth
anniversaries of the date of grant. The options become fully vested in
the event of a change in control of the Company.
(14) Represents options to purchase 10,000 shares of Common Stock at an
exercise price of $1.4062 per share and options to purchase 10,000
shares of Common Stock at an exercise price of $1.62 per share, granted
under the 1996 Plan. These options vest as to 25% of the shares on the
first anniversary of the date of grant and as to an additional 25% of
the shares on the second, third and fourth anniversaries of the date of
grant. The options become fully vested in the event of a change in
control of the Company.
8
(15) Represents options to purchase 15,000 shares of Common Stock at an
exercise price of $3.4375 per share, options to purchase 3,000 shares
of Common Stock at an exercise price of $1.25 per share and options to
purchase 5,000 shares of Common Stock at an exercise price of $.78125
per share, granted under the 1998 Plan. These options vest as to 25% of
the shares on the first anniversary of the date of grant and as to an
additional 25% of the shares on the second, third and fourth
anniversaries of the date of grant. The options become fully vested in
the event of a change in control of the Company.
STOCK OPTIONS GRANTED
The following tables set forth further information regarding the grant
of options to the Named Executives of the Company in 2002. No stock appreciation
rights were granted to any Named Executive during 2002.
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Indivisual Grants Option Term
---------------------------------------------------------------------------------------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees Exercise or
Options Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) (1) Date 5% 10%
------------------------------------------------------------------------------------------------------------------------------
Margaret E. Grayson 150,000 8.85 $.69 04/01/12 $65,091 $164,952
150,000 8.85 $.25 07/23/12 $23,584 $59,765
Christopher T. Brook 50,000 2.95 $.69 04/01/12 $21,697 $54,984
50,000 2.95 $.25 07/23/12 $7,861 $19,922
Douglas M. Hurt 50,000 2.95 $.69 04/01/12 $21,697 $54,984
50,000 2.95 $.25 07/23/12 $7,861 $19,922
Mandy J. Schuyler 50,000 2.95 $.69 04/01/12 $21,697 $54,984
50,000 2.95 $.25 07/23/12 $7,861 $19,922
Merle B. Miller 50,000 2.95 $.69 04/01/12 $21,697 $54,984
50,000 2.95 $.25 07/23/12 $7,861 $19,922
(1) Represents fair market value on date of grant.
9
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND DECEMBER 31, 2002
OPTION VALUES
The following table summarizes the value realized upon exercise of
outstanding stock options and the value of the outstanding options held by the
Named Executives at December 31, 2002.
Number of
Securities Underlying Value of
Unexercised Unexercised
Options at In-the-Money
Shares December 31, Options at
Acquired 2002 (#) December 31,
on Value Exercisable/ 2002 ($) (1)
Name Exercise (#) Realized ($) Unexercisable Exercisable/
---- ------------ ------------- ------------- Unexercisable
-------------
Margaret E. Grayson 0 0 807,500/422,500 0/0
Christopher T. Brook 0 0 81,200/131,200 0/0
Douglas M. Hurt 0 0 25,000/125,000 0/0
Mandy J. Schuyler 0 0 8,750/135,000 0/0
Merle B. Miller 0 0 16,500/126,500 0/0
(1) Based on the closing sales price of $.14 on Tuesday, December 31, 2002.
RELATED TRANSACTIONS
In July and August 2002, the Company closed on approximately $1,188,000
in a private placement of 8% Secured Convertible Notes with detachable warrants,
due 180 days after issuance with an additional 180-day extension available at
the option of the Company or the note holders. The note holders may convert
their notes at any time into the Company's Common Stock at a conversion price
equal to the greater of $0.25 per share or 60% of the average closing sales
price of the Company's Common Stock for the five trading day period immediately
preceding the Company's receipt of the note holders notification of conversion.
Detachable five year warrants, exercisable at $0.50 per share, are included to
provide 100% warrant coverage to the note holders. In January 2003, in
connection with its efforts to raise capital, the Company agreed to adjust the
exercise price of the warrants from $0.50 per share to $0.15 per share. Ms.
Grayson, Mr. Heiden and General Odom participated in the private placement of
the notes in the amounts of $25,000, $25,000 and $10,000, respectively. Each
immediately converted his or her notes into Common Stock. Neither Ms. Grayson,
Mr. Heiden nor General Odom has exercised the warrants attached to the notes.
10
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2002 with
respect to the shares of the Company's Common Stock that may be issued under the
Company's existing equity compensation plans.
(A) (B) (C)
--------------------------------------------------------
Number of
Securities
Remaining
Available for Future
Number of Issuance Under
Securities to Equity
be Issued Compensation
upon Exercise Plans (Excluding
of Weighted Average Securities
Outstanding Exercise Price of Reflected in
Plan Category Options (2) Outstanding Options Column A)
------------- --------------------------------------------------------
Equity Compensation Plans Approved by Shareholders(1) 4,526,857 $1.23 3,965,687
Equity Compensation Plans Not Approved by Shareholders - - -
--------------------------------------------------------
Total 4,526,857 $1.23 3,965,687
(1) Consists of the Company's 1995 Non-statutory Stock Option Plan, 1996 Incentive Stock Plan, 1998 Incentive Stock Plan and
2001 Employee Stock Purchase Plan.
(2) Excludes purchase rights accruing under the Company's 2001 Employee Stock Purchase Plan which has a shareholder
approved reserve of 2,500,000 shares. Under the purchase plan, each eligible employee may purchase shares of
Common Stock in quarterly intervals.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
In June 1996, the Board established the Compensation Committee, which
makes recommendations concerning the compensation arrangements for all directors
and executive officers. In 2002, the Compensation Committee consisted of Mr.
Heiden, Mr. McManus and General Odom. Mr. McManus resigned from the Board of
Directors effective March 31, 2003. The Compensation Committee met once in 2002.
Compensation for executive officers currently consists primarily of
base salary, cash and stock bonuses and grants of stock options pursuant to the
Company's stock option plans. Base salaries are determined by evaluating the
responsibilities of the position and the experience and knowledge of the
individual. Bonuses and annual salary adjustments, if any, are determined by
evaluating performance taking into account such factors as achievement of the
Company's strategic goals, assumption of additional responsibilities, attainment
of specific individual objectives, and the compensation paid to other senior
executives in the Company's industry. The Compensation Committee believes that
stock ownership by management is especially beneficial in aligning the interests
of management and shareholders in the Company.
Grants of Company stock options are intended to align the interest of
executives, key employees and others with the long-term interests of the
Company's shareholders and to encourage executives and key employees to remain
with the Company. The Board initially authorized the Compensation Committee to
grant stock options to key employees and others under the Company's stock option
plans. Currently, the Board is administering the Company's stock option plans
and Ms. Grayson recommends to the Board levels of stock option grants based upon
the same factors as those used for bonus and salary adjustments.
Bonus.
-----
Bonus compensation of the Chief Executive Officer and other Named
Executives is tied to certain performance goals reasonably established from time
to time by the Company. On March 7, 2002 the Board of Directors determined that
no performance bonuses would be paid for the year ended December 31, 2002.
Section 162(m).
--------------
Section 162(m) of the Internal Revenue Code of 1986, as amended
("Code"), imposes a limitation on the deductibility of nonperformance-based
compensation in excess of $1 million paid to the Named Executives. Currently, no
executive officer of the Company is paid compensation in excess of $1 million
per year and it is not anticipated that any executive officer will be paid in
11
excess of $1 million in 2003. The Company's 1998 Incentive Stock Plan and 1996
Incentive Stock Plan provide for awards that can be made in compliance with
Section 162(m).
SUBMITTED BY THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS
Heidi B. Heiden
William E. Odom
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2002, the Company's Compensation Committee consisted of Heidi B.
Heiden, James T. McManus and William E. Odom. Mr. McManus resigned from the
Board of Directors effective March 31, 2003.
The Company has adopted a policy providing that all material
transactions (other than compensation arrangements that must be approved by the
Compensation Committee) between the Company and its directors, officers and
other affiliates (i) must be approved by a majority of the disinterested members
of the Board or a committee thereof (following disclosure to the Board of the
material facts of the relationship and the transaction), and (ii) must be on
terms no less favorable to the Company than can be obtained from unaffiliated
third parties.
In July and August 2002, the Company closed on approximately $1,188,000
in a private placement of 8% Secured Convertible Notes with detachable warrants,
due 180 days after issuance with an additional 180-day extension available at
the option of the Company or the note holders. The note holders may convert
their notes at any time into the Company's Common Stock at a conversion price
equal to the greater of $0.25 per share or 60% of the average closing sales
price of the Company's Common Stock for the five trading day period immediately
preceding the Company's receipt of the note holders notification of conversion.
Detachable five year warrants, exercisable at $0.50 per share, are included to
provide 100% warrant coverage to the note holders. In January 2003, in
connection with its efforts to raise capital, the Company agreed to adjust the
exercise price of the warrants from $0.50 per share to $0.15 per share. Ms.
Grayson, Mr. Heiden and General Odom participated in the private placement of
notes in the amounts of $25,000, $25,000 and $10,000, respectively. Each
immediately converted his or her notes into Common Stock. Neither Ms. Grayson,
Mr. Heiden nor General Odom has exercised the warrants attached to the notes.
STOCK PERFORMANCE GRAPH
The following graph compares the change in the Company's total return
on its Common Stock with (i) the change in the total return on the stock
included in the CRSP Total Return Index for the Nasdaq Stock Market (U.S.) and
(ii) the change in the total return on the stocks included in the Company's peer
group. The companies in the peer group are Check Point Software Technologies
Ltd., RSA Security, Inc., Cylink Corporation and SafeNet, Inc. SafeNet, Inc.
acquired Cylink Corporation on February 6, 2003.
These comparisons assume an investment of $100 made on December 31,
1997 and compare relative values on an annual basis for the years ending
December 31, 1998, 1999, 2000, 2001 and 2002. All of these total returns are
computed assuming the reinvestment of dividends at the frequency with which
dividends were paid during this period. The Common Stock price performance shown
below should not be viewed as being indicative of future performance.
12
THE GRAPH OMITTED CONTAINS THE FOLLOWING PLOT POINTS:
SOURCES: NASDAQ DEC. 1997 DEC. 1998 DEC. 1999 DEC. 2000 DEC. 2001 DEC. 2002
V-ONE CORPORATION $100 $85 $168 $18 $41 $5
NASDAQ TOTAL RETURN INDEX $100 $141 $262 $158 $375 $182
PEER GROUP (4 COMPANIES) $100 $82 $293 $328 $110 $77
EMPLOYMENT AGREEMENTS
The Company originally entered into an employment agreement with Ms.
Grayson in July 1999 when she was the Company's Senior Vice President and Chief
Financial Officer. In November 2000, the Board of Directors elected Ms. Grayson
President and Chief Executive Officer and extended her employment agreement. The
employment agreement has a one-year term and is automatically renewed for
additional one-year terms on the anniversary date and each successive
anniversary date thereafter. However, either the Company or Ms. Grayson may
serve written notice of an intention not to renew not less than 90 days prior to
the expiration of the then current term, in which case the employment agreement
terminates on such termination date. Effective July 15, 2002, Ms. Grayson's
employment agreement was amended to reduce her base salary from $300,000 to
$200,000 plus 2% of the Company's gross revenues. Ms. Grayson's base salary is
subject to periodic review by the Board and may be increased at the Board's
discretion. Under the employment agreement, Ms. Grayson is eligible for a cash
bonus if the Company meets certain performance objectives as outlined in the
Report of the Compensation Committee on Executive Compensation. In June 2002,
Ms. Grayson assumed the responsibilities of Principal Financial Officer in
addition to those of President and Chief Executive Officer.
If the Company terminates Ms. Grayson's employment for cause, she is
not entitled to any severance payment. Ms. Grayson is deemed to be terminated
for cause if, in the reasonable determination of the Board, she, among other
things, is convicted of a felony or a crime involving moral turpitude,
participates in a fraud against the Company, or willfully discloses the
Company's trade secrets or other confidential information to any of its
competitors. If the Company terminates Ms. Grayson's employment other than for
cause (or fails to renew the employment agreement other than for cause), Ms.
Grayson receives a severance payment equal to one year's salary plus any
projected bonus that would have been paid during that year, and all options
previously granted become immediately exercisable.
In June 1996, the Company entered into an employment agreement with
Jieh-Shan Wang, who then held the position of Senior Vice President and Chief
Technical Officer. In 2000, Dr. Wang's title was changed to Chief Scientist, his
13
base salary was reduced to $100,000 and his weekly work schedule was reduced to
thirty hours. Dr. Wang's employment agreement was terminated on July 16, 2002.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than 10% of the Company's Common
Stock to file initial reports of ownership and reports of changes in ownership
with the SEC. Directors, executive officers and greater than 10% shareholders
(collectively, "Reporting Persons") are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms provided to the
Company and written representations by the Reporting Persons, the Company
believes that, for the year ended December 31, 2002, all Section 16(a) filing
requirements applicable to the Reporting Persons were met.
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee with respect to the
Company's unaudited financial statements for the fiscal year ended December 31,
2002, which include the balance sheets of the Company as of December 31, 2002
and 2001, and the related statements of operations, changes in stockholders'
equity and cash flows for the years in the period ended December 31, 2002, 2001
and 2000 and the notes thereto. The audit of the Company's financial statements
at December 31, 2002 is in progress but will not be completed in time to include
audited financial statements and a Report of Independent Auditors in the
Company's Annual Report on Form 10-K. When the audit is completed and a Report
of Independent Auditors is issued, the Company expects to file an amended Annual
Report on Form 10-K. The information contained in this report shall not be
deemed to be "soliciting material" or to be "filed" with the Securities and
Exchange Commission, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
company specifically incorporates it by reference in such filing.
REVIEW WITH MANAGEMENT
The Audit Committee has reviewed and discussed the Company's unaudited
financial statements with management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT AUDITORS
The Company expects that review and discussion with Ernst & Young LLP
("E & Y"), the Company's independent public accountants for 2002, regarding the
matters required to be discussed by SAS 61 (Codification of Statements on
Accounting Standards) which include, among other items, matters related to the
conduct of the audit of the Company's financial statements, will occur upon
completion of the fiscal 2002 audit.
The Company expects that the Audit Committee will receive written
disclosures and the letter from E & Y required by Independence Standards Board
Standard No. 1 (which relates to the accountant's independence from the Company
and its related entities) and will discuss with E & Y its independence from the
Company upon completion of the fiscal 2002 audit.
The Audit Committee has adopted a charter for the Committee. All
members of the Audit Committee are independent as defined under the NASD rules.
CONCLUSION
Based on the review and discussions referred to above, the Audit
Committee recommended to the Company's Board that the Company's unaudited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2002.
SUBMITTED BY THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Molly G. Bayley
Heidi B. Heiden
Michael D. O'Dell
14
INFORMATION CONCERNING INDEPENDENT AUDITORS
AUDIT FEES
The Company's independent auditors for the fiscal year ended December
31, 2002 were E & Y. The aggregate fees billed by E & Y for the fiscal year
ended December 31, 2002 were $95,000 for the annual audit and $59,661 for audit
related services. Audit related services generally include fees for pension and
statutory audits, business acquisitions, accounting consultations, internal
audits and SEC reporting obligations. No fees were billed for non-audit
services, which, in the opinion of the Audit Committee, is compatible with
maintaining auditor independence.
The audit of the Company's financial statements at December 31, 2002 is
in progress but will not be completed in time to include audited financial
statements and a Report of Independent Auditors in the Company's Annual Report
on Form 10-K. When the audit is completed and a Report of Independent Auditors
is issued, the Company expects to file an amended Annual Report on Form 10-K.
NO PROPOSAL TO APPROVE OR RATIFY INDEPENDENT AUDITORS
Consistent with its cost containment efforts, the Company is seeking to
engage a new independent public accounting firm better suited to its size.
Because the Company contemplates that it may engage new independent auditors, it
is not seeking approval or ratification of the appointment of independent
auditors for the fiscal year ended December 31, 2003 at the annual meeting.
The Company does not expect representatives of E & Y to attend the
annual meeting.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
(PROPOSAL 2)
The Company is currently authorized to issue 50,000,000 shares of
Common Stock, par value $0.001 per share, of which, as of April 10, 2003,
26,755,551 shares were issued and outstanding, 7,685,626 shares were reserved
for issuance upon exercise of options which have been granted or may be granted
pursuant to the stock option plans of the Company and 2,500,000 shares were
reserved for issuance upon exercise of options which have been granted or may be
granted pursuant to the stock purchase plan of the Company. In addition,
5,862,040 shares of Common Stock are reserved for issuance upon conversion of
the Company's outstanding notes and preferred stock and 2,586,204 shares are
reserved for issuance upon the exercise of outstanding warrants. Thus, as of
April 10, 2003, there were only approximately 4,610,579 shares of Common Stock
that were unissued and not reserved for issuance.
In these circumstances, the Board of Directors determined that it would
be advisable and in the best interest of the Company to amend the Company's
certificate of incorporation, as amended and restated ("Certificate of
Incorporation"), to increase the number of authorized shares of Common Stock in
order to have additional shares available for issuance to meet various business
needs as they may arise and to enhance the Company's flexibility in connection
with possible future actions. Those business needs and actions may include
additional financing, stock dividends, stock splits, employee benefit programs,
corporate business combinations and other corporate purposes. While the Company
currently has no arrangements, understandings or commitments with respect to the
issuance of any additional shares of Common Stock, it is considered advisable to
have sufficient authorized and unissued shares available to enable the Company,
as the need may arise, to move promptly to take advantage of market conditions
and the availability of other favorable opportunities without the delay and
expense involved in calling a special meeting of shareholders. Unless otherwise
required by applicable law or regulation, the additional shares of Common Stock
will be issuable without further authorization by vote or consent of the
shareholders and on such terms and for such consideration as may be determined
by the Board.
Pursuant to that determination, on April 11, 2003, the Board of
Directors unanimously approved and recommended that the Company's shareholders
consider and approve an amendment to Article IV of the Certificate of
Incorporation of the Company to increase the number of authorized shares of
Common Stock of the Company from 50,000,000 shares to 75,000,000 shares.
The authorization of additional shares of Common Stock pursuant to this
proposal will have no dilutive effect upon proportionate voting power of the
present shareholders of the Company. However, to the extent that shares are
subsequently issued in connection with any corporate action to persons other
than the present shareholders, such issuance could have a dilutive effect on the
earnings per share and voting power of present shareholders.
In addition, although the issuance of additional shares of Common Stock
in certain instances may have the effect of forestalling a hostile takeover, the
Board does not intend nor does it view the increase in authorized shares of
Common Stock as an anti-takeover measure. The Company is not aware of any
15
proposed or contemplated transaction of this type, and the proposed amendment to
the Certificate of Incorporation is not being recommended in response to any
specific effort of which the Company is aware to obtain control of the Company.
At the annual meeting, the shareholders will be asked to consider the
proposal recommended by the Board of Directors to amend Article IV of the
Certificate of Incorporation. As proposed to be amended, paragraph one of
Article IV would read as follows:
The Corporation is authorized to issue two classes of shares to be
designated Common Stock and Preferred Stock, respectively. The total
number of shares of stock the Corporation shall have authority to
issue is eighty-eight million three hundred thirty-three thousand
three hundred thirty-three (88,333,333) shares; seventy-five million
(75,000,000) shares of Common Stock with par value of $0.001 per
share, and thirteen million three hundred thirty-three thousand three
hundred thirty-three (13,333,333) shares of Preferred Stock with par
value of $0.001 per share.
If the amendment is approved by the Company's shareholders, it will
become effective upon the filing of a Certificate of Amendment in accordance
with the General Corporation Law of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO
AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK.
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, WITHOUT EXHIBITS,
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 ACCOMPANIES THIS PROXY STATEMENT.
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE TO ANY SHAREHOLDER, FREE OF
CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-K, WITHOUT EXHIBITS, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS FOR COPIES OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K SHOULD BE DIRECTED TO MERLE B. MILLER, VICE
PRESIDENT ADMINISTRATION, V-ONE CORPORATION, 20300 CENTURY BOULEVARD, SUITE 200,
GERMANTOWN, MARYLAND 20874.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2004 Annual
Meeting of Shareholders must be received by the Company no later than December
5, 2003 to be considered for inclusion in the Company's Proxy Statement and form
of proxy relating to such meeting. Proposals of shareholders received by the
Company after December 5, 2003 will be considered untimely.
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of no
business other than that described herein that will be presented for
consideration at the annual meeting. If, however, any other business shall
properly come before the annual meeting, the proxy holders intend to vote the
proxies as determined by a majority of the Board.
By Order of the Board of Directors
Joseph D. Gallagher
Secretary
May 2, 2003
16
Please date, sign and mail your
proxy card as soon as possible!
V-ONE Corporation
Annual Meeting of Shareholders on June 5, 2003
/ X / Please mark your votes as in this example. Note to Preferred C Shareholders:
You may not vote on Proposal 1.
1. Proposal One: Election of two directors: For Withhold Authority FOR, except vote withheld from the
following nominee:
Nominees: Margaret E. Grayson
Michael D. O'Dell / / / / __________________________________
For Against Abstain
/ / / / / / 2. Proposal Two: Amendment of the Company's Certificate of Incorporation,
as amended and restated, to increase the number of authorized shares of
common stock of the Company from 50,000,000 shares to 75,000,000 shares.
/ / / / / / 3. In the discretion of such proxies on such other business as may
properly come before the meeting or any adjournment thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED IN ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS HEREON. IN
THE ABSENCE OF SUCH SPECIFICATIONS, THE PROXY WILL BE VOTED "FOR" THE PROPOSALS.
Change of Address or / /
Comments, mark here:
_________________________________ ___________________________________ ________________, 2003
Signature of Shareholder Signature of Additional Shareholder Dated
Please sign your name exactly as it appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
V-ONE CORPORATION
Proxy for Annual Meeting of Shareholders on June 5, 2003
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Margaret E. Grayson and Merle B. Miller,
or either of them with full power of substitution, as the lawful proxies of the
undersigned and hereby authorizes them to represent and to vote as designated on
the reverse all shares of common stock and preferred stock of V-ONE Corporation
("Company") that the undersigned would be entitled to vote if personally present
at the Annual Meeting of Shareholders of the Company to be held on June 5, 2003
and at any adjournment thereof. This Proxy, when properly executed, will be
voted in the manner directed herein by the undersigned shareholder. If no
direction is given, this Proxy will be voted FOR the matters listed on the
reverse. Whether or not you plan to attend the meeting, you are urged to execute
and return this Proxy which may be revoked at any time prior to its use.
(Continued and to be signed on other side.)