SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Section 240.14a-11(c) or Section
240.14a-12
Network Six Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(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 fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
NETWORK SIX, INC.
475 KILVERT STREET
WARWICK, RI 02886
(401) 732-9000
April 14, 2000
Dear Stockholder:
The annual meeting of the stockholders of Network Six, Inc., will be held on
Wednesday, May 24, 2000 at 3:00 p.m. at the Radisson Airport Hotel, 2081 Post
Road, Warwick, Rhode Island, 02886.
Please sign and return the enclosed proxy at your earliest convenience
indicating on the bottom of the proxy if you plan to attend the meeting in
person.
The following material is enclosed for your review and action:
- Notice of the Annual Meeting
- Proxy
- Return Envelope
- Chairman's Letter to Stockholders
- Annual Report (Securities and Exchange Form 10-K)
We hope to see you at the annual meeting. Thank you for your support of
Network Six, Inc.
Sincerely,
Kenneth C. Kirsch
Chairman, President and Chief
Executive Officer
NETWORK SIX, INC.
475 KILVERT STREET
WARWICK, RI 02886
(401) 732-9000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 2000
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("the
Meeting") of Network Six, Inc., (the "Company"), will be held at 3:00 p.m. local
time on May 24, 2000, at the Radisson Airport Hotel, 2081 Post Road, Warwick,
Rhode Island, for the following purposes:
1. To elect the following Directors of the Company: Kenneth C. Kirsch;
Donna J. Guido; Henry N. Huta; and Edward J. Braks.
2. To amend the Company's Articles of Incorporation to change the name of
the Corporation to such name as the Board of Directors deems
appropriate.
3. To consider and act upon any other matters which may properly come
before the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 3, 2000, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Meeting and at any adjournments thereof.
The accompanying Proxy Statement contains information regarding matters to
be considered at the Meeting. For the reasons outlined therein, the Board of
Directors recommends a vote "FOR" the matters being voted upon.
YOUR PROXY IS IMPORTANT TO ASSURE A QUORUM AT THE MEETING. IF YOU ARE UNABLE
TO ATTEND THE MEETING, YOU ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE SO THAT YOUR
SHARES WILL BE REPRESENTED.
By Order of the Board of Directors,
Kenneth C. Kirsch
Chairman, President and Chief
Executive Officer
Warwick, Rhode Island
April 14, 2000
NETWORK SIX, INC.
PROXY STATEMENT
FOR THE
2000 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to the holders of the Common Stock and the
holder of the Series A Convertible Preferred Stock ("Convertible Preferred
Stock") of Network Six, Inc., (the "Company"), in connection with the
solicitation on behalf of the Board of Directors of the Company of proxies to be
used in voting at the Annual Meeting of Stockholders to be held on May 24, 2000,
and any adjournments or postponement thereof (the "Meeting").
The enclosed proxy is for use at the Meeting if the stockholder will not be
able to attend in person. Any stockholder who executes a proxy may revoke it at
any time before it is voted by delivering to the Secretary of the Company either
an instrument revoking the proxy or a duly executed proxy bearing a later date.
A proxy may also be revoked by any stockholder present at the Meeting who
expresses a desire to vote his shares in person. All shares represented by valid
proxies received pursuant to this solicitation and not revoked before they are
exercised will be voted in the manner specified therein. If no specification is
made the proxies will be voted:
1. To elect the following Directors of the Company: Kenneth C. Kirsch;
Donna J. Guido; Henry N. Huta; and Edward J. Braks.
2. To amend the Company's Articles of Incorporation to change the name of
the Corporation to such name as the Board of Directors deems
appropriate.
3. To consider and act upon any other matters which may properly come
before the Meeting or any adjournment thereof.
Only the holders of Common Stock and Convertible Preferred Stock of record
at the close of business on April 3, 2000 will be entitled to vote at the
Meeting. On March 31, 2000, 796,184 shares of Common Stock and 714,285.71 shares
of Convertible Preferred Stock were outstanding. The Preferred Stock converts
four shares into one share of Common Stock. Each share of Common Stock is
entitled to one vote on each matter to be voted upon at the Meeting. Holders of
shares of Preferred Stock are entitled to one vote for every four shares held by
them on each matter to be voted upon at the Meeting. A majority of shares
entitled to vote is required to be represented at the Meeting to constitute a
quorum for the holding of the Meeting. The failure of a quorum to be represented
at the Meeting will necessitate adjournment and subject the Company to
additional expense. It is the Company's policy to count abstentions and broker
non-votes for purposes of determining the presence of a quorum at the Meeting
and to disregard abstentions and broker non-votes in determining results on
proposals requiring a majority vote.
The cost of soliciting proxies in the enclosed form will be borne by the
Company. In addition to solicitation by mail, officers, employees or agents of
the Company may solicit proxies personally, or by telephone, facsimile
transmission or other means of communication. The Company will request banks and
brokers or other similar agents or fiduciaries to transmit the proxy material to
the beneficial owners for their voting instructions and will reimburse them for
their expenses in so doing.
The Notice of Annual Meeting of Stockholders, this Proxy Statement and the
accompanying proxy were first mailed to stockholders on or about April 14, 2000.
PROPOSAL 1
ELECTION OF DIRECTORS
The first proposal for stockholder consideration is election of the nominees
shown below as Directors of Network Six, Inc. to serve until the next annual
meeting of the Company.
The four nominees are elected by the affirmative vote of a majority of the
Common Stock entitled to vote thereon, represented by person or proxy, at the
Annual Meeting when a quorum is present. The holders of the Convertible
Preferred Stock are entitled to vote as a class for the election of two
additional Directors. The holders of Convertible Preferred Stock have elected
Owen S. Crihfield and Thomas J. Berardino to the Board of Directors.
Each of the nominees for Director is presently a Director of the Company.
Each has consented to being named a nominee in this Proxy Statement and has
agreed to serve as a Director if elected at the Meeting. The Board of Directors
has no reason to believe that any of the nominees will be unavailable for
election. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES FOR
ELECTION AS DIRECTORS.
NOMINEES
The following sets forth, as of the date hereof, information concerning the
four nominees for election as Directors of the Company.
KENNETH C. KIRSCH. Mr. Kirsch, 46, has been a Director since December 1995
when he was named President of the Company. Mr. Kirsch was appointed Chief
Executive Officer on April 3, 1996 and was elected Chairman in January 1996 by
the Board of Directors. From August 1995 until December 1995, he served as Vice
President of Sales and Marketing for the Company. From February 1994 until
August 1995, Mr. Kirsch was Vice Chairman and Chief Operating Officer of
VideoBridge International Corp., a videoconferencing services company. From
May 1983 until February 1994, Mr. Kirsch held a number of senior management
positions at GTECH Corporation, a leading supplier of on-line lottery systems to
state and federal governments worldwide.
DONNA J. GUIDO. Ms. Guido, 44, was appointed to the Board in March 2000.
Ms. Guido joined the Company in 1986 and has been in her current position for
four years as Vice President of Information Systems. She has overseen many
system development projects for both private and public sector clients. Prior to
working at Network Six, Ms. Guido worked at Blue Cross of Rhode Island.
HENRY N. HUTA. Mr. Huta, 52, was appointed to the Board in March 2000.
Mr. Huta, a Certified Public Accountant, is President of BIW Tamaqua Cables, a
member of Draka Holdings, NV, a public company on the Netherlands Stock
Exchange. He has a diverse international business career including assignments
as President of BTR Thermal Sensors and Controls, President and CEO of Wahlco
Environmental and Group Vice President at Ducommum, Inc. Mr. Huta also serves on
the Advisory Committee of Hamilton Technology Investors, a San Diego, CA, based
venture capital fund.
EDWARD J. BRAKS. Mr. Braks, 57, was appointed to the Board in March 2000.
Mr. Braks, a Certified Public Accountant, is Chief Financial Officer and Chair
of the Management Committee of Paul Arpin Van Lines, a privately-held company
based in West Warwick, Rhode Island, where he has worked since 1995. From 1990
until 1994, Mr. Braks was Executive Vice President and Chief Financial Officer
for Old Stone Corporation and Old Stone Bank. From 1964 until 1990 (except for
two years of
2
service in the U.S. Army), he was a Partner with Deloitte and Touche's
Accounting and Auditing Division based in New York City.
CERTAIN BOARD INFORMATION
Since last year's annual meeting of stockholders on May 19, 1999, the Board
of Directors has held four meetings. All Directors attended all such meetings or
approved all the actions of the Board of Directors. All Directors attended all
meetings of Board committees of which they were members.
The Board of Directors has two committees: (i) the Audit Committee; and
(ii) the Compensation and Option Committee.
The Audit Committee is authorized by the Board to review, with the Company's
independent public accountants, the annual financial statements of the Company
prior to publication; to review the work of, and approve non-audit services
performed by, such independent accountants; and to make annual recommendations
to the Board for the appointment of independent public accountants for the
ensuing year. The Audit Committee also reviews the effectiveness of the
financial and accounting functions, organization, operations and management of
the Company. Through December 1999, its members were Messrs. Cote and Supron.
Effective January 10, 2000, the Audit Committee members were Messrs. Supron,
Cote and Wallace. The above Audit Committee held a meeting in February 2000 to
review the Company's 1999 financial statements and to consider other financial
and accounting matters. The Audit Committee also held one meeting in early 1999
to review the 1998 financial statements. On March 14, 2000, Messrs. Supron, Cote
and Wallace resigned from the Board of Directors. Effective March 24, 2000,
Messrs. Henry N. Huta and Edward J. Braks were appointed to the Audit Committee.
Messrs. Huta and Braks attended one meeting in March 2000 to review the
Company's 1999 financial statements and to consider other financial and
accounting matters.
The Compensation and Option Committee reviews and recommends to the Board of
Directors the compensation and benefits of all executive officers of the
Company. Its members through November 1999, consisted of Mr. Supron and
Mr. Cote. On November 16, 1999, Mr. Supron resigned from the Compensation and
Option Committee and Mr. Wallace was appointed to the Compensation and Option
Committee. It held four meetings since last year's Annual Meeting of
Stockholders. Its current members are Messrs. Huta and Braks. The current
Compensation and Option Committee has not met as of the date of this filing.
The Board has no nominating committee, as the Board as a whole reviews
qualifications and recommends to the stockholders the election of Directors of
the Company.
AUDIT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT") THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT OF THE
COMPENSATION AND OPTION COMMITTEE AND PERFORMANCE GRAPH SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
3
REPORT OF THE COMPENSATION AND OPTION COMMITTEE
The Board of Directors established the Compensation and Option Committee on
October 13, 1993 and gave the Committee final decision-making authority with
respect to stock options on March 23, 1994.
The principal duties of the Compensation and Option Committee are to:
(i) establish the executive compensation policies of the Company; (ii) oversee
the design and administration of executive officer compensation programs;
(iii) approve specific compensation decisions with respect to executive
officers; and (iv)administer stock option programs. The Compensation and Option
Committee offers the following report concerning compensation.
GUIDING PRINCIPLES. The Company applies a consistent philosophy to
compensation for all employees, including senior management. In all cases, the
Company is committed to maximizing stockholder value and as part of that
commitment seeks to align the financial interests of all its employees with
those of its stockholders. The Company provides executive compensation that is
designed to attract and retain highly qualified and seasoned executive officers
from the systems integration industry. To ensure that compensation is
competitive, the Company compares its pay practices with those of comparable
companies. The Compensation and Option Committee administers an executive
compensation program that has been crafted in accordance with these guiding
principles. It consists of two elements: annual compensation and long-term stock
compensation.
ANNUAL COMPENSATION. Total annual compensation is comprised of two parts:
base salary and annual incentive bonus. Both parts are targeted to provide
compensation equivalent to that provided by similar companies. Total
compensation also reflects the executive's experience, sustained performance and
corporate or operating unit performance. Annual incentive bonuses increase or
decrease both with Company and individual performance and with the achievement
of annual financial and strategic goals established by the Company.
LONG-TERM STOCK COMPENSATION. The Company's long-term stock compensation
includes stock option programs and stock purchase plans. These programs provide
for the retention of key employees as well as the alignment of employees' and
stockholders' financial interests since a substantial portion of potential
compensation is realized only through increases in stock price.
CEO COMPENSATION. Generally, the Company compensates its Chief Executive
Officer in accordance with the same guiding principles applied to its
compensation of other executive officers and employees. For 1999, the Company
paid Kenneth C. Kirsch, the Company's Chief Executive Officer, a base salary of
$177,500, and an incentive cash bonus of $105,390. In 1998, as part of
Mr. Kirsch's 1997 incentive compensation, the Board of Directors gave
Mr. Kirsch the choice of receiving either $50,000 in cash or a non-qualified
option to purchase 50,000 shares of the Company's Common Stock at $4.50 per
share, subject to the Company's stockholders approval and the approval of the
Company's Preferred Shareholder, Saugatuck Capital Company Limited Partnership
III ("Saugatuck"), as required in Saugatuck's Agreement with the Company dated
October 29, 1992, as amended. In 1999, the Company's stockholders voted in favor
of this option grant, but Saugatuck did not approve the award. In early 2000,
Mr. Kirsch elected to receive the $50,000 in cash.
4
The incentive bonus granted to Mr. Kirsch for his performance in 1999 was
based upon his meeting certain performance objectives set by the Company's
Compensation and Option Committee. Mr. Kirsch was eligible, per his employment
agreement, to receive up to 125% of his base pay if he met 100% of his
objectives. The Compensation and Option Committee of the Board of Directors
determined that Mr. Kirsch met 47.5% of his objectives in 1999. Mr. Kirsch's
1999 total salary and bonus increased 5.5% from 1998 primarily due to an
increase in his base salary. Mr. Kirsch's total compensation decreased from 1998
to 1999, as a result of Mr. Kirsch receiving no long-term compensation awards in
1999. The Committee considers the total compensation paid to Mr. Kirsch to be
appropriate and consistent with the compensation received by similarly
performing CEOs in comparable companies within the information technology
industry.
The Compensation and Option Committee
Henry N. Huta
Edward J. Braks
5
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table discloses compensation received by the persons serving
as the Company's Chief Executive Officer and the next two most highly paid
executive officers (the "Named Executive Officers") for each of the three years
ended December 31, 1999.
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------------------- --------------------------
OTHER ANNUAL RESTRICTED ALL OTHER
CASH COMPENSATION STOCK OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUSES($)(1) ($) AWARDS ($)(2) SARS(#)(1) ($)(3)
- --------------------------- -------- --------- ------------- ------------ ------------- ---------- ------------
Kenneth C. Kirsch (4)........... 1999 177,500 105,390 -- -- -- 7,713
Chairman, President 1998 160,000 110,000 -- -- 18,750 4,530
Chief Executive Officer 1997 160,000 100,000 -- -- 18,750 5,027
Donna J. Guido.................. 1999 119,167 33,125 -- -- -- 1,553
Vice President, 1998 109,167 21,565 -- 21,560 7,500 --
Information Systems 1997 96,417 25,000 -- 25,000 7,500 --
Dorothy M. Cipolla (5).......... 1999 85,577 43,250 -- -- -- 1,775
Chief Financial Officer, 1998 88,026 15,300 -- 15,300 -- --
Treasurer and Secretary 1997 80,987 10,625 -- 10,625 4,500 --
Samara H. Navarro (6)........... 1999 127,025 -- -- -- 15,000 11,000
Vice President, 1998 -- -- -- -- -- --
Governmental Services 1997 -- -- -- -- -- --
- --------------------------
(1) Mr. Kirsch's 1997 compensation has been restated from the prior year proxy
statement to reflect the receipt of $50,000 cash instead of the grant of an
option to purchase 50,000 shares of the Company's Common Stock, which
required the Company's shareholder approval and the approval of the
Company's preferred shareholder. In 1999, the Company's shareholders voted
in favor of this option grant, but the Company's preferred shareholder did
not approve the award.
(2) The restricted stock is subject to forfeiture under certain conditions.
Forfeiture provisions lapse gradually over a three-year period. The stock
price as reported by the NASDAQ National Market on December 31, 1997 and the
NASDAQ SmallCap Market on December 31, 1998, respectively, was used to
determine the number of shares issued to each employee.
(3) Amounts listed under All Other Compensation for Mr. Kirsch consist of
automobile lease payments, life insurance premiums, and matching
contributions to the Company's 401(k) plan. Ms. Guido's and Ms. Cipolla's
All Other Compensation consists of matching contributions to the Company's
401(k) plan. Dr. Navarro's All Other Compensation consists of a car
allowance.
(4) Served as Vice President Sales and Marketing from August 14, 1995 to
December 12, 1995. Appointed President on December 12, 1995, Chairman of the
Board in January 1996, and Chief Executive Officer in April 1996.
(5) Served as Chief Financial Officer and Treasurer since January 1996,
Secretary since February 1996. Ms. Cipolla resigned from her position as
Chief Financial Officer, Treasurer and Secretary effective November 23,
1999. On November 29, 1999, James J. Ferry was appointed Vice President of
Finance and Administration, Chief Financial Officer, Treasurer and
Secretary.
(6) Dr. Navarro joined the Company effective January 27, 1999.
6
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants during the year
ended December 31, 1999 to the Named Executive Officers.
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------- ANNUAL RATES OF
STOCK PRICE
% OF TOTAL APPRECIATION FOR
NUMBER OF OPTIONS/ OPTION TERM(2)
SECURITIES SAR'S EXERCISE ---------------------
UNDERLYING GRANTED TO PRICE PER EXPIRATION
OPTIONS EMPLOYEES IN PER --------------------
NAME GRANTED FISCAL YEAR(1) SHARE DATE 5% 10%
- ----------------------------------------- ---------- -------------- --------- -------- --------- ---------
Samara H. Navarro........................ 15,000 33% $4.13 1/27/09 $38,913 $98,613
- ------------------------
(1) The Company granted 45,500 options to purchase shares of Common Stock to
employees during the year ended December 31, 1999.
(2) The dollar amounts are the result of calculations at assumed rates of
appreciation from the exercise price until the expiration date of the
options and therefore are not intended to forecast possible future
appreciation, if any, of the Company's stock prices.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
No options were exercised by Named Executive Officers in 1999.
BOARD COMPENSATION
Non-employee Directors receive $500 per board or committee meeting attended
and are reimbursed for out-of-pocket expenses incurred for attendance at
meetings. All non-employee Directors also receive a $10,000 annual retainer paid
quarterly in arrears. On May 17, 1995, the stockholders approved a non-employee
Director stock option plan and amended that plan on May 20, 1998. Pursuant to
that plan, each non-employee Director receives an option to purchase 2,500
shares of the Company's Common Stock each January 15(th) with a maximum of
10,000 shares per Director. The option is priced at market on the date of the
grant. New Directors receive an option to purchase 2,500 shares of Common Stock
on the date of their appointment.
EMPLOYMENT AGREEMENTS
The Company is party to a three-year employment agreement ("the Agreement")
with Mr. Kirsch which expires December 31, 2001. The Agreement provides for
Mr. Kirsch to receive an annual base salary of $177,500 in 1999, $187,500 in
2000, and $202,500 in 2001, an incentive bonus of up to 125% of base salary,
based upon Mr. Kirsch meeting certain performance objectives established by the
Board, health insurance, disability insurance, a car allowance and term life
insurance. If the Company terminates the Agreement for reasons other than cause
(e.g., the employee's death or disability, willful misconduct, or fraud, or upon
Mr. Kirsch's continued failure to perform his duties as set forth in the
Agreement), or if the Company gives Mr. Kirsch cause to resign (e.g., assignment
of duties inconsistent with his position, non-payment of salary, moving his
place of employment more than 60 miles from Providence, Rhode Island or change
of control not approved by the Board of Directors), Mr. Kirsch is entitled to
receive severance. The severance Mr. Kirsch may receive is his annual base
salary for the
7
duration of the contract plus any incentive bonus earned for the last year that
he was employed by the Company. If the Company does not offer Mr. Kirsch a new
employment agreement with at least as favorable terms as those contained in the
Agreement, he is also entitled to receive severance. The Agreement further
provides that Mr. Kirsch may not compete with the Company for a period of one
year following the termination of his employment, or longer depending on the
nature and timing of the termination.
CERTAIN BUSINESS RELATIONSHIPS
None.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's Executive Officers
and Directors, and persons who own more than ten percent of the Company's Common
Stock to file reports of ownership and changes in ownership with the Securities
and Exchange Commission. Officers, Directors and greater than 10% stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely on
review of the copies of such reports furnished to the Company and written
representations that no other reports were required during the year ended
December 31, 1999, all Section 16(a) filing requirements applicable to its
Executive Officers, Directors and greater than 10% stockholders were satisfied,
except one report was filed late for James J. Ferry, Vice President of Finance
and Administration, CFO and Treasurer for one option to purchase the Company's
Common Stock, and one report for Dorothy M. Cipolla to record the forfeiture of
unvested restricted stock and options upon her resignation.
8
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The Company's outstanding voting securities consist of its Common Stock and
Convertible Preferred Stock, which vote together as a single class on most
matters. The following table sets forth certain information, as of December 31,
1999, concerning beneficial ownership of the Company's voting securities by
(i) each person who is known by the Company to be the beneficial owner of more
than 5% of such voting securities, (ii) each director of the Company, (iii) the
Named Executive Officers, and (iv) all directors and executive officers of the
Company as a group. The Company believes that the beneficial owners of the
voting securities listed below, based on information furnished by such owners,
have sole voting and investment power with respect to such shares, subject to
community property laws where applicable and the information contained in the
footnotes to the table below.
TOTAL
CONVERTIBLE PREFERRED SHARES UNDER SHARES
STOCK BENEFICIALLY SHARES EXERCISABLE BENEFICIALLY PERCENTAGE OF
NAME OF BENEFICIAL OWNER OWNED (1) OWNED (1) OPTIONS (1) OWNED (1) VOTING STOCK
- ------------------------ --------------------- --------- ------------ ------------ -------------
Saugatuck Capital Co. Limited III...... 714,286(2) -- -- 178,572 18%
One Canterbury Green
Stamford, CT 06901
Ralph A. Cote (3)...................... -- -- 7,500 7,500 *
341 Melrose Court
Venice, FL 34292
Peter C. Wallace (3)................... -- 4,000 5,000 9,000 *
26 Bel Air Road
Hingham, MA 02043
Nicholas R. Supron (3)................. -- 7,500 2,500 10,000 1%
20 Fore Royal Court
Jamestown, RI 02835
Kenneth C. Kirsch (4) (5).............. -- 33,135 56,250 89,385 9%
Donna J. Guido (4) (5)................. -- 14,850 12,625 27,475 3%
James J. Ferry (4) (5)................. -- -- -- -- *
Samara H. Navarro (4) (5).............. -- 3,750 3,750 *
Executive Officers and Directors Group
(7 persons).......................... -- 59,485 87,625 147,110 14%
- --------------------------
* Less than one percent
(1) Includes shares issuable upon the exercise of options that were exercisable
as of December 31, 1999 or became exercisable within 60 days of that date.
Four shares of the Convertible Preferred Stock converts into one share of
Common Stock.
(2) Constitutes 100% of the issued and outstanding Convertible Preferred Stock.
(3) Messrs. Cote, Wallace and Supron resigned from the Board on March 14, 2000.
This table does not include Mr. Henry N. Huta who was elected to the Board
on March 15, 2000, Mr. Edward J. Braks who joined the Board on March 23,
2000, or Messrs. Owen S. Crihfield and Thomas J. Berardino who joined the
Board on March 30, 2000.
(4) The business address of Mr. Kirsch, Ms. Guido, Mr. Ferry and Dr. Navarro is
475 Kilvert Street, Warwick, Rhode Island 02886.
(5) These shares are deemed to be outstanding for the purpose of computing the
percentage of outstanding Common Stock owned by such person individually and
by the group, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person. It excludes shares
issuable upon the exercise of stock options that are not currently vested
but will vest over a three-year period through 2001. The excluded shares are
as follows: Mr. Kirsch--6,250, Ms. Guido--7,500, Mr. Ferry--6,000 and
Dr. Navarro--11,250.
9
BACKGROUND OF OFFICERS OTHER THAN NOMINEES
JAMES J. FERRY, Vice President of Finance and Administration, Chief
Financial Officer and Treasurer. Mr. Ferry, 45, is responsible for all corporate
financial activities as well as human resources and administration. Mr. Ferry
has over 20 years of financial management experience. He worked at Invensys
Thermal Systems, a global leader in the thermal systems industry selling under
the Elmwood Sensors and Fenwal Electronics brand names, where he held the
position of Vice President of Finance and Administration. Mr. Ferry previously
held the position of Chief Financial Officer of Fenwal Electronics.
SAMARA H. NAVARRO, DBA, Vice President, Governmental Services. Dr. Navarro,
43, joined the Company in January 1999. She was most recently Deputy Secretary,
Department of Children and Families, State of Florida, a position she held for
three years. Earlier, she was Inspector General, Department of Children and
Families, State of Florida and Inspector General, Department of Banking and
Finance, State of Florida. Dr. Navarro had also been a consultant with
Deloitte & Touche LLP.
PERFORMANCE GRAPH
The following graph demonstrates the cumulative total return to stockholders
of the Company's Common Stock during the previous five years in comparison to
the cumulative total return on the NASDAQ Stock Market (US) and the NASDAQ
Computer and Data Processing Services Stocks Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
12/31/94 12/31/95 12/30/96 12/29/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
Network Six, Inc............................. $100.00 $ 29.76 $ 1.93 $ 6.85 $ 9.08 $ 8.04
Nasdaq Total Return Index for Nasdaq Computer
& Data Processing Services Stocks.......... $100.00 $152.28 $187.95 $230.90 $412.23 $871.27
Index values for Nasdaq Stock Market (US).... $100.00 $141.33 $173.89 $213.07 $300.25 $542.43
10
PROPOSAL 2
TO AMEND THE ARTICLES OF INCORPORATION
The second proposal for stockholder consideration would give the Company's
Board of Directors authority to change the Company's name and to amend Article
First of its articles of Incorporation accordingly. The Company's name can only
be changed by affirmative vote of a majority of the Company's stock entitled to
vote under the Company's present Articles of Incorporation. The Board of
Directors and Company management is considering changing the Company's name to
reflect better the Company's developing focus on e-commerce. The marketplace for
services provided by the Company is changing rapidly. The Board of Directors,
therefore, believes that it should have the flexibility in the exercise of its
discretion to change the Company's name to coincide with the development of the
Company's business strategy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE
COMPANY'S ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S NAME IN THE
DISCRETION OF THE BOARD OF DIRECTORS.
STOCKHOLDER PROPOSALS FOR THE
2001 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who wishes to present a proposal for consideration at the
Company's Annual Meeting of Stockholders to be held in 2001 must submit such
proposal in accordance with the rules promulgated by the Securities and Exchange
Commission. In order for a proposal to be included in the Company's proxy
materials relating to the Company's 2000 Annual Meeting, the stockholder must
submit such proposal in writing to the Company so that it is received not later
than December 21, 2000. Such proposals should be addressed to: Secretary,
Network Six, Inc., 475 Kilvert Street, Warwick, Rhode Island, 02886.
OTHER MATTERS
The Board of Directors has no knowledge of any business to be presented for
consideration at the Meeting other than as described above. Should any such
other matters properly come before the Meeting or any adjournment thereof, the
persons named in the enclosed proxy will have discretionary authority to vote
such proxy in accordance with their best judgment on such other matters and with
respect to matters incident to the conduct of the Meeting.
A copy of the Company's 1999 Annual Report to Stockholders is being mailed
with this Proxy Statement. Additional copies of the Annual Report and the Notice
of Annual Meeting of Stockholders, Proxy Statement and accompanying proxy may be
obtained from the Company.
A list of stockholders of record entitled to be present and vote at the
Meeting will be available at the offices of the Company, 475 Kilvert Street,
Warwick, Rhode Island 02886, for inspection by the stockholders during regular
business hours from April 14, 2000 to the date of the Meeting and will be
available during the Meeting for inspection by stockholders who are present.
In order to assure the presence of the necessary quorum at the Meeting,
please sign and mail the enclosed proxy promptly in the envelope provided. No
postage is required if mailed within the United States. The signing of the proxy
will not prevent your attending the Meeting and voting in person, should you so
desire.
By Order of the Board of Directors,
-----------------------------------------
Kenneth C. Kirsch
Chairman, President and Chief Executive
Officer
April 14, 2000
11
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ----------------------------------------------------------------
NETWORK SIX, INC.
- ----------------------------------------------------------------
Mark box at right if an address change or comment has been
noted on the reverse side of this card. / /
CONTROL NUMBER:
RECORD DATE SHARES:
1. To elect the following Directors of the Company:
For All With- For All
Nominees hold Except
(01) Kenneth C. Kirsch
(02) Donna J. Guido / / / / / /
(03) Henry N. Huta
(04) Edward J. Braks
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE(S) NAME(S).
YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).
2. To amend the Company's Articles of For Against Abstain
Incorporation to change the name of the
Corporation to such name as the Board / / / / / /
of Directors deems appropriate.
3. To consider and act upon any other matters For Against Abstain
which may properly come before the Meeting
or any adjournment thereof. / / / / / /
--------------------------
Please be sure to sign and date this Proxy. Date
- ----------------------------------------------------------------------------
Stockholder sign here Co-owner sign here
- ----------------------------------------------------------------------------
DETACH CARD DETACH CARD
NETWORK SIX, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy
Ballot. There are a number of issues related to the management and operation
of your Company that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, May
24, 2000.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Kenneth C. Kirsch
Network Six, Inc.
NETWORK SIX, INC.
475 KILVERT STREET, WARWICK, RI 02886
(401) 732-9000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 2000
KNOW ALL MEN BY THESE PRESENT, that I (we) the undersigned stockholder(s) in
NETWORK SIX, INC., do hereby appoint Kenneth C. Kirsch, James J. Ferry and
Dana H. Gaebe, or any one of them, my (our) true and lawful Attorneys, with
the power of substitution for me (us) and in my (our) name, to vote at the
meeting of the stockholders of said Network Six, Inc. to be held at 3:00 p.m.
local time on May 24, 2000 at the Radisson Airport Hotel, 2081 Post Road,
Warwick, Rhode Island for the purposes listed on the reverse.
The Board of Directors has fixed the close of business April 3, 2000 as the
record date for the determination of stockholders entitled to notice of and
to vote at the meeting and at any adjournment thereof.
If you are unable to attend the meeting, you are requested to complete, sign,
date, and return the accompanying proxy in the enclosed postage-paid envelope
so that your shares will be represented.
- ------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Please sign this proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If a corporation, this signature
should be that of an authorized officer who should state his or her title.
- ------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ----------------------------------- -------------------------------------
- ----------------------------------- -------------------------------------
- ----------------------------------- -------------------------------------