SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the 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 Section240.14a-12
NETWORK SIX, INC.
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(Name of Registrant as Specified In Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(5) Total fee paid:
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/ / 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.
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PRELIMINARY COPY
SUBJECT TO REVIEW BY THE SECURITIES AND EXCHANGE COMMISSION
CERTAIN INFORMATION INCLUDED HEREIN IS PRESENTED AS IT IS
EXPECTED TO EXIST WHEN THE DEFINITIVE PROXY STATEMENT IS MAILED
April 27, 2001
Dear Stockholder:
The annual meeting of the stockholders of Network Six, Inc., will be held on
Wednesday, August 15, 2001 at 3:00 p.m. at the Crowne Plaza Hotel at the
Crossings, 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 Statement
- 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
PRELIMINARY COPY
SUBJECT TO REVIEW BY THE SECURITIES AND EXCHANGE COMMISSION
CERTAIN INFORMATION INCLUDED HEREIN IS PRESENTED AS IT IS
EXPECTED TO EXIST WHEN THE DEFINITIVE PROXY STATEMENT IS MAILED
NETWORK SIX, INC.
475 KILVERT STREET
WARWICK, RI 02886
(401) 732-9000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 15, 2001
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 August 15, 2001, at the Crowne Plaza Hotel at the Crossings, 801
Greenwich Avenue, 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 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 July 1, 2001, 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 27, 2001
PRELIMINARY COPY
SUBJECT TO REVIEW BY THE SECURITIES AND EXCHANGE COMMISSION
CERTAIN INFORMATION INCLUDED HEREIN IS PRESENTED AS IT IS
EXPECTED TO EXIST WHEN THE DEFINITIVE PROXY STATEMENT IS MAILED
NETWORK SIX, INC.
PROXY STATEMENT
FOR THE
2001 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 August 15,
2001, 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 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 July 1, 2001 will be entitled to vote at the
Meeting. On March 31, 2001, 816,991 shares of Common Stock and 714,285.71 shares
of Convertible Preferred Stock were outstanding. 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. A broker non-vote occurs when a broker
votes on some matters on the proxy card but not on others, usually because he
does not have the authority to do so.
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 27, 2001.
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 indicated
their intention to elect 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, 47, has been a Director since December 1995
when he was named President of the Company. Mr. Kirsch was appointed Chief
Executive Officer in April 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, the leading supplier of on-line lottery systems
to state and federal governments worldwide.
DONNA J. GUIDO. Ms. Guido, 45, was appointed to the Board in March 2000.
Ms. Guido is currently Vice President of Information Systems for the Company, a
position she has held since February 1997. From April 1996 until February 1997,
Ms. Guido held the position of Senior Consultant with the Company.
HENRY N. HUTA. Mr. Huta, 53, was appointed to the Board in March 2000.
Mr. Huta, a Certified Public Accountant, is currently President of BIW Tamaqua
Cables, a position he has held since March 1999. From October 1997 to
March 1999, Mr. Huta was President of BTR Thermal Sensors and Controls. From
November 1986 to February 1997, Mr. Huta was President and CEO of Wahlco
Environmental Systems, Inc.
EDWARD J. BRAKS. Mr. Braks, 58, 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 January 1995.
OTHER DIRECTORS AND OFFICERS
BOARD MEMBERS ELECTED BY PREFERRED STOCKHOLDER
THOMAS J. BERARDINO, 60, Managing Director, Saugatuck Capital Company.
Mr. Berardino joined Saugatuck Capital Company in July 1998 through the
merger of Saugatuck Associates, Inc. and Meridian Capital Management, a
merchant bank which Mr. Berardino co-founded in 1992.
OWEN S. CRIHFIELD, 48, has been a partner with Hamilton Robinson LLC since
June 2000. Prior to joining Hamilton Robinson in June 2000, Mr. Crihfield
has been a General Partner of Saugatuck Capital Company since 1986.
OTHER OFFICERS
JAMES J. FERRY, 46, Vice President of Finance and Administration, Chief
Financial Officer and Treasurer since November 1999. Mr. Ferry was Vice
President of Finance and Administration at Invensys Thermal Systems
(formerly BTR Thermal Sensors and Controls) from January 1997 to
November 1999 and Vice President and Chief Financial Officer of Fenwal
Electronics, Inc. from October 1992 until January 1997.
CERTAIN BOARD INFORMATION
Since last year's annual meeting of stockholders on May 24, 2000, the Board
of Directors has held seven 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 three committees: (i) the Audit Committee;
(ii) the Compensation and Option Committee; and (iii) the Special Committee. 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. The Audit Committee provides assistance to the corporate
Directors in fulfilling their responsibility to the shareholders, potential
shareholders, and investment community relating to corporate accounting,
reporting practices of the corporation, and the quality and integrity of the
financial reports of the corporation. Its members are Messrs. Braks
(Chairperson), Huta and Berardino. The Committee is responsible for reviewing
and evaluating the Company's accounting and financial reporting practices;
recommending the firm to be appointed as independent accountants; reviewing the
Company's interim and year-end operating results; reviewing the scope and
results of the audit; and reviewing any non-audit services to be performed by
the firm of independent accountants and considering the effect of such
performance on the accountants' independence.
COMPENSATION AND OPTION COMMITTEE. 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 are Messrs. Huta
(Chairperson), Braks and Crihfield. It held two meetings since last year's
Annual Meeting of Stockholders attended by each of its members.
SPECIAL COMMITTEE. The Special Committee was established by the Board of
Directors on January 29, 2001 to review and advise the full Board of Directors
with respect to (i) the rights, privileges and dividends of the Company's
Series A Convertible Preferred Stock; and (ii) strategic alternatives available
to the Company to maximize stockholder value. Its members are Henry N. Huta and
Edward J. Braks. The Special Committee held two meetings since its inception on
January 29, 2001 attended by each of its members.
AUDIT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
None.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is composed of three directors and operates under a
written charter approved by the Board of Directors that is reviewed at least
annually by the Committee. The Committee recommends to the Board of Directors
the selection of the Company's outside accountants, currently Sansiveri,
Kimball & McNamee, L.L.P.
Management is responsible for the Company's internal controls and the
financial reporting process. The outside accountants are responsible for
performing an independent audit of the Company's financial statements in
accordance with generally accepted auditing standards and issue a report
thereon. The Committee's responsibility is to monitor and oversee these
processes.
In this context, the Committee met five times since last year's annual
meeting. The Committee met three times prior to issuing the Company's quarterly
reports on Form 10-Q for the second and third quarters of 2000 as well as the
first quarter of 2001. The Committee also met in December 2000 with the
Company's outside auditors and management to discuss plans for the year-end
audit and met in March 2001 to review the financial statements for the year
ended December 31, 2000. At the March 2001 meeting, management represented to
the Committee that the Company's financial statements were prepared in
accordance with generally accepted accounting principles, and the Committee
reviewed and discussed the financial statements with management and Sansiveri,
Kimball & McNamee, L.L.P. The Committee also discussed with Sansiveri,
Kimball & McNamee, L.L.P. matters required to be discussed by Statement of
Auditing Standards No. 61 (Communications with Audit Committees) including their
judgments about the quality of the Company's accounting principles, estimates
and financial statements.
The Committee was provided the written disclosures required by Independence
Standards Boards Standard No. 98-1 (Independence Discussions with Audit
Committees) by Sansiveri, Kimball & McNamee, L.L.P. and discussed their
independence with them.
Based on the Committee's discussion with management and Sansiveri,
Kimball & McNamee, L.L.P. and the Committee's review of the representation of
management and the report of Sansiveri, Kimball & McNamee, L.L.P. to the
Committee, the Committee recommended that the Board of Directors include the
audited financial statements in the Corporation's Annual Report on Form 10-K for
the year ended December 31, 2000 filed with the Securities and Exchange
Commission.
The Audit Committee,
Edward J. Braks, Chairman
Henry N. Huta
Thomas J. Berardino
REPORT OF THE COMPENSATION AND OPTION COMMITTEE
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.
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. In January 1999, the
Company entered into an employment agreement with Kenneth C. Kirsch, the
Company's Chief Executive Officer that governs his compensation through
December 2001. For 2000, the Company paid Mr. Kirsch a base salary of $187,500,
and an incentive cash bonus of $43,531. 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.
The incentive bonus granted to Mr. Kirsch for his performance in 2000 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 18.6% of his objectives in 2000. Mr. Kirsch's
2000 total salary and bonus decreased from 1999 due to a lower attainment of
bonus objectives. 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, Chairman
Edward J. Braks
Owen S. Crihfield
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,
2000, 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.
SHARES TOTAL
CONVERTIBLE PREFERRED 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 Company (2)........... 714,286(3) -- -- 178,572 18%
Limited Partnership III
One Canterbury Green
Stamford, CT 06901
Saugatuck Associates II (2)............. -- -- 5,000 5,000 *
One Canterbury Green
Stamford, CT 06901
Alliance Capital Investment Corp. (4)... -- 85,506 -- 85,506 8%
125 West Shore Road
Huntington, NY 11743
Jericho Capital Corp. SEP f/b/o (4)..... -- 11,000 -- 11,000 1%
Kenneth Greene
125 West Shore Road
Huntington, NY 11743
Henry N. Huta........................... -- -- 5,000 5,000 *
50 Princess Pine Drive
East Greenwich, RI 02818
Edward J. Braks......................... -- -- 5,000 5,000 *
18 Eagle Drive
North Kingstown, RI 02852
Owen S. Crihfield....................... -- -- 5,000 5,000 *
6 Ledge Road
Greenwich, CT 06870
Kenneth C. Kirsch (5)................... -- 53,885 43,750 97,635 9%
Donna Guido (5) (6)..................... -- 14,600 22,500 37,100 4%
James J. Ferry (5) (6).................. -- -- -- 1,500 *
Executive Officers and Directors
Group (6 persons)..................... -- 68,485 81,250 151,235 14%
- --------------------------
* Less than 1%
(1) Includes shares issuable upon the exercise of options that were exercisable
as of December 31, 2000 or became exercisable within 60 days of that date.
Four shares of the Convertible Preferred Stock converts into one share of
Common Stock.
(2) Saugatuck Associates II, Inc. is the investment advisor to Saugatuck Capital
Company Limited Partnership III.
(3) Constitutes 100% of the issued and outstanding Convertible Preferred Stock.
(4) The number of shares indicated is based on Schedule 13D, dated December 28,
2000 as amended on January 23, 2001, which was filed jointly by Alliance
Capital Investment Corp. ("Alliance"), Stacie Greene, Jericho Capital Corp.
SEP F/B/O Kenneth Greene ("Jericho") and Kenneth Greene. According to that
filing, Ms. Greene is the President and sole executive officer of Alliance
and shares power with Alliance to vote or direct the vote and to dispose of
or direct the disposition of shares of Company stock owned by Alliance.
Also, according to that filing, Mr. Greene is sole beneficiary of Jericho
and shares power with Jericho to vote or direct the vote and to dispose of
or direct the disposition of shares of Company stock owned by Jericho.
(5) The business address of Mr. Kirsch, Ms. Guido and Mr. Ferry is 475 Kilvert
Street, Warwick, Rhode Island 02886.
(6) 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: Ms. Guido--6,875 and Mr. Ferry--19,500.
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 three most highly paid
executive officers (the "Named Executive Officers") for each of the three years
ended December 31, 2000.
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------- ------------------------
OTHER ANNUAL RESTRICTED ALL OTHER
CASH COMPENSATION STOCK OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUSES($) ($) AWARDS ($)(1) SARS(#) ($)(2)
- --------------------------- -------- --------- ---------- ------------ ------------- -------- ------------
Kenneth C. Kirsch.......... 2000 187,500 43,531 -- -- -- 9,847
Chairman, President 1999 177,500 105,390 -- -- -- 11,188
Chief Executive Officer 1998 160,000 110,000 -- -- 18,750 4,530
Donna J. Guido............. 2000 130,208 26,350 -- -- 5,000 8,750
Vice President, 1999 119,167 33,125 -- -- -- --
Information Systems 1998 109,167 21,565 -- 21,560 7,500 --
James J. Ferry (3)......... 2000 120,750 20,000 -- -- 15,000 5,400
Vice President of Finance 1999 10,923 -- -- -- 6,000 450
and Administration, 1998 -- -- -- -- -- --
Chief Financial Officer,
Treasurer and Secretary
Samara H. Navarro (4)...... 2000 86,218 4,125 -- -- -- 4,500
Vice President, 1999 127,025 -- -- -- 15,000 11,000
Government Services 1998 -- -- -- -- -- --
- ------------------------
(1) 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 SmallCap Market on December 31, 1998 was
used to determine the number of shares issued to Ms. Guido.
(2) Amounts listed under All Other Compensation for Mr. Kirsch consist of
automobile lease payments and life insurance policy premiums. Ms. Guido's,
Mr. Ferry's and Dr. Navarro's All Other Compensation represents car
allowances.
(3) Mr. Ferry joined the Company effective November 29, 1999.
(4) Dr. Navarro joined the Company effective January 27, 1999 and resigned from
her position as Vice President, Governmental Services on May 15, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants during the year
ended December 31, 2000 to the Named Executive Officers.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
---------------------------------------------------- STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION FOR
SECURITIES OPTIONS/SAR'S EXERCISE OPTION TERM(2)
UNDERLYING GRANTED TO PRICE PER ---------------------
OPTIONS EMPLOYEES IN PER EXPIRATION
NAME GRANTED FISCAL YEAR(1) SHARE DATE 5% 10%
- ---- ---------- -------------- --------- ---------- --------- ---------
Donna J. Guido.................. 5,000 9% $1.59 12/17/10 $ 5,000 $12,670
James J. Ferry.................. 15,000 26% $1.59 12/17/10 $15,000 $38,011
- ------------------------
(1) The Company granted 57,500 options to purchase shares of Common Stock to
employees during the year ended December 31, 2000.
(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
On May 2, 2000, Mr. Kirsch exercised 18,750 options at a price of $1.125
each. No other options were exercised by Named Executive Officers in 2000.
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. The Special Committee members of the Board of Directors receive a fee
of $1,500 per week. 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 15th with a maximum of
10,000 shares per Director. The option is priced at market on the date of the
grant. New Non-Employee 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 base
salary as provided in his Employment Agreement, until the later of December 31,
2001 or twelve (12) months from the effective date of such termination, plus the
maximum annual bonus payable for the year in which the termination occurred. 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, 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 Kenneth C. Kirsch, Chairman, President and Chief Executive
Officer for the purchase of 2,000 shares of the Company's Common Stock and the
exercise of 18,750 options to purchase the Company's Common Stock. In addition,
Owen S. Crihfield and Thomas J. Berardino, both Directors, each filed one report
late for the initial statement of beneficial ownership of securities.
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
12/31/95 12/31/96 12/30/97 12/29/98 12/31/99 12/31/00
Network Six, Inc. 100 6.5 23 30.5 27 12
Nasdaq Computer & Data Processing Services Stocks
Index 100 123.41 151.61 270.52 594.39 274.91
Nasdaq Stock Market Index (US) 100 123.04 150.69 212.51 394.92 237.62
STOCKHOLDER PROPOSALS FOR THE
2002 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 2002 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 2002 Annual Meeting, the stockholder must
submit such proposal in writing to the Company so that it is received not later
than December 31, 2001. 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 2000 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 July 13, 2001 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 27, 2001
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
- -------------------------------------------- 1. To elect the following Directors of the Company:
NETWORK SIX, INC. For All With- For All
- -------------------------------------------- Nominees held Except
(01) Kenneth C. Kirsch
(02) Donna J. Guido / / / / / /
(03) Henry N. Huta
(04) Edward J. Braks
Mark box at right if an address change or
comment has been noted on the reverse side / / NOTE: If you do not wish your shares voted "FOR" a particular nominee, mark
of this card. 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).
CONTROL NUMBER:
RECORD DATE SHARES: For Against Abstain
2. To consider and act upon any other matters 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,
August 15, 2001.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Kenneth C. Kirsch
Network Six, Inc.
NETWORK SIX, INC.
476 Kilvert Street, Warwick RI 02886
(401) 732-8000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 16, 2001
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 August 15, 2001 at the Crowne Plaza Hotel at the Crossings, 801
Greenwich Avenue, Warwick, Rhode Island for the purposes listed on the
reverse.
The Board of Directors has fixed the close of business July 1, 2001 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?
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