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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NETWORK SYSTEMS CORPORATION
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(Name of Registrant as Specified In Its Charter)
NETWORK SYSTEMS CORPORATION
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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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[X] 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: $105,746.28
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(2) Form, Schedule or Registration Statement No.: 33-55343
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(3) Filing Party: STORAGE TECHNOLOGY CORPORATION
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(4) Date Filed: September 2, 1994
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Notes:
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DISCUSSION POINTS FOR NETWORK SYSTEMS' DIRECTORS AND OFFICERS
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IN CONNECTION WITH THE NETWORK SYSTEMS/STORAGETEK MERGER
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The following material is being used by directors and officers of Network
Systems for solicitation purposes.
1. THE BOARD OF DIRECTORS OF NETWORK SYSTEMS STRONGLY BELIEVES THAT THE MERGER
WITH STORAGETEK IS A WIN-WIN FOR BOTH COMPANIES.
* THE BOARD OF NETWORK SYSTEMS BELIEVES THE TWO COMPANIES WOULD ACHIEVE
SIGNIFICANT STRATEGIC AND OPERATING SYNERGIES BY COMBINING RESOURCES,
PROVIDING ACCESS TO EACH OTHER'S LOYAL CUSTOMER BASES AND REALIZING
ECONOMIES OF SALE. The combined company would be the largest in the
internetworking marketplace with revenues in the neighborhood of $2
billion and would be better equipped to take advantage of the
high-growth segments of an increasingly competitive industry.
* THE MERGER SHOULD PROVIDE NSC ACCESS TO SOME 14,000 PRIME ACCOUNTS. NSC
and StorageTek typically sell into the same Fortune 1000 accounts. STK
has 19,000 installations; NSC has 5,000.
* THE MERGER BETWEEN NETWORK SYSTEMS AND STORAGETEK WOULD BE THE FIRST
MERGER BETWEEN A MAJOR ENTERPRISE STORAGE PROVIDER AND A LEADER IN
HIGH-PERFORMANCE COMPUTER NETWORKING PRODUCTS. This would provide, for
the first time, coverage of two quickly growing components of the
marketplace: inter-networking and storage. The convergence of the two
companies' strategy and vision for "enterprise-wide networking" is a
unique synergy of the merger.
* THE TWO COMPANIES EXPECT TO COMBINE SMOOTHLY. StorageTek has indicated
that Tom Gooch, one of the top members of STK's management team, will
augment the Network Systems management team and help ensure a smooth
transition. In addition, the two companies' sales and customer support
organizations have worked closely together through a joint marketing
relationship since 1992. Network Systems Board of Directors believes
these key organizations are well positioned to combine quickly and
efficiently.
2. EVEN WITH THE REDUCED STOCK PRICE OF STK IN THE MARKETPLACE, THE NETWORK
SYSTEMS BOARD OF DIRECTORS REAFFIRMS ITS OPINION THAT THE TERMS OF THE
MERGER AGREEMENT ARE FAVORABLE FOR NETWORK SYSTEMS SHAREHOLDERS. THE
BOARD BELIEVES THAT SHAREHOLDERS ARE BETTER SERVED BY THE UPSIDE POTENTIAL
OF THE COMBINED ENTITIES THAN BY REMAINING INDEPENDENT.
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Discussion Points
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* The Board of Directors of Network Systems believes that there is
significant risk to shareholders of remaining independent in a
marketplace that is increasingly competitive and where Network Systems
would have considerable difficulty in breaking into new, highly
competitive segments of the internetworking marketplace without the
depth and breadth of the resources StorageTek would provide.
* The tax-free exchange of shares of .2618 shares of StorageTek for each
Network Systems share would allow shareholders to continue to hold an
equity interest in a larger, more diversified company.
3. THE BOARD OF NSC BELIEVES A MERGER WITH STORAGE TECHNOLOGY REPRESENTS A
SYNERGISTIC BUSINESS OPPORTUNITY AS OPPOSED TO THE SUBSTANTIAL RISK
INHERENT IN THE COMPANY REMAINING AN INDEPENDENT ENTITY.
* THE COMPANY IS REALLY AT A FORK IN THE ROAD. TO REMAIN INDEPENDENT, THE
BOARD BELIEVES NSC WOULD NEED TO BE RESTRUCTURED TO IMPROVE ITS NEAR-TERM
PERFORMANCE BY DE-EMPHASIZING REVENUE GROWTH (HOLD TO A LOWER GROWTH
PROFILE) AND REDUCING COSTS,INCLUDING RESEARCH AND DEVELOPMENT BUDGETS.
* THE BOARD HAS DETERMINED THAT, IN THE ABSENCE OF A MERGER WITH STK, A NEW
LEADER WITH AN EXPERTISE IN TURNAROUND SITUATIONS AND A STRATEGIC VISION
FOR GROWTH WOULD BE REQUIRED TO AUGMENT NSC'S MANAGEMENT TEAM.
* NETWORK SYSTEMS' NEW PRODUCTS OFFER OPPORTUNITY ALONG WITH SIGNIFICANT
RISK. Although some new products (for example, Enterprise Routing Switch
and Security Router) will be shipped shortly, the planned volume is
anticipated to ramp up significantly throughout the year. The Company's
1995 Operating Plan is dependent in part upon the successful introduction
of the new products and either delays in the introduction of these
products or lack of acceptance by the market of these products would
adversely affect the achievement of this Plan.
* NSC'S NEW PRODUCTS WILL BE COMPETING WITH WELL ESTABLISHED MARKET PLAYERS
WHOSE DEEP POCKETS AND ACCESS TO CUSTOMERS IS EXTREMELY FORMIDABLE. The
Board believes without a merger the Company will need to hold to a lower
growth profile.
* MANY OF NETWORK SYSTEMS' EXISTING PRODUCTS ARE IN MATURE MARKETS AND ARE
SUBJECT TO PRICE EROSION.
February 28, 1995
