<PAGE>
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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
- --------------------------------------------------------------------------------
(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:
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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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/ / 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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<PAGE>
April 15, 1999
Dear Stockholder:
The annual meeting of the stockholders of Network Six, Inc. will be held on
Wednesday, May 19, 1999 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 Statement
- Proxy
- Return Envelope
- Annual Report
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
<PAGE>
NETWORK SIX, INC.
475 KILVERT STREET
WARWICK, RI 02886
(401) 732-9000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1999
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 19, 1999, 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;
Ralph O. Cote; Nicholas R. Supron, and Peter C. Wallace.
2. To approve a non-qualified stock option to purchase 50,000 shares of the
Company's Common Stock issued to Kenneth C. Kirsch in 1998.
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 1, 1999 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 15, 1999
<PAGE>
NETWORK SIX, INC.
PROXY STATEMENT
FOR THE
1999 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 19, 1999, 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;
Ralph O. Cote; Nicholas R. Supron and Peter C. Wallace.
2. To approve a non-qualified stock option to purchase 50,000 shares of the
Company's Common Stock issued to Kenneth C. Kirsch in 1998.
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 1, 1999 will be entitled to vote at the
Meeting. On March 31, 1999, 780,156 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 15, 1999.
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.
1
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The four Directors 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
Directors. The holders of convertible preferred stock have elected not to have a
representative on the Board of Directors at this time.
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, 45, 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, the leading supplier of on-line lottery systems
to state and federal governments worldwide.
RALPH O. COTE. Mr. Cote, 67, has been a Director of the Company since
November 1998. Mr. Cote was Sr. Vice President, Information Technology, for
Commercial Union, a leading global insurance company, where he had worked since
1979. Most recently, Mr. Cote was responsible for information systems, computing
and telecommunications networks for Commercial Union's North American
operations.
NICHOLAS R. SUPRON. Mr. Supron, 43, has been a Director since May 1996. Mr.
Supron is a private investor. Mr. Supron was an executive with GTECH Corporation
from 1984 until February 1999, serving as Senior Vice President, Worldwide
Operations, Vice President, Latin America Sales and Operations, Director of
Marketing, Director of Product Management, and Senior Business Consultant. Mr.
Supron previously worked for Tenneco, General Motors, and Brown and Root.
PETER C. WALLACE. Mr. Wallace, 57, joined the Board in April of 1999. From
1990 to 1998, Mr. Wallace was Vice President, ITT World Directories, where he
was responsible for business development in a number of international locations.
From 1985-1990, Mr. Wallace was Senior Vice President for GTECH Corporation with
responsibilities in Sales and Operations. Previously, Mr. Wallace was Founder
and Chief Operating Officer of Network Dynamics, Inc., a developer of decision
support software, and Chairman and CEO of Electrowatt Holdings, Inc., the US
subsidiary of a large Swiss concern.
CERTAIN BOARD INFORMATION
Since last year's annual meeting of stockholders on May 20, 1998, the Board
of Directors has held five 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
2
<PAGE>
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. During December 1998, its members were
Messrs. Dutton and Supron. Effective December 15, 1998 the audit committee
members were Messrs. Supron and Cote. The Audit Committee held a meeting earlier
in 1999 to review the Company's 1998 financial statements and to consider other
financial and accounting matters. The Audit Committee also held one meeting in
early 1998 to review the 1997 financial statements.
The Compensation and Option Committee reviews and recommends to the Board of
Directors the compensation and benefits of all officers of the Company. The
Compensation and Option Committee also administers the Company's bonus and stock
option plans. Its members during 1998 and up until Mr. Dutton's resignation from
the Board, were Messrs. Supron and Dutton. It held seven meetings since last
year's Annual Meeting of Stockholders. Its current members are Messrs. Supron
and Wallace.
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.
REPORT OF THE COMPENSATION AND OPTION COMMITTEE
The Board of Directors established the Compensation 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
3
<PAGE>
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 1998, the Company
paid Kenneth C. Kirsch, the Company's Chief Executive Officer, a base salary of
$160,000, an incentive cash bonus of $110,080, and granted him an incentive
stock option for 18,750 shares of common stock. The incentive cash bonus was
based on Mr. Kirsch meeting certain performance objectives. The grant of the
incentive stock option was a condition of Mr. Kirsch's employment contract. Per
the contract, the incentive stock option was issued at market on February 2,
1998. Mr. Kirsch's 1998 total compensation increased from 1997 largely due to
his taking his annual incentive bonus in cash rather than in a combination of
cash plus a stock option. The Committee considers the total annual compensation
paid to Mr. Kirsch to be appropriate and consistent with the compensation
received by similarly performing CEOs in comparable companies within the systems
integration industry.
The Compensation and Option Committee
Clifton C. Dutton
Nicholas R. Supron
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table discloses compensation received by the persons serving
as the Company's Chief Executive Officer and the next two most highly paid
executive officers (the "Named Executive Officers") for each of the three years
ended December 31, 1998.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
OTHER ANNUAL RESTRICTED
COMPENSATION STOCK OPTIONS/
NAME AND PRINCIPAL POSITION YEAR SALARY($) CASH BONUSES ($) ($) (1) AWARDS ($)(2) SARS(#)(3)
- ------------------------------------------ --------- --------- ---------------- --------------- ------------- -----------
Kenneth C. Kirsch (4)..................... 1998 160,000 110,000 4,530 -- 18,750
Chairman, President 1997 160,000 50,000 5,027 -- 68,750
Chief Executive Officer 1996 90,000 30,000 -- -- 25,000
Donna J. Guido............................ 1998 109,167 21,565 -- 21,560 7,500
Vice President, 1997 96,417 25,000 -- 25,000 7,500
Information Systems 1996 70,874 -- -- -- 9,375
Dorothy M. Cipolla (5).................... 1998 88,026 15,300 -- 15,300 --
Chief Financial Officer, 1997 80,987 10,625 -- 10,625 4,500
Treasurer and Secretary 1996 76,923 -- -- -- 7,750
</TABLE>
- ------------------------
(1) Amounts listed under Other Annual Compensation consist of automobile lease
payments and life insurance policy premiums.
(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. was used to determine the
number of shares issued to each employee.
(3) For 1997 includes a non-qualified stock option to purchase 50,000 shares of
common stock issued to Mr. Kirsch in 1998 as part of his 1997 incentive
bonus, which must be approved by the Company shareholders. See Proposal #2.
(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.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants during the year
ended December 31, 1998 to the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS/SAR'S STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES IN PRICE PER OPTION TERM (3)
OPTIONS FISCAL YEAR PER EXPIRATION ----------------------
NAME GRANTED (1) (2) SHARE DATE 5% 10%
- ---------------------------------------------- ----------- ------------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth C. Kirsch............................. 50,000 41% $ 4.50 2/23/08 $ 141,501 $ 358,592
Kenneth C. Kirsch............................. 18,750 15% $ 3.13 2/2/08 $ 36,849 $ 93,383
Donna J. Guido................................ 7,500 6% $ 3.00 10/9/09 $ 14,150 $ 35,859
</TABLE>
- ------------------------
(1) The grant of an option to Mr. Kirsch to purchase 50,000 shares of Common
Stock vests immediately and is subject to shareholder approval. See Proposal
#2. Mr. Kirsch's option to purchase 18,750 shares of Common Stock vests
evenly over three years. Mrs. Guido's option vests evenly over four years.
The exercise price for all options was the market price of the Company's
Common Stock on the date of grant except for the 50,000 share option which
was priced at market ninety days after grant or May 23, 1998.
(2) The Company granted options to purchase 122,660 shares of Common Stock to
employees during the year ended December 31, 1998.
(3) 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 1998.
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
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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 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, 1998, 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 by Kenneth C. Kirsch, Chairman, president and
CEO, regarding the grant of one option to purchase the Company's Common Stock.
7
<PAGE>
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,
1998, 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.
* Less than one percent
<TABLE>
<CAPTION>
CONVERTIBLE SHARES TOTAL
PREFERRED UNDER SHARES
STOCK BENEFICIALLY SHARES EXERCIABLE BENEFICIALLY PERCENTAGE OF
NAME OF BENEFICIAL OWNER OWNED (1) OWNED (1) OPTIONS (1) OWNED (1) VOTING STOCK
- ----------------------------------------------- -------------------- ----------- ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Saugatuck Capital Co. Limited III.............. 714,286(2) -- -- 178,572 19%
One Canterbury Green
Stamford, CT 06901
Ralph A. Cote.................................. -- -- 5,000 5,000 *
475 Kilvert Street
Warwick, RI 02886
Clifton C. Dutton (3).......................... -- -- 6,250 6,250 *
2006 Nooseneck Hill Road
Coventry, RI 02816
Nicholas R. Supron............................. -- -- 7,500 7,500 *
20 Fore Royal Court
Jamestown, RI 02835
Kenneth C. Kirsch (4) (5)...................... -- 32,135 77,083 109,218 11%
Donna Guido (4) (5)............................ -- 14,850 9,375 24,225 3%
Samara H. Navarro (4).......................... -- -- -- -- *
Dorothy M. Cipolla (4) (5)..................... -- 7,708 7,500 15,208 2%
Executive Officers and Directors Group (7 -- 54,693 112,708 167,401 16%
persons).....................................
</TABLE>
- ------------------------
(1) Includes shares issuable upon the exercise of options that were exercisable
as of December 31, 1998 or became exercisable within 60 days of that date.
The Convertible Preferred Stock converts each four shares into one share of
Common Stock.
(2) Constitutes 100% of the issued and outstanding convertible preferred stock.
(3) Mr. Dutton resigned from the Board on March 31, 1999. This table does not
include Mr. Peter C. Wallace as he joined the Board on April 1, 1999.
(4) The business address of Mr. Kirsch, Mrs. Guido, Mrs. Navarro and Mrs.
Cipolla 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
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<PAGE>
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--35,417, Mrs.
Guido--15,000 and Mrs. Cipolla--4,750.
BACKGROUND OF OFFICERS OTHER THAN NOMINEES
DONNA J. GUIDO, Vice President Information Systems. Mrs. Guido, 43, joined
the Company in 1986 as a Consultant, later to become a Lead Systems Consultant
and a Senior Systems Consultant. Ms. Guido is well known nationally for her work
in human service systems development. She has led numerous projects for the
Company, including the development of a model child welfare system, a child care
system for the State of Louisiana, a children's immunization tracking system for
the RI Department of Health and, most recently, was Project Director for the
Company's child welfare systems development effort for the State of Maine. Prior
to joining the Company, from 1982 to 1986, Mrs. Guido was a project manager at
Blue Cross of Rhode Island.
DOROTHY M. CIPOLLA, Chief Financial Officer, Treasurer and Secretary. Mrs.
Cipolla, 43, joined the Company in 1994 as its Controller and became Chief
Financial Officer in January 1996. Prior to joining Network Six, Mrs. Cipolla
was a consultant at Ernst and Whinney, a project manager for Kendall Company and
a controller at each of Garelick Farms and Bird Machine Company. Mrs. Cipolla is
a Certified Public Accountant.
SAMARA H. NAVARRO, DBA, Vice President, Governmental Services. Dr. Navarro,
42, 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.
9
<PAGE>
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
<TABLE>
<CAPTION>
NASDAQ TOTAL NASDAQ
<S> <C> <C> <C>
Return Index Total
for Nasdaq Return
Computer & Index
Data for The
Processing Nasdaq
Network Services Stock
Six, Inc. Stocks Market (US)
12/31/93 $100.00 $100.00 $100.00
12/31/94 $80.77 $121.40 $97.75
12/30/95 $24.04 $184.88 $138.23
12/29/96 $1.56 $228.33 $170.04
12/31/97 $5.53 $280.36 $208.75
12/31/98 $7.33 $502.03 $292.94
</TABLE>
10
<PAGE>
PROPOSAL 2
GRANT OF OPTION TO PURCHASE 50,000 SHARES
The second proposal for stockholder consideration is the approval of the
grant of an option to purchase 50,000 shares of the Company's common stock to
Mr. Kenneth C. Kirsch, the Company's Chairman, President and Chief Executive
Officer. The Board of Directors issued this option to Mr. Kirsch on February 23,
1998 as a portion of his 1997 compensation. The option, which vested upon grant,
has an exercise price of $4.50 per share, which was the closing price of the
Company's common stock as reported by the NASDAQ National Market on May 23,
1998.
The Board of Directors believes that stock options, particularly when
granted to the Company's executive officers, are critical in motivating and
rewarding the creation of long-term stockholder value. All stock option awards
granted by the Company to employees and Directors have been made with option
exercise prices equal to the fair market value of the underlying stock at the
time of grant so that holders benefit from such options only when and to the
extent the stock price increases after the option grant. However, the Company
has permitted executive officers to purchase restricted stock at a discount from
fair market value.
When the Board of Directors granted the option for 50,000 shares to Mr.
Kirsch it had noted the improved performance of the Company in 1997 over 1996 as
well as Mr. Kirsch's expanded duties and responsibilities. The Compensation and
Option Committee of the Board of Directors reported to the stockholders in April
1998 that it considered all compensation provided to Mr. Kirsch, including the
option to purchase 50,000 shares, to be appropriate and consistent with the
compensation received by similarly situated chief executive officers.
The affirmative vote of the majority of the shares of the Company's common
stock present or represented and entitled to vote at the Annual Meeting is
required for approval of the option granted to Mr. Kirsch. The choice was
offered to Mr. Kirsch to receive an option or cash equivalent, which the Board
of Directors determined, was $50,000. Mr. Kirsch choose to receive the option.
Should this Proposal #2 not be approved, the Board of Directors intends to
permit Mr. Kirsch to receive the $50,000 originally offered.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE GRANT OF THE
OPTION TO MR. KIRSCH TO PURCHASE 50,000 SHARES OF THE COMPANY'S COMMON STOCK.
STOCKHOLDER PROPOSALS FOR THE
2000 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 2000 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, 1999. 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.
11
<PAGE>
A copy of the Company's 1998 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 15, 1999 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 15, 1999
12
<PAGE>
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13
<PAGE>
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14
<PAGE>
PLEASE MARK VOTES
/X/
<TABLE>
<CAPTION>
AS IN THIS EXAMPLE
With- For All
For hold Except
For Against Abstain
<S> <C> <C> <C>
1. To elect the following Directors of
the
3. To consider and act upon any other
Company: matters which may properly
come before the meeting or any
adjournment / / / / / /
KENNETH C. KIRSCH, NICHOLAS R. SUPRON, RALPH O. COTE
thereof. / / / / / /
AND PETER C. WALLACE
RECORD DATE SHARES:
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)
Please be sure to sign and date this Date
name. Proxy.
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
2. To approve the grant of a stock
option
issued to Kenneth C. Kirsch. / / / / / /
</TABLE>
Stockholder sign here Co-owner sign here
Mark box at right if comments or address change have been noted
on the reverse side of this card. / /
<PAGE>
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 the proxy card to indicate how your shares shall 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 19,
1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Kenneth C. Kirsch
Network Six, Inc.
<PAGE>
NETWORK SIX, INC.
475 KILVERT STREET WARWICK, RI 02886
(401) 732-9000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1999
KNOW ALL MEN BY THESE PRESENTS, That I (we) the undersigned stockholder(s) in
NETWORK SIX, INC., do hereby appoint Kenneth C. Kirsch, Dorothy M. Cipolla 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, to be held at 3:00 p.m. local time on
May 19, 1999 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 1, 1999 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 OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE
<PAGE>
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.
<TABLE>
<S> <C>
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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</TABLE>
