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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2)
LanVision Systems, 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)(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.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1. Amount previously paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing party:
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4. Date filed:
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LANVISION SYSTEMS, INC.
ONE FINANCIAL WAY, SUITE 400
CINCINNATI, OHIO 45242-5859
NOTICE OF ANNUAL MEETING
TO THE STOCKHOLDERS OF LANVISION SYSTEMS, INC.:
The annual meeting of the stockholders of LanVision Systems, Inc. will be held
on May 27, 1998, at 9:30 a.m., Eastern Time, at the Embassy Suites Hotel, 4545
Lake Forest Drive, Cincinnati, Ohio 45242, for the following purposes:
1. To elect four directors each to hold office until a successor
is duly elected and qualified at the 1999 annual meeting of
stockholders or otherwise or until any earlier removal or
resignation; and
2. To transact such other business as may properly be brought
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 3, 1998 will be
entitled to notice of and to vote at the annual meeting and any adjournment
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Cincinnati, Ohio ALAN J. HARTMAN
April 24, 1998 Corporate Secretary
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IMPORTANT
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A PROXY STATEMENT AND PROXY ARE SUBMITTED WITH THIS NOTICE. AS A STOCKHOLDER,
YOU ARE URGED TO COMPLETE AND RETURN THE PROXY PROMPTLY WHETHER OR NOT YOU PLAN
TO ATTEND THE ANNUAL MEETING IN PERSON. THE ENCLOSED ENVELOPE FOR THE RETURN OF
THE PROXY REQUIRES NO POSTAGE IF MAILED IN THE USA. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY VOTE YOUR SHARES IN PERSON, EVEN THOUGH YOU PREVIOUSLY SIGNED
AND RETURNED YOUR PROXY. IT IS IMPORTANT THAT YOUR SHARES BE VOTED. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN RETURNING YOUR PROXY PROMPTLY.
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LANVISION SYSTEMS, INC.
ONE FINANCIAL WAY, SUITE 400
CINCINNATI, OHIO 45242-5859
PROXY STATEMENT
The accompanying proxy is solicited on behalf of the Board of Directors
("Board") of LanVision Systems, Inc., a Delaware corporation ("Company" or
"LanVision"), for use at the 1998 annual meeting of stockholders of the Company
("Annual Meeting"). The Annual Meeting will be held on May 27, 1998 at 9:30
a.m., Eastern Time, or any adjournment thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting. The annual meeting will be held at
the Embassy Suites Hotel, 4545 Lake Forest Drive, Cincinnati, Ohio 45242. All
holders of record of the Company's common stock, par value $.01 per share
("Common Stock"), on April 3, 1998, the record date, will be entitled to notice
of and to vote at the Annual Meeting. At the close of business on the record
date, the Company had 8,806,000 shares of Common Stock outstanding and entitled
to vote. A majority, or 4,403,001, of these shares of Common Stock will
constitute a quorum for the transaction of business at the Annual Meeting.
The proxy card, this Proxy Statement, and the Company's 1997 Annual Report to
Stockholders will be mailed to stockholders on or about April 24, 1997.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Stockholders are entitled to one vote for each share of Common Stock held.
Shares of Common Stock may not be voted cumulatively.
The shares represented by all properly executed proxies which are timely sent to
the Company will be voted as designated and each proxy not designated will be
voted affirmatively. Any person signing a proxy in the form accompanying this
Proxy Statement has the power to revoke it at any time before the shares subject
to the proxy are voted by notifying the Corporate Secretary of the Company in
writing or by attendance at the meeting and voting in person.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may be
made by certain directors, officers, and other employees of the Company by
personal interview, telephone, or facsimile. No additional compensation will be
paid for such solicitation. The Company will request brokers and nominees who
hold shares of Common Stock in their names to furnish proxy materials to
beneficial owners of the shares and will reimburse such brokers and nominees for
the reasonable expenses incurred in forwarding the materials to such beneficial
owners.
The Company's bylaws provide that the holders of a majority of all of the shares
of Common Stock issued and outstanding and entitled to vote, whether present in
person or represented by proxy, shall constitute a quorum for the transaction of
business at the Annual Meeting. Shares that are voted "FOR", "AGAINST",
"ABSTAIN", OR "WITHHELD", as applicable, with respect to a matter are treated as
being present at the meeting for purposes of establishing a quorum and are also
treated as shares entitled to vote at the Annual Meeting with respect to such
matter. If a broker, bank, custodian, nominee, or other record holder of shares
indicates on a proxy that it does not have the discretionary authority to vote
certain shares on a particular matter ("broker non-vote"), then those shares
will not be considered entitled to vote with respect to that matter, but will be
counted in determining the presence of a quorum.
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All shares represented by valid proxies received prior to the Annual Meeting
will be voted and, where a stockholder specifies by means of the proxy how the
shares are to be voted with respect to any matter to be acted upon, the shares
will be voted in accordance with the specification so made. If the stockholder
fails to so specify, except for broker non-votes, the shares will be voted "FOR"
the election of the Board's nominees as directors.
J. Brian Patsy and Eric S. Lombardo, the co-founders and two of the directors of
the Company, together beneficially own 4,440,000 shares of Common Stock,
constituting a majority of the shares necessary for a quorum to transact
business at the Annual Meeting. Blue Chip Capital Fund Limited Partnership
("Blue Chip") beneficially owns 746,000 shares of Common Stock. Z. David
Patterson, one of the directors of the Company, is Executive Vice President of
Blue Chip Venture Company, the General Partner of Blue Chip. Messrs. Patsy and
Lombardo, and Blue Chip have each indicated that they intend to vote for the
election of all of the those nominated by the Board for election as directors.
For information regarding the ownership of Common Stock by holders of more than
five percent of the outstanding shares and by the management of the Company, see
"Security Ownership of Certain Beneficial Owners and Management."
In accordance with Delaware Law, a list of stockholders entitled to vote at the
Annual Meeting will be available at the Annual Meeting at the Embassy Suites
Hotel on May 27, 1998, and for ten days prior to the Annual Meeting, between the
hours of 9:00 a.m. and 4:00 p.m. Eastern Time, at the office of the Transfer
Agent, Fifth Third Bank, Corporate Trust Administration, 38 Fountain Square
Plaza, Cincinnati, Ohio 45263.
PROPOSAL 1 - ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders will elect four directors, comprising
the entire membership of the Board, each to hold office until a successor is
duly elected and qualified at the 1999 annual meeting of stockholders of the
Company or otherwise or until any earlier resignation or removal. Shares
represented by the accompanying proxy will be voted for the election of the four
nominees recommended by the Board, unless the proxy is marked in such a manner
as to withhold authority to vote or as to vote for one or more alternate
candidates. All nominees for election are currently serving as members of the
Board and have consented to continue to serve. If any nominee for any reason is
unable to serve or will not serve, the proxies may be voted for such substitute
nominee as the proxyholder may determine. The Company is not aware of any
nominee who will be unable or unwilling to serve as a director.
Provided a quorum is duly constituted at the Annual Meeting, the affirmative
vote by the holders of a plurality of the shares of Common Stock present in
person or represented by proxy at the Annual Meeting and entitled to vote on the
election of directors is required to approve the election of directors. An
abstention is counted as a vote "AGAINST" and a broker non-vote and a withheld
vote are not counted for purposes of electing the directors. A representative of
the Company's Transfer Agent, Fifth Third Bank, will serve as inspector of
election for the election of the directors.
NOMINEES FOR ELECTION AS DIRECTORS
The following incumbent directors are being nominated by the Board for
reelection to the Board: George E. Castrucci, Eric S. Lombardo, J. Brian Patsy,
and Z. David Patterson. THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH
OF THE NOMINEES.
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George E. Castrucci, age 59, was appointed to the Board in May, 1996.
Prior to his retirement in March, 1992, he served as Chairman and Chief
Executive Officer of Great American Broadcasting Company, a Cincinnati, Ohio
based broadcasting company, and as President and Chief Operating Officer of its
parent company, Great American Communications Company. Mr. Castrucci also
currently serves as a director of Baldwin Piano & Organ Company, BMF Savings
Bank, The Ohio National Fund, Inc., and ONE Fund, Inc.
Eric S. Lombardo, age 45, is a co-founder of the Company and has served
as Vice President and Director of the Company or its predecessor since the
Company's or its predecessor's inception in October, 1989, and as Executive Vice
President of the Company or its predecessor since May, 1990. Mr. Lombardo has
over 23 years of experience in the information technology industry. From 1983 to
1990, Mr. Lombardo served as Major Account Executive for Wang Laboratories. In
1979, Mr. Lombardo established and managed the Cincinnati, Ohio office of Triad
Systems, a wholesale distribution software company. Prior to 1979, Mr. Lombardo
was employed by NCR Corporation in various capacities.
J. Brian Patsy, age 47, is a co-founder of the Company and has served
as President and Director of the Company or its predecessor since the Company's
or its predecessor's inception in October, 1989. Mr. Patsy was appointed
Chairman of the Board and Chief Executive Officer in March, 1996. Mr. Patsy has
over 25 years of experience in the information technology industry. From 1988 to
1989, Mr. Patsy served as Branch Manager and District Marketing Manager for Wang
Laboratories, Cincinnati, Ohio. From 1986 to 1988, Mr. Patsy served as District
Marketing Manager of Voice Products for Wang Laboratories. Prior to 1986, Mr.
Patsy served twelve years in numerous engineering, sales, marketing, and
executive management positions with AT&T, Ameritech and Ohio Bell Telephone
Company.
Z. David Patterson, age 61, has been an Executive Vice President of
Blue Chip Venture Company, the general partner of Blue Chip Capital Fund Limited
Partnership, since 1992. He has served as Director of the Company or its
predecessor since December, 1994. From 1991 through 1992, Mr. Patterson served
as Vice President of Recoll Management, a subsidiary of Fleet Financial
Corporation. From 1983 to 1991, Mr. Patterson served as President of New England
Capital Corporation, a subsidiary of Bank of New England.
There are no family relationships among any of the above named nominees for
director nor among any of the nominees and any executive officers of the
Company.
DIRECTOR COMPENSATION
The Company currently pays Messrs. Castrucci and Patterson directors' fees of
(i) $1,000 for each regularly scheduled Board meeting attended, and (ii) $1,000
per day for each special meeting or committee meeting attended on days when
there are no Board meetings. Messrs. Patsy and Lombardo are officers of the
Company and are not separately compensated as directors of the Company.
Non-employee members of the Board are also eligible to participate in the
Company's 1996 Non-Employee Directors Stock Option Plan (the "Directors Plan").
The Directors Plan provides for the granting of non-qualified stock options to
directors who are not employees of the Company to enable the Company to attract
and retain high quality non-employee directors. Options for a total of 100,000
shares of Common Stock may be granted under the Directors Plan prior to February
8, 2006. Options may be granted under the Directors Plan by the Company at such
times as may be determined by the Board's Compensation Committee. Currently,
5,000 options have been granted under the Directors Plan to Mr. Castrucci. The
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Company also granted Mr. Castrucci an additional 5,000 options outside of the
Directors Plan at the time he first agreed to serve as a director for the
Company as further inducement for him to serve as a director.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board met 11 times during fiscal year 1997 and during that same period acted
four times without a meeting by unanimous written consent. Standing committees
of the Board currently include an audit committee and a compensation committee.
The Board does not have a nominating committee.
In fiscal year 1997, all directors attended all meetings of the Board and all
committee meetings of the committees on which such directors served during the
period for which each such director has been a director.
The non-employee directors, Messrs. Patterson (Chairman) and Castrucci, are
presently the members of the Audit Committee. The Audit Committee met two times
during fiscal year 1997. The function of the Audit Committee is to review, with
the Company's independent public accountants, the Company's management, and the
Board, the Company's accounting practices and controls, financial and auditing
issues, and financial reports, including recommending the Company's choice of
independent public accountants, and to make recommendations on all such matters
to the Board. The Audit Committee reviews the results of the examination of the
Company's financial statements by the independent public accountants and the
independent public accountant's opinion thereon.
The non-employee directors, Messrs. Castrucci (Chairman) and Patterson, are
presently the members of the Compensation Committee. The Compensation Committee
met five times during fiscal year 1997. The Compensation Committee reviews the
performance of and establishes the salaries and all other compensation of the
Company's executive officers. The Compensation Committee also administers the
Company's 1996 Employee Stock Option Plan, the Company's 1996 Non-Employee
Directors Stock Option Plan, and the Company's 1996 Stock Purchase Plan and is
responsible for recommending grants of stock options under such plans, subject
to the approval of the Board.
STOCK OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 24, 1998, with
respect to the beneficial ownership of Common Stock by: (i) each stockholder
known by the Company to be the beneficial owner of more than 5% of Common Stock;
(ii) each director; (iii) each Named Executive Officer listed in the Summary
Compensation Table; and (iv) all directors and current executive officers as a
group.
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OF CLASS(2)
- ------------------------------------ ------ ---------
Blue Chip Capital Fund Limited Partnership(3).......................................... 746,000 8.47%
201 East 5th Street
Cincinnati, Ohio 45202
J. Brian Patsy......................................................................... 2,279,000 25.88%
One Financial Way, Suite 400
Cincinnati, Ohio 45242-5859
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Eric S. Lombardo....................................................................... 2,161,000 24.54%
One Financial Way, Suite 400
Cincinnati, Ohio 45242-5859
George E. Castrucci(4)................................................................. 7,500 *
Z. David Patterson(3).................................................................. 746,000 8.47%
Robert F. Golden(5)...................................................................... 179,434 2.04%
Thomas E. Perazzo(6)................................................................... 41,894 *
Alan J. Hartman(7)....................................................................... 10,000 *
All current directors and executive officers as a group (7 persons).................... 5,449,826 61.89%
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* Represents less than 1%.
1 Unless otherwise indicated below, each person listed has sole voting and
investment power with respect to all shares shown as beneficially owned, subject
to community property laws where applicable. For purposes of this table, shares
subject to stock options are considered to be beneficially owned if by their
terms they may be exercised as of the date of mailing of this Proxy Statement or
if they become exercisable within 60 days thereafter.
2 These percentages assume the exercise of certain currently exercisable stock
options.
3 Mr. Z. David Patterson, a Director of the Company, is also Executive Vice
President of Blue Chip Venture Company, the general partner of Blue Chip Capital
Fund Limited Partnership. Mr. Patterson may be deemed to be the beneficial owner
of such shares and shares investment power with the other officers of Blue Chip
Venture Company.
4 Includes 7,500 shares that are issuable upon the exercise of currently
exercisable options.
5 Includes 179,434 shares that are issuable upon the exercise of currently
exercisable options.
6 Includes 2,000 shares held of record by Mr. Perazzo's wife, and 39,894 shares
that are issuable upon the exercise of currently exercisable options.
7 Includes 8,000 shares that are issuable upon the exercise of currently
exercisable options.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning compensation
earned during fiscal years 1995, 1996, and 1997 by the Company to the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company who held office as of the end of fiscal year
1997 ("Named Executive Officers").
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SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- ------------------ ALL OTHER
STOCK OPTIONS COMPEN-
SALARY(1) BONUS OTHER(2) GRANTED(3) SATION(4)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
--------------------------- -------- ---------- ---------- ----------- ------------------ -----------
J. Brian Patsy 1997 150,000 25,000 - - -
Chairman of the Board, Chief 1996 150,000 25,000 - - -
Executive Officer, and President 1995 99,671 12,000 - - -
Eric S. Lombardo 1997 148,000 25,000 - - -
Executive Vice President 1996 148,000 25,000 - - -
1995 97,500 12,000 - - -
Robert F. Golden 1997 115,000 15,000 - - -
Vice President and Chief Technology 1996 110,000 15,000 23,749(5) - -
Officer 1995 - - - 209,418 -
Thomas E. Perazzo 1997 120,000 35,000 - 15,000 -
Chief Operating Officer, Chief 1996 120,000 25,000 - - -
Financial Officer, and Treasurer 1995 923 - - 59,840 -
Alan J. Hartman 1997 115,000 15,000 - 10,000 -
Vice President and General Counsel, 1996 115,000 15,000 - 12,000 -
and Corporate Secretary 1995 - - - - -
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1 All amounts include amounts contributed by the officers to the Company's
401(k) plan. There was no Company contribution to the plan in any years
reported.
2 Does not include perquisites and other personal benefits, the aggregate amount
of which with respect to each of the Named Executive Officers does not exceed
the lesser of $50,000 or 10% of the total salary and bonus reported for that
year.
3 All amounts reflect the number of options to purchase Common Stock.
4 Term life insurance premiums were paid by the Company for the benefit of each
Named Executive Officer, but only to the extent that such premiums were paid by
the Company for all of its employees.
5 Includes reimbursement of $17,776 for moving expenses, and reimbursement of
health care and other expenses.
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STOCK OPTIONS
The following table sets forth information concerning the grant of stock options
to each of the Named Executive Officers in fiscal year 1997.
OPTION GRANTS IN FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
NUMBER OF OF STOCK PRICE APPRECIATION
SHARES % OF TOTAL FOR OPTION TERM(3)
UNDERLYING OPTIONS GRANTED EXERCISE OR ----------------------------
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME GRANTED FISCAL YEAR 1997(1) ($/SH)(2) DATE ($) ($)
---- ------- -----------------
-------------- ------------- ----------- ------------
J. Brian Patsy 0 0 - - - -
Eric S. Lombardo 0 0 - - - -
Robert F. Golden 0 0 - - - -
Thomas E. Perazzo 15,000 (4) 9.00% 5.00 8-4-07 41,350 101,846
Alan J. Hartman 10,000 (4) 6.00% 5.00 8-4-07 27,566 67,897
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1 Stock options exercisable into 166,500 shares of Common Stock were granted to
all employees of the Company as a group during fiscal year 1997.
2 Options were granted at an exercise price equal to the fair market value per
share at the date of grant.
3 Potential realizable values are net of exercise price, but before taxes
associated with exercise. Amounts represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option term.
The assumed 5% and 10% rates of stock price appreciation are provided in
accordance with rules of the U.S. Securities and Exchange Commission and do not
represent the Company's estimate or projection of the future Common Stock price.
Actual gains, if any, on stock option exercises are dependent on the future
performance of Common Stock, overall market conditions and the option holders'
continued employment through the vesting period. This table does not take into
account any appreciation in the price of Common Stock from the date of grant to
date. The closing price of Common Stock on March 31, 1998 was $5.00.
4 These options were granted on August 5, 1997, are to vest at the rate of
331/3% on August 5, 1998, 1999, and 2000, and are to expire on August 4, 2007.
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The following table sets forth information with respect to the Named Executive
Officers concerning exercises of options during fiscal year 1997 and unexercised
options held as of the end of fiscal year 1997.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY
AT FISCAL OPTIONS AT
SHARES ACQUIRED VALUE YEAR-END (#) FISCAL YEAR-END ($)(1)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
(#) ($) UNEXERCISABLE UNEXERCISABLE
------------------ -------------- ---------------------- ----------------------
J. Brian Patsy 0 0 0/0 0/0
Eric S. Lombardo 0 0 0/0 0/0
Robert F. Golden 0 0 119,364/90,054(2) 107,372/218,007
Thomas E. Perazzo 0 0 19,947/54,893 0/0
Alan J. Hartman 0 0 4,000/18,000 0/0
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1The closing market price for one share of Common Stock on January 31, 1998, the
end of fiscal year 1997, was $4.625. Except for the options described in
footnote 2 below, the exercise price of all options exceeded the fiscal year end
market price.
2 Exercise of 29,620 of exercisable options and of 60,140 of unexercisable
options at $1.00 per share is contingent upon a market share price of not less
than $4.00 per share.
EMPLOYMENT AGREEMENTS
LanVision entered into employment agreements with Messrs. Patsy, Lombardo,
Golden and Perazzo in January 1996 and with Mr. Hartman in June 1996.
Mr. Patsy's agreement extends through January 31, 1999 and provides that he will
serve as the Company's President and/or Chief Executive Officer throughout the
term of the agreement. The agreement establishes his base salary at $150,000,
subject to annual adjustment upward at the discretion of the Compensation
Committee, and provides that LanVision will pay Mr. Patsy a bonus of not less
than $25,000.
Mr. Lombardo's agreement extends through January 31, 1999 and provides that he
will serve as the Company's Executive Vice President, or similar position,
throughout the term of the agreement. The agreement establishes his base salary
at $148,000, subject to annual adjustment upward at the discretion of the
Compensation Committee, and provides that LanVision will pay Mr. Lombardo a
bonus of not less than $25,000.
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Mr. Golden's agreement extends through January 31, 1999 and provides that he
will serve as the Company's Vice President, Development (now Vice President and
Chief Technology Officer) throughout the term of the agreement. The agreement
establishes his base salary at $110,000 (later amended to $115,000), subject to
annual adjustment upward at the discretion of the Compensation Committee, and
provides that LanVision will pay Mr. Golden an annual bonus of not less than
$20,000 (later amended to $15,000).
Mr. Perazzo's agreement extends through January 31, 1999 and provides that he
will serve as the Company's Chief Financial Officer throughout the term of the
agreement. The agreement establishes his base salary at $120,000, subject to
annual adjustment upward at the discretion of the Compensation Committee, and
provides that LanVision will pay Mr. Perazzo an annual bonus of not less than
$25,000. Mr. Perazzo now also serves as Chief Operating Officer.
Mr. Hartman's agreement extends through May 31, 1999 and provides that he will
serve as the Company's General Counsel and Director of Human Resources (now Vice
President and General Counsel) throughout the term of the agreement. The
agreement establishes his base salary at $115,000, subject to adjustment at the
discretion of the Compensation Committee, and provides that LanVision will pay
Mr. Hartman an annual bonus of not less than $15,000.
The employment agreements for each of Messrs. Patsy, Lombardo, Golden, Perazzo,
and Hartman further provide that in the event the employee is terminated by the
Board without cause, the employee terminates the employment agreement due to a
material reduction in his duties or compensation or the employment agreement is
terminated within one year after a change in control, each of Messrs. Patsy and
Lombardo is entitled to severance benefits equal to two and one-half times his
then current annual salary and each of Messrs. Golden, Perazzo, and Hartman is
entitled to severance benefits equal to three-quarters of his then current
annual salary and bonus. Such severance benefits shall be paid in a lump sum
within three months after the termination date. The employment agreements for
Messrs. Patsy, Lombardo, Golden, and Perazzo also provide that during the term
of the agreement, and for a period of two years thereafter for Messrs. Patsy,
Lombardo, and Golden, and one year for Messrs. Perazzo and Hartman, the employee
will not compete with the Company in the healthcare information systems
industry, including serving as an employee, officer, director, consultant,
stockholder, or general partner of any entity other than the Company. In
addition, each of Messrs. Patsy, Lombardo, Golden, Perazzo, and Hartman has
agreed to assign to the Company all of his interest in any developments,
discoveries, inventions, and certain other interests developed by him during the
course of employment with the Company, and not to use or disclose any
proprietary information of the Company at any time during or after the course of
employment with the Company.
COMPENSATION COMMITTEE REPORT
For fiscal year 1997, the Compensation Committee of the Board was at all times
comprised entirely of non-employee directors. The Compensation Committee is
charged with responsibility for reviewing the performance and establishing the
compensation of the Company's executive officers on an annual basis. The
Compensation Committee also administers the Company's 1996 Employee Stock Option
Plan, the Company's 1996 Non-Employee Directors Stock Option Plan, and the
Company's 1996 Stock Purchase Plan and is responsible for recommending grants of
stock options under such plans, unless otherwise directed by the Board.
The fiscal year 1996 compensation plans for the Company's executive officers
were established prior to the appointment of the Compensation Committee pursuant
to the employment agreements with the executive
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officers. The compensation plans provide, for each executive officer, an annual
salary, a minimum bonus, discretionary bonuses, stock options (excluding Messrs.
Patsy and Lombardo), and severance arrangements. The compensation plan for Mr.
Patsy, the Company's Chief Executive Officer and President, was the same for
fiscal year 1997 as it was for fiscal year 1996. In addition, the compensation
plans for the Company's other executive officers were the same for fiscal year
1997 as they were for fiscal year 1996.
The Compensation Committee met five times during fiscal year 1997. On May 8,
1997, the Compensation Committee approved a one-time $10,000 bonus for Mr.
Perazzo in recognition of his extraordinary efforts as Chief Financial Officer
in facilitating the Company's successful initial public offering. For fiscal
year 1997, the Compensation Committee decided not to make any changes to
executive officers compensation, except for the one-time bonus described above
for Mr. Perazzo, and has stated that the current executive officer compensation
shall continue as is into fiscal year 1998, until such time that it determines
that the Company's performance warrants any changes.
The Compensation Committee
George E. Castrucci, Chairman
Z. David Patterson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors serve on the Compensation Committee: George
E. Castrucci and Z. David Patterson. No member of the Compensation Committee is
or was an officer or employee of the Company or any subsidiary of the Company.
No director or executive officer of the Company serves on any board of directors
or compensation committee that compensates any member of the Compensation
Committee.
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on Common Stock
with the cumulative total return on the Nasdaq US Total Return Index and on the
Nasdaq Computer and Data Processing Services Stock Index for the period
commencing April 18, 1996 and ending January 30, 1998, assuming an investment of
$100 and the reinvestment of any dividends.
The comparison in the graph below is based upon historical data and is not
indicative of, nor intended to forecast, the future performance of Common Stock.
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LANVISION STOCK PERFORMANCE
[GRAPHIC]
APRIL 18, 1996(1) JANUARY 31, 1997(2) JANUARY 30, 1998(2)
-------------------- ----------------------- ----------------------
LanVision Systems, Inc. Common Stock $100.00 $ 54.81 $ 35.58
Nasdaq US Total Return Index $100.00 $121.77 144.02
Nasdaq Computer and Data Processing
Services Stock Index $100.00 $122.32 $148.27
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1 The Company's initial public offering commenced on April 18, 1996. For
purposes of this presentation, the Company has assumed that its initial offering
price of $13.00 per share would have been the closing price on April 17, 1996,
the day prior to commencement of trading.
2 Assumes that $100.00 was invested on April 18, 1996 in Common Stock at the
offering price of $13.00 per share and at the closing sales price of each index
on that date and that all dividends were reinvested. No dividends have been
declared on Common Stock. Stockholder returns over the indicated period should
not be considered indicative of future stockholder returns.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to a stockholder agreement among the Company, Blue Chip Capital Fund
Limited Partnership ("Blue Chip"), and Messrs. Patsy and Lombardo, executed in
connection with Blue Chip's purchase of its equity interest in the Company, the
Company is obligated to nominate for election, as a director, a person
designated by Blue Chip as long as Blue Chip beneficially owns at least 8% of
the outstanding Common Stock. Blue Chip currently owns 8.47% of the outstanding
Common Stock. Blue Chip has designated Z. David Patterson as its nominee.
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OTHER SECURITIES FILINGS
The information contained in this Proxy Statement under the heading
"Compensation Committee Report" and "Stock Performance Graph" are not, and
should not be deemed to be, incorporated by reference into any filings of the
Company under the Securities Act of 1933 or the Securities Exchange Act of 1934
that purport to incorporate by reference other U.S. Securities and Exchange
Commission filings made by the Company, in whole or in part, including this
Proxy Statement.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than 10% of Common Stock
(collectively, "Reporting Persons") to file reports of ownership and changes in
ownership with the SEC and NASDAQ. Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received, the Company
believes that with respect to the fiscal year ended January 31, 1998, all the
Reporting Persons complied with all applicable filing requirements.
INDEPENDENT AUDITORS
Ernst & Young LLP served as the independent auditors of the Company for the
fiscal year ended January 31, 1998. At its meeting scheduled to follow the
Annual Meeting, the Board expects to select Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending January 31, 1999.
Representatives of Ernst & Young LLP will be present at the Annual Meeting. They
will have the opportunity to make a statement if they desire to do so and will
be available to respond to appropriate stockholder questions.
OTHER BUSINESS
The Board does not presently intend to bring any other business before the
Annual Meeting, and, so far as is known to the Board, no matters are to be
brought before the Annual Meeting except as specified in the Notice of Annual
Meeting. As to any business that may properly come before the meeting, however,
it is intended that proxies, in the form enclosed, will be voted in respect
thereof in accordance with the judgment of the persons voting such proxies.
Provided a quorum is duly constituted at the Annual Meeting, the affirmative
vote by the holders of the majority of the shares of Common Stock present, in
person or represented by proxy, at the Annual Meeting and entitled to vote on
the matter is required to approve any other matter to be acted upon at the
Annual Meeting. An abstention is counted as a vote "AGAINST" and a broker
non-vote and a withheld vote are not counted for purposes of approving other
matters to be acted upon at the Annual Meeting.
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JANUARY
31, 1998, AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION, WILL BE
MAILED WITHOUT CHARGE TO STOCKHOLDERS UPON WRITTEN REQUEST. REQUESTS SHOULD BE
ADDRESSED TO ALAN J. HARTMAN, CORPORATE SECRETARY, LANVISION SYSTEMS, INC., ONE
FINANCIAL WAY, SUITE 400, CINCINNATI, OHIO 45242-5859. THE FORM10-K INCLUDES
CERTAIN EXHIBITS. COPIES OF THE EXHIBITS WILL BE PROVIDED ONLY UPON RECEIPT OF
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PAYMENT COVERING THE COMPANY'S REASONABLE EXPENSES FOR SUCH COPIES. THE FORM
10-K MAY ALSO BE OBTAINED FROM THE COMPANY'S WEB SITE, HTTP://WWW.LANVISION.COM,
ON THE "FINANCIAL" PAGE VIA "SEC EDGAR'S INFO ON LANVISION."
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Stockholder proposals intended for inclusion in the Company's proxy statement
and form of proxy relating to the Company's 1999 annual meeting of stockholders
must be received by the Company not later than December 26, 1998. Such proposals
should be sent to Alan J. Hartman, Corporate Secretary, LanVision Systems, Inc.,
One Financial Way, Suite 400, Cincinnati, Ohio 45242-5859. The inclusion of any
proposal will be subject to applicable rules of the U.S. Securities and Exchange
Commission, including Rule 14a-8 of the Securities and Exchange Act of 1934.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING
PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THANK YOU FOR YOUR PROMPT
ATTENTION TO THIS MATTER.
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LANVISION SYSTEMS, INC.
ONE FINANCIAL WAY, SUITE 400 THIS PROXY IS SOLICITED ON BEHALF OF
CINCINNATI, OH 45242-5859 THE BOARD OF DIRECTORS OF THE COMPANY
PROXY
The undersigned hereby appoints J. Brian Patsy and Eric S. Lombardo and
each of them, attorneys-in-fact and proxies, with full power of substitution, to
vote as designated below all shares of the Common Stock of LanVision Systems,
Inc. that the undersigned would be entitled to vote if personally present at the
annual meeting of stockholders to be held on May 27, 1998, at 9:30 a.m., and at
any adjournment thereof.
1. ELECTION OF DIRECTORS: J. BRIAN PATSY, ERIC S. LOMBARDO, Z. DAVID PATTERSON, AND GEORGE E. CASTRUCCI.
[ ] FOR all nominees listed above (except as marked below) [ ] WITHHOLD AUTHORITY to vote for all nominees
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on the line below.)
-----------------------------------------------------------------------------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted FOR Proposal 1.
(continued on other side)
The undersigned acknowledges having received from LanVision Systems, Inc.,
prior to the execution of this Proxy, a Notice of Annual Meeting, a Proxy
Statement, and an Annual Report.
Please sign exactly as your name appears below. When shares are held as
joint tenants, each holder should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated: , 1998
------------------------
[STOCKHOLDER NAME AND ADDRESS] [STOCKHOLDER NAME AND NUMBER OF SHARES]
---------------------------------------
(Signature)
---------------------------------------
(Signature if held jointly)
Please mark, sign, date, and return the
Proxy promptly using the enclosed
envelope.
REVOCABLE PROXY