<PAGE> 1
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.
- - - -------------------------------------------------------------------------------
(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): NO FEE REQUIRED (per
SEC Press Release 96-117)
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(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:
N/A
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2) Aggregate number of securities to which transaction applies:
N/A
---------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:* N/A
-----------------------------------
4) Proposed maximum aggregate value of transaction: N/A
--------------
5) Total fee paid: N/A
-----------------------------------------------
[ ] 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: N/A
------------------------------
2) Form, Schedule or Registration Statement No.: N/A
---------------
3) Filing party: N/A
--------------------------------------------
4) Date filed: N/A
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*Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
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, 1997, 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 1998 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 4, 1997 will be
entitled to notice of and to vote at the annual meeting and any adjournment
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ J. Brian Patsy
--------------------------------------
J. Brian Patsy
Chairman of the Board, Chief Executive
Officer, and President
April 25, 1997
- - - -------------------------------------------------------------------------------
IMPORTANT
A PROXY STATEMENT AND PROXY ARE SUBMITTED HEREWITH. 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.
- - - -------------------------------------------------------------------------------
<PAGE> 3
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 1997 annual meeting of stockholders of the Company
("Annual Meeting"). The Annual Meeting will be held on May 27, 1997 at 9:30
a.m., local 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 4, 1997, 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 8,876,500 shares of Common Stock outstanding and entitled
to vote. A majority, or 4,438,251, 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 1996 Annual Report to
Stockholders will be mailed to stockholders on or about April 25, 1997.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Stockholders are entitled to one vote for each share of Common Stock held.
Shares of the 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 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 the 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
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<PAGE> 4
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.
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 4,488,000 shares of the 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 the 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. Mr. Patsy, Mr.
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 the Company's 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, 1997, and for ten days prior to the Annual Meeting, between
the hours of 9:00 a.m. and 4:00 p.m., 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 1998 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 the 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.
2
<PAGE> 5
George E. Castrucci, age 58, 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 44, is a co-founder of the Company, 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 and Secretary of the Company or its predecessor since May, 1990.
Mr. Lombardo has over 22 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 46, is a co-founder of the Company and has
served as President, Treasurer, 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 24 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 60, 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 Mr. Castrucci and Mr. Patterson directors' fees of
(1) $1,000 for each regularly scheduled Board meeting attended, (2) $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 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
3
<PAGE> 6
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.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board met five times at regularly scheduled meetings during fiscal year
1996 and during that same period acted 20 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 1996, all directors attended all meetings of the Board and all
committee meetings of the committees on which the director served during the
period for which he 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 one time
during fiscal year 1996. 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
did not meet during fiscal year 1996, because the fiscal year 1996 compensation
for the Company's executive officers was established prior to the Company's
April 1996 initial public offering pursuant to the employment agreements with
the executive officers. 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 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 25, 1997, with
respect to the beneficial ownership of the Company's Common Stock by: (i) each
stockholder known by the Company to be the beneficial owner of more than 5% of
the Company's 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.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OF CLASS(2)
- - - ------------------------------------ ------------ -----------
<S> <C> <C>
Blue Chip Capital Fund Limited Partnership(3).......................................... 746,000 8.40%
201 East 5th Street
Cincinnati, Ohio 45202
</TABLE>
4
<PAGE> 7
<TABLE>
<S> <C> <C>
J. Brian Patsy......................................................................... 2,279,000 25.67%
One Financial Way, Suite 400
Cincinnati, Ohio 45242-5859
Eric S. Lombardo....................................................................... 2,211,000 24.91%
One Financial Way, Suite 400
Cincinnati, Ohio 45242-5859
Robert F. Golden(4).................................................................... 119,364 1.34%
Thomas R. McLean(5).................................................................... 21,974 *
Thomas E. Perazzo(6)................................................................... 21,974 *
George E. Castrucci(7)................................................................. 3,750 *
Z. David Patterson(3).................................................................. 746,000 8.40%
All current directors and executive officers as a group (7 persons(8))................. 5,386,888 60.67%
</TABLE>
- - - ---------
* 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, which options have not in fact been exercised.
(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 119,364 shares which are issuable upon the exercise of currently
exercisable, but unexercised, options.
(5) Includes 19,974 shares which are issuable upon the exercise of currently
exercisable, but unexercised, options. Mr. McLean ceased being an
executive officer of the Company on April 8, 1997.
(6) Includes 2,000 shares held of record by Mr. Perazzo's wife; and 19,974
shares which are issuable upon the exercise of currently exercisable, but
unexercised, options.
(7) Includes 3,750 shares which are issuable upon the exercise of currently
exercisable, but unexercised, options.
(8) Mr. McLean's shares are excluded, since Mr. McLean ceased being an
executive officer of Company on April 8, 1997. Alan J. Hartman's shares
are included. Mr. Hartman is an executive officer of the Company, but is
not a Named Executive Officer for fiscal year 1996.
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<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid during fiscal year 1996 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 1996
("Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER LONG-TERM
ANNUAL COMPENSATION ANNUAL COMPENSATION ALL OTHER
-------------------------- COMPEN- AWARDS COMPEN-
SALARY(1) BONUS(2) SATION(3) STOCK OPTIONS(4) SATION(5)
NAME AND PRINCIPAL POSITION YEAR $ $ $ (#) ($)
--------------------------- -------- ---------- ---------- ----------- ------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
J. Brian Patsy 1996 150,000 29,833 - - 520
Chairman of the Board,
Chief Executive Officer and
President
Eric S. Lombardo 1996 148,000 29,833 - - 456
Executive Vice President
Robert F. Golden 1996 110,000 21,249 23,749(6) - -
Chief Technology Officer
Thomas R. McLean(7) 1996 119,166 63,583 - 59,840 50
Former Vice President, Sales and
Marketing
Thomas E. Perazzo 1996 120,000 25,000 - - 30
Chief Financial Officer
</TABLE>
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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) Includes bonuses accrued for fiscal year 1996 to be paid in fiscal year
1997.
(3) 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.
(4) All amounts reflect options to purchase common stock.
(5) All amounts reflect group term life and disability insurance.
(6) Includes reimbursement of $17,776 for moving expenses, and reimbursement
of health care and other expenses.
(7) Mr. McLean joined the Company on March 1, 1996, and compensation is
included from that date through the end of the current fiscal year. Mr.
McLean ceased being an executive officer of the Company on April 8, 1997.
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<PAGE> 9
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options to each of the Named Executive Officers in fiscal year 1996.
OPTION GRANTS IN FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
NUMBER OF OF STOCK PRICE APPRECIATION
SHARES % OF TOTAL FOR OPTION TERM(3)
UNDERLYING OPTIONS GRANTED EXERCISE OR ----------------------------
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME GRANTED FISCAL YEAR 1996(1) ($/SH)(2) DATE ($) ($)
---- ------- ------------------- -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Brian Patsy 0 0 - - - -
Eric S. Lombardo 0 0 - - - -
Robert F. Golden 0 0 - - - -
Thomas R. McLean 59,840(4) 42.19% 10.40 7-7-97 13,380 26,626
Thomas E. Perazzo 0 0 - - - -
</TABLE>
- - - ---------
(1) Stock options exercisable into 131,840 shares of Common Stock were granted
to all employees of the Company as a group during fiscal year 1996.
(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 the 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 the Common Stock from the date of grant to
date. The closing price of the Company's Common Stock on March 31, 1997
was $4.50.
(4) These options were granted on March 20, 1996, were to vest at the rate of
33-1/3% on February 1, 1997, 1998, and 1999, and were to expire on January
10, 2006. Due to Mr. McLean's cessation of employment with the Company on
April 8, 1997, only 19,974 of such options have and will vest. These
vested options will expire on July 7, 1997, if not exercised prior to that
date.
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<PAGE> 10
The following table sets forth information with respect to the Named Executive
Officers concerning exercises of options during fiscal year 1996 and
unexercised options held as of the end of fiscal year 1996.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY
AT FISCAL OPTIONS AT
SHARES ACQUIRED VALUE YEAR-END (#) FISCAL YEAR-END($)(1)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
(#) ($) UNEXERCISABLE UNEXERCISABLE
------------------ -------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
J. Brian Patsy........ 0 0 0/0 0/0
Eric S. Lombardo...... 0 0 0/0 0/0
Robert F. Golden...... 0 0 59,830/149,588(2) 0/549,780
Thomas R. McLean(3) 0 0 0/59,840 0/0
Thomas E. Perazzo..... 0 0 0/59,840 0/0
</TABLE>
- - - ---------
(1) The closing market price for one share of the Company's Common Stock on
January 31, 1997, the end of fiscal year 1996, was $7.125. 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 89,760 of unexercisable options at $1.00 per share is
contingent upon a market share price of not less than $4.00 per share.
(3) Mr. McLean ceased being an executive officer of the Company on April 8,
1997.
EMPLOYMENT AGREEMENTS
LanVision entered into employment agreements with Messrs. Patsy, Lombardo,
Golden and Perazzo in January 1996 and with Mr. McLean in March 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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<PAGE> 11
Mr. Golden's agreement extends through January 31, 1999 and provides that he
will serve as the Company's Vice President, Development (now known as Chief
Technology Officer) throughout the term of the agreement. The agreement
establishes his base salary at $110,000, subject to annual adjustment upward at
the discretion of the Compensation Committee, and provides that LanVision will
pay Mr. Golden a bonus of not less than $20,000.
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 a bonus of not less than $25,000.
Mr. McLean's agreement established his base salary at $130,000, and provided
that LanVision would pay Mr. McLean a bonus of not less than $30,000. Mr.
McLean's employment agreement terminated on April 8, 1997.
The employment agreements for each of Messrs. Patsy, Lombardo, Golden, and
Perazzo 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, and Perazzo 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 Mr. Perazzo, 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, and Perazzo 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 1996, 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 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.
The fiscal year 1996 compensation for the Company's executive officers was
established prior to the appointment of the Compensation Committee pursuant to
the employment agreements with the executive officers. The Compensation
Committee did not meet during fiscal year 1996. However, it has already met in
fiscal year 1997, and at that meeting has stated that the executive officer
compensation shall continue unchanged. The Compensation Committee is in the
process of setting the Company's overall compensation
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philosophy, reviewing current executive officer compensation in light of market
practices, and establishing an annual review structure. The Compensation
Committee expects to complete this process by the middle of fiscal year 1997.
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 the
Company's Common Stock with the cumulative total return on the Nasdaq Total
Return Index and on the Nasdaq Computer and Data Processing Services Stock
Index for the period commencing April 18, 1996 and ending January 31, 1997,
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 the Common
Stock.
[STOCK PERFORMANCE GRAPH]
10
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<TABLE>
<CAPTION>
APRIL 18, 1996(1) JANUARY 31, 1997(2)
----------------------- ------------------------
<S> <C> <C>
LanVision Systems, Inc. Stock $100.00 $54.81
Nasdaq Total Return Index $100.00 $121.86
Nasdaq Computer and Data Processing
Services Stock Index $100.00 $122.44
- - - ---------
</TABLE>
(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 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 the Company's
Common Stock at the initial offering price of $13.00 and at the closing
sales price of each index on that date and that all dividends were
reinvested. No dividends have been declared on the Company's 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 n 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 Company's outstanding Common Stock. Blue Chip currently owns 8.4% of the
Company's outstanding Common Stock. Blue Chip has designated Z. David Patterson
as its nominee.
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 the Company's
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, 1997, all the
Reporting Persons complied with all applicable filing requirements.
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<PAGE> 14
INDEPENDENT AUDITORS
The Board has selected Ernst & Young LLP as the Company's independent auditor
for the year ending January 31, 1998. Ernst & Young LLP served as the
independent auditor of the Company for the year ended January 31, 1997.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting. They will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions.
OTHER BUSINESS
The Board does not presently intend to bring any other business before the
meeting, and, so far as is known to the Board, no matters are to be brought
before the 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 the 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, 1997, 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, GENERAL COUNSEL, 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
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 1998 annual meeting of stockholders
must be received by the Company not later than December 26, 1997. Such
proposals should be sent to Alan J. Hartman, General Counsel, LanVision
Systems, Inc., One Financial Way, Suite 400, Cincinnati, Ohio 45242-5859. The
inclusion of any
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<PAGE> 15
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.
BY ORDER OF THE BOARD OF DIRECTORS
/s/J. Brian Patsy
-----------------------------------
J. Brian Patsy
Chairman of the Board, Chief
Executive Officer and President
April 25, 1997
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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<PAGE> 16
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
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 Shareholders to be held on May 27, 1997, 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.
<TABLE>
<S> <C>
[ ] 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.)
---------------------------------------------------------------------------------------
</TABLE>
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 the Meeting, a Proxy
Statement, and an Annual Report.
Please sign exactly as your name appears below. When shares are held as
joint tenants, both 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: _______________________, 1997
[SHAREHOLDER NAME AND ADDRESS] [SHAREHOLDER NAME AND NUMBER OF SHARES]
-------------------------------------
(Signature)
-------------------------------------
(Signature if held jointly)
Please mark, sign, date and return
the proxy card promptly using the
enclosed envelope.
REVOCABLE PROXY
