<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12.
</TABLE>
LANVISION SYSTEMS, INC.
------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
------------------------------------------------------------------------
(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: .......
(2) Aggregate number of securities to which transaction applies: ..........
(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): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] 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: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
LANVISION SYSTEMS, INC.
4700 DUKE DRIVE, SUITE 170
MASON, OHIO 45040-9374
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2000
To the Stockholders of LanVision Systems, Inc.:
You are cordially invited to attend the Annual Meeting of the Stockholders
of LanVision Systems, Inc. to be held on May 24, 2000, at 9:30 a.m., Eastern
Time, at the offices of the Company, 4700 Duke Drive, Suite 170, Mason, Ohio
45040-9374, for the following purposes:
1. Election of four directors each to hold office until a successor is
duly elected and qualified at the 2001 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, 2000 will
be entitled to notice of, and to vote at, the Annual Meeting and any adjournment
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
J. BRIAN PATSY
President and Chief Executive Officer
Mason, Ohio
April 21, 2000
IMPORTANT
A PROXY STATEMENT AND PROXY ARE SUBMITTED HEREWITH. AS A STOCKHOLDER, YOU ARE
URGED TO COMPLETE AND MAIL 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. STOCKHOLDERS OF RECORD ATTENDING THE
MEETING MAY PERSONALLY VOTE ON ALL MATTERS WHICH ARE CONSIDERED IN WHICH EVENT
THE SIGNED PROXIES ARE REVOKED. 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 MAILING YOUR PROXY PROMPTLY.
<PAGE> 3
LANVISION SYSTEMS, INC.
4700 DUKE DRIVE, SUITE 170
MASON, OHIO 45040-9374
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 2000 annual meeting of stockholders of the Company
("Annual Meeting"). The Annual Meeting will be held on May 24, 2000 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 offices of the Company, 4700 Duke Drive, Suite 170, Mason, Ohio 45040-9374.
All holders of record of the Company's common stock, par value $.01 per share
("Common Stock"), on April 3, 2000, 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 8,848,093 shares of Common Stock outstanding and entitled
to vote. A majority, or 4,424,047, 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 1999 Annual Report
to Stockholders will be mailed to stockholders on or about April 21, 2000.
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", or
"AGAINST", 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.
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 4,440,200 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")
1
<PAGE> 4
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 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 "Stock Ownership by
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 offices of the
Company, 4700 Duke Drive, Suite 170, Mason, Ohio 45040-9374, on May 24, 2000,
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 2001 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. 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. A broker non-vote and a withheld vote are not counted for purposes of
electing the directors and will have no effect on the election. 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.
George E. Castrucci, age 62, 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, The Ohio National Fund,
Inc., and ONE Fund, Inc.
Eric S. Lombardo, age 47, 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 24 years of experience in the information technology industry. From 1983 to
1990, Mr. Lombardo served as Major Account Executive for Wang Laboratories,
Cincinnati, Ohio. 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 49, 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 26
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
2
<PAGE> 5
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 63, 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 or 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
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 eleven times during fiscal year 1999 and during that same
period acted two 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 1999, 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 1999. 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 one time during fiscal year 1999. 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.
3
<PAGE> 6
STOCK OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 3, 2000,
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.
<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 8.44%
250 East 5th Street
Cincinnati, Ohio 45202
The HillStreet Fund, L.P.(6)................................ 750,000 7.82%
300 Main Street
Cincinnati, Ohio 45202
J. Brian Patsy.............................................. 2,279,200 25.79%
4700 Duke Drive, Suite 170
Mason, Ohio 45040-9374
Eric S. Lombardo............................................ 2,161,000 24.45%
4700 Duke Drive, Suite 170
Mason, Ohio 45040-9374
George E. Castrucci(4)...................................... 18,750 *
Z. David Patterson(3)....................................... 746,000 8.44%
Thomas E. Perazzo(5)........................................ 92,507 *
All current directors and executive officers as a group (5
persons).................................................. 5,298,704 59.26%
</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 or warrants 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 and warrants.
(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 8,750 shares that are issuable upon the exercise of currently
exercisable options. Mr. Castrucci acquired 10,000 shares in the open market
on May 27, 1999.
(5) Includes 2,000 shares held of record by Mr. Perazzo's wife, and 77,174
shares that are issuable upon the exercise of currently exercisable options
and 13,333 shares issuable in connection with outstanding stock options
exercisable within the next sixty days. Pursuant to the terms of his amended
employment agreement with the Company, Mr. Perazzo will cease to be an
executive officer of the Company after April 30, 2000. He will continue as a
Company employee to assist with various financial and transitional matters
through October 31, 2000. See "Executive Compensation -- Employment
Agreements."
(6) Registrant has issued a warrant in connection with the issuance of a
$6,000,000 Note to purchase 750,000 shares of Common Stock of the Company at
$3.87 per share at any time through July 16, 2008.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table is a summary of certain information concerning the
compensation earned during the last three fiscal years by the Company's Chief
Executive Officer and the Company's two other executive officers. These
individuals are collectively referred to herein as the "Named Executive
Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
------------------------------- STOCK OPTIONS ALL OTHER
SALARY(1) BONUS OTHER(2) GRANTED(3) COMPENSATION(4)
NAME AND PRINCIPAL POSITION(5) YEAR ($) ($) ($) (#) ($)
- ------------------------------ ---- --------- ------ -------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Brian Patsy 1999 150,000 39,600 -- -- --
Chairman of the Board, Chief 1998 150,000 25,000 -- -- --
Executive Officer and
President 1997 150,000 25,000 -- -- --
Eric S. Lombardo 1999 148,000 39,600 -- -- --
Executive Vice President 1998 148,000 25,000 -- -- --
and Corporate Secretary 1997 148,000 25,000 -- -- --
Thomas E. Perazzo 1999 135,000 39,600 -- 40,000 --
Chief Operating Officer, Chief 1998 120,000 40,000 -- 7,000 --
Financial Officer and
Treasurer 1997 120,000 35,000 -- 15,000 --
</TABLE>
- ---------------
(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 $50,000 or 10% of the total salary and bonus
reported for that year.
(3 )All amounts reflect the number of options to purchase Common Stock.
(4 )Term life insurance premiums were paid by the Company for the benefit of
each Named Executive Officer, but only to the extent that such premiums were
paid by the Company for all of its employees.
(5 )For additional information on Messrs. Patsy and Lombardo see Nominees for
Election as Directors. Mr. Perazzo is 46 years old and served in the
positions as noted above during fiscal year 1999. As indicated under "Stock
Ownership By Certain Beneficial Owners And Management", Mr. Perazzo will
cease to be an executive officer of the Company after April 30, 2000. All
officers serve at the pleasure of the Board of Directors and are appointed
annually to their current positions.
5
<PAGE> 8
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options to each of the Named Executive Officers in fiscal year 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
NUMBER OF APPRECIATION
SHARES % OF TOTAL FOR OPTION TERM(3)
UNDERLYING OPTIONS GRANTED EXERCISE OR --------------------
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME GRANTED FISCAL YEAR 1998(1) ($/SH)(2) DATE ($) ($)
- ---- ---------- ------------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
J. Brian Patsy......... 0 0 -- -- -- --
Eric S. Lombardo....... 0 0 -- -- -- --
Thomas E. Perazzo...... 40,000 (4) 39.6% 1.375 5-25-09 30,323 74,687
</TABLE>
- ---------------
(1) Stock options exercisable into 101,000 shares of Common Stock were granted
to all employees of the Company as a group during fiscal year 1999.
(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 US 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, 2000 was $1.969.
(4) These options were granted on May 26, 1999, and vest as follows: 5,000 on
February 1, 2000; 13,333 on each of May 26, 2000 and 2001; and the remainder
on May 26, 2002. All such options will expire on the earlier of ninety days
after termination of employment or May 26, 2009.
The following table sets forth information with respect to the Named
Executive Officers concerning exercises of options during fiscal year 1999 and
unexercised options held as of the end of fiscal year 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY
AT FISCAL OPTIONS AT
SHARES ACQUIRED VALUE YEAR-END (#) FISCAL YEAR-END ($)(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
Thomas E. Perazzo................. 0 0 72,174/49,666 0/0(2)
</TABLE>
- ---------------
(1) The closing market price for one share of Common Stock on January 31, 2000,
the end of fiscal year 1999, was $1.25.
(2) None of the current outstanding options are in-the-money at the fiscal year
end.
6
<PAGE> 9
EMPLOYMENT AGREEMENTS
LanVision entered into employment agreements with Messrs. Patsy, Lombardo,
and Perazzo in January 1996. The agreements with Messrs. Patsy and Lombardo were
amended in September 1998. Mr. Perazzo's agreement was amended in January 1999
and February 2000.
Mr. Patsy's agreement was amended on September 25, 1998 and provides that
he will serve as the Company's President and/or Chief Executive Officer
throughout the term of the agreement ending March 31, 2001. 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 was amended on September 25, 1998 and provides
that he will serve as the Company's Executive Vice President, or similar
position, throughout the term of the agreement ending March 31, 2001. 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.
Mr. Perazzo's agreement was amended on January 29, 1999 and February 1,
2000. As amended, his agreement provides that he will serve as the Company's
Chief Financial Officer through April 30, 2000 and thereafter, as a non-officer
employee through October 31, 2000. The agreement established his base salary at
$120,000, subject to annual adjustment upward at the discretion of the
Compensation Committee, and provided that LanVision will pay Mr. Perazzo an
annual bonus of not less than $25,000. For the period May 1, 2000 through
October 31, 2000, the Company will pay Mr. Perazzo an amount equal to
one-quarter of his 1999 salary and bonus and he will be paid an hourly rate for
certain additional services that may be mutually agreed to by the Company and
Mr. Perazzo. The only other benefit to be received by Mr. Perazzo was the early
vesting of 5,000 stock options in February 2000 that would otherwise not have
vested prior to his termination of employment.
The employment agreements for each of Messrs. Patsy and Lombardo 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. Such severance benefits shall be paid in a lump sum within three months
after the termination date. The employment agreements for Messrs. Patsy,
Lombardo and Perazzo also provide that during the term of the agreement, and for
a period of two years thereafter for Messrs Patsy and Lombardo, 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, 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 1999, 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 compensation plans provide, for each executive officer, an annual
salary, a minimum bonus, a potential for discretionary bonuses, stock options
(excluding Messrs. Patsy and Lombardo), and severance arrangements. The
compensation plans for Mr. Patsy, the Company's Chief Executive Officer and
President, Mr. Lombardo, the Company's Executive Vice President, and Mr.
Perazzo, the Company's Chief Operating Officer, Chief Financial Officer and
Treasurer were virtually the same for fiscal year 1999 as they were for fiscal
years 1998 and 1997,
7
<PAGE> 10
except for a 12.5% increase in Mr. Perazzo's base salary and a modification of
the bonuses payable to the Company's executive officers and other key employees.
The 1999 bonuses were calculated based upon management's ability to improve the
Company's results of operations. If the results of operations target were
achieved, then each Executive Officer would receive 100% of a targeted bonus
amount established by the Compensation Committee for each Executive Officer. If
the target was exceeded, the bonus payable would be a multiple of the excess
percent. If the target was not met, the bonus payable would be reduced by a
multiple of the percent missed down to the guaranteed minimum included in their
employment agreements. Because management did not achieve 100% of the target in
fiscal 1999, the bonuses earned by the Executive Officers in 1999 were less than
the targeted amounts.
The Compensation Committee believes that stock options can be an effective
incentive to attract and retain Executive Officers and key employees of the
Company and to encourage stock ownership by these persons so that they acquire
or increase their proprietary interest in the success of the Company. The
Compensation Committee has not granted any options to Messrs. Patsy or Lombardo
in light of their existing substantial ownership in the Company. However, in
fiscal year 1999, the Compensation Committee determined that a grant of 40,000
stock options to Mr. Perazzo under the 1996 Employee Stock Option Plan was
appropriate in furtherance of the above objectives.
The Compensation Committee met one time during fiscal year 1999. For fiscal
year 1999, the Compensation Committee decided not to make any changes to
Executive Officers compensation, except for the increase in the base salary of
Mr. Perazzo. For fiscal year 2000, the Compensation Committee has increased the
base compensation of Mr. Patsy & Mr. Lombardo by 5%.
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 the 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.
8
<PAGE> 11
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 31, 2000, 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.
STOCK PERFORMANCE GRAPH
<TABLE>
<CAPTION>
APRIL 18, JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31,
1996(1) 1997(2) 1998(2) 1999(2) 2000(2)
--------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
LanVision Systems, Inc. Common
Stock........................... $100.00 $ 54.78 $ 35.54 $ 20.92 $ 9.62
Nasdaq US Total Return Index...... $100.00 $121.88 $143.86 $225.04 $283.21
Nasdaq Computer and Data
Processing Services Stock
Index........................... $100.00 $122.31 $148.13 $297.64 $382.11
</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 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.
9
<PAGE> 12
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 8.44% of the 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 US 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, 2000,
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, 2000. 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, 2001.
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. No stockholder has informed the Company of any intention to propose any
other matter to be acted upon at the Annual Meeting. Accordingly, the persons
named in the accompanying proxy are allowed to exercise their discretionary
authority to vote upon any such proposal without the matter having been
discussed in this proxy statement. As to any business that may properly come
before the meeting, 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.
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
JANUARY 31, 2000, AS FILED WITH THE US SECURITIES AND EXCHANGE COMMISSION, WILL
BE MAILED WITHOUT CHARGE TO STOCKHOLDERS UPON WRITTEN REQUEST. REQUESTS SHOULD
BE ADDRESSED TO INVESTOR RELATIONS, LANVISION SYSTEMS, INC., 5481 CREEK ROAD,
CINCINNATI, OHIO 45242-5859. THE FORM 10-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 AND EXHIBITS MAY
ALSO BE OBTAINED FROM THE COMPANY'S WEB SITE, HTTP://WWW.LANVISION.COM, ON
10
<PAGE> 13
THE "FINANCIAL" PAGE VIA "SEC EDGAR'S INFO ON LANVISION" OR DIRECTLY FROM THE US
SECURITIES AND EXCHANGE COMMISSION WEB SITE,
HTTP://WWW.SEC.GOV/CGI-BIN/SRCH-EDGAR.
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 2001 annual meeting of
stockholders must be received by the Company not later than December 26, 2000.
Such proposals should be sent to the Corporate Secretary, LanVision Systems,
Inc., 4700 Duke Drive, Suite 170, Mason, Ohio 45040-9374. The inclusion of any
proposal will be subject to applicable rules of the US Securities and Exchange
Commission, including Rule 14a-8 of the Securities and Exchange Act of 1934. Any
stockholder who intends to propose any other matter to be acted upon at the 2001
annual meeting of Stockholders must inform the Company no later than March 10,
2001. If notice is not provided by that date, the persons named in the Company's
proxy for the 2001 annual meeting will be allowed to exercise their
discretionary authority to vote upon any such proposal without the matter having
been discussed in the proxy statement for the 2001 annual meeting.
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.
By Order of the Board of Directors,
J. Brian Patsy
President and Chief Executive Officer
Mason, Ohio
April 21, 2000
11
<PAGE> 14
LANVISION SYSTEMS, INC.
4700 DUKE DRIVE, SUITE 170 THIS PROXY IS SOLICITED ON BEHALF OF
MASON, OHIO 45040-9374 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 24, 2000, 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 [ ] WITHHOLD AUTHORITY
(except as marked below) 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: ________________________________, 2000
[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
