SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 18, 1997
LCA-Vision Inc.
(Exact name of Registrant as specified in its Charter)
Delaware 0-27610 11-2882328
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification Number)
incorporation)
7840 Montgomery Road, Cincinnati, Ohio 45236
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513) 792-9292
N/A
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On August 18, 1997, LCA-Vision Inc. ("LCAV") closed an
acquisition of assets ("Closing" or "Closing Date"). On July 23,
1997, LCAV, Summit Technology, Inc. ("Summit") and Refractive
Centers International, Inc., a wholly-owned subsidiary of Summit
("RCII"), entered into an Acquisition Agreement (the "Agreement"),
pursuant to which LCA at Closing purchased from Summit 5,000,000
shares of RCII's Common Stock, par value $.01(which represented 100%
of the issued and outstanding shares of Common Stock of RCII held by
Summit) in exchange for 16,164,361 newly-issued shares of LCAV
Common Stock. Nineteen (19) individuals (the "Option Holders") held
options for 312,500 shares of RCII Common Stock, 278,767 of which
were exercisable at Closing ("Exercisable Shares"). All 19 of the
Option Holders exercised their options prior to Closing and LCAV
also purchased all 278,767 shares of RCII Common Stock owned by the
Option Holders in exchange for 901,218 newly-issued shares of LCAV
Common Stock. As a result of these transactions, LCAV in the
aggregate issued 17,065,579 shares of its Common Stock and came to
own 100% of the issued and outstanding RCII Common Stock. The per
share consideration for RCII Common Stock was a number of shares of
LCAV Common Stock equal to the quotient of (a) 17,065,579 divided by
(b) the sum of the number of shares of issued and outstanding RCII
Common Stock on the Closing Date (5,278,767 shares) plus the number
of shares of RCII Common Stock into which options to purchase shares
of RCII Common Stock were exercisable on the Closing Date (0
shares).
RCII owns and operates 19 laser vision correction centers and
has a working relationship with six (6) additional treatment sites
at university medical centers/hospitals, all in the U.S.A.
(collectively, the "Centers"). LCAV intends to continue to own and
operate or work with, as applicable, the Centers, subject to an
ongoing evaluation of the costs and benefits of maintaining each
Center, the economies of scale and market share created by the
addition of the Centers to similar centers already owned and
operated by LCAV and LCAV's business generally.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired
REFRACTIVE CENTERS INTERNATIONAL, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditors' Report F-2
Consolidated Balance Sheets as of December 31,
1996 and 1995 F-3
Consolidated Statements of Operations for the
Years Ended December 31, 1996, 1995 and 1994 F-4
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1996, 1995 and 1994 F-5
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1996, 1995 and 1994 F-6
Notes to Consolidated Financial Statements F-7
Independent Auditors' Report
The Board of Directors and Stockholders
Refractive Centers International, Inc.:
We have audited the accompanying consolidated balance sheets of
Refractive Centers International, Inc. and subsidiaries as of
December 31, 1996 and 1995, and the related consolidated statements
of operations, stockholder's equity, and cash flows for each of the
years in the three-year period ended December 31, 1996. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Refractive Centers International, Inc. and subsidiaries
at December 31, 1996 and 1995, and the results of their operations
and their cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
August 8, 1997<PAGE>
REFRACTIVE CENTERS INTERNATIONAL, INC. AND SUBSIDIARIES
<TABLE>
Consolidated Balance Sheets
December 31, 1996 and 1995
(in thousands, except per share amounts)
<CAPTION>
December 31,
1996 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $10,000 $ 329
Receivables 194 166
Prepaid expenses and other current
assets 126 165
Prepaid advertising 40 1,829
------ -----
Total current assets 10,360 2,489
Property and equipment, net 8,097 2,591
Other assets 105 113
Organization costs, net 890 417
------ -----
TOTAL ASSETS $19,452 $ 5,610
====== ======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 239 $ 1,396
Accrued expenses 1,009 731
Current maturities of long term debt - 281
----- ------
Total current liabilities 1,248 2,408
Long term debt, less current maturities - 712
Total liabilities 1,248 3,120
----- ------
Commitments and contingencies
Stockholder's equity:
Common stock, $.01 par value.
Authorized 10,000 shares;
issued 5,000 shares in 1996 and
in 1995 50 50
Investment by Parent 47,897 13,426
Accumulated deficit (29,743) (10,986)
-------- ------
Total stockholder's equity 18,204 2,490
-------- ------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY $19,452 $ 5,610
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.<PAGE>
<TABLE>
REFRACTIVE CENTERS INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 1996, 1995 and 1994
(in thousands, except per share amounts)
<CAPTION>
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Revenues:
Patient service revenues $ 1,025 $ 824 $ 839
Management fee revenues 1,993 - -
------- ----- ------
Total revenues 3,018 824 839
Operating expenses:
Clinic 6,317 1,617 1,360
Marketing and advertising 6,994 1,263 30
Parent company administrative
services 1,042 - -
General and administrative 6,149 2,348 1,728
------- ------ -----
Total operating expenses 20,502 5,228 3,118
------- ------ -----
Loss from operations (17,484) (4,404) (2,279)
Interest expense, net 1,273 138 87
------- ------ ------
Net loss $(18,757) $(4,542) $(2,366)
======== ======= ======
Net loss per share $ (3.75) $ (.91) $ (.47)
======== ======= ======
Weighted average number of
common shares outstanding 5,000 5,000 5,000
======== ======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
REFRACTIVE CENTERS INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholder's Equity
Years ended December 31, 1996, 1995 and 1994
(in thousands)
<CAPTION>
Investment
Common Stock by Accumulated Stockholder's
Shares Par value Parent deficit equity
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993 5,000 $50 $ 5,414 $ (4,078) $ 1,386
Net loss - - - (2,366) (2,366)
Working Capital Investment by
Parent - - 1,534 - 1,534
------ ---- ------ ------- --------
Balance at December 31, 1994 5,000 $50 $ 6,948 $ (6,444) $ 554
====== ==== ====== ======= ========
Net loss - - - (4,542) (4,542)
Working Capital Investment
by Parent - - 6,478 - 6,478
------ ---- ------ -------- --------
Balance at December 31, 1995 5,000 $50 $13,426 $(10,986) $ 2,490
===== ==== ====== ======== =======
Net loss - - - (18,757) (18,757)
Working Capital Investment
by Parent - - 8,171 - 8,171
Assumption of debt by Parent - - 16,300 - 16,300
------ ---- ------ -------- --------
Contribution of cash and cash
equivalents
by Parent - - 10,000 - 10,000
------ ---- ------ -------- ------
Balance at December 31, 1996 5,000 $50 $47,897 $(29,743) $ 18,204
====== ==== ====== ======== ======
</TABLE>
See accompanying notes to consolidated financial statements.<PAGE>
<TABLE>
REFRACTIVE CENTERS INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
(in thousands)
<CAPTION>
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(18,757) $(4,542) $(2,366)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 1,156 416 425
Changes in operating assets and liabilities:
Receivables (28) (43) (123)
Prepaid expenses and other current assets
and prepaid advertising 1,828 (1,782) (184)
Accounts payable (1,158) 1,397 (4)
Accrued expenses 279 741 (115)
------- ------ ------
Net cash used by operating activities (16,680) (3,813) (2,367)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (7,413) (1,687) (41)
Change in other assets (565) (501) 53
------ ------- ------
Net cash provided (used) by investing activities (7,978) (2,188) 12
------ ------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (repayments) of long-term debt 16,158 (259) 822
Investment by Parent 18,171 6,478 1,534
------ ------- ------
Net cash provided by financing
activities 34,329 6,219 2,356
------ ------- ------
Increase in cash and cash
equivalents 9,671 218 1
Cash and cash equivalents at beginning of year 329 111 110
------ ------ ------
Cash and cash equivalents at end of year $ 10,000 $ 329 $ 111
====== ====== ======
Supplemental disclosures
Interest paid $ 1,222 $ 176 $ 109
======= ====== ======
Debt assumed by Parent $ 16,300 $ - $ -
======= ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Notes to Consolidated Financial Statements
(in thousands, except share and per share amounts)
Years ended December 31, 1996, 1995, and 1994
1. Nature of Business
Refractive Centers International, Inc. (the "Company") owns and
manages free-standing vision centers that provide primarily excimer
laser refractive surgery procedures to correct myopia
("nearsightedness"). This procedure is also called photorefractive
keratectomy ("PRK"). At December 31, 1996, the Company had nineteen
U.S. centers in operation. Of the nineteen centers, the company
directly owns seven centers ("Company Centers"), operates five
centers pursuant to management and stock restriction agreements with
professional corporations ("P.C. Centers"), and operates seven
centers ("Satellite Centers") in conjunction with management
agreements with two teaching hospitals. The Company also has
contracts with four additional teaching hospitals whereby the
Company receives fees for certain Company provided services.
Prior to opening its U.S. centers in 1996, the Company operated
centers in Europe. The Company ceased all European operations in
April of 1996 (see note 9).
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company is a wholly-owned subsidiary of Summit Technology, Inc.
("the Parent"). The Company has not operated as a stand alone
entity and its operating losses have been funded by the Parent. In
addition, since the Company began U.S. operations in 1996,
administrative services have been provided by the Parent and certain
allocations have been made to present the financial statements of
the Company as a separate entity. Management believes that the
allocation methods are reasonable. No provisions for income taxes
has been made since the Company has incurred operating losses since
inception. Interest expense has been recorded on all external debt
and no interest has been charged to the Company by the Parent for
advances made since the Company's primary source of financing has
been through equity.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries after elimination of
material intercompany accounts and transactions.
Revenue Recognition
The Company recognizes revenue on procedures at Company Centers when
the procedures are performed. The Company recognizes revenue for its
Satellite and P.C. Centers pursuant to the fee arrangements in the
management agreements. The Company recognizes fees from its
contracts with teaching hospitals when the services are performed.
Cash Equivalents
Cash equivalents consist of certificates of deposit and highly
liquid debt instruments with original maturities of three months or
less.
Financial Instruments
The carrying amounts of cash and cash equivalents, accounts payable
and accrued expenses approximate fair value because of the short-term maturity
of these items.
Concentration of Credit Risk
The Company limits its credit risk by arranging third party
financing for its customers or by requiring prepayment or credit
card payment.
Revenues
The Company, in general, has entered into various arrangements to
deliver its services: Company Centers, P.C. and Satellite Centers
and teaching hospitals. Company Centers account for $1,025 of
revenue (34%) for the year ending December 31, 1996. At Company
Centers the ophthalmologists are employed by the Company and all
revenue and expenses are included in the consolidated statements of
operations.
Management fees of Satellite and P.C Centers account for $1,338 of
revenue (44%) for the year ended December 31, 1996. The Company is
responsible for and has included all expenses (including
professional fees) of the Satellite and P.C Centers in the
consolidated financial statements. To date the Management fees
earned under agreements with Satellite and P.C. Centers have
exceeded the cash generated by the Centers. Accordingly, management
fee revenues have been recorded only up to the amount of cash
realized.
Management fees of teaching hospitals account for $655 of revenue
(22%) for the year ended December 31, 1996. The Company has
recognized the fee revenue as the services have been performed.
Property and Equipment
Property and equipment is stated at cost. Laser equipment was
purchased from the Parent and accordingly is recorded at the
Parent's cost. Property and equipment under capital leases is
stated at the lower of the present value of future minimum lease
payments or fair market value at the beginning of the lease term.
Depreciation on property and equipment is calculated using the
straight-line method over the estimated useful lives of the assets
ranging from five to ten years. Amortization of leasehold
improvements is calculated using the straight-line method over the
lease terms.
Organization costs
Organization costs are amortized over five years using the straight-line method.
Income taxes
Deferred tax assets and liabilities have been established for the
expected future tax consequences of events that have been recognized
in the Company's consolidated financial statements and tax returns.
These deferred tax assets and liabilities are determined based on
the difference between the financial statement carrying amounts and
tax bases of assets and liabilities using currently enacted tax
rates that are expected to be in effect during the years in which
the differences are anticipated to reverse. Deferred tax provision
(benefit) represents the change in the deferred tax asset balance.
Tax credits are treated as reductions of income taxes in the year in
which the credits become available for income tax purposes.
Foreign Currency Translation
Assets, liabilities and expenses related to foreign operations are
remeasured in U.S. dollars at the appropriate exchange rates. Gains
and losses resulting from remeasurement are included in other income
and expense.
Advertising and Marketing Expense
The Company expenses the production costs of advertising when the
advertising takes place. For the years ended December 31, 1996,
1995 and 1994 the Company expensed $6,994, $1,263 and $30,
respectively. The 1995 and 1996 expenses include advertising
expenses incurred pursuant to contracts with advertising and public
relations agencies. The Company canceled all of its fixed contracts
with these firms and has no such commitments at December 31, 1996.
Stock Based Compensation
Prior to January 1, 1996, the Company accounted for its stock option
plan in accordance with the provisions of Accounting Principles
Board ("APB") Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. As such, compensation
expense would be recorded on the date of grant only if the current
market price of the underlying stock exceeded the exercise price.
On January 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation, which permits entities to recognize as expense over
the vesting period the fair value of all stock-based awards on the
date of grant. Alternatively, SFAS No. 123 also allows entities to
continue to apply the provisions of APB Opinion No. 25 and provide
pro forma net income (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants made in 1995 and future
years as if the fair-value-based method defined in SFAS No. 123 had
been applied. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma
disclosure provisions of SFAS No. 123.
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed
Of
The Company adopted the provisions of SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of, on January 1, 1996. This Statement requires that long-lived assets
and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets
exceed the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less
costs to sell. Adoption of this Statement did not have any impact
on the Company's financial position and results of operations.
Net Loss Per Share
Net loss per common share is based on the weighted average number of
common shares outstanding during each year.<PAGE>
3. Property and Equipment
Property and equipment consist of the following:
December 31,
1996 1995
Leasehold improvements $1,764 $ 526
Furniture, fixtures and office
equipment 3,279 1,603
Laser equipment and medical
equipment 4,050 1,125
------ -----
$9,093 $3,254
Less accumulated depreciation (996) (663)
------ -----
net property and equipment $8,097 $2,591
====== =====
4. Accrued Expenses
Accrued expenses consist of the following:
December 31,
1996 1995
Accrued marketing $ 36 $383
Other accrued expenses 973 348
----- ---
$1,009 $731
===== ===
5. Financing and Leasing Arrangements
Leases
The Company leases its facilities under operating leases expiring in
2002. Rent expense was approximately $777, $293 and $137, for the
years ended December 31, 1996, 1995, and 1994, respectively.
At December 31, 1996, future payments of minimum rental payments
under noncancelable operating leases were as follows:
Operating Leases
Year ending December 31:
1997 1,082
1998 1,092
1999 976
2000 892
2001 359
Thereafter 23
-----
$4,424
=====
Debt
In May of 1996, the Company obtained a $20.0 million unsecured term
loan that is guaranteed by the Parent. At December 31, 1996, $16.3
million was outstanding under this facility and the obligation was
assumed by the Parent.
The interest rate at December 31, 1996 was 8.25%. Principal
payments were made quarterly.
6. Stockholder's Equity
Common Stock
The Company has authorized 10,000,000 shares of common stock at $.01
par value.
All of the Company's outstanding 5,000,000 shares have been owned by
its Parent since the Company's initial capitalization. The Parent
has funded the Company with periodic advances that have been shown
as Investment by Parent in the consolidated statements of
stockholder's equity.
At December 31, 1996, the Parent agreed to advance cash and cash
equivalents of $10,000,000 to the Company. The Company believes
that $10,000,000 is necessary to fund its operating losses and
negative cash flow for the next twenty four months. If the Company
is unable to generate sufficient volume over the next twenty-four
months, additional financing will be necessary. There can be no
assurances that the Company will be able to obtain additional
financing.
In addition, the Parent assumed certain debt obligations of the
Company (see note 5).
Stock Option Plan
In August 1993, the Company adopted a Stock Option Plan ("93 Plan")
to grant options to purchase shares of Company Stock and reserved
2,500,000 shares for issuance under the 93 Plan. In September 1995,
the Company decreased the number of shares reserved from 2,500,000
to 800,000. Options granted under the plan must be exercised not
later than 10 years from the date of grant.
The following table summarizes activity under the 93 Plan for each
of the years in the three year period ended December 31, 1996:
Weighted average
Shares Price per share price per share
Options outstanding,
December 31, 1993 125,200 $.50
Options granted at
market price 564,750 $.50 .50
Options lapsed or
canceled (20,000) .50
--------
Options outstanding,
December 31, 1994 670,250 .50
Options granted at
market price 108,000 $.50 .50
Options lapsed or
canceled (17,000) .50
-------
Options outstanding,
December 31, 1995 761,250 .50
Options granted at
market price 83,500 $.50 .50
Options lapsed or
canceled (526,250) .50
--------
Options outstanding,
December 31, 1996 318,500 $.50
======== ====
There were 418,500, 38,750 and 1,829,750 shares available for grants
under the Plan at December 31, 1996, 1995 and 1994, respectively.
The weighted average fair value of options granted during 1996 and
1995 was $.13 per option.
Options on 97,000, 213,250 and 25,100 shares were exercisable at an
exercise price of $.50 under the Plan at December 31, 1996, 1995 and
1994, respectively.
The following table summarizes significant ranges of outstanding and
exercisable options under the 93 Plan at December 31, 1996:
Options Outstanding Options Exercisable
- ---------------------------------------- -------------------
Weighted Weighted Weighted
Average Average Average
Exercise Number Remaining Exercise Number Exercise
Price Outstanding Contractual Price Exercisable Price
Life
$.50 318,500 8.0 $ .50 97,000 $ .50
The fair value of options at date of grant was estimated using the
Black-Scholes model with the following weighted average assumptions:
1996 1995
Expected life 5 years 5 years
Interest rate 6.18% 6.38%
Volatility 0% 0%
Dividend yield 0% 0%
Stock based compensation costs would have increased the net loss
in 1996 and 1995 by $42 and $24, respectively if the fair values of
the options granted in that year had been recognized as compensation
expense on a straight-line basis over the vesting period of the
grant. The pro forma effect on net income for 1996 and 1995 is not
representative of the pro forma effect on net income in future years
because it does not take into consideration pro forma compensation
expense related to grants made prior to 1995.
7. Income Taxes
The appropriate tax effect of each type of temporary difference and
carryforward that gives rise to significant portions of the deferred
tax assets and liabilities are as follows:
December 31,
1996 1995
Deferred tax asset:
Net operating loss $6,131 $667
Other temporary differences 223 55
------ -----
Subtotal $6,354 $722
Valuation allowance (6,348) (722)
------ -----
$ 6 $ -
Deferred tax liability:
Other temporary differences 6 -
------ -----
Net Deferred Tax Asset $ 0 $ 0
====== =====
Due to the uncertainty of future taxable income being generated, the
Company has recorded a valuation allowance against its deferred tax
assets. The valuation allowance for deferred tax assets as of
December 31, 1994, was $933. The net change in the total valuation
allowance for the years ended December 31, 1996 and December 31,
1995 was $5,626 and $(211), respectively.
The provision for income taxes differs from the amount computed by
applying the federal income tax rate of 35% as a result of the
following:
Year ended December 31,
1996 1995 1994
Expected benefit at federal
income tax rate $(6,565) $(1,590) $(828)
Change in valuation allowance
for deferred tax assets
allocated to income tax expense 5,626 (106) 828
Loss absorbed by consolidated
group prior to divestiture 217 868 -
Other 722 616 -
------ ------- -----
Provision for income tax $ 0 $ 0 $ 0
====== ======= =====
At December 31, 1996, the Company had an operating loss carryforward
of approximately $15,203 available to offset future federal taxable
income from continuing operations. The operating loss carryforward
expires in varying amounts through 2011. Pursuant to Section 382 of
the Internal Revenue Code, if there is a change in stock ownership
of the Company exceeding 50% during a three-year period, the
utilization of the Company's net operating loss may be limited. As
of December 31, 1996, utilization of the Company's net operating
loss carryforward is not limited by Section 382.
8. Retirement Plans
The Company does not sponsor any retirement plans. Certain
employees of the Company, may, however participate in the Parent's
defined contribution retirement plan.
9. Sale of U.K. Assets and Liabilities
Effective April 5, 1996, the Company's U.K. subsidiary, New Image
Laser Centres Limited ("New Image") sold certain assets and
transferred certain liabilities to the European subsidiary of Laser
Vision Centers, International, Inc. ("LVCI") for $169. At December
31, 1996, New Image had $34 of equipment leasing obligations that
are accrued in the consolidated financial statements. New Image is
also contingently liable for one operating lease for office space
currently sublet by LVCI. The total contingent payments remaining
at December 31, 1996 are approximately $192.
10. Related Party Transactions
The Company purchases Omnicards (required to perform laser vision
correction procedures with the Company's equipment) for $250 from
its Parent. The Company also purchases service contracts and
certain disposable products used to operate and maintain its laser
systems from its Parent. These laser systems were purchased from
the Parent and are accordingly recorded at the Parent's cost. The
Company also purchases from its Parent certain administrative
services at the Parent's cost. These administrative services
consist primarily of accounting, information technology and human
resource services.<PAGE>
11. Foreign Operations
<TABLE>
The following table summarizes financial
information by geographic area:
<CAPTION>
Year Ended December 31, 1996: United States Europe Eliminations Consolidated
<S> <C> <C> <C> <C>
Revenues from unaffiliated customers $ 2,859 $ 159 $ - $ 3,018
======= ====== ==== =======
Loss from operations $(16,432) $(1,052) $ - $(17,484)
======= ====== ==== =======
Identifiable assets $ 19,481 $ (29) $ - $ 19,452
======= ====== ==== =======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1995: United States Europe Eliminations Consolidated
<S> <C> <C> <C> <C>
Revenues from unaffiliated customers $ - $ 824 $ - $ 824
======= ====== ===== ======
Loss from operations $(2,171) $(2,376) $ 143 $(4,404)
======= ====== ===== ======
Identifiable assets $ 4,605 $ 1,842 $(837) $ 5,610
======= ====== ===== ======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1994: United States Europe Eliminations Consolidated
<S> <C> <C> <C> <C>
Revenues from unaffiliated customers $ - $ 839 $ - $ 839
======== ====== ===== =====
Loss from operations $ - $(2,399) $ 120 $(2,279)
======= ======= ===== =======
Identifiable assets $ - $ 2,537 $(455) $ 2,082
======= ======= ===== =======
</TABLE>
<PAGE>
12. Supplemental Cash Flow Information
For the years ended December 31, 1996, 1995, and 1994, the Company
recorded the following non cash transactions:
1996
The Company received $ 20.0 million pursuant to an unsecured term
loan guaranteed by the Parent who has assumed this obligation at
December 31, 1996. The Company has recorded $1.2 million of
interest in 1996 related to this debt.
13. Subsequent Event
On August 18, 1997 Summit Technology, Inc. ("Summit") entered into
an agreement to sell 5,000,000 shares of outstanding common stock in
Refractive Centers International, Inc. ("RCII"), par value $.01 per
share, to LCA-Vision Inc. ("LCA"), in consideration for 16,164,361
shares of LCA common stock, par value $.001 per share. The
5,000,000 shares of RCII common stock sold by Summit represents all
its ownership in RCII or approximately 94.7% of the issued and
outstanding shares of RCII common stock. LCA purchased the
remaining 5.3% of the outstanding shares of RCII from certain option
holders of RCII, who exercised their options prior to the closing,
in exchange for shares of common stock of LCA.
REFRACTIVE CENTERS INTERNATIONAL, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Page
-----
Consolidated Balance Sheet as of June 30, 1997 F-2
Consolidated Statement of Operations for the six months
ended June 30, 1997 and 1996 F-3
Notes to Consolidated Financial Statements F-4
<PAGE>
<TABLE>
REFRACTIVE CENTERS INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
June 30, 1997
(in thousands; unaudited )
<CAPTION>
June 30, 1997
-------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $10,000
Receivables 136
Prepaid expenses and other current assets 242
------
Total current assets 10,378
Property and equipment, net 7,353
Other assets 87
Organization costs, net 762
------
TOTAL ASSETS $18,580
======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 343
Accrued expenses 1,528
------
Total current liabilities 1,871
Stockholder's equity:
Common stock, $.01 par value. Authorized 10,000
shares;
issued 5,000 shares 50
Investment by Parent 51,008
Accumulated deficit (34,349)
------
Total stockholder's equity 16,709
------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $18,580
======
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
REFRACTIVE CENTERS INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
Six Months ended June 30, 1997 and 1996
(in thousands, except per share amounts; unaudited)
<CAPTION>
June 30,
----------------
1997 1996
---- ----
<S> <C> <C>
Revenues:
Patient service revenues $ 931 $ 77
Management fee revenues 2,521 778
----- -----
Total revenues 3,452 855
Operating expenses:
Clinic 6,036 1,990
Marketing and advertising 603 4,372
Parent company administrative services 480 599
General and administrative 954 3,208
----- -----
Total operating expenses 8,073 10,169
----- -----
Loss from operations (4,621) (9,314)
Interest expense/ (income), net (15) 528
----- -----
Net loss $ (4,606) $(9,842)
===== =====
Net loss per share $ (.92) $ (1.97)
===== =====
Weighted average number of
common shares outstanding 5,000 5,000
===== =====
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REFRACTIVE CENTERS INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Nature of Business
Refractive Centers International, Inc. (the "Company") owns and
manages free-standing vision centers that provide primarily excimer
laser refractive surgery procedures to correct myopia
("nearsightedness"). This procedure is also called photorefractive
keratectomy ("PRK"). At December 31, 1996, the Company had nineteen
U.S. centers in operation. Of the nineteen centers, the company
directly owns seven centers ("Company Centers"), operates five
centers pursuant to management and stock restriction agreements with
professional corporations ("P.C. Centers"), and operates seven
centers ("Satellite Centers") in conjunction with management
agreements with two teaching hospitals. The Company also has
contracts with four additional teaching hospitals whereby the
Company receives fees for certain Company provided services.
Prior to opening its U.S. centers in 1996, the Company operated
centers in Europe. The Company ceased all European operations in
April of 1996.
2. Summary of Significant Accounting Policies
Basis of Presentation:
The Company is a wholly-owned subsidiary of Summit Technology, Inc.
("the Parent"). The Company has not operated as a stand alone
entity and its operating losses have been funded by the Parent. In
addition, since the Company began U.S. operations in 1996,
administrative services have been provided by the Parent and certain
allocations have been made to present the financial statements of
the Company as a separate entity. Management believes that the
allocation methods are reasonable. No provisions for income taxes
has been made since the Company has incurred operating losses since
inception. Interest expense has been recorded on all external debt
and no interest has been charged to the Company by the Parent for
advances made since the Company's primary source of financing has
been through equity.
Principles of Consolidation:
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries after elimination of
material intercompany accounts and transactions.
(b) Proforma financial information
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information (the
"Unaudited Pro Forma Financial Information") is based on the
historical financial statements of LCA-Vision and RCII and has
been prepared to illustrate the effects of the acquisition of RCII
and the related financing transactions.
The unaudited pro forma condensed consolidated statements of
operations for the year ended December 31, 1996 and the six months
ended June 30, 1997 give effect to the acquisition of RCII as if
such transaction had been completed by January 1, 1996 and January
1, 1997, respectively. The pro forma condensed consolidated
balance sheet as of June 30, 1997 has been prepared as if the
acquisition had occurred on such date.
The acquisition will be accounted for using the purchase method of
accounting in accordance with Accounting Principles Board Opinion
No. 16. The total purchase costs will be allocated to the tangible
and intangible assets based upon their respective fair values. The
allocation of the purchase price reflected in the unaudited pro
forma financial information is preliminary. The pro forma
adjustments are based on available information and certain
assumptions that management believes are reasonable in the
circumstances. The unaudited pro forma financial information is
not necessarily indicative of either future results of operations
or the results that might have occurred if the foregoing
transaction had been consummated on the indicated dates.
<PAGE>
<TABLE>
LCA-Vision Inc.
Unaudited Pro Forma Condensed Consolidated Income Statement
Six Months Ended June 30, 1997
(in thousands, except per share data)
<CAPTION>
Historical Historical Pro Forma LCA-Vision
LCA-Vision RCII Adjustments Combined Pro Forma
<S> <C> <C> <C> <C>
Net revenue $ 6,602 $ 3,452 $ 10,054 A
Direct operating expenses 4,412 5,071 9,483 A
Depreciation and
amortization 832 1,100 $ 300 B 2,232
Corporate general and
administrative expenses 3,408 1,902 (1,077) C 4,233
Center pre-opening costs 163 163
------ ----- -------- -------
Operating income (loss) (2,213) (4,621) 777 (6,057)
Equity in (loss) from
unconsolidated affiliates (31) (31)
Interest expense (508) (508)
Other income (expense), net 47 15 62
------- ------ ------- -------
Income (loss) before
income taxes (2,705) (4,606) 777 (6,534)
Income tax expense 61 - - 61
------- ------ ------- -------
Income (loss) from
continuing operations $(2,766) $(4,606) $ 0 (6,595)
Accrued dividend - Class B
preferred stock 94 94
Amount applicable to (loss)
per common share $(2,860) $(4,606) $ (6,689)
======== ====== ========
(Loss) per common share $( 0.15) $ (.19)
======== ========
Number of common shares
used in per share
computations 19,598 17,066 E 36,664
======== ======== ========
</TABLE>
<TABLE>
LCA-Vision Inc.
Unaudited Pro Forma Condensed Consolidated Income Statement
Year Ended December 31, 1996
(in thousands, except per share data)
<CAPTION>
Historical Historical Pro Forma LCA-Vision
LCA-Vision RCII Adjustments Combined Pro Forma
<S> <C> <C> <C> <C>
Net revenue $13,760 $ 3,018 $ 16,778 A
Direct operating expenses 7,732 5,632 13,364 A
Depreciation and amortization 1,597 1,156 $ 600 B 3,353
Corporate general and
administrative expenses 7,327 13,714 (9,280) C 11,761
Center pre-opening costs 220 220
------- ------ --------- -------
Operating income (loss) (3,116) (17,484) 8,680 (11,920)
Equity in (loss) from
unconsolidated affiliates (906) (906)
Interest expense (770) (1,273) 1,273 D (770)
Other income (expense), net 741 741
-------- ------ -------- ------
Income (loss) before
income taxes (4,051) (18,757) 9,953 (12,855)
Income tax expense - - - -
-------- -------- -------- --------
(Loss) from
continuing operations $(4,051) $(18,757) $ 9,953 $(12,855)
======== ========= ========= =========
(Loss) per common
share $ (0.21) $ (0.35)
======== =========
Number of common shares
used in per share
computations 19,610 17,066 E 36,676
======== ====== =========
/TABLE
<PAGE>
<TABLE>
LCA-Vision Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
June 30, 1997
(dollars in thousands)
<CAPTION>
Historical
LCA-Vision RCII Pro Forma LCA-Vision
Adjustments Combined Pro Forma
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,209 $10,000 $(4,000) F $ 7,209
Restricted cash 4,000 F 4,000
Accounts receivable 1,356 136 1,492
Surgical supplies, prepaid
expenses, other 1,207 242 1,449
----- ------ --------- ------
Total Current Assets 3,772 10,378 14,150
Property and equipment, net 9,069 7,353 $ 1,500 G 17,922
Intangible assets 15,977 H 15,977
Investment in unconsolidated
affiliates 238 238
Other assets 789 849 117 I 1,755
------- ----- ---------- ------
Total Assets $13,868 $18,580 $17,594 $50,042
------ ------- --------- -------
Current Liabilities:
Accounts payable, accrued
liabilities and
other current liabilities $ 1,562 $ 1,871 $ 1,017 J $ 4,450
Current portion of long-term debt 7,744 (6902) M 842
Deferred revenue 210 210
------- ------- ---------- ------
Total Current Liabilities 9,516 1,871 (5885) 5,502
Long-term debt, net of current
maturities 4,494 6902 M 11,396
Notes payable to shareholders 1500 1,500
Other liabilities 600 K 600
Shareholders' Equity:
Preferred stock 2,522 2,522
Common stock 79 50 (33) L 96
Additional paid-in capital 3,234 32,669 L 35,903
Investment by parent 51,008 (51,008) L 0
Treasury stock (30) (30)
Translation adjustment 6 6
Retained deficit (7,453) (34,349) 34,349 L (7,453)
Total Shareholders' Equity (1,642) 16,709 15,977 38,497
-------- ------- ---------- ---------
Total Liabilities and
Shareholders' Equity $13,868 $ 18,580 $17,594 $ 50,042
======== ======== =========== =========
/TABLE
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(dollars in thousands)
(A) The combined pro forma amounts do not reflect the elimination
of revenues and direct operating expenses for RCII centers which
will be closed by the Company. Management expects that the four
centers located in West Palm Beach, Florida; Miami, Florida;
Towson, Maryland and Chicago, Illinois will be closed by December
31, 1997. The revenues and direct operating expenses for these
four centers for the periods presented are:
Year Ended Six Months
December 31, 1996 Ended June 30, 1997
Revenues $362 $967
Direct operating
expenses $553 $432
(B) The adjustment reflects additional depreciation and
amortization resulting from the allocation of the Company's
purchase price to the assets acquired, including an increase in
property and equipment and the recording of goodwill associated
with the Acquisition. Property and equipment acquired is amortized
over a weighted average of 17 years and goodwill is amortized over
7 years.
(C) The adjustments reflect cost savings for the year ended
December 31, 1996 and the six months ended June 30, 1997 resulting
from the elimination of redundant corporate general and
administrative expenses, RCII's parent company overhead allocation
and certain marketing costs that will not be recurring expenses of
the Company. Such pro forma cost savings are expected to be as
follows:
Year ended Six months ended
December 31, 1996 June 30, 1997
Salaries terminated $ 967 $ 425
Corporate costs 8,397 652
RCII parent company allocation 1,042 -
---- -----
$10,406 $1,077
(D) Adjustment represents the elimination of RCII interest expense
to reflect interest expense based on the capitalization of the
Company.
(E) The adjustment represents the shares issued in conjunction
with the acquisition of RCII.
(F) The adjustment represents the reclassification of cash
acquired in the acquisition to restricted cash. In conjunction
with the acquisition of RCII, the Company entered into a new debt
facility with its primary lender which requires the company to
maintain $4 million on deposit with the bank.
(G) The adjustment represents the allocation of the purchase price
to the estimated fair value of property and equipment acquired.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION (continued)
(in thousands, except per share)
(H) The adjustment represents the recording of goodwill associated
with the acquisition. The purchase price is summarized as follows:
Issuance of 17,066 shares of LCA-Vision common stock valued at
$1.97 per share in exchange for all the outstanding shares of RCII
common stock $32,786
Acquisition costs 400
------
33,186
Net assets acquired at
fair market value (17,209)
---------
Goodwill recorded $ 15,977
=========
(I) Adjustment represents capitalized financing costs related to
renegotiation of the Company's credit facility.
(J) Adjustment represents accrued costs directly attributable to
the Acquisition, credit facility renegotiation and the issuance of
LCA-Vision common shares.
(K) Adjustment represents the recording of deferred tax
liabilities associated with the difference between the book and
the tax basis of assets and liabilities, excluding goodwill.
(L) Adjustment represents the net additional common stock issued
in connection with the acquisition of RCII after elimination of
historical common stock amounts for RCII, and the elimination of
the historical stockholders' equity of RCII as the acquisition
will be accounted for as a purchase.
(M) Adjustment represents effect of new credit facility.
(c) Exhibits
Exhibit No. Description Page
2 Acquisition Agreement dated as of July 23, 1997
by and among LCA-Vision Inc., Summit Technology,
Inc. and Refractive Centers International, Inc.
99.1 LCA-Vision Inc. Press Release dated August 19,
1997
99.2 LCA-Vision Inc. Press Release dated August 21,
1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.
LCA-Vision Inc.
Date: October 27, 1997 By:/s/ Larry P. Rapp
-------------------------
Larry P. Rapp
Chief Financial Officer
<PAGE>
Execution Copy
ACQUISITION AGREEMENT
between
LCA-VISION INC.,
SUMMIT TECHNOLOGY, INC.
and
REFRACTIVE CENTERS INTERNATIONAL, INC.
Dated
July 23, 1997
<PAGE>
INDEX
ARTICLE I DEFINITIONS 1
ARTICLE II PURCHASE AND SALE OF STOCK 1
2.1 Purchase and Sale of RCII Common Stock 1
2.2 Closing 1
2.3 Consideration 1
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SUMMIT 2
3.1 Organization, Qualification, Corporate Power,
Competence, Etc 2
3.2 Capitalization 2
3.3 Noncontravention 3
3.4 Title 4
3.5 Subsidiaries 4
3.6 Financial Statements 4
3.7 Events Subsequent to Most Recent RCII
Fiscal Year End 4
3.8 Undisclosed Liabilities 5
3.9 Legal Compliance 5
3.10 Tax Matters 6
3.11 Real Property 6
3.12 Material Contracts 6
3.13 Notes and Accounts Receivable 7
3.14 Powers of Attorney 7
3.15 Insurance 7
3.16 Litigation 7
3.17 Employees 7
3.18 Employee Benefit Plans 8
3.19 Brokers 8
3.20 Guaranties 8
3.21 Activities in LCA Common Stock 8
3.22 Disclosure 8
3.23 Incorporation 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF LCA 9
4.1 Organization, Qualification, Corporate
Power, Competence, Etc 9
4.2 Capitalization 9
4.3 Noncontravention 10
4.4 Financial Statements 11
4.5 Events Subsequent to Most Recent LCA Fiscal Year End 11
4.6 SEC Filings 12
4.7 Tax Matters 13
4.8 Undisclosed Liabilities 14
4.9 Legal Compliance 14
4.10 Title 14
4.11 Notes Payable to Shareholders 14
4.12 Brokers 14
4.13 Material Contracts 14
4.14 Litigation 15
4.15 Activities in LCA Common Stock 15
4.16 Disclosure 15
4.17 Incorporation 16
ARTICLE V COVENANTS 16
5.1 Conduct of Business 16
5.2 Access to Premises and Information 16
5.3 Fulfillment of Conditions 16
5.4 Forbearances 16
5.5 No Transactions in LCA Common Stock 17
5.6 Advice of Changes 17
5.7 No Restrictions on Summit's Conduct of Business 17
5.8 Public Announcement 17
5.9 HSR Act Compliance 17
5.10 LCA SEC Reports 18
5.11 RCII Option Holders 18
5.12 NASDAQ Listing 18
5.13 Business Restrictions 18
ARTICLE VI CONDITIONS TO LCA'S OBLIGATION TO CLOSE 18
6.1 Representations and Warranties; Covenants 19
6.2 RCII Cash Balance 19
6.3 Third Party Consents 19
6.4 No Injunctions or Restraints; Illegality 19
6.5 Deliveries at Closing 19
6.6 No Material Adverse Change 19
6.7 HSR Act 19
6.8 RCII Stock 19
ARTICLE VII CONDITIONS TO SUMMIT'S AND
RCII'S OBLIGATION TO CLOSE 20
7.1 Representations and Warranties; Covenants 20
7.2 Board of Directors 20
7.3 Restructuring of Bank Debt 20
7.4 Shareholder Debt 20
7.5 No Injunctions or Restraints; Illegality 20
7.6 Deliveries at Closing 20
7.7 No Material Adverse Change 21
7.8 HSR Act 21
7.9 Rights and Preferences of Interim Series Preferred Stock21
ARTICLE VIII DELIVERIES AT CLOSING 21
8.1 Summit and RCII Deliveries 21
8.2 LCA Deliveries 22
ARTICLE IX POST-CLOSING OBLIGATIONS 22
9.1 Upgrade of Summit Laser Systems 22
9.2 Release of Summit Guaranties 22
9.3 Payment of LCA Shareholder Debt 23
9.4 Registration of Distribution Shares and
Selling Shareholder Registrable Shares 23
9.5 NASDAQ Listing 24
9.6 Compliance With SEC Disclosure Requirements 24
9.7 Distribution of Distribution Shares 25
9.8 Occupancy of Summit Space 25
9.9 Post-Approval Support Services 25
9.10 Interim Series Preferred Stock 25
9.11 Access to Records 25
ARTICLE X INDEMNIFICATION; BREACH 25
10.1 Indemnity Obligations of Summit 25
10.2 Indemnity Obligations of LCA 25
10.3 Procedures for Indemnification for Third Party Claims 25
10.4 Claims by Summit or LCA 26
10.5 Survival of Representations and Warranties 26
10.6 Limitations on Indemnification and Damages 27
10.7 Subrogation 27
ARTICLE XI TERMINATION 27
11.1 Mutual Agreement 27
11.2 Termination for Breach 27
11.3 Failure of Condition Precedent 27
11.4 Effect of Termination 27
ARTICLE XII MISCELLANEOUS 28
12.1 Fees and Expenses 28
12.2 Governing Law 28
12.3 Notices 28
12.4 Waiver 28
12.5 Binding Effect 29
12.6 Entire Agreement 29
12.7 Survival of Confidentiality Agreement 29
12.8 Severability 29
12.9 Amendment 29
12.10 Exhibits and Schedules 29
12.11 Third Party Beneficiaries 29
12.12 Construction 29
12.13 Counterparts 29
SCHEDULE A DEFINITIONS 31
SCHEDULE B RCII DISCLOSURE SCHEDULE 35
SCHEDULE C LCA DISCLOSURE SCHEDULE 36
EXHIBIT A FORM OPINION OF GOLDSTEIN & MANELLO, P.C. 37
EXHIBIT B SHAREHOLDERS' AGREEMENT 38
EXHIBIT C REGISTRATION RIGHTS AGREEMENT 47
EXHIBIT D FORM OPINION OF DINSMORE & SHOHL LLP 66
EXHIBIT E HERSKOWITZ EMPLOYMENT DOCUMENTS 67
<PAGE>
This Acquisition Agreement is made and entered into this 23rd day
of July, 1997 by and between LCA-Vision Inc., a Delaware
corporation ("LCA"), Refractive Centers International, Inc., a
Delaware corporation ("RCII") and Summit Technology, Inc., a
Massachusetts corporation ("Summit").
WHEREAS, the Boards of Directors of each of LCA, RCII and Summit
deem it advisable and in the best interests of their respective
corporations that LCA acquire issued and outstanding common stock
of RCII, all on the terms and subject to the conditions contained
in this Agreement (the "Acquisition").
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings
set forth on Schedule A, unless the context otherwise requires.
ARTICLE II
PURCHASE AND SALE OF STOCK
2.1 Purchase and Sale of RCII Common Stock. Subject to the terms
and conditions of this Agreement, at the Closing Summit agrees to
sell, assign and transfer and LCA agrees to purchase and acquire,
all of the issued and outstanding shares of the RCII Common Stock
owned by Summit (the "Subject Stock"). LCA further agrees to
purchase and acquire any Selling Shareholder Shares.
2.2 Closing. Subject to Article XI, the closing of the
Acquisition and the other transactions contemplated hereunder (the
"Closing") shall take place at the offices of Goldstein & Manello,
P.C., 265 Franklin Street, Boston, Massachusetts 02110, or such
other place as is mutually agreed to between the parties, at 10:00
a.m. on the next business day after expiration of the applicable
waiting period under the HSR Act; or, if the conditions to Closing
set forth in Article VI shall not have been satisfied on or prior
to such date, at such later time or date as LCA shall specify, by
notice to Summit, not less than three (3) nor more than five (5)
business days after receipt of a Conditions Notice from Summit;
or, if the conditions to Closing set forth in Article VII shall
not have been satisfied on or prior to such date, at such later
time or date as Summit shall specify, by notice to LCA, not less
than three (3) nor more than five (5) business days after receipt
of a Conditions Notice from LCA; provided that the Closing shall
not take place later than the Outside Closing Date (the "Closing
Date").
2.3 Consideration. The aggregate consideration payable by LCA at
the Closing (the "Stock Consideration") shall be a number of
shares of LCA Common Stock determined as follows:
2.3.1 To Summit for the Subject Stock, the number of shares of
Subject Stock multiplied by the Per Share Consideration; and
2.3.2 To each Selling Shareholder for the Selling Shareholder
Shares, the number of Selling Shareholder Shares sold by each such
Selling Shareholder multiplied by the Per Share Consideration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUMMIT
Summit hereby represents and warrants to LCA as follows:
3.1 Organization, Qualification, Corporate Power, Competence, Etc.
3.1.1 RCII is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Except
as set forth in Section 3.1.1 of the RCII Disclosure Schedule,
RCII is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such
qualification is required, except where the failure to so qualify
or obtain authorization would not have a Material Adverse Effect
on RCII. RCII has full corporate power and authority and all
licenses, permits, and authorizations necessary to carry on the
businesses in which it is engaged, to own and use the properties
owned and used by it and to execute, deliver and perform this
Agreement. The execution and delivery of this Agreement and the
consummation of the Acquisition and the other transactions
contemplated hereby by RCII have been duly and validly authorized
by all necessary corporate action. No other corporate acts or
proceedings on the part of RCII are necessary to authorize this
Agreement or the transactions contemplated hereby.
3.1.2 Summit is a corporation duly organized, validly existing
and in good standing under the laws of The Commonwealth of
Massachusetts. Summit has full corporate power and authority and
all licenses, permits, and authorizations necessary to execute,
deliver and perform this Agreement. The execution and delivery of
this Agreement and the consummation of the Acquisition and the
other transactions contemplated hereby by Summit have been duly
and validly authorized by all necessary corporate action. No
other corporate acts or proceedings on the part of Summit are
necessary to authorize this Agreement or the transactions
contemplated hereby.
3.1.3 This Agreement has been duly executed and delivered by RCII
and Summit and constitutes the legal, valid and binding
obligations of RCII and Summit, enforceable against each of them
in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
of general application and equitable principles applied by a court
of competent jurisdiction.
3.1.4 Section 3.1.4 of the RCII Disclosure Schedule lists the
directors and officers of RCII. Summit has delivered to LCA
correct and complete copies of RCII's Certificate of Incorporation
and By-Laws (each as amended to date). RCII is not in default
under or in violation of any provision of its Certificate of
Incorporation or By-Laws.
3.2 Capitalization. Subject to adjustment as contemplated in
Section 5.11 hereof:
3.2.1 The entire authorized capital stock of RCII consists of
10,000,000 shares of RCII Common Stock, of which 5,000,000 shares
are issued and outstanding;
3.2.2 All such issued and outstanding shares of RCII Common Stock
have been duly authorized, are validly issued, fully paid, and
nonassessable and are owned, of record and beneficially, by
Summit, free and clear of all pledges, liens, encumbrances,
charges or other security interests;
3.2.3 The designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of the
RCII Common Stock are as set forth in RCII's Certificate of
Incorporation; and
3.2.4 Except as set forth in Section 3.2.4 of the RCII Disclosure
Schedule, (a) no person owns of record or is known to Summit to
own beneficially any shares of capital stock of RCII, (b) no
subscription, warrant, option, convertible security, or other
right (contingent or otherwise) to purchase or otherwise acquire
equity securities of RCII is authorized or outstanding, (c) there
is no commitment by RCII to issue shares, subscriptions, warrants,
options, convertible securities, or other such rights or to
distribute to holders of any of its equity securities any evidence
of indebtedness, and (d) there is no written or oral agreement by
RCII or Summit to sell or transfer any RCII Common Stock to any
third Person. RCII has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities
or any interest therein or to pay any dividend or make any other
distribution in respect thereof. Except as set forth in Section
3.2.4 of the RCII Disclosure Schedule, there are no voting trusts
or agreements, stockholders' agreements, pledge agreements, buy-sell agreements,
rights of first refusal, preemptive rights or
proxies relating to any securities of RCII. All of the
outstanding securities of RCII were issued in compliance with all
applicable Federal and state securities laws.
3.3 Noncontravention. Except as set forth in Section 3.3 of the
RCII Disclosure Schedule, neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge or other restriction of any government, governmental agency
or court to which RCII or Summit is subject or any provision of
the Certificate of Incorporation or By-Laws of RCII or of the
Articles of Organization or By-Laws of Summit, or (b) result in a
breach of, constitute a default under, result in the acceleration
of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice or consent under any
agreement, contract, lease, license, instrument, or other
arrangement to which RCII is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets). Neither RCII nor
Summit is required to give any notice to, make any filing with, or
obtain any authorization, consent or approval of any government or
governmental agency in order for the parties to consummate the
transactions contemplated by this Agreement, other than pursuant
to the HSR Act and as contemplated under Section 9.4 hereof.
3.4 Title.
3.4.1 Summit has good and marketable title to the Subject Stock,
free and clear of all liens, charges, claims or encumbrances
whatsoever. At the Closing and upon the consummation of the
transactions contemplated by this Agreement, Summit shall transfer
such title to the Subject Stock to LCA.
3.4.2 Except as set forth in Section 3.4.2 of the RCII Disclosure
Schedule, RCII has good title to, or a valid leasehold interest in
or license to, all properties and assets (a) used by it in the
operations of its business, (b) located on its premises (except
personal items not material to the operations of the business),
(c) shown on the Most Recent RCII Balance Sheet or (d) acquired
after the date thereof, free and clear of all Security Interests,
except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent RCII Balance
Sheet.
3.5 Subsidiaries. Except as set forth in Section 3.5 of the RCII
Disclosure Schedule, RCII does not have any subsidiaries,
operating or otherwise, and does not own any capital stock or
other equity interest in any Person, and is not a partner, joint
venturer or member in any joint venture, partnership or other
enterprise.
3.6 Financial Statements. Summit has delivered separately to LCA
the following RCII consolidated financial statements (collectively
the "RCII Financial Statements"): audited consolidated balance
sheets and statements of operations, stockholder's equity and cash
flow as of and for the fiscal years ended December 31, 1994, 1995
and 1996 (the last being the "Most Recent RCII Fiscal Year End"),
and for the five month period ended May 31, 1997. The RCII
Financial Statements (including the notes thereto) have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
covered thereby, and present fairly in all material respects the
financial condition of RCII as of such dates and the results of
operations of RCII for such periods.
3.7 Events Subsequent to Most Recent RCII Fiscal Year End. Since
the Most Recent RCII Fiscal Year End, RCII has conducted its
business only in the Ordinary Course of Business and there has not
been any Material Adverse Effect in the business, financial
condition, operations or results of operations of RCII, and RCII
has not engaged in or been party to any agreement or occurrence
outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, since that date (or such other date
as may be specified below) and except as disclosed in Section 3.7
of the RCII Disclosure Schedule:
3.7.1 No Person (including RCII) has accelerated, terminated,
modified or canceled any agreement, contract, lease or license (or
series of related agreements, contracts, leases or licenses) to
which RCII is a party or by which it or any of its properties are
bound, except in the Ordinary Course of Business;
3.7.2 RCII has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of
Business;
3.7.3 RCII has not canceled, compromised, waived or released any
right or claim (or series of related rights and claims) outside
the Ordinary Course of Business;
3.7.4 RCII has not (a) issued, sold or otherwise disposed of any
of its capital stock, (b) granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange
or exercise) any of its capital stock, (c) declared, set aside or
paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or (d) redeemed,
purchased or otherwise acquired any of its capital stock;
3.7.5 RCII has not made any loan to or agreement with any of its
directors, officers or employees and it has not entered into any
other transaction with any of its directors, officers or employees
outside the Ordinary Course of Business;
3.7.6 There has been no sale, assignment or transfer of any of the
assets of RCII, except in the Ordinary Course of Business;
3.7.7 There have been no capital expenditures in excess of One
Hundred Thousand Dollars ($100,000) individually or Five Hundred
Thousand Dollars ($500,000) in the aggregate;
3.7.8 RCII has not failed to perform in any material respects all
of its obligations under agreements, contracts, leases, licenses
and instruments relating to or affecting its properties, assets
and business, and has not changed materially the prices or offer
terms of sale or license of any of its products or services;
3.7.9 RCII has not failed to maintain its books of account and
records in the usual, regular and ordinary manner;
3.7.10 RCII has not made any material change in its accounting
methods or materially revalued any of its assets outside the
Ordinary Course of Business; and
3.7.11 There has not been any increase in the wages, salaries,
compensation, stock option, pension or other fringe benefits
payable to Ronald Herskowitz from those set forth in the
definitive proxy materials filed by Summit with the SEC with
respect to its annual meeting of stockholders held on June 25,
1997.
RCII is not under any legal obligation, whether written or oral,
to do any of the foregoing.
3.8 Undisclosed Liabilities. To Summit's Knowledge and except as
set forth in Section 3.8 of the RCII Disclosure Schedule, RCII
does not have any Liability except for (a) Liabilities set forth
in the Most Recent RCII Balance Sheet and (b) Liabilities which
have arisen after the Most Recent RCII Fiscal Year End in the
Ordinary Course of Business.
3.9 Legal Compliance. Except as disclosed in Section 3.9 of the
RCII Disclosure Schedule, RCII has complied in all material
respects (including without limitation in its capacity as a
tenant), with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings and
charges thereunder) of federal, state, local and foreign
governments (and all agencies thereof), including, without
limitation, federal and state health care laws, rules and
regulations restricting fee-splitting, patient referrals to
entities in which physicians hold an interest and the corporate
practice of medicine, and no material action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against it alleging any failure so to
comply. Except as set forth in Section 3.9 of the RCII Disclosure
Schedule and as contemplated by Sections 5.9 and 9.4 hereof, no
consent, approval or authorization of, or registration,
qualification or filing with, any governmental agency or authority
is required for the execution and delivery of this Agreement by
RCII or Summit or for the consummation by RCII and Summit of the
transactions contemplated hereby or thereby. All of RCII's
material rights under all of its permits, approvals and licenses,
both governmental and private, related to the operation of its
business will continue unimpaired by the Acquisition contemplated
hereby, except as set forth in Section 3.9 of the RCII Disclosure
Schedule.
3.10 Tax Matters.
3.10.1 RCII has filed all Tax Returns that it was required to
file, including, without limitation, any Tax Returns required to
be filed with any state. All such Tax Returns were correct and
complete in all material respects. All Taxes owed by RCII shown
on any Tax Return have been paid. Except as set forth in Section
3.10 of the RCII Disclosure Schedule, RCII currently is not the
beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a
jurisdiction where RCII does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of RCII that arose in
connection with any failure (or alleged failure) to pay any Tax.
3.10.2 RCII has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other
third party.
3.10.3 There is no dispute or claim concerning any Tax Liability
of RCII either (a) claimed or raised by any authority in writing
or (b) as to which RCII or Summit has Knowledge.
3.10.4 Section 3.10 of the RCII Disclosure Schedule lists all
federal, state, local and foreign income Tax Returns filed with
respect to RCII for taxable periods ended on or after December 31,
1993; no such Tax Returns have been audited or currently are the
subject of audit. RCII has delivered to LCA correct and complete
copies of all federal income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by RCII
since December 31, 1993.
3.10.5 RCII has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
3.10.6 RCII will not have as of the Closing Date any liability for
Taxes, except for Taxes which have been specifically accrued for
in full on the books and records of RCII in the Ordinary Course of
Business and Taxes not yet due and payable.
3.11 Real Property. Except for the leases described in Section
3.11 of the RCII Disclosure Schedule, RCII does not own or lease
any real property.
3.12 Material Contracts. Section 3.12 of the RCII Disclosure
Schedule lists and briefly describes all written contracts,
agreements and instruments to which RCII is a party, or by which
it or its properties are bound, and which involve on the part of
any Person provision of goods or services or payment of money in
excess of $20,000 or which, if breached, could result in damages
or loss of benefits to RCII in excess of $20,000 (the "RCII
Material Contracts"), and sets forth, as to each contract,
agreement or instrument, whether consummation of the transactions
contemplated hereby will require consent of any third party to
avoid the occurrence of a breach or default of, or termination or
change of rights or benefits under, such contract, agreement or
instrument. Summit has delivered to LCA a correct and complete
copy of each written agreement listed in Section 3.12 of the RCII
Disclosure Schedule (as amended to date) and a written summary
setting forth the terms and conditions of each oral agreement
referred to in Section 3.12 of the RCII Disclosure Schedule. With
respect to each RCII Material Contract and except as set forth in
Section 3.12 of the RCII Disclosure Schedule, (a) the RCII
Material Contract is legal, valid, binding, enforceable and in
full force and effect, (b) no material breach, default,
termination or loss or change of rights or benefits shall occur
with respect to such RCII Material Contract as a result of the
consummation of the transactions contemplated hereby, (c) RCII is
not, and to Summit's Knowledge no other party is, in material
breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under an RCII Material
Contract, (d) no party has repudiated any provision of an RCII
Material Contract and (e) RCII has not incurred any penalty or
similar charges for delays in delivery of any product or service
or any indemnification or warranty obligations under such RCII
Material Contract.
3.13 Notes and Accounts Receivable. All notes and accounts
receivable of RCII are reflected properly on its books and
records, are valid receivables subject to no setoffs or
counterclaims and are current and collectible in accordance with
their terms at their recorded amounts, subject only to the reserve
for bad debts set forth in the Most Recent RCII Balance Sheet as
adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of RCII.
3.14 Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of RCII.
3.15 Insurance. Section 3.15 of the RCII Disclosure Schedule
contains a true and complete list and brief description of all
insurance policies currently in force with respect to RCII.
Except as set forth in such Section 3.15, each of the insurance
policies is in full force and effect and the premiums with respect
thereto have been fully paid through the current billed date.
RCII has delivered to LCA a copy of each insurance policy
(including policies providing property, casualty, liability and
workers' compensation coverage and bond and surety arrangements)
to which RCII has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past two years.
3.16 Litigation. Section 3.16 of the RCII Disclosure Schedule
sets forth each instance in which RCII (a) is subject to any
outstanding injunction, judgment, order, decree, ruling or charge
or (b) is a party or is threatened in writing to be made a party
to any action, suit, proceeding, hearing or investigation of, in,
or before any court or quasi judicial or administrative agency of
any federal, state, local or foreign jurisdiction or before any
arbitrator.
3.17 Employees. RCII is not a party to or bound by any collective
bargaining agreement, nor has it experienced during the last four
years any strikes, grievances, claims of unfair labor practices or
other collective bargaining disputes. Summit has no Knowledge of
any organizational effort presently being made or threatened by or
on behalf of any labor union with respect to employees of RCII.
3.18 Employee Benefit Plans.
3.18.1 RCII does not maintain, and has not at any time maintained,
any Employee Benefit Plans for the benefit of its employees.
Certain of its employees participate in Employee Benefit Plans of
Summit, as set forth in Section 3.18.1 of the RCII Disclosure
Schedule.
3.18.2 Except as set forth in Section 3.18.2 of the RCII
Disclosure Schedule, RCII does not maintain any bonus, stock
option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance or other similar fringe benefit
or employee benefit plans or have any written employment
agreements with any of its employees. RCII has provided to LCA
true, correct any complete copies of all plans and agreements set
forth in such Section 3.18.2.
3.19 Brokers. Neither RCII nor Summit has retained, utilized or
been represented by any broker or finder in connection with the
transactions contemplated by this Agreement other than Piper
Jaffray Inc.
3.20 Guaranties. Except as disclosed in Section 3.20 of the RCII
Disclosure Schedule, RCII is not a guarantor or otherwise liable
for any Liability or obligation (including indebtedness) of any
other Person.
3.21 Activities in LCA Common Stock. To Summit's Knowledge,
neither Summit nor any of its Affiliates, nor any Person acting on
behalf of either or all of Summit or any of its Affiliates, have
at any time engaged in any purchase, sale, transfer, hedging,
derivative or other activities of any kind relating to the LCA
Common Stock that constitutes, or reasonably could be construed as
constituting, a manipulative or deceptive device or contrivance in
violation of applicable federal or state securities laws or common
law.
3.22 Disclosure. The representations and warranties contained in
this Article 3 do not contain any untrue statement of a material
fact or, in light of any other information regarding RCII and
Summit contained in this Agreement, omit to state any material
fact necessary in order to make the statements and information
contained in this Article 3 not misleading.
3.23 Incorporation. Each item of disclosure contained in a
numbered section of the RCII Disclosure Schedule shall be deemed
incorporated by reference in each other numbered section of the
RCII Disclosure Schedule, as if fully set forth therein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LCA
LCA hereby represents and warrants to Summit as follows:
4.1 Organization, Qualification, Corporate Power, Competence, Etc.
4.1.1 LCA is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. LCA is
duly authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is
required, except where the failure to so qualify or obtain
authorization would not have a Material Adverse Effect on LCA.
LCA has full corporate power and authority and all licenses,
permits and authorizations necessary to carry on the businesses in
which it is engaged, to own and use the properties owned and used
by it and to execute, deliver and perform this Agreement. The
execution and delivery of this Agreement and the consummation of
the Acquisition and the other transactions contemplated hereby by
LCA have been duly and validly authorized by all necessary
corporate action. No other corporate acts or proceedings on the
part of LCA are necessary to authorize this Agreement or the
transactions contemplated hereby.
4.1.2 This Agreement has been duly executed and delivered by LCA
and constitutes the legal valid and binding obligations of LCA,
enforceable against it in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application and equitable
principles applied by a court of competent jurisdiction.
4.1.3 Section 4.1.3 of the LCA Disclosure Schedule lists the
directors and officers of LCA. LCA has delivered to Summit
correct and complete copies of its Certificate of Incorporation
and By-Laws (each as amended to date). LCA is not in default
under or in violation of any provision of its Certificate of
Incorporation or By-Laws.
4.2 Capitalization.
4.2.1 The entire authorized capital stock of LCA consists of (a)
110,000,000 shares of LCA Common Stock, of which 19,599,237 shares
are issued and outstanding and (b) 10,000,000 shares of preferred
stock, $.001 par value per share (the "LCA Preferred Stock"),
1,688 shares of which are designated as Class A Preferred Stock
(all of which are issued and outstanding), and 12.6 shares of
which are designated as Class B Preferred Stock (6 shares of which
are issued and outstanding as the "First Interim Series" and 6.6
of which are issued and outstanding as the "Second Interim
Series", such Series together, the "Interim Series Preferred
Stock"). In addition, 2,500,000 shares of LCA Common Stock are
reserved for future issuance under the LCA-Vision Inc. 1995 Long-Term Stock
Incentive Plan and 1,250,000 shares of LCA Common Stock
are reserved for future issuance under the LCA-Vision Inc.
Directors' Non-Discretionary Stock Option Plan (such plans
together being the "LCA Option Plans"). No additional classes of
the LCA Preferred Stock have been designated and there are no
current commitments, arrangements, understandings or agreements to
do so. Section 4.2.1 of the LCA Disclosure Schedule is a true,
accurate and complete statement of all issued and outstanding
shares of LCA Common Stock and LCA Preferred Stock, and all shares
of LCA Common Stock subject to options.
4.2.2 All issued and outstanding shares of LCA Common Stock and
LCA Preferred Stock have been duly authorized and are validly
issued, fully paid and nonassessable.
4.2.3 The designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of the LCA
Common Stock and LCA Preferred Stock are as set forth in LCA's
Certificate of Incorporation, as amended, and Certificates of
Designations previously provided to Summit.
4.2.4 Except as set forth in Section 4.2.4 of the LCA Disclosure
Schedule, (a) no person owns of record or is known to LCA to own
beneficially more than five percent (5%) of any shares of capital
stock of LCA, (b) no subscription, warrant, option, convertible
security, or other right (contingent or other) to purchase or
otherwise acquire equity securities of LCA is authorized or
outstanding, (c) there is no commitment by LCA to issue shares,
subscriptions, warrants, options, convertible securities or other
such rights or to distribute to holders of any of its equity
securities any evidence of indebtedness and (d) there is no
written or oral agreement by LCA to sell or transfer any LCA
Common Stock or LCA Preferred Stock to any third Person. LCA has
no obligation (contingent or other) to purchase, redeem or
otherwise acquire any of its equity securities or any interest
therein, or to pay any dividend or make any other distribution in
respect of the LCA Common Stock or LCA Preferred Stock. Except as
set forth in Section 4.2.4 of the LCA Disclosure Schedule, there
are no voting trusts or agreements, stockholders' agreements,
pledge agreements, buy-sell agreements, rights of first refusal,
preemptive rights or proxies relating to any securities of LCA.
All of the outstanding securities of LCA were issued in compliance
with all applicable Federal and state securities laws.
4.2.5 The shares of LCA Common Stock that constitute the Stock
Consideration will be duly authorized and validly issued, and as
of the date of issuance shall be fully paid and nonassessable and
free of all liens, charges, claims, encumbrance and Liabilities
whatsoever.
4.3 Noncontravention. Except as set forth in Section 4.3 of the
LCA Disclosure Schedule, neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency, or court to which LCA is subject or any provision of the
Certificate of Incorporation or By-Laws of LCA or (b) result in a
breach of, constitute a default under, result in the acceleration
of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice or consent under any
agreement, contract, lease, license, instrument, or other
arrangement to which LCA is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets). LCA is not
required to give any notice to, make any filing with, or obtain
any authorization, consent or approval of any federal, state or
local government or governmental agency in order for the parties
to consummate the transactions contemplated by this Agreement,
other than pursuant to the HSR Act and as contemplated under
Section 9.4 hereof.
4.4 Financial Statements. LCA has delivered separately to Summit
the following LCA consolidated financial statements (collectively
the "LCA Financial Statements"): audited consolidated balance
sheets and statements of operations stockholder's equity and cash
flow as of and for the fiscal years ended December 31, 1995 and
1996 (the last being the "Most Recent LCA Fiscal Year End"). LCA
has also delivered to Summit unaudited monthly income statements
and balance sheets for the period ended May 31, 1997, together
with account analysis and other supporting detail relating thereto
(the "May Financial Statements"). The LCA Financial Statements
(including the notes thereto) and the May Financial Statements
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the
periods covered thereby, present fairly in all material respects
the financial condition of LCA as of such dates and the results of
operations of LCA for such periods.
4.5 Events Subsequent to Most Recent LCA Fiscal Year End. Since
the Most Recent LCA Fiscal Year End, LCA has conducted its
business only in the Ordinary Course of Business and there has not
been any Material Adverse Effect in the business, financial
condition, operations or results of operations of LCA, and LCA has
not engaged in or been party to any agreement or occurrence
outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, since that date (or such other date
as may be specified below) and except as disclosed in Section 4.5
of the LCA Disclosure Schedule:
4.5.1 No Person (including LCA) has accelerated, terminated,
modified or canceled any agreement, contract, lease or license (or
series of related agreements, contracts, leases or licenses) to
which LCA is a party or by which it or any of its properties are
bound, except in the Ordinary Course of Business;
4.5.2 LCA has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of
Business;
4.5.3 LCA has not canceled, compromised, waived or released any
right or claim (or series of related rights and claims) outside
the Ordinary Course of Business;
4.5.4 LCA has not (a) issued, sold or otherwise disposed of any of
its capital stock, (b) granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange
or exercise) any of its capital stock, (c) declared, set aside or
paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or (d) redeemed,
purchased or otherwise acquired any of its capital stock;
4.5.5 LCA has not made any loan to or agreement with any of its
directors, officers or employees and it has not entered into any
other transaction with any of its directors, officers or employees
outside the Ordinary Course of Business;
4.5.6 There has been no sale, assignment or transfer of any of the
assets of LCA, except in the Ordinary Course of Business;
4.5.7 There have been no capital expenditures in excess of One
Hundred Thousand Dollars ($100,000) individually or Five Hundred
Thousand Dollars ($500,000) in the aggregate;
4.5.8 LCA has not failed to perform in any material respects all
of its obligations under agreements, contracts, leases, licenses
and instruments relating to or affecting its properties, assets
and business, and has not changed materially the prices or offer
terms of sale or license of any of its products or services;
4.5.9 LCA has not failed to maintain its books of account and
records in the usual, regular and ordinary manner;
4.5.10 LCA has not made any material change in its accounting
methods or materially revalued any of its assets outside the
Ordinary Course of Business;
4.5.11 There has not been any increase in the wages, salaries,
compensation, stock option, pension or other fringe benefits
payable to any executive officer, employee or director of LCA from
those set forth in the definitive proxy materials filed by LCA
with the SEC with respect to its annual meeting of stockholders
held on June 9, 1997 (the "LCA Proxy Statement"); and
4.5.12 There has not occurred any event that would require the
filing by LCA of a report on Form 8-K with the SEC.
LCA is not under any legal obligation, whether written or oral, to
do any of the foregoing.
4.6 SEC Filings.
4.6.1 LCA has timely filed all forms, reports and documents
required to be filed by it with the SEC at all times from and
after LCA became obligated to make such filings with the SEC
(collectively, the "LCA SEC Reports"), and has heretofore
delivered to RCII and Summit, in the form filed with the SEC, (a)
all Annual Reports on Form 10-K filed by LCA with the SEC, (b) all
proxy statements relating to LCA's meetings of stockholders
(whether annual or special) for which definitive proxy statements
have been required to be filed with the SEC, (c) all other reports
or registration statements filed by LCA with the SEC, and (d) all
amendments and supplements to all such reports and registration
statements filed by LCA with the SEC.
4.6.2 The LCA SEC Reports (a) were prepared in all material
respects in accordance with, and comply with, the requirements of
the 1933 Act or the 1934 Act, as the case may be, and (b) did not
at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
4.6.3 None of LCA's subsidiaries is required to file any forms,
reports or other documents with the SEC.
4.6.4 Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the LCA SEC
Reports are identical to the LCA Financial Statements provided to
Summit by LCA.
4.6.5 Except as set forth in Section 4.6.5 of the LCA Disclosure
Schedule, there are no impediments to LCA's eligibility to
register its equity securities with the SEC by use of any SEC Form
appropriate for purposes of filing and causing to become effective
the Distribution Shares Registration Statement and the Selling
Shareholders Registration Statement, as contemplated by Section
9.4, including, without limitation, impediments resulting from
current or past violations of filing or reporting obligations
under the 1933 Act or the 1934 Act, the listing of the LCA Common
Stock on the NASDAQ SmallCap Market, magnitude of market
capitalization or any actions or inactions of any of its officers,
directors or shareholders.
4.6.6 Except as set forth in Section 4.6.6 of the LCA Disclosure
Schedule, from and after the respective filing dates of the most
recent annual report on Form 10-KSB, quarterly report on Form 10-QSB and
definitive proxy statement filed under Section 14A of the
1934 Act, there has been no material change in the statements,
facts or information contained in any one or more of such LCA SEC
Reports, whether or not such material change constitutes a
Material Adverse Effect and whether or not such material change
would be required to be contained in an amendment to an LCA SEC
Report as filed with the SEC, a filing on any Form approved for
use by the SEC or in a press release.
4.7 Tax Matters.
4.7.1 LCA has filed all Tax Returns that it was required to file,
including, without limitation, any Tax Returns required to be
filed with any state. All such Tax Returns were correct and
complete in all material respects. All Taxes owed by LCA (whether
or not shown on any Tax Return) have been paid. Except as
disclosed in Section 4.7 of the LCA Disclosure Schedule, LCA
currently is not the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where LCA does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction.
There are no Security Interests on any of the assets of LCA that
arose in connection with any failure (or alleged failure) to pay
any Tax.
4.7.2 LCA has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other
third party.
4.7.3 There are no disputes or claims concerning any Tax
Liability of LCA either (a) claimed or raised by any authority in
writing or (b) as to which LCA has Knowledge, which in the
aggregate exceed $10,000.00.
4.7.4 Section 4.7 of the LCA Disclosure Schedule lists all
federal, state, local and foreign income Tax Returns filed with
respect to LCA for taxable periods ended on or after December 31,
1995; no such Tax Returns have been audited or currently are the
subject of audit. LCA has delivered to RCII and Summit correct
and complete copies of all federal income Tax Returns, examination
reports and statements of deficiencies assessed against or agreed
to by LCA since December 31, 1995.
4.7.5 LCA has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
4.7.6 LCA will not have as of the Closing Date any liability for
Taxes, except for Taxes which have been specifically accrued for
in full on the books and records of LCA in the Ordinary Course of
Business and Taxes not yet due and payable.
4.7.7 LCA has no liability with respect to any Taxes resulting
from operations of any predecessor entity (by merger,
consolidation, sale of stock or assets or otherwise) taxed under
Subchapter S of the Code. LCA is not bound by any agreement
pursuant to which it has any obligation to reimburse any
shareholder or other person with respect to any tax liability
incurred by such shareholder or Person during the period for which
LCA was taxed under Subchapter S of the Code.
4.8 Undisclosed Liabilities. To LCA's Knowledge and except as set
forth in Section 4.8 of the LCA Disclosure Schedule, LCA does not
have any Liability except for (a) Liabilities set forth in the
Most Recent LCA Balance Sheet and (b) Liabilities which have
arisen after the Most Recent LCA Fiscal Year End in the Ordinary
Course of Business.
4.9 Legal Compliance. LCA has complied in all material respects
(including without limitation in its capacity as a tenant), with
all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges
thereunder) of federal, state, local and foreign governments (and
all agencies thereof), including, without limitation, federal and
state health care laws, rules and regulations restricting fee-splitting,
patient referrals to entities in which physicians hold
an interest and the corporate practice of medicine, and no
material action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been filed or commenced
against it alleging any failure so to comply. Except as set forth
in Section 4.9 of the LCA Disclosure Schedule and as contemplated
by Sections 5.9 and 9.4 hereof, no consent, approval or
authorization of, or registration, qualification or filing with,
any governmental agency or authority is required for the execution
and delivery of this Agreement by LCA or for the consummation by
LCA of the transactions contemplated hereby or thereby. All of
LCA's material rights under all of its permits, approvals and
licenses, both governmental and private, related to the operation
of its business will continue unimpaired by the Acquisition
contemplated hereby, except as set forth in Section 4.9 of the LCA
Disclosure Schedule.
4.10 Title. LCA has good and marketable title to the shares that
constitute the Stock Consideration, free and clear of any liens,
charges, claims or encumbrances whatsoever. At the Closing and
upon the consummation of the transactions contemplated by this
Agreement, LCA shall transfer such title to Summit and any Selling
Shareholders. Except as set forth in Section 4.10 of the LCA
Disclosure Schedule, LCA owns all of its assets and properties
free and clear of all liens, claims, encumbrances, security
interests and mortgages.
4.11 Notes Payable to Shareholders. The aggregate indebtedness of
LCA to its shareholders (the "LCA Shareholder Debt") on all notes
payable as of the date of this Agreement is $1,901,339 as of May
31, 1997.
4.12 Brokers. LCA has not retained, utilized or been represented
by any broker or finder in connection with the transactions
contemplated by this Agreement.
4.13 Material Contracts. Section 4.13 of the LCA Disclosure
Schedule lists and briefly describes all written contracts,
agreements and instruments to which LCA is a party, or by which it
or its properties are bound, and which involve on the part of any
Person provision of goods or services or payment of money in
excess of $20,000 or which, if breached, could result in damages
or loss of benefits to RCII in excess of $20,000 (the "LCA
Material Contracts"), and sets forth, as to each contract,
agreement or instrument, whether consummation of the transactions
contemplated hereby will require consent of any third party to
avoid the occurrence of a breach or default of, or termination or
change of rights or benefits under, such contract, agreement or
instrument. LCA has delivered to Summit a correct and complete
copy of each agreement listed in Section 4.13 of the LCA
Disclosure Schedule relating in any way to its laser refractive
surgery centers, and upon request, shall deliver to Summit a
correct and complete copy of each other written agreement listed
in Section 4.13 of the LCA Disclosure Schedule (as amended to
date) and a written summary setting forth the terms and conditions
of each oral agreement referred to in Section 4.13 of the LCA
Disclosure Schedule. With respect to each LCA Material Contract
and except as set forth in Section 4.13 of the LCA Disclosure
Schedule, (a) the LCA Material Contract is legal, valid, binding,
enforceable and in full force and effect, (b) no material breach,
default, termination or loss or change of rights or benefits shall
occur with respect to such LCA Material Contract as a result of
the consummation of the transactions contemplated hereby, (c) LCA
is not, and to LCA's Knowledge no other party is, in material
breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under an LCA Material
Contract, (d) no party has repudiated any provision of an LCA
Material Contract and (e) LCA has not icurred any penalty or
similar charges for delays in delivery of any product or service
or any indemnification or warranty obligations under such LCA
Material Contract. Except as disclosed in Section 4.13 of the LCA
Disclosure Schedule, all contracts, understandings and
arrangements between LCA and Stephen N. Joffe (and his
Affiliates)(a) have been disclosed in LCA's annual report on Form
10-KSB for the fiscal year ended December 31, 1996 or in the LCA
Financial Statements for the fiscal year ended December 31, 1996,
including the notes thereto, or the LCA Proxy Statement, whether
or not such contracts, understandings and arrangements meet the
criteria of materiality set forth in this Section 4.13 and (b)
reflect arms'-length transactions, in each case at fair market
value for the relevant services, goods or property.
4.14 Litigation. Section 4.14 of the LCA Disclosure Schedule sets
forth each instance in which LCA (a) is subject to any outstanding
injunction, judgment, order, decree, ruling or charge or (b) is a
party or is threatened in writing to be made a party to any
action, suit, proceeding, hearing or investigation of, in, or
before any court or quasi judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any
arbitrator.
4.15 Activities in LCA Common Stock. To LCA's Knowledge, neither
LCA nor any of its Affiliates, nor any Person acting on behalf of
either or all of LCA or any of its Affiliates, have at any time
engaged in any purchase, sale, transfer, hedging, derivative or
other activities of any kind relating to the LCA Common Stock that
constitutes, or reasonably could be construed as constituting, a
manipulative or deceptive device or contrivance in violation of
applicable federal or state securities laws or common law.
4.16 Disclosure. The representations and warranties contained in
this Article 4 do not contain any untrue statement of a material
fact or, in light of any other information regarding LCA contained
in this Agreement, omit to state any material fact necessary in
order to make the statements and information contained in this
Article 4 not misleading.
4.17 Incorporation. Each item of disclosure contained in a
numbered section of the RCII Disclosure Schedule shall be deemed
incorporated by reference in each other numbered section of the
RCII Disclosure Schedule, as if fully set forth therein.
ARTICLE V
COVENANTS
5.1 Conduct of Business. From and after the date of this
Agreement (and with respect to LCA from and after the date of
filing of its most recent Annual Report on Form 10-K with the SEC)
through the Closing Date, except as expressly contemplated or
permitted by this Agreement, each of RCII and LCA shall (a)
conduct its business in the Ordinary Course of Business, and(b)
use reasonable efforts to maintain and preserve its business
organizations, assets, employees and advantageous business
relationships.
5.2 Access to Premises and Information. Prior to Closing, each
party shall permit the other party and their respective authorized
representatives to have reasonable access, during regular business
hours, to their premises and documents, books and records, and
such financial and operating data and other information as a party
may reasonably request (with respect to Summit solely relating to
RCII), and to make copies at their own expense.
5.3 Fulfillment of Conditions. The parties will use their best
efforts to bring about the fulfillment of each of the conditions
precedent to the obligations of the other party to close the
transactions contemplated by this Agreement, and will render
reasonable assistance to the other party as requested by such
other party to enable it to fulfill its obligations hereunder.
Summit and LCA each shall give notice to the other party, by
telecopy, when they, respectively, have satisfied all of the
conditions to the other party's obligation to close for which
they, respectively, are responsible (a "Conditions Notice").
5.4 Forbearances. Prior to Closing, neither LCA, on the one hand,
nor RCII, on the other, shall, without the prior written consent
of the other party:
5.4.1 Other than in the Ordinary Course of Business incur any
indebtedness for borrowed money, assume, guarantee, endorse or
otherwise become responsible for the obligations of any other
Person, or make any loan or advance to any other Person;
5.4.2 Issue or grant any rights with respect to issuance of, any
shares of its capital stock, or adjust, split, combine or
reclassify any capital stock, make, declare or pay any dividend or
make any other distribution on, or redeem, purchase or otherwise
acquire, any shares of its capital stock, except for issuance of
shares of LCA Common Stock or RCII Common Stock, as the case may
be, pursuant to the exercise of stock options outstanding on the
date of this Agreement and which (a) in the case of LCA, are
listed on Section 4.2.1 and or 4.2.4 of the LCA Disclosure
Schedule and (b) in the case of RCII are contemplated under
Section 5.11 hereof, and except that LCA may grant options in the
Ordinary Course of Business under the LCA Option Plans to
directors and employees, except executive employees listed in the
LCA Proxy Statement;
5.4.3 Other than in the Ordinary Course of Business sell,
transfer, mortgage, encumber or otherwise dispose of any of its
properties or assets, or cancel, release or assign any
indebtedness to any Person;
5.4.4 Make any material investment in another Person, either by
purchase of stock or securities, contributions to capital,
property transfers or otherwise;
5.4.5 Except in the Ordinary Course of Business, enter into, amend
or terminate any material contracts or agreements, including,
without limitation, any agreements of employment, stock or asset
sale, acquisition, merger, consolidation or other business
acquisition, disposition or combination, or make any change in any
material leases or contracts; or
5.4.6 Amend its Certificate of Incorporation or By-Laws.
5.5 No Transactions in LCA Common Stock. Except as otherwise
expressly permitted by this Agreement, neither LCA nor any of its
Affiliates, nor Summit nor any of its Affiliates, shall have
engaged in any transactions directly or indirectly involving LCA
Common Stock, including, without limitation, purchases, sales,
transfers, dispositions, transactions in derivatives, pledges or
grants of options, proxies or voting rights.
5.6 Advice of Changes. The parties shall promptly advise the
other party of any change or event having a Material Adverse
Effect on it (with respect to Summit solely relating to RCII) or
which it believes would or would be reasonably likely to cause or
constitute a material breach of any of their respective
representations, warranties or covenants hereunder.
5.7 No Restrictions on Summit's Conduct of Business. LCA
acknowledges and agrees that the covenants, obligations and
restrictions contained in this Article V and elsewhere in this
Agreement, as they relate to activities involving Summit, relate
solely to Summit in its capacity as shareholder of RCII, and not
generally to Summit and its business and assets. Except as
expressly provided herein, there shall be no express or implied
limitation on Summit's ability to conduct its business, other than
as it relates solely to RCII, whether or not in the Ordinary
Course of Business.
5.8 Public Announcement. Neither Summit and RCII, on the one
hand, nor LCA, on the other, nor any of their respective officers,
employees, representatives or agents, will make any public
announcement or issue any press release regarding this Agreement
and the transactions contemplated hereby, without the advance
consent of the other party, provided, however, that any party may
make any announcements that, upon advice of counsel and after
notice to the other party, it believes to be necessary to comply
with the disclosure obligations under any federal or state
securities laws or the rules and regulations of any self-regulatory organization
by which such party is bound.
5.9 HSR Act Compliance. Each of Summit and LCA represents that it
has sent for filing with the Federal Trade Commission and the
United States Department of Justice a Premerger Notification and
Report Form with respect to the Acquisition. Summit and LCA shall
each prepare and file all such other documents with the Federal
Trade Commission and the United States Department of Justice as
are required for the parties to comply with the HSR Act, and shall
promptly furnish all material thereafter requested by any of the
regulatory agencies having jurisdiction over such filings. Each
of the parties represents that it has not requested an
acceleration of the applicable waiting period under the HSR Act,
and agrees that it shall not make such a request for acceleration
unless the parties shall mutually agree to make such request.
5.10 LCA SEC Reports. Any reports, forms and other documents
filed by LCA with the SEC after the date of this Agreement (a)
will be prepared in all material respects in accordance with, and
will comply with, the requirements of the 1933 Act or the 1934
Act, as the case may be, and (b) will not at the time they are
filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
5.11 RCII Option Holders. RCII shall use its reasonable best
efforts to cause each of the holders (the "Option Holders") of
options to purchase shares of RCII Common Stock (the "RCII
Options") to exercise the RCII Options and acquire shares of RCII
Common Stock (the "Option Shares") and sell the Option Shares to
LCA simultaneously with consummation of the Acquisition. Any
Option Holder so electing (a "Selling Shareholder") shall, as of
the Closing Date, (a) sell, assign and transfer the Option Shares
(the "Selling Shareholder Shares") to LCA for the Stock
Consideration contemplated under Section 2.3 hereof, (b) make the
representations and warranties to LCA contained in Sections 3.1.3
and 3.4.1, revised to relate solely to the Selling Shareholders,
upon LCA making to them the representations and warranties
contained in Sections 4.2.5 and 4.10 hereof and agreeing to
register the shares of LCA Common Stock constituting the Stock
Consideration pursuant to the Selling Shareholder Registration
Statement as provided in Section 9.4 hereof, and (c) deliver to
LCA a stock certificate representing the Selling Shareholder's
Option Shares, duly endorsed for transfer. LCA agrees to include
all shares of LCA Common Stock constituting the Stock
Consideration (the "Selling Shareholder Registrable Shares") in a
registration statement under the 1933 Act to permit resale of such
Selling Shareholder Registrable Shares by the Selling
Shareholders, as provided in Section 9.4 hereof.
5.12 NASDAQ Listing. LCA shall apply for and use its best efforts
to obtain, prior the Closing Date, a listing for the trading of
the LCA Common Stock (including the shares of LCA Common Stock
that constitute the Stock Consideration) on the NASDAQ National
Market System.
5.13 Business Restrictions. Prior to the date that is the earlier
of (i) three (3) years after the date of this Agreement, and (ii)
the expiration of the Shareholders' Agreement, Summit shall not
own or operate laser vision correction centers. This shall not,
however, restrict Summit in any way from providing support
services to its customers, including without limitation, leasing
of laser systems, marketing support and results analysis.
ARTICLE VI
CONDITIONS TO LCA'S
OBLIGATION TO CLOSE
The obligation of LCA to consummate the Acquisition and the other
transactions contemplated by this Agreement is subject to
satisfaction or waiver by LCA, on or prior to the Closing Date, of
the following conditions:
6.1 Representations and Warranties; Covenants. The
representations and warranties of Summit set forth in this
Agreement shall be true and correct in all material respects as of
the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of
the Closing Date, as though made on and as of the Closing Date,
except as contemplated in Section 5.11 hereof. RCII and Summit
shall have complied with all of their obligations under this
Agreement which are to be performed or complied with by them on or
prior to the Closing, including without limitation covenants
contained in Article V hereof. LCA shall have received an
officer's certificate signed on behalf of Summit to the foregoing
effect.
6.2 RCII Cash Balance. RCII shall have a cash balance of not less
than Ten Million Dollars ($10,000,000) on the Closing Date.
6.3 Third Party Consents. Summit and RCII shall have obtained the
third party consents to the Acquisition called for under those
RCII Material Contracts identified in Section 3.12 of the RCII
Disclosure Schedule.
6.4 No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing
the consummation of the Acquisition or any of the other
transactions contemplated by this Agreement shall be in effect.
No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced which
prohibits, restricts or makes illegal consummation of the
Acquisition or any of the other transactions contemplated by this
Agreement.
6.5 Deliveries at Closing. At Closing, Summit and RCII shall have
executed and delivered all of the agreements, instruments and
documents, and made other deliveries, required of them under
Section 8.1 and such other agreements, instruments and documents
LCA may reasonably request in order to fulfill the intents and
purposes of this Agreement.
6.6 No Material Adverse Change. Without limiting the generality
of Section 6.1, since the Most Recent RCII Fiscal Year End, no
Material Adverse Effect with respect to RCII shall have occurred,
nor shall any event or events have occurred which could reasonably
be expected, individually or in the aggregate, to have a Material
Adverse Effect on RCII. LCA shall have received an officer's
certificate signed on behalf of Summit to the foregoing effect.
6.7 HSR Act. The waiting period under the HSR Act shall have
expired and there shall not be any outstanding order of a court of
competent jurisdiction restraining the consummation of the
transactions contemplated hereby.
6.8 RCII Stock. As of the Closing Date, (a) Summit shall own no
less than ninety six percent (96%) of the then issued and
outstanding shares of RCII Common Stock and (b) any Selling
Shareholders shall have complied with the obligations set forth in
Section 5.11(a), (b) and (c) hereof.
ARTICLE VII
CONDITIONS TO SUMMIT'S AND RCII'S
OBLIGATION TO CLOSE
The obligation of RCII and Summit to consummate the Acquisition
and the other transactions contemplated by this Agreement is
subject to satisfaction or waiver by Summit and RCII, on or prior
to the Closing Date, of the following conditions:
7.1 Representations and Warranties; Covenants. The
representations and warranties of LCA set forth in this Agreement
shall be true and correct in all material respects as of the date
of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing
Date, as though made on and as of the Closing Date. LCA shall
have complied with all of its obligations under this Agreement
which are to be performed or complied with by it on or prior to
the Closing, including without limitation covenants contained in
Article V hereof. RCII and Summit shall have received an
officer's certificate signed on behalf of LCA to the foregoing
effect.
7.2 Board of Directors. The Board of Directors of LCA shall
consist of the following five (5) members: Stephen N. Joffe, John
C. Hassan, John H. Gutfreund, Ronald Herskowitz and William O.
Coleman. If Ronald Herskowitz shall not have become employed by
LCA pursuant to the Employment Documents, he shall not serve as a
director of LCA and the fifth director shall be mutually agreed to
between LCA and Summit.
7.3 Restructuring of Bank Debt. LCA shall have restructured its
bank indebtedness in a manner acceptable to Summit in its sole
discretion. Without limiting the generality of the foregoing, the
restructured facility will not be acceptable to Summit unless it
has a maturity date of not less than thirteen (13) months from the
date of restructuring, provides for LCA property to serve as
collateral only for indebtedness as to which LCA is the sole,
primary obligor and permits borrowings of not less than the
current facility.
7.4 Shareholder Debt. LCA shall not have repaid any of the
Shareholder Debt (including payments of principal and interest)
from and after the date of this Agreement through the Closing Date
and LCA shall have delivered to Summit, on or prior to the Closing
Date, evidence that the instruments representing Shareholder Debt
have been legended as required by Section 9.3.
7.5 No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing
the consummation of the Acquisition or any of the other
transactions contemplated by this Agreement shall be in effect.
No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced which
prohibits, restricts or makes illegal consummation of the
Acquisition or any of the other transactions contemplated by this
Agreement.
7.6 Deliveries at Closing. At Closing, LCA shall have executed
and delivered all of the agreements, instruments and documents,
and made other deliveries, required of them under Section 8.2 and
such other agreements, instruments and documents RCII and Summit
may reasonably request in order to fulfill the intents and
purposes of this Agreement.
7.7 No Material Adverse Change. Without limiting the generality
of Section 7.1, since the Most Recent LCA Fiscal Year End, no
Material Adverse Effect with respect to LCA shall have occurred,
nor shall any event or events have occurred which could reasonably
be expected, individually or in the aggregate, to have a Material
Adverse Effect on LCA. RCII and Summit shall have received an
officer's certificate signed on behalf of LCA to the foregoing
effect.
7.8 HSR Act. The waiting period under the HSR Act shall have
expired and there shall not be any outstanding order of a court of
competent jurisdiction restraining the consummation of the
transactions contemplated hereby.
7.9 Rights and Preferences of Interim Series Preferred Stock. LCA
shall have amended, and shall have obtained all necessary consents
and taken all necessary corporate action to amend the Certificates
of Designations, Preferences and Rights (the "Certificates of
Designations") of the Interim Series Preferred Stock to (i)
establish the "per share Conversion Price of Interim Series Class
B Preferred Stock" in Section 4(a) of the Certificates of
Designations at Three and 50/100 Dollars ($3.50) per share, (ii)
to delete Section 4(b) from the Certificates of Designations, and
(iii) to delete the two parenthetical phrases in Section 4(c) of
the Certificates of Designations.
ARTICLE VIII
DELIVERIES AT CLOSING
8.1 Summit and RCII Deliveries. At the Closing, Summit shall
deliver the following, duly executed:
8.1.1 Certificate of an officer of Summit contemplated under
Sections 6.1 and 6.6.
8.1.2 One or more stock certificates representing the shares of
Subject Stock acquired by LCA, duly endorsed for transfer.
8.1.3 An opinion of Goldstein & Manello, P.C., counsel to Summit
and RCII, dated as of the Closing Date and addressed to LCA,
substantially in the form attached as Exhibit A hereto.
8.1.4 Contracts pursuant to which Summit will provide maintenance
services to LCA for all Summit excimer laser systems owned or
leased by LCA as of the Closing Date, including without limitation
those owned or leased by LCA and by RCII prior to the Acquisition,
such contracts to be in Summit's standard form (the "Service
Contracts"). The Service Contracts shall have a term of three (3)
years and require fees of $80,000 per laser system for such three
(3) year period. Notwithstanding the foregoing, with respect to
no more than five (5) such service contracts, if during the term
of a service contract LCA discontinues all use of the laser system
subject to a service contract (except in connection with the
closing of a laser vision correction center), and does not replace
such laser system, either at the original location of such laser
system or at a new location, with any Summit excimer laser system,
then LCA may terminate such contract.
8.1.5 A shareholders' agreement between Summit, Stephen N. Joffe,
Sandra F.W. Joffe and any holder of five percent (5%) or more of
LCA Common Stock in the form attached as Exhibit B (the
"Shareholders' Agreement").
8.1.6 The Registration Rights Agreement in the form attached as
Exhibit C.
8.1.7 The documents contemplated under Section 5.11.
8.2 LCA Deliveries. At the Closing, LCA shall deliver the
following, duly executed:
8.2.1 Certificate of an officer of LCA contemplated under
Sections 7.1 and 7.7.
8.2.2 One or more certificates representing the Stock
Consideration, issued in the names and amounts designated by
Summit no less than three (3) business days prior to the Closing.
8.2.3 An opinion of Dinsmore & Shohl, L.L.P., counsel to LCA,
dated as of the Closing Date and addressed to Summit and RCII,
substantially in the form attached as Exhibit D hereto.
8.2.4 The Service Contracts.
8.2.5 The Shareholders' Agreement.
8.2.6 The Registration Rights Agreement.
8.2.7 The Employment Documents in the form attached as Exhibit E
hereto, provided that LCA shall be relieved of its obligation to
execute and deliver the Employment Documents if Mr. Herskowitz
does not, at or prior to the Closing, execute the Employment
Documents.
ARTICLE IX
POST-CLOSING OBLIGATIONS
9.1 Upgrade of Summit Laser Systems. Summit shall, at LCA's
request, and subject to the execution and delivery of Summit's
standard sales contract, upgrade any Summit Apex laser system to
an Apex Plus laser system. The charge per system for any such
upgrade shall be the lesser of (a) Fifty Five Thousand Dollars
($55,000) and (b) Summit's cost of the upgrade.
9.2 Release of Summit Guaranties. LCA shall use its best efforts
to obtain releases of Summit's guaranties of RCII real estate
leases, as identified in Section 3.12 of the RCII Disclosure
Schedule, including without limitation, offering its own
guaranties in place of Summit's. LCA shall indemnify, defend and
hold Summit harmless from and against any Liabilities Summit may
incur from and after the Closing Date with respect to any such
guaranties from which it has not been released.
9.3 Payment of LCA Shareholder Debt. Regardless of the payment
terms contained in the instruments representing the LCA
Shareholder Debt, LCA shall not make principal payments under the
LCA Shareholder Debt unless the earnings of LCA for the prior
fiscal year (before taxes, amortization of goodwill and
depreciation, net of capital expenditures for such fiscal year)
exceeded One Million Dollars ($1,000,000), and then payment may be
made only to the extent of twenty-five percent (25%) of such
excess. LCA shall cause the instruments representing the LCA
Shareholder Debt to contain a legend to the effect of the
foregoing.
9.4 Registration of Distribution Shares and Selling Shareholder
Registrable Shares.
9.4.1 Within sixty (60) days of the Closing, LCA shall prepare,
file and cause to become effective one or more registration
statements under the 1933 Act registering (a) the Distribution
Shares for distribution by Summit pro rata to its shareholders
(the "Distribution Shares Registration Statement"), and (b) the
Selling Shareholder Registerable Shares (either separately or in
combination with the Distribution Shares Registration Statement
the "Selling Shareholders Registration Statement"). If LCA is
unable, after using its best efforts throughout such sixty-day
period, to cause the Distribution Shares Registration Statement
and/or the Selling Shareholders Registration Statement to become
effective, the sixty-day period shall be extended for an
additional thirty (30) days, provided that LCA continues to use
its best efforts to bring about such effectiveness throughout such
additional thirty-day period.
9.4.2 LCA shall consult with Summit throughout the registration
process, and shall permit Summit to (a) review and comment upon
all drafts of the Registration Statements and preliminary and
final prospectuses contained therein, and all amendments and
supplements thereto, prior to filing with the SEC, and(b) conduct
such due diligence regarding the combined business operations of
LCA and RCII as Summit, in its reasonable discretion, shall
determine to be necessary and appropriate, including, without
limitation, the inspection and copying of corporate documents of
LCA. The Registration Statements, and the preliminary and final
prospectuses contained therein, and all amendments and supplements
thereto, shall be satisfactory in form and substance to Summit and
its counsel before being filed.
9.4.3 Unless application of state securities laws (other than
anti-fraud laws and filing requirements) is preempted by federal
legislation under the National Securities Markets Improvement Act
of 1996, LCA further shall register or otherwise qualify the
Distribution Shares and the Selling Shareholder Registrable Shares
covered by the Registration Statements under the applicable
securities or "blue sky" laws of those jurisdictions which purport
to regulate distributions of securities as contemplated by the
Registration Statements.
9.4.4 LCA further shall (a) furnish to Summit a copy of all
documents filed and all correspondence from and to the SEC in
connection with the Registration Statements, (b) insure the
obtaining of any necessary approvals from the National Association
of Securities Dealers, Inc. and (c) cause the Distribution Shares
and the Selling Shareholder Registrable Shares to be listed with
NASDAQ.
9.4.5 LCA shall use its best efforts to maintain the effectiveness
of the Registration Statements until all of the Distribution
Shares have been distributed by Summit to its shareholders and
then, if later, until the earlier to occur of (a) completion of
the sale of all Selling Shareholder Registrable Shares registered
thereunder and (b) one year from the effective date of the Selling
Shareholders Registration Statement. LCA shall promptly notify
Summit of any material event or change in circumstances that
renders any Registration Statement or prospectus incomplete,
inaccurate or misleading in any material way, and LCA promptly
will amend the Registration Statements and the prospectuses
contained therein as and to the extent necessary to comply with
all applicable securities laws.
9.4.6 All expenses of such registration, including without
limitation filing and registration fees and expenses of complying
with state securities laws, shall be borne by LCA.
9.4.7 LCA shall effect the registration of the Distribution Shares
in accordance with Summit's intended method of distribution to its
shareholders.
9.4.8 In connection with the Distribution Shares Registration
Statement and the Selling Shareholders Registration Statement, LCA
shall provide to Summit and the Selling Shareholders such
representations, warranties, covenants, indemnifications, opinions
of counsel, accountants' "comfort letters" (if obtainable) and
such other protections as are customarily provided to underwriters
and selling shareholders, as the case may be, in public
underwritten offerings, including but not limited to, those
provided in Section 7 of the Registration Rights Agreement.
9.4.9 LCA shall, as promptly as practicable, notify Summit, at any
time when a prospectus relating to the sale of the Distribution
Shares is required by law to be delivered in connection with sales
by an underwriter or dealer, of the occurrence of any event
requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of
the registered Distribution Shares, such prospectus will not
contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, and as promptly as
practicable make available to Summit and to the underwriters any
such supplement or prospectus.
9.5 NASDAQ Listing. If the LCA listing for the trading of the LCA
Common Stock (including the shares of LCA Common Stock that
constitute the Stock Consideration) on the NASDAQ National Market
System has not been completed prior to Closing, LCA shall continue
to use its best efforts to obtain such listing as soon as
practicable after the Closing.
9.6 Compliance With SEC Disclosure Requirements. From and after
the Closing Date and with respect solely to the Acquisition and
the other transactions contemplated by this Agreement, each of LCA
and Summit shall comply with all disclosure obligations under any
federal or state securities laws or the rules and regulations of
any self-regulatory organization by which such party is bound. At
all times that LCA has a class of equity securities registered
under the 1934 Act, LCA shall comply with all disclosure
obligations under any federal or state securities laws or the
rules and regulations of any self-regulatory organization by which
LCA is bound.
9.7 Distribution of Distribution Shares. Subject to compliance
with Section 9.4 hereof, Summit shall, as soon as practicable
after the effective date of the Distribution Shares Registration
Statement, distribute to its shareholders, as a dividend, the
Distribution Shares.
9.8 Occupancy of Summit Space. RCII may continue to occupy the
space it currently occupies at Summit's facility at 21 Hickory
Drive, Waltham, Massachusetts for ninety (90) days after the
Closing Date, upon such terms and conditions to which the parties
shall mutually agree. During such period, LCA shall use its best
efforts to obtain alternate space and to relocate RCII.
9.9 Post-Approval Support Services. After the Closing Date, LCA
shall cause RCII to continue to comply with its existing
obligations to Summit to provide post-approval support services,
related to Summit's obligation to provide information to the U.S.
Food and Drug Administration.
9.10 Interim Series Preferred Stock. LCA shall not amend the
rights and preferences of the Interim Series Preferred Stock
without Summit's prior written approval in each instance for a
period commencing on the date of this Agreement and terminating on
the earlier of (i) five (5) years from the date of this Agreement
and (ii) the date on which Summit owns less than 5% of LCA's
outstanding Common Stock.
9.11 Access to Records. After the Closing Date, LCA shall have
the right to review and copy, at reasonable times on reasonable
notice to Summit, RCII records which predate the Closing Date.
ARTICLE X
INDEMNIFICATION; BREACH
10.1 Indemnity Obligations of Summit. Summit hereby agrees to
indemnify and hold LCA harmless from, and to reimburse LCA for,
any and all losses, damages, deficiencies, claims, liabilities,
obligations, suits, actions, fees, costs, penalties, charges and
expenses (including, without limitation, reasonable attorneys'
fees) of any nature whatsoever (collectively, "Losses"), suffered
or incurred by LCA resulting from or in connection with breach of
any representation, warranty, covenant or agreement of Summit
contained in this Agreement or any document, agreement, instrument
or certificate delivered or filed pursuant hereto.
10.2 Indemnity Obligations of LCA. LCA hereby agrees to indemnify
and hold Summit harmless from, and to reimburse Summit for, any
and all Losses suffered or incurred by Summit resulting from or in
connection with breach of any representation, warranty, covenant
or agreement of LCA contained in this Agreement or any document,
agreement, instrument or certificate delivered or filed pursuant
hereto.
10.3 Procedures for Indemnification for Third Party Claims. If
any third party shall make a claim for which Summit or LCA is
entitled to indemnification under Section 10.1 or 10.2 hereof, the
following procedures shall apply:
10.3.1 Within thirty (30) days after receipt by an Indemnified
Party of any third party notice of any demand, claim or
circumstance that, with the lapse of time, would or could give
rise to a claim or the commencement (or threatened commencement)
of any action, proceeding or investigation with respect to which
the Indemnified Party intends to seek indemnification hereunder
("Asserted Liability"), the Indemnitee shall give notice thereof
(the "Claims Notice") to the Indemnifying Party. The Claims
Notice shall describe the Asserted Liability in reasonable detail
and shall indicate the amount (estimated, if necessary) of the
indemnification claim that is being or may be asserted by the
Indemnified Party.
10.3.2 Promptly after receipt of a Claims Notice, but no later
than fifteen (15) days after such receipt, the Indemnifying Party
shall proceed to compromise or defend such Asserted Liability at
its own expense, employing counsel of its own choosing reasonably
satisfactory to the Indemnified Party. The Indemnifying Party
shall immediately notify the Indemnified Party of the initiation
of such compromise or defense, and shall keep the Indemnified
Party informed as to the status and progress of such compromise or
defense. The Indemnified Party shall reasonably cooperate in the
compromising of or the defending against such Asserted Liability,
and shall have the right to participate in any such compromise or
defense, and such participation shall not limit, impair or affect
its rights to indemnification hereunder. If within fifteen (15)
days after delivery of the Claims Notice, the Indemnified Party
has not received from the Indemnifying Party any notice of the
initiation of the defense or compromise of the Asserted Liability,
the Indemnified Party shall be free to compromise or defend the
Asserted Liability at its sole election at the expense and risk of
the Indemnifying Party, and with full right of indemnification as
provided herein.
10.3.3 If any Indemnifying Party reasonably determines that its
interests in any Asserted Liability conflict or may conflict with
those of any Indemnifying Party, it may retain separate counsel
and separately participate in the defense or compromise of any
Asserted Liability, with full right of indemnification with
respect to any expense related thereto, including attorney's fees.
10.3.4 All parties shall make available to each other party any
books, records or other documents within its control which are
necessary or useful for the defense or compromise of any Asserted
Liability, and shall in all cases cooperate fully with one another
in the defense or compromise of any Asserted Liability. In the
event that the interests of any one or more parties conflict with
the interests of any one or more other parties, such cooperation
shall not be required if it would jeopardize the defense of any
such party or parties.
10.4 Claims by Summit or LCA. Summit and LCA shall be entitled to
bring a direct claim against the other in connection with any
breach of any provision of this Agreement, including without
limitation, any claim for indemnification for any such breach
under Section 10.1 or 10.2 hereof, as the case may be.
10.5 Survival of Representations and Warranties. All
representations and warranties and, except as otherwise
contemplated in this Agreement, all covenants and agreements of
the parties contained in or made pursuant to this Agreement, and
the rights of the parties to seek indemnification with respect
thereto, or otherwise to seek recovery with respect to a breach
thereof, shall survive the Closing and shall expire eighteen (18)
months after the Closing Date. The expiration of indemnification
rights shall not relate to any claim made by an Indemnified Party
or claiming party under Section 10.3 or 10.4 until such claim has
been fully and finally resolved.
10.6 Limitations on Indemnification and Damages. An Indemnifying
Party, both in its capacity as an indemnitor and as a party to
this Agreement, shall not be liable to an Indemnified Party, both
in its capacity as an indemnitee and as a party to this Agreement,
unless the aggregate amount of all Losses suffered by the
Indemnified Party in any capacity exceed $2,000,000 (the "Claims
Basket"), and shall not be liable for any individual Loss suffered
by the Indemnified Party in any capacity unless the amount of such
Loss exceeds $200,000 (the "Claims Minimum"). At such time as the
Claims Basket has been exceeded, the Indemnifying Party shall be
liable to the Indemnified Party for all Losses that are in excess
of the Claims Minimum, without further reference to the Claims
Basket. Notwithstanding the foregoing, claims by an Indemnified
Party under Sections 3.2 , 3.4.1, 4.2 and 4.10 of this Agreement
shall not be subject to the Claims Basket.
10.7 Subrogation. Any Indemnifying Party which indemnifies an
Indemnified Party for any matter pursuant to this Article X shall,
upon payment in full of the amount owed with respect to such
matter, be subrogated to the rights of such Indemnified Party
against all other Persons with respect to such matter, and, in its
own name or in the name of the Indemnified Party, may assert any
claim against any such Person with the Indemnified Party may have
with respect thereto.
ARTICLE XI
TERMINATION
This Agreement may be terminated in the following manner:
11.1 Mutual Agreement. The parties may terminate this Agreement
by mutual written agreement.
11.2 Termination for Breach. Summit and RCII, on the one hand,
and LCA, on the other, may terminate this Agreement at any time
prior to the Closing if there has been (a) a material breach of a
representation or warranty of the other party to this Agreement or
(b) a material breach of a covenant, agreement or undertaking to
be performed by the other party under this Agreement. Any party
seeking to terminate this Agreement under this Section 11.2 shall
give written notice to the other party specifying the basis for
the claim of breach, and the party receiving such notice shall
have fifteen (15) days to attempt to cure such breach, unless the
Outside Closing Date is less than fifteen days after the date of
such notice, in which case the receiving party shall have through
the Outside Closing Date to attempt such cure.
11.3 Failure of Condition Precedent. Summit and RCII, on the one
hand, and LCA, on the other, may terminate this Agreement as of
the Outside Closing Date, if any of the conditions precedent to
such party's obligation to close have not been met on or prior to
the Outside Closing Date.
11.4 Effect of Termination. Upon any termination of this
Agreement, this Agreement shall terminate and be of no further
force and effect without any further liability of any party,
provided, however, that no termination of this Agreement shall
relieve or release any of the parties hereto from liability with
respect to any breaches or violations of any representations,
warranties, covenants or agreements contained in this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Fees and Expenses. Each party to this Agreement shall bear
its own expenses, including, without limitation, legal expenses,
incurred in connection with the negotiation, drafting and
consummation of the Agreement and like matters. Notwithstanding
the foregoing, LCA shall pay all stock transfer Taxes, sales
Taxes, documentary stamp Taxes, recording charges and other
similar Taxes arising with respect to the transactions consummated
under this Agreement. Summit hereby represents that it has paid
the filing fees required to be paid under the HSR Act.
12.2 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware
without application of principles of conflict of laws, any suit
for the enforcement of this Agreement may be brought in the courts
of such state and all parties consent to the exclusive
jurisdiction of such courts and to service of process in any such
suit being made upon any party by mail at their respective
addresses set forth in below.
12.3 Notices. All notices hereunder shall be in writing and shall
be deemed to have been duly given (i) when delivered in hand, (ii)
five (5) business days after dispatch by certified mail, postage
prepaid, return receipt requested, (iii) one (1) business day
after dispatch via a courier service which guaranties delivery
within one business day or (iv) upon receipt of confirmation of a
telecopy to a party, in each case to the parties at their
respective addresses set forth below, or to such other address as
a party may specify by notice:
If to Summit or RCII: If to LCA:
Summit Technology, Inc. LCA-Vision, Inc.
21 Hickory Drive 7840 Montgomery Road
Waltham, MA 02154 Cincinnati, OH 45236
Attn: Chief Executive Officer Attn: President
with a copy to: with a copy to:
Goldstein & Manello, P.C. Dinsmore & Shohl LLP
265 Franklin Street 1900 Chemed Center
Boston, MA 02110 255 East Fifth Street
Attn: Lauren Jennings, Esq. Cincinnati, OH 45202-3172
Attn: Charles F. Hertlein, Jr.,
Esq.
12.4 Waiver. All of the parties hereby waive any rights they may
have for a rescission of the Acquisition and the other
transactions contemplated by this Agreement, whether by reason of
a claim under securities laws, common law, contract or otherwise.
Waiver of any provision of this Agreement, in whole or in part, in
any one instance shall not constitute a waiver of any other
provision in the same instance, nor any waiver of the same or
another provision in another instance, but each provision shall
continue in full force and effect with respect to any other then-existing or
subsequent breaches.
12.5 Binding Effect. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors,
heirs, representatives and assigns, except that no party may
delegate any of his or its obligations under this Agreement or
assign this Agreement without the prior written consent of the
other party.
12.6 Entire Agreement. This Agreement, together with the
Confidentiality Agreement dated October 18, 1996 (the
"Confidentiality Agreement"), the Shareholders' Agreement and the
Registration Rights Agreement constitutes the entire agreement
between the parties hereto with respect to its subject matter,
superseding all prior negotiations, communications, contracts and
other agreements, courses of dealing and the like between or among
the parties.
12.7 Survival of Confidentiality Agreement. The Confidentiality
Agreement shall survive execution of this Agreement and shall
remain binding on the parties hereto through any Closing and any
termination of this Agreement, in accordance with its terms.
12.8 Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby
and this Agreement shall be interpreted as if such provision or
provisions were not a part hereof.
12.9 Amendment. This Agreement may be amended, modified or
terminated, and any right under this Agreement may be waived in
whole or in part, only by a writing signed by all parties hereto.
12.10 Exhibits and Schedules. All Exhibits and Schedules to this
Agreement shall be incorporated in and deemed for all purposes a
part of this Agreement.
12.11 Third Party Beneficiaries. Nothing in this Agreement,
whether express or implied, is intended to or shall be deemed to
confer upon any Person other than the parties hereto any rights or
remedies, under this Agreement or otherwise.
12.12 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
12.13 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall constitute one and the same
instrument.
REMAINDER OF PAGE DELIBERATELY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
officers, have executed this Agreement under seal, as of the day
and year first above written.
SUMMIT TECHNOLOGY, INC. LCA-VISION INC.
By: /s/Robert J. Palmisano By:/s/Stephen N. Joffe
Chief Executive Officer President
REFRACTIVE CENTERS
INTERNATIONAL, INC.
By: /s/Robert J. Palmisano
Chief Executive Officer
The undersigned shareholders of LCA-Vision, Inc. hereby execute
this Acquisition Agreement solely with respect to the obligations
contained in Sections 7.9, 8.2.5 and 9.3.
/s/Stephen N. Joffe
Stephen N. Joffe
/s/Sandra F.W. Joffe
Sandra F.W. Joffe
<PAGE>
SCHEDULE A
DEFINITIONS
"Acquisition" has the meaning set forth in the recitals.
"Affiliate" means any director, officer or ten percent or greater
stockholder of a corporate Person, and any entity controlled by or
under common control with a Person, as well as a Person's
immediate family members.
"Agreement" means this Acquisition Agreement dated July 23, 1997.
"Asserted Liability" has the meaning set forth in Section 10.3.1.
"Certificates of Designations" has the meaning set forth in
Section 7.9.
"Claims Basket" has the meaning set forth in Section 10.6.
"Claims Minimum" has the meaning set forth in Section 10.6.
"Claims Notice" has the meaning set forth in Section 10.3.1.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations thereunder, as amended, and in the case
of any referenced section of any such statute, rule or regulation,
any successor section thereto.
"Conditions Notice" has the meaning set forth in Section 5.3.
"Confidentiality Agreement" has the meaning set forth in Section
12.6.
"Distribution Shares" means those shares of the Stock
Consideration that Summit intends to distribute to its
shareholders. The total number of Distribution Shares shall be
approximately Nine Million Seven Hundred Thirty Two Thousand Six
Hundred Twenty One (9,732,621), but not less than Nine Million
(9,000,000).
"Distribution Shares Registration Statement" has the meaning set
forth in Section 9.4.
"Employee Benefit Plans" means any employee pension plans (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) and employee welfare plans (as defined
in Section 3(1) of ERISA).
"Employment Documents" means the documents setting forth the terms
and conditions of LCA's employment of Ronald Herskowitz with RCII,
including, without limitation, his position, compensation package
and stock options.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the regulations promulgated thereunder.
"Indemnified Party" means a party seeking indemnification from the
other party pursuant to Article X.
"Indemnifying Party" means a party from whom indemnification is
being sought pursuant to Article X.
"Interim Series Preferred Stock" has the meaning set forth in
Section 4.2.1.
"Knowledge" means actual knowledge of a Person and any information
that Person would have discovered by conducting a reasonable
investigation of the subject matter as to which information is
being sought, which investigation shall include, without
limitation, information obtained upon consultation with executive
officers of any corporation as to which Knowledge is imputed.
"LCA Common Stock" means the class of common stock of LCA, $0.001
par value per share, registered under Section 12(g) of the 1934
Act.
"LCA Financial Statements" has the meaning set forth in Section
4.4.
"LCA Material Contract" has the meaning set forth in Section 4.13.
"LCA Option Plans" means the LCA-Vision Inc. 1995 Long-Term Stock
Incentive Plan and the LCA-Vision Inc. Directors' Non-Discretionary Stock Option
Plan.
"LCA Preferred Stock" has the meaning set forth in Section 4.2.1.
"LCA Proxy Statement" has the meaning set forth in Section 4.5.11.
"LCA SEC Reports" has the meaning set forth in Section 4.6.1.
"LCA Shareholder Debt" has the meaning set forth in Section 4.11.
"Liability" means any liability or obligation of a Person, whether
absolute, accrued, contingent or otherwise, of a type and nature
that would be reported on a financial statement (including the
notes thereto) prepared in accordance with generally accepted
accounting principles and would be material, whether individually
or in the aggregate, to the consolidated financial condition or
business of the Person taken as a whole.
"Losses" has the meaning set forth in Section 10.1.
"Material Adverse Effect" means any change in or effect on the
assets, condition or prospects, financial or otherwise, of LCA or
RCII, as the case may be, which, when considered either singly or
in the aggregate together with all other adverse changes or
effects with respect to a party, is materially adverse to LCA or
RCII, as the case may be.
"May Financial Statements" has the meaning set forth in Section
4.4.
"Most Recent LCA Balance Sheet" means the balance sheet of LCA
contained within the LCA Financial Statements for the year ended
December 31, 1996.
"Most Recent LCA Fiscal Year End" has the meaning set forth in
Section 4.4.
"Most Recent RCII Balance Sheet" means the balance sheet of RCII
contained within the RCII Financial Statements for the year ended
December 31, 1996.
"Most Recent RCII Fiscal Year End" has the meaning set forth in
Section 3.6.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"1933" Act" means the Securities Act of 1933, as from time to time
amended.
"1934 Act" means the Securities Exchange Act of 1934, as from time
to time amended.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with
respect to quantity and frequency).
"Option Holders" has the meaning set forth in Section 5.11.
"Option Shares" has the meaning set forth in Section 5.11.
"Outside Closing Date" means forty-five (45) calendar days after
execution of this Agreement.
"Per Share Consideration" means the quotient of (a) seventeen
million sixty five thousand five hundred seventy nine (17,065,579)
divided by (b) the sum of the number of shares of issued and
outstanding RCII Common Stock on the Closing Date plus the number
of shares of RCII Common Stock into which options to purchase
shares of RCII Common Stock are exercisable on the Closing Date.
"Person" means an individual, partnership, corporation,
association, joint stock company, trust, joint venture,
unincorporated organization, or governmental entity (or any
department, agency, or political subdivision thereof).
"RCII Common Stock" means common stock of RCII, $0.01 par value
per share.
"RCII Financial Statements" has the meaning set forth in Section
3.6.
"RCII Material Contracts" has the meaning set forth in Section
3.12.
"RCII Options" has the meaning set forth in Section 5.11.
"Registration Rights Agreement" has the meaning set forth in
Section 8.1.6.
"Registration Statements" means the Distribution Shares
Registration Statement and the Selling Shareholders Registration
Statement.
"SEC" means the United States Securities and Exchange Commission.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest, other than (a) mechanic's,
materialmen's and similar liens, (b) liens for Taxes not yet due
and payable or for Taxes the taxpayer is contesting in good faith
through appropriate proceedings, (c) purchase money liens and
liens securing rental payments under capital lease arrangements
and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Selling Shareholder" has the meaning set forth in Section 5.11.
"Selling Shareholder Shares" has the meaning set forth in Section
5.11.
"Selling Shareholders Registrable Shares" has the meaning set
forth in Section 5.11.
"Selling Shareholders Registration Statement" has the meaning set
forth in Section 9.4.
"Service Contracts" has the meaning set forth in Section 8.1.4.
"Shareholders' Agreement" has the meaning set forth in Section
8.1.5.
"Stock Consideration" has the meaning set forth in Section 2.3.
"Subject Stock" has the meaning set forth in Section 2.1.
"Summit Retained Shares" means the shares of LCA Common Stock
representing Stock Consideration retained by Summit after
distribution of the Distribution Shares.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including
taxes under Code Section 59A), customs, duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including
any interest, penalty or addition thereto, whether disputed or
not.
"Tax Returns" means any return, declaration, report, claim for
refund or information return relating to Taxes, including any
schedule or attachment thereto, and including any amendment
thereof.
SCHEDULE B
RCII DISCLOSURE SCHEDULE
Not filed herewith but available on request
SCHEDULE C
LCA DISCLOSURE SCHEDULE
Not filed herewith but available on request
EXHIBIT A
FORM OPINION OF GOLDSTEIN & MANELLO, P.C.
Not filed herewith but available on request
EXHIBIT B
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement is made and entered into this 18th
day of August, 1997 by and between LCA-Vision Inc., a Delaware
corporation ("LCA"), Summit Technology, Inc., a Massachusetts
corporation ("Summit") and the LCA shareholders listed on Schedule
A hereto ("Shareholders").
WHEREAS, the LCA and Summit have entered into a certain
Acquisition Agreement dated as of even date herewith (the
"Acquisition Agreement") pursuant to which LCA is acquiring from
Summit all of its shares of common stock of Refractive Centers
International, Inc., a Delaware Corporation ("RCII"), in
consideration for shares of LCA common stock; and
WHEREAS, one of the conditions to the closing of the Acquisition
Agreement is the execution and delivery of this Shareholders'
Agreement.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement and not otherwise defined
shall have the meanings ascribed to them in the Acquisition
Agreement.
ARTICLE II
BOARD OF DIRECTORS
2.1 Nomination of Directors. For the term of this Agreement, the
Shareholders agree, consistent with their fiduciary duties in any
and all capacities as shareholders, officers and directors of LCA,
to cause LCA, whether itself or through its Board of Directors
(the "Board") or a committee thereof, (a) to set the number of
directors that constitute the full Board at five (5) and (b) to
nominate individuals for election to the Board at each annual
meeting of the shareholders of LCA in the manner provided in this
Agreement (the "Designated Nominees"). The following individuals
shall be the initial Designated Nominees:
Stephen N. Joffe
John C. Hassan
John H. Gutfreund
Ronald Herskowitz
William O. Coleman
2.2 Alternate Designated Nominees. If there is a vacancy in the
Board occurring between annual meetings, or if one or more of the
initial Designated Nominees shall decline to stand for election to
the Board, the Shareholders and Summit shall appoint one or more
alternate Designated Nominees (each an "Alternate Designated
Nominee") in the following manner. The Shareholders shall select
an individual to serve as the Alternate Designated Nominee, which
individual shall be independent both of LCA (except through
proposed service as a member of the Board) and of the
Shareholders. The selected individual shall be subject to
Summit's approval, which shall not unreasonably be withheld.
Summit's approval shall be deemed given if Summit has not
responded to the Shareholders within thirty (30) days of notice of
the identity of the selected individual. Upon selection and
approval, such Alternate Designated Nominee shall for all purposes
be deemed a Designated Nominee under this Agreement.
2.3 Voting of Shares. In any and all elections of directors of
the Board, whether in person or by proxy at a meeting of LCA
shareholders, or at a meeting of the Board called for the purpose
of filling a vacancy in the Board (to the extent not inconsistent
with the fiduciary duties of any director who is also a
Shareholder), the Shareholders and Summit shall vote all shares of
LCA stock owned by them to elect the Designated Nominees to the
Board and shall vote against any proposal that would violate any
term or provision of this Agreement.
ARTICLE III
COVENANTS OF SHAREHOLDERS
3.1 Payment of LCA Shareholder Debt. The Shareholders agree that
they will not accept, demand or request any payment on the LCA
Shareholder Debt unless the earnings of LCA for the prior fiscal
year (before taxes, amortization of goodwill and depreciation, net
of capital expenditures for such fiscal year) exceeded One Million
Dollars ($1,000,000), and agree that payment in such event may be
made only to the extent of twenty-five percent (25%) of such
excess. The Shareholders understand and agree that LCA shall
cause the instruments representing the LCA Shareholder Debt to
contain a legend to the effect of the foregoing.
3.2 Conversion of LCA Preferred Stock. The Shareholders agree
that the per share Conversion Price of the LCA Interim Series
Preferred Stock shall not be less than Three and 50/100 Dollars
($3.50) per share.
3.3 Arms' Length Transactions. During the term of this Agreement,
none of the Shareholders shall enter into any transaction with LCA
unless such transaction is at fair market value and approved by a
majority of LCA's independent directors.
ARTICLE IV
MISCELLANEOUS
4.1 Binding Effect. This Agreement shall be binding upon the
parties hereto and their respective heirs, successors and assigns.
All shares of LCA Common Stock and LCA Preferred Stock at any time
owned by a party to this Agreement shall be subject to this
Agreement. Shares of LCA Common Stock and LCA Preferred Stock can
be transferred by a party only if the transferee of such shares
agrees to be bound by this Agreement, except for transfers by
Summit pursuant to or not in violation of this Agreement or the
Registration Rights Agreement or to any Person who is not an
Affiliate of Summit.
4.2 Duration of Agreement. This Agreement shall remain in effect
until the earlier of (i) the date which is five (5) years from the
date of this Agreement, and (ii) the date on which Summit owns
less than five percent (5%) of the issued and outstanding shares
of LCA Common Stock. At any time that Summit owns less than such
percentage, this Agreement shall terminate and be of no further
force and effect, without the necessity of any action on the part
of any of the parties hereto.
4.3 Injunctive Relief. It is acknowledged that it would be
impossible to measure the damages that would be suffered by a
party to this Agreement if the other parties were to fail to
comply with the provisions of this Agreement, and that in the
event of any such failure, monetary damages would not provide the
injured party an adequate remedy. The parties shall, therefore,
be entitled to seek specific performance and injunctive relief for
any breach of this Agreement in a court of competent jurisdiction.
4.4 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware
without application of principles of conflict of laws, any suit
for the enforcement of this Agreement may be brought in the courts
of that state and all parties consent to the exclusive
jurisdiction of such courts and to service of process in any such
suit being made upon any party by mail at their respective
addresses set forth in below.
4.5 Notices. All notices hereunder shall be in writing and shall
be deemed to have been duly given when actually received. Notices
hereunder may be given (i) by hand, (ii) by certified mail,
postage prepaid, return receipt requested, (iii) by a courier
service which guaranties delivery within one business day or (iv)
by telecopy to a party; in each case to the parties at their
respective addresses set forth below, or to such other address as
a party may specify by notice:
If to Summit or RCII: If to LCA:
Summit Technology, Inc. LCA-Vision, Inc.
21 Hickory Drive 7840 Montgomery Road
Waltham, MA 02154 Cincinnati, OH 45236
Attn: Chief Executive
Officer Attn: President
with a copy to: with a copy to:
Goldstein & Manello, P.C. Dinsmore & Shohl, L.L.P.
265 Franklin Street 1900 Chemed Center
Boston, MA 02110 255 East Fifth Street
Attn: Lauren Jennings, Esq. Cincinnati, OH 45202-3172
Attn: Charles F. Hertlein, Jr.,
Esq.
If to the Shareholders:
Stephen N. Joffe, M.D. Sandra F.W. Joffe
8750 Red Fox Lane 8750 Red Fox Lane
Cincinnati, Ohio 45243 Cincinnati, Ohio 45243
Craig P.R. Joffe
22 Bigelow Street, #2B
Cambridge, MA 02139
4.6 Waiver. Waiver of any provision of this Agreement, in whole
or in part, in any one instance shall not constitute a waiver of
any other provision in the same instance, nor any waiver of the
same or another provision in another instance, but each provision
shall continue in full force and effect with respect to any other
then-existing or subsequent breaches.
4.7 Entire Agreement. This Agreement, together with the
Acquisition Agreement, the Confidentiality Agreement and the
Registration Rights Agreement constitutes the entire agreement
between the parties hereto with respect to its subject matter,
superseding all prior negotiations, communications, contracts and
other agreements, courses of dealing and the like between or among
the parties.
4.8 Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby
and this Agreement shall be interpreted as if such provision or
provisions were not a part hereof. Moreover, if any provision of
this Agreement shall for any reason be held to be excessively
broad as to time, duration, geographical scope, activity or
subject, it shall be construed by limiting and reducing it, so as
to be enforceable to the extent compatible with applicable laws as
they shall then be in force.
4.9 Amendment. This Agreement may be amended, modified or
terminated, and any right under this Agreement may be waived in
whole or in part, only by a writing signed by all parties hereto.
4.10 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
4.11 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall constitute one and the same
instrument.
4.12 Defaults. Any breach or default by a party under the
Acquisition Agreement shall be deemed a default by such party
under this Agreement.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
officers in the case of corporate parties, have executed this
Agreement under seal, as of the day and year first above written.
SUMMIT TECHNOLOGY, INC. LCA-VISION INC.
By: /s/Robert J. Palmisano By: /s/Stephen N. Joffe
Chief Executive Officer President
SHAREHOLDERS:
/s/Stephen N. Joffe
/s/Sandra F.W. Joffe
/s/Craig P.R. Joffe
SCHEDULE A
Stephen N. Joffe
Sandra F.W. Joffe
Craig P.R. Joffe
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, made and effective as of the 18th
day of August, 1997 (the "Effective Date"), is entered into by and
between LCA-Vision Inc., a Delaware corporation (the "Company"),
and Summit Technology, Inc., a Massachusetts corporation
("Summit").
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
1.1. "Acquisition Agreement" means the Acquisition Agreement of
even date herewith, by and between the Company, Summit and
Refractive Centers International, Inc. ("RCII").
1.2. "Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities
Act and the Exchange Act.
1.3. "Common Stock" means the Company's Common Stock, $.001 par
value, as authorized on the date of this Agreement, and any other
securities into which or for which any of the Common Stock may be
converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
1.4. "Exchange Act" means the Securities Exchange Act of 1934, or
any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
1.5. "Person" means an individual, corporation, partnership, joint
venture, limited liability company, trust, or unincorporated
organization, or a government or any agency or political
subdivision thereof.
1.6 "Retained Shares" means the shares of Common Stock
representing Stock Consideration (as defined in the Acquisition
Agreement) retained by Summit after distribution of the
Distribution Shares (as defined in the Acquisition Agreement).
1.7 "Rule 144" means Rule 144 promulgated under the Securities
Act, as the same shall be in effect at the time, or any successor
Rule.
1.8. "Securities Act" means the Securities Act of 1933, or any
similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
1.9 "Shelf Registration Statement" has the meaning set forth in
Section 4.2 hereof.
2. Transfer Restrictions. Summit agrees that it shall not sell,
assign or otherwise transfer any of the Retained Shares for a
period of nine (9) months from the date of this Agreement. After
such nine (9) month period, Summit agrees that it shall not sell,
assign or otherwise transfer any of the Retained Shares except as
hereinafter provided. Nothing in this Agreement shall be
construed as prohibiting Summit from distributing the Distribution
Shares to shareholders of Summit as contemplated under the
Acquisition Agreement.
3. Demand Registrations. If, at any time on or after the date
that is nine (9) months from the date hereof, Summit shall request
in writing that the Company file a registration statement under
the Securities Act for all or part of the shares of Common Stock
held by Summit on the date of such request, the Company will use
its best efforts to cause such number of shares of Common Stock as
requested by Summit to be registered under the Securities Act as
expeditiously as possible.
Summit agrees that it shall provide the Company such information
as the Company may reasonably request to enable the Company to
comply with any applicable law or regulation or to facilitate
preparation of the registration statement. The Company shall not
be required to effect more than two (2) such demand registrations.
4. Sales Other Than by Demand Registrations.
4.1 Rule 144. If, at any time, the Company and/or Summit has not
been able to engage an underwriter to sell the Retained Shares
under Section 3 hereof at a price that is acceptable to Summit, or
if, at any time after the date that is twenty-four (24) months
from the date of this Agreement, Summit shall not have sold or
otherwise transferred all of the Retained Shares, Summit shall be
entitled to sell, assign or otherwise transfer the Retained Shares
pursuant to the provisions of Rule 144, (to the extent the
provisions of Rule 144 are available to Summit). In such event,
the Company agrees to use its best efforts to facilitate and
expedite transfers of the Retained Shares pursuant to Rule 144,
which efforts shall include timely notice to its transfer agent to
expedite such transfers of Retained Shares.
4.2 "Shelf" Registrations. (a) If the provisions of subsection
(k) of Rule 144 are not available to Summit at any time that
Summit is entitled hereunder to transfer the Retained Shares
pursuant to Section 4.1 hereof, the Company shall, upon written
request of Summit, as expeditiously as possible, use its best
efforts to effect one or more so-called "shelf" qualifications and
registrations (collectively the "Shelf Registration Statement") on
the appropriate form for an offering to be made on a continuous
basis under Rule 415 promulgated under the Securities Act (or any
successor rule or similar provision then in effect) covering all
or such portion of the Retained Shares as Summit shall specify.
(b) The Company shall, from time to time, upon written request of
Summit, prepare and file with the Commission such prospectus
supplements and/or amendments to the Shelf Registration Statements
with respect to all or such portion of the Retained Shares that
Summit may determine to sell or transfer under the Shelf
Registration Statements (each, a "Take Down") and shall comply
with the provisions of the Securities Act and all rules thereunder
applicable to the Company, and shall otherwise cooperate with
Summit, with respect to the disposition of all Retained Shares
covered by such Shelf Registration Statement during the applicable
period in accordance with the intended methods of disposition of
the Retained Shares by Summit set forth in such Shelf Registration
Statement or amendment thereto or such prospectus or supplement
thereto, until all of the Retained Shares so registered shall have
been sold or transferred.
5. Effectiveness of Registration Statements. The Company will use
its best efforts to maintain the effectiveness of any registration
statement (including any Shelf Registration Statement) pursuant to
which any of the Retained Shares are being offered until the
completion by the underwriters of the distribution pursuant to
such registration statement and the sale by Summit of all of the
shares of Common Stock registered pursuant to its request under
Section 3 or 4 hereof, and from time to time will amend or
supplement such registration statement, and shall cause the
prospectus included in any Shelf Registration Statement to be
supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the
Securities Act, in each case to the extent necessary to comply
with the Securities Act and rules promulgated thereunder and any
applicable state securities statute or regulation. The Company
will also provide Summit with as many copies of the prospectus and
prospectus supplements contained in any such registration
statement as Summit may reasonably request.
6. Right of First Offer Upon Sale for Cash.
(a) Notwithstanding the provision of Sections 3 and 4 hereof, if
at any time during the term of this Agreement Summit wishes to
sell for cash all or any part of the Retained Shares, Summit shall
submit a written offer (the "Offer") to sell such shares (the
"Offered Shares") to LCA. The Offer shall contain (a) the number
of Offered Shares, (b) the price at which the Offered Shares are
offered, which shall be the greater of (i) the average closing
price during the thirty (30) day period preceding the date of the
Offer less any commissions that would be applicable if Summit were
to sell the Offered Shares through a broker or placement agent and
(ii) any bona fide offer received by Summit for the Offered Shares
from another party within such 30 day period, (c) the proposed
closing date for the sale and purchase of the Offered Shares and
(d) such other terms and conditions as Summit shall deem relevant.
This section shall not apply to any sale or other transfer by
Summit of all or any part of the Retained Shares for any non-cash
consideration, including without limitation, any stock swap.
Summit shall give the Company twenty-one (21) days' notice of any
such non-cash transaction.
(b) If the Company desires to purchase the Offered Shares on the
terms and conditions in the Offer, it shall so notify Summit
within fifteen (15) days after submission of the Offer, and such
notice, together with the Offer, shall constitute a binding and
enforceable agreement for the sale and purchase of the Offered
Shares on the terms set forth in the Offer. If the Company fails
to respond within such time period, or declines to purchase the
Offered Shares, Summit shall be free to dispose of the Offered
Shares in any manner it deems appropriate, consistent with the
other provisions of this Agreement or any other agreement Summit
has with the Company.
(c) The foregoing rights of first offer shall be operative only
if they can be offered and exercised in compliance with all
applicable federal and state securities laws.
7. Indemnification of Summit.
7.1. In the event that the Company registers any shares of
Common Stock under the Securities Act, whether pursuant to this
Agreement or the Acquisition Agreement, the Company will, to the
extent permitted by law, indemnify and hold harmless Summit,
(including its officers, directors, affiliates and partners), each
Selling Shareholder (as defined in the Acquisition Agreement) and
each Person, if any, who controls Summit or such Selling
Shareholder within the meaning of Section 15 of the Securities
Act, from and against any and all losses, claims, damages,
expenses (including reasonable attorneys' fees and expenses) or
liabilities joint or several, to which they or any of them become
subject under the Securities Act or under any other statute or at
common law or otherwise, and, except as hereinafter provided, will
reimburse Summit, each Selling Shareholder and each such
controlling Person, if any, for any legal or other expenses
reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in
any liability, including but not limited to any losses, claims,
damages, expenses, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement or any
filing with any state securities commission or agency, in any
preliminary or amended preliminary prospectus or in the final
prospectus (or the registration statement or prospectus as from
time to time amended or supplemented by the Company) or arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, or any
violation by the Company of any rule or regulation promulgated
under the Securities Act or any state securities laws or
regulations applicable to the Company and relating to action or
inaction required of the Company in connection with such
registration, unless such untrue statement or alleged untrue
statement or omission or alleged omission was made in such
registration statement, preliminary or amended preliminary
prospectus or final prospectus in reliance upon and in conformity
with information furnished in writing to the Company in connection
therewith by Summit, any Selling Shareholder or any such
controlling Person, as the case may be, expressly for use therein.
7.2. Promptly after receipt by Summit, a Selling Shareholder or
any controlling Person of notice of the commencement of any action
in respect of which indemnity may be sought against the Company,
Summit, such Selling Shareholder or such controlling Person, as
the case may be, will notify the Company in writing of the
commencement thereof, and, subject to the provisions hereinafter
stated, the Company shall assume the defense of such action
(including the employment of counsel, who shall be counsel
reasonably satisfactory to Summit, such Selling Shareholder or
such controlling Person, as the case may be), and the payment of
expenses insofar as such action shall relate to any alleged
liability in respect of which indemnity may be sought against the
Company. Summit, such Selling Shareholder or any such controlling
Person shall have the right to employ separate counsel in any such
action and to participate in the defense thereof but the fees and
expenses of such counsel shall not be at the expense of the
Company unless the employment of such counsel has been
specifically authorized by the Company. The Company shall not be
liable to indemnify any Person for any settlement of any such
action effected without the Company's consent (which consent shall
not be unreasonably withheld or delayed). The Company shall not,
except with the approval of each party being indemnified under
this Section, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to the parties being so
indemnified of a release from all liability in respect to such
claim or litigation.
7.3. In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which
Summit, a Selling Shareholder or any controlling Person of Summit,
makes a claim for indemnification pursuant to this Section but it
is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case
notwithstanding the fact that this Section provides for
indemnification in such case, then the Company and Summit, such
Selling Shareholder or such controlling Person, as the case may
be, will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from
others) in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and of Summit, such
Selling Shareholder or controlling Person on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the
Company on the one hand and of Summit, such Selling Shareholder or
controlling Person on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the
Company on the one hand or by Summit, such Selling Shareholder or
controlling Person on the other, and each party's relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that, in
any such case, (A) Summit, such Selling Shareholder or controlling
Person shall not be required to contribute any amount in excess of
the public offering price of all such shares of Common Stock
offered by it pursuant to such registration statement; and (B) no
Person or entity guilt of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any Person or entity who was not guilty of
such fraudulent misrepresentation.
8. Indemnification of Company.
8.1. In the event that the Company registers any of the Common
Stock under the Securities Act at the request of Summit pursuant
to Section 3 of this Agreement, Summit, to the extent permitted by
law, will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed or otherwise
participated in the preparation of the registration statement and
each Person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act from and against any and all
losses, claims, damages, expenses or liabilities, joint or
several, to which they or any of them may become subject under the
Securities Act or under any other statute or at common law or
otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer or controlling Person for
any legal or other expenses reasonably incurred by them or any of
them in connection with investigating or defending any actions
whether or not resulting in any liability, insofar as such loses,
claims, damages, expenses, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of
a material fact contained in the registration statement or any
filing with any state securities commission or agency, in any
preliminary or amended preliminary prospectus or in the final
prospectus (or in the registration statement or prospectus as from
time to time amended or supplemented) or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make
the therein not misleading, but only insofar as any such statement
or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection
therewith by Summit expressly for use therein; provided, however,
that Summit's obligations hereunder shall be limited to an amount
equal to the proceeds received by Summit of the shares of Common
Stock sold in such registration.
8.2. Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against Summit,
the Company will notify Summit in writing of the commencement
thereof, and Summit shall, subject to the provisions hereinafter
stated, assume the defense of such action (including the
employment of counsel, who shall be counsel reasonably
satisfactory to the Company) and the payment of expenses insofar
as such action shall relate to the alleged liability in respect of
which indemnity may be sought against Summit.
8.3. The Company and each such director, officer or controlling
Person shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and
expenses of such counsel shall not be at the expense of Summit
unless employment of such counsel has been specifically authorized
by Summit. Summit shall not be liable to indemnify any Person for
any settlement of any such action effected without Summit's
consent (which consent shall not be unreasonably withheld or
delayed).
9. Damages. The Company recognizes and agrees that Summit will
not have an adequate remedy if the Company fails to comply with
this Agreement and that damages may not be readily ascertainable,
and the Company expressly agrees that, in the event of such
failure, it shall not oppose an application by Summit or any other
Person entitled to the benefits of this Agreement requiring
specific performance of any and all provisions hereof or enjoining
the Company from continuing to commit any such breach of this
Agreement.
10. Further Obligations of the Company. Whenever under the
preceding Sections of this Agreement, the Company is required
hereunder to register shares of Common Stock, it agrees that it
shall also do the following:
10.1 Within 60 days of any request hereunder, file with the
Commission a registration statement, in form and substance
required by the Securities Act, with respect to such Common Stock
and use its best efforts to cause that registration statement to
become effective;
10.2 As expeditiously as reasonably possible, furnish to Summit,
such reasonable number of copies of such registration statement,
each amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein)
and the prospectus included in such registration statement,
including each preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents
Summit may reasonably request in order to facilitate the public
sale or other disposition of the Common Stock owned by it;
10.3 After the filing of the registration statement, promptly
notify Summit of any stop order issued or, to the knowledge of the
Company, threatened to be issued by the Commission and use all
commercially reasonable efforts to prevent the entry of such stop
order or to remove it if entered;
10.4 Enter into a written agreement with the managing underwriter
in such form and containing such provisions as are customary in
the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment
stature;
10.5. Furnish to Summit such copies of each preliminary and final
prospectus and such other documents as Summit may reasonably
request to facilitate the public offering of shares of Common
Stock held by Summit;
10.6. Use its best efforts to register or qualify the Common Stock
covered by said registration statement under the applicable
securities or "blue sky" laws of such jurisdictions as Summit may
reasonably request;
10.7 Cooperate with Summit in taking all action in connection
with completing the public offering of Common Stock, including but
not limited to hiring, at the expense of the Company, investment
bankers acceptable to Summit to, among other things, execute an
institutional investor "roadshow", sell the Common Stock in the
offering, make a market in the Common Stock, and provide research
coverage on the Company;
10.8. Furnish to Summit a "signed counterpart" of:
(a) an opinion of counsel for the Company, dated the effective
date of the registration statement, and
(b) "comfort" letters signed by the Company's independent public
accountants who have examined and reported on the Company's
financial statements included in the registration statement, to
the extent permitted by the standards of the American Institute of
Certified Public Accountants, covering substantially the same
matters with respect to the registration statement (and the
prospectus included therein) and tin the case of the accountants'
"comfort" letters) with respect to events subsequent to the date
of the financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' "comfort" letters
delivered to the underwriters in underwritten public offerings of
securities,
in each case to the extent that the Company is required to deliver
or cause the delivery of such opinion or "comfort" letters to the
underwriters in an underwritten public offering of securities;
10.9 As promptly as practicable, notify Summit, at any time when
a prospectus relating to the sale of the Common Stock is required
by law to be delivered in connection with sales by an underwriter
or dealer, of the occurrence of any event requiring the
preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of the registered
Common Stock, such prospectus will not contain an untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and as promptly as practicable make available to
Summit and to the underwriters any such supplement or prospectus;
10.10. Permit Summit and its counsel or other representatives to
inspect and copy such corporate documents and records as may
reasonably be requested by them;
10.11. Furnish to Summit a copy of all documents filed and all
correspondence from or to the Commission in connection with any
such offering of securities;
10.12. Use its best efforts to insure the obtaining of all
necessary approvals from the National Association of Securities
Dealers, Inc.; and
10.13. Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with
the first month after the effective date of the registration
statement filed in connection with the consummation of the
Acquisition Agreement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
11. Expenses. The Company shall bear all costs and expenses of
each registration under this Agreement, including, but not limited
to, printing, legal and accounting expenses, Securities and
Exchange Commission and National Association of Securities
Dealers, Inc. filing fees and expenses, and "blue sky" fees and
expenses and the reasonable expenses of Summit in connection with
the registration of its shares of Common Stock; provided, however,
that Summit shall bear the expenses of any underwriter's fees,
commissions or discounts in connection with such registrations,
and that the Company and Summit shall share the costs of any
accountant's "comfort letters" obtained in connection with any
Take Downs under a Shelf Registration Statement pursuant to
Section 4.2 hereof.
The Company shall also pay all expenses in connection with any
registration initiated pursuant to this Agreement which is
withdrawn, delayed or abandoned at the request of the Company,
unless such registration is withdrawn, delayed or abandoned solely
because of any actions of Summit.
12. Delay of Registration. For a period not to exceed 90 days,
the Company shall not be obligated to prepare and file, or
prevented from delaying or abandoning, a registration statement
pursuant to this Agreement at any time when the Company, in its
good faith judgment with advice of counsel (as certified by an
officer of the Company in a certificate delivered to Summit)
reasonably believes:
12.1. That the filing thereof at the time requested, or the
offering of Common Stock pursuant thereto, would materially and
adversely affect (a) a pending or scheduled public offering of the
Company's securities, (b) an acquisition, merger,
recapitalization, consolidation, reorganization or similar
transaction by or of the Company, (c) preexisting and continuing
negotiations, discussions or pending proposals with respect to any
of the foregoing transactions, (d) the financial condition of the
Company in view of the disclosure of any pending or threatened
litigation, claim, assessment or governmental investigation which
may be required thereby or any other material Company matter; and
12.2. That the failure to disclose any material information with
respect to the foregoing would cause a violation of the Securities
Act or the Exchange Act.
The Company may exercise its rights under this Section only once
during any twelve (12) month period.
13. Approval of Underwriter. Any managing underwriter engaged by
the Company in any registration made pursuant under this Agreement
shall require the approval in writing of Summit and the consent of
the Company, which consent shall not be unreasonably withheld.
14. No Waiver; Cumulative Remedies. No failure or delay on the
part of any party to this Agreement in exercising any right, power
or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of
any other right, power or remedy hereunder. The remedies herein
provided are cumulative and not exclusive of any remedies provided
by law.
15. Amendments, Waivers and Consents. Except as hereinafter
provided, changes in or additions to this Agreement may be made,
termination of this Agreement, and compliance with any covenant or
provision set forth herein may be omitted or waived, if consented
to in writing by the Company and Summit. Any waiver or consent
may be given subject to satisfaction of conditions stated therein
and any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
16. Addresses for Notices. All notices, requests, demands and
other communications provided for hereunder shall be in writing
(including telegraphic communication) and mailed, telegraphed or
delivered to each party at the address set forth in below or at
such other address as to which such party may inform the other
parties in writing in compliance with the terms of this Section.
All such notices, requests, demands and other communications
shall, when mailed (which mailing must be accomplished by first
class mail, postage prepaid; electronic facsimile transmission;
express overnight courier service; or registered mail, return
receipt requested) or telegraphed, and shall be considered to be
delivered three (3) days after dispatch.
If to Summit:
Summit Technology, Inc.
21 Hickory Drive
Waltham, MA 02154
Attn: Chief Executive Officer
with a copy to:
Goldstein & Manello, P.C.
265 Franklin Street
Boston, MA 02110
Attn: Lauren Jennings, Esq.
If to the Company:
LCA-Vision Inc.
7840 Montgomery Road
Cincinnati, Ohio 45236
Attn: President
with a copy to:
Dinsmore & Shohl, L.L.P.
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-3172
Attn: Charles F. Hertlein, Jr., Esq.
17. Binding Effect, Assignment. This Agreement shall be binding
upon and inure to the benefit of the Company and Summit and their
respective successors and assigns, except that the Company shall
not have the right to delegate its obligations hereunder or to
assign its rights hereunder or any interest herein without the
prior written consent of Summit.
18. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of
Delaware, and without giving effect to choice of laws provisions.
19. Headings. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.
20. Counterparts. This Agreement may be executed in one or more
of counterparts, all of which taken together shall constitute one
and the same instrument, and either party hereto may execute this
Agreement by signing any such counterpart.
21. Term. This Agreement shall remain in full force and effect
until all of the Retained Shares shall have been sold hereunder;
provided that the provisions of Section 7 and 8 hereof shall
survive any termination of this Agreement.
22. Further Assurances. From and after the date of this
Agreement, upon the request of Summit or the Company, the Company
and Summit shall execute and deliver such instruments, documents
and other writings as may be reasonably necessary or desirable to
confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under seal as of the date set forth in the first
paragraph hereof.
LCA-VISION INC.
By:/s/Stephen N. Joffe
Name: Stephen N. Joffe
Title: President
SUMMIT TECHNOLOGY, INC.
By: /s/Robert J. Palmisano
Name: Robert J. Palmisano
Title: Chief Executive Officer
EXHIBIT D
FORM OPINION OF DINSMORE & SHOHL LLP
Not filed herewith but available on request
EXHIBIT E
HERSKOWITZ EMPLOYMENT DOCUMENTS
Not filed herewith but available on request<PAGE>
Contacts: Dr. Stephen Joffe, CEO Joel Pomerantz
Larry Rapp, CFO The Dilenschneider Group
LCA-Vision, Inc. (212) 922-0900
(513) 792-9292
LCA-VISION COMPLETES ACQUISITION OF
ALL SUMMIT LASER EYE SURGERY CENTERS
NOW NATION'S LARGEST PROVIDER
OF NEW VISION CORRECTION PROCEDURE
Dr. Ronald Herskowitz Named Chief Officer of Expanded Company
LCA's Board Of Directors Will Also Be Enlarged
CINCINNATI, August 19 -- LCA-Vision Inc. (NASDAQ:LCAV), the
leading facility chain operator in the fast-growing laser vision
correction sector, said today it has completed acquisition of
Summit Technology, Inc.'s Refractive Centers International
subsidiary in exchange for 17 million shares of common stock. The
transaction positions LCA-Vision as the nation's largest provider
of the new laser vision treatment procedure with twice the number
of locations as its nearest competitor.
Refractive Centers International has 19 wholly owned-and-operated
facilities around the country and a working relationship with six
additional treatment sites at prestigious university medical
centers/hospitals. Refractive Centers International's total 1997
revenues are projected at $6 million. LCA-Vision's projected
annualized 1997 revenues are $14.4 million.
Under terms of the agreement, LCA-Vision will file a registration
statement with the Securities and Exchange Commission for the
newly-issued shares within 90 days. Summit has announced its
plans to retain a just-under 20 percent stake in LCA and
distribute the balance of the new shares to its shareholders after
the shares have been registered with the S.E.C.
Consistent with terms of the acquisition agreement, LCA-Vision
also announced that Dr. Ronald Herskowitz has been named chief
operating officer of LCA-Vision and that the company's board will
be changed and enlarged. Dr. Herskowitz was formerly executive
vice president of Refractive Centers International, Inc., the
acquired Summit subsidiary. Prior to that, he was a vice
president at Bausch & Lomb.
With the acquisition, LCA-Vision will have 40 major vision
correction centers in the U.S., two facilities in Canada, and one
in Europe. The company now provides the most advanced, state-of-the-art laser
technology available for the correction of myopia,
or near-sightedness, and astigmatism. The one-hour, out-patient
treatment effectively eliminates patients' dependence on glasses
or contact lenses.
Dr. Stephen Joffe, LCA-Vision president and chief executive
officer, who remains the company's largest shareholder, commented:
"This acquisition dramatically alters the retail laser eye surgery
market, strategically positioning LCA-Vision as the clear industry
leader with an aggressive new senior management team headed by Dr.
Herskowitz. We are unchallenged in terms of locations, number of
affiliated physicians and optometrists, procedures performed,
clinical experience, and marketing expertise.
"The acquired Summit centers will give us a presence in many major
new markets, making LCA-Vision a national player. We have the
most recognizable brand-name in the field and an unmatched track
record for the correction of myopia and astigmatism using FDA-approved,
laser-assisted technology. Today, LCA has the size,
critical mass, and capital resources to define and lead this
young, rapidly-growing, potentially huge industry."
Dr. Joffe added that the combination of the two companies with
their proven management and marketing techniques will also produce
significant economics of scale and improved profitability.
He noted further that patient acceptance of laser treatment for
vision correction continues to accelerate rapidly, reflecting the
impact of strong word-of-mouth and media exposure. "We are
already well ahead of projections for 1997. Patient procedure
volume at our existing 18 centers for the second quarter was up 44
percent over the first quarter and we are running well ahead of
plan for the first six months of 1997."
LCA-Vision centers have, to date, completed over 10,000 of these
procedures, known technically as photo refractive keratectomy, at
an average cost of $2,000-$2,500 per eye. An estimated 130
million Americans require some kind of vision correction,
including 25 to 30 million contact lens wearers. Additionally,
new procedures are now undergoing FDA evaluation for the treatment
of hyperopia, or far-sightedness, which will further increase the
potential market beyond the current 70 million myopic and
astigmatic patients.
Among the laser vision correction centers that LCA-Vision will
acquire from Summit are sites in Agoura Hills, Glendale, San
Bernardino, and Torrance, California (UCLA Laser Refractive
Centers in the L.A. area); San Jose, Concord, and San Francisco,
California (Stanford University Laser Centers); Costa Mesa,
California; Chicago, Vernon Hills, and Schaumburg in Illinois
(Rush Eye Laser Centers); and Columbus (Worthington), Ohio.
Also, West Palm Beach, Miami, and Plantation in Florida; Bethesda,
Maryland; and Tysons Corner, Virginia (George Washington
University Refractive Laser Centers in the D.C. area); Towson,
Maryland; and Minneapolis (Edina), Minnesota.
The hospital/university medical center-based sites include those
affiliated with the UCLA/Jules Stein Eye Institute in Los Angeles;
Stanford Medical Center in Stanford, California; Rush-Presbyterian
- - St. Luke's Medical Center in Chicago; George Washington
University Medical Center in Washington, D.C.; the Cleveland
Clinic Foundation in Cleveland; and the University of Iowa.
LCA-Vision's existing facilities are located in Cincinnati,
Columbus, Cleveland, Warren, Dayton, and Toledo, Ohio; Buffalo,
Albany, New York City, and Westchester County, New York State;
Charlotte, North Carolina; Toronto and Ft. Erie, Canada; Savannah,
Georgia; Baltimore, Maryland; Clearwater, Florida; Mountain View
(Silicon Valley), California; and Helsinki, Finland.
# # #
August 19, 1997
"Safe Harbor" statement under the Private Securities Litigation
Reform Act of 1995:
This release contains forward-looking statements that are subject
to risks and uncertainties, including, but not limited to, the
impact of competitive products and pricing, product demand and
market acceptance, reliance on key strategic alliances,
fluctuations in operating results and other risks detailed from
time to time in the company's filings with the Securities and
Exchange Commission.
Contacts: Dr. Stephen Joffe or Larry Rapp Joel Pomerantz
LCA-Vision, Inc. The Dilenschneider
Group
(513) 792-9292 (212) 922-0900
LCA-VISION NAMES THREE NEW MEMBERS TO COMPANY'S BOARD
INCLUDING PROMINENT WALL STREETER JOHN GUTFREUND
CINCINNATI, August 21 -- LCA-Vision (NASDAQ-LCAV) today announced
the appointments of John H. Gutfreund, William O. Coleman, and Dr.
Ronald Herskowitz to the company's board of directors and the
resignations from the board of founding family members Sandra
Joffe and Craig Joffe.
The new appointments will increase the number of LCA-Vision's
directors to five and bring strong financial and specialized
management expertise to the company. Continuing on the board are
Dr. Stephen Joffe, chairman, president, and chief executive
officer and outside director John Hassan.
Naming of the new directors implements provisions of LCA-Vision's
recently-completed acquisition of Summit Technology, Inc.'s laser
vision correction subsidiary. LCA-Vision now operates the largest
chain of laser eye treatment sites in the U.S. with 40 locations
across the country plus two centers in Canada and one in Europe.
Mr. Gutfreund, 67, a leading Wall Street figure for over three
decades, was chief executive officer and board chairman of Salomon
Brothers from 1981 to 1991. He is currently president of
Gutfreund & Company, a New York-based financial consulting firm.
Mr. Coleman, 68, a retired senior executive with Procter & Gamble
Corporation, currently serves as trustee of the multi-billion-dollar P&G
Retirement Trusts.
Dr. Herskowitz, 43, was recently named chief operating officer of
LCA-Vision. He had been executive vice president of Summit
Technology, Inc. in charge of the chain of vision correction
centers acquired by LCA earlier this month.
Commenting on the appointments, Dr. Joffe said: "We are extremely
gratified that two such distinguished representatives from the
world of finance and business as Mr. Gutfreund and Mr. Coleman
have agreed to serve on LCA's board as outside directors and that
our newly-named chief operating officer, Ron Herskovitz, will be
joining them.
"Their presence underscores LCA's new dominant position in the
laser eye surgery sector, following the Summit acquisition. With
the number of LCA shareholders and locations now significantly
increased, the managerial experience, expertise and guidance
provided by the new directors will be especially valuable."
Mr. Gutfreund, whose financial consulting firm has advised some of
the nation's top companies, is a past vice chairman of the New
York Stock Exchange (1985-87) and a former member of the Board of
Directors of the Securities Industry Association. He has also
served as president of the Bond Club of New York and as a member
of The Trilateral Commission. LCA-Vision's newest board member is
a 1951 graduate of Oberlin College.
Mr. Coleman spent most of his professional career at Procter &
Gamble. He held a series of key managerial positions with the
company, rising, successively, from general sales manager to vice
president, food products, vice president, International/Latin
America, vice president, professional affairs, and most recently,
vice president, special projects.
In the public sphere, he has served as general chairman of the
United Way Campaign, vice president of the University of
Cincinnati Foundation, president of the Boys & Girls Clubs of
Cincinnati, and director of the Greater Cincinnati Foundation.
Mr. Coleman is a graduate of the University of Oklahoma and served
as an officer with the U.S. Navy during the Korean War.
Dr. Herskowitz, who holds university degrees in optometry and
chemistry, joined Summit in 1993. Previously, he had been vice
president, research and development and vice president, technical
affairs, with the Polymer Technology Corp. subsidiary of Bausch &
Lomb. Dr. Herskowitz is a graduate of Knox College and the
Illinois College of Optometry.
August 21, 1997
