SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|X| Preliminary proxy statement
|_| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
TLC The Laser Center Inc.
---------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
__________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
__________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
__________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
__________________________________________________________________________
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
__________________________________________________________________________
(2) Form, schedule or registration statement no.:
__________________________________________________________________________
(3) Filing party:
__________________________________________________________________________
(4) Date filed:
__________________________________________________________________________
- ----------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE>
[LOGO OF TLC LASER EYE CENTERS]
TLC THE LASER CENTER INC.
MANAGEMENT INFORMATION CIRCULAR
GENERAL PROXY INFORMATION
Solicitation of Proxies
The information contained in this management information circular
("Circular") is furnished in connection with the solicitation of proxies to be
used at the annual and special meeting of shareholders (the "Meeting") of TLC
The Laser Center Inc. (the "Corporation" or "TLC") to be held on November 4,
1999 at 2:00 p.m. (Toronto time) at the Toronto Stock Exchange Conference
Center, 2 First Canadian Place, Toronto, Ontario, and at all adjournments
thereof, for the purposes set forth in the accompanying notice of meeting. It is
expected that the solicitation will be made primarily by mail but proxies may
also be solicited personally by employees of the Corporation, without additional
remuneration. The Corporation will, if requested, reimburse banks, brokerage
houses and other custodians, nominees and certain fiduciaries for their
reasonable out-of-pocket expenses incurred in connection with the distribution
of proxy materials to their principals. The solicitation of proxies by this
circular is being made by or on behalf of the management of the Corporation and
the total cost of the solicitation will be borne by the Corporation. The
information contained herein is given as at September 1, 1999, except where
otherwise noted. This Circular and the accompanying annual report to
shareholders was first sent or given to shareholders on or about September 29,
1999.
Appointment of Proxies
The persons named in the enclosed form of proxy are representatives of
management of the Corporation and are directors or officers of the Corporation.
A shareholder who wishes to appoint some other person (who need not be a
shareholder of the Corporation) to represent such shareholder at the Meeting may
do so by inserting such person's name in the blank space provided in the form of
proxy. To be valid, proxies must be deposited with the secretary of the
Corporation, c/o CIBC Mellon Trust Company, Proxy Dept., 320 Bay Street, P.O.
Box 1, Toronto, Ontario M5H 4A6 not later than the close of business on November
2, 1999 or, if the Meeting is adjourned, 48 hours (excluding Saturdays and
holidays) before any adjourned meeting.
<PAGE>
-2-
Non-Registered Shareholders
Only registered shareholders or the persons they appoint as their proxies
are permitted to vote at the Meeting. However, in many cases, shares of the
Corporation beneficially owned by a person (a "Non-Registered Holder") are
registered either: (a) in the name of an intermediary (an "Intermediary") that
the Non-Registered Holder deals with in respect of the shares (Intermediaries
include, among others, banks, trust companies, securities dealers or brokers and
trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar
plans); or (b) in the name of a clearing agency (such as The Canadian Depository
for Securities Limited (or CDS)) of which the Intermediary is a participant. In
accordance with the requirements of National Policy Statement No. 41 of the
Canadian Securities Administrators, the Corporation has distributed copies of
the Notice, this Circular and the form of proxy (collectively, the "meeting
materials") to the clearing agencies and Intermediaries for onward distribution
to Non-Registered Holders of Common Shares.
Intermediaries are required to forward the meeting materials to
Non-Registered Holders unless a Non-Registered Holder has waived the right to
receive them. Very often, Intermediaries will use service companies to forward
the meeting materials to Non-Registered Holders. Generally, Non-Registered
Holders who have not waived the right to receive meeting materials will either:
(a) be given a form of proxy which has already been signed by the
Intermediary (typically by a facsimile, stamped signature), which is
restricted as to the number of shares beneficially owned by the
Non-Registered Holder but which is otherwise not completed. Because
the Intermediary has already signed the form of proxy, this form of
proxy is not required to be signed by the Non-Registered Holder when
submitting the proxy. In this case, the Non-Registered Holder who
wishes to submit a proxy should otherwise properly complete the form
of proxy and deliver it to the secretary of the Corporation as set
out above under "General Proxy Information - Appointment of
Proxies"; or
(b) more typically, be given a form of proxy which is not signed by the
Intermediary, and which, when properly completed and signed by the
Non-Registered Holder and returned to the Intermediary or its
service company, will constitute voting instructions (often called a
"proxy authorization form") which the Intermediary must follow.
Typically, the Non-Registered Holder will also be given a page of
instructions which contains a removable label containing a bar-code
and other information. In order for the form of proxy to validly
constitute a proxy authorization form, the Non-Registered Holder
must remove the label from the instructions and affix it to the form
of proxy, properly complete and sign the form of proxy and submit it
to the Intermediary or its service company in accordance with the
instructions of the Intermediary or its service company.
In either case, the purpose of this procedure is to permit Non-Registered
Holders to direct the voting of the shares which they beneficially own. Should a
Non-Registered Holder who receives either form of proxy wish to vote at the
Meeting in person, the Non-Registered Holder should strike out the persons named
in the proxy and insert the Non-Registered Holder's name in the blank space
provided. In either case, Non-Registered Holders should carefully follow the
instructions of their Intermediary, including those regarding when and where the
proxy or proxy authorization form is to be delivered.
<PAGE>
-3-
Revocation of Proxies
In addition to revocation in any other manner provided by law, a
shareholder who has given a proxy may revoke the proxy (a) by completing and
signing a proxy bearing a later date and depositing it as aforesaid; or (b) by
depositing an instrument in writing executed by the shareholder or the
shareholder's attorney authorized in writing (i) at the registered office of the
Corporation at any time up to and including the last business day preceding the
day of the Meeting, or any adjournment thereof, at which the proxy is to be
used, or (ii) with the chairman of the Meeting on the day of the Meeting or any
adjournment thereof.
A Non-Registered Holder may revoke a proxy authorization form (voting
instructions) or a waiver of the right to receive meeting materials and to vote
given to an Intermediary at any time by written notice to the Intermediary,
except that an Intermediary is not required to act on a revocation of a proxy
authorization form (voting instructions) or of a waiver of the right to receive
materials and to vote that is not received by the Intermediary at least seven
days prior to the Meeting.
Voting of Proxies
The management representatives designated in the enclosed form of proxy
will vote or withhold from voting the shares in respect of which they are
appointed by proxy on any ballot that may be called for in accordance with the
instructions of the shareholder as indicated on the proxy and, if the
shareholder specifies a choice with respect to any matter to be acted upon, the
shares will be voted accordingly. In the absence of such direction, such shares
will be voted by the management representatives as indicated under the headings
in this Circular. Votes cast by proxy or in person at the Meeting will be
tabulated by the judge of elections appointed for the Meeting. The judge of
elections will include Common Shares that are present and entitled to vote but
that are withheld from voting on a particular matter for purposes of determining
the presence of a quorum but not for purposes of determining the approval of any
matter submitted to stockholders for a vote. If a broker indicates on a proxy
that such broker does not have discretionary authority as to certain Common
Shares to vote on a particular matter, such shares will be considered as present
and not entitled to vote with respect to that matter.
The enclosed form of proxy confers discretionary authority upon the
management representatives designated therein with respect to amendments to or
variations of matters identified in the notice of meeting and with respect to
other matters which may properly come before the Meeting. At the date of this
Circular, the management of the Corporation knows of no such amendments,
variations or other matters.
<PAGE>
-4-
VOTING SHARES AND RECORD DATE
On September 1, 1999, the Corporation had outstanding 37,410,324 common
shares (the "Common Shares"). Each registered holder of Common Shares of record
at the close of business on September 24, 1999, the record date established for
notice of the Meeting, will be entitled to one vote for each Common Share held
by such shareholder on all matters proposed to come before the Meeting, except
to the extent that such shareholder has transferred any Common Shares after the
record date and the transferee of such shares establishes ownership thereof and
demands, not later than 10 days before the Meeting, to be included in the list
of shareholders entitled to vote at the Meeting, in which case the transferee
will be entitled to vote such shares.
ELECTION OF DIRECTORS
The number of directors to be elected at the Meeting is seven. It is the
intention of the management representatives designated in the enclosed form of
proxy to vote the Common Shares in respect of which they are appointed for the
election as directors of the proposed nominees whose names are set out below,
unless the shareholder who has given such proxy has directed that the Common
Shares be withheld from voting. All such nominees have been directors since the
dates indicated below. Management does not contemplate that any of the proposed
nominees will be unable to serve as a director but, if that should occur for any
reason prior to the Meeting, the management representatives designated in the
enclosed form of proxy reserve the right to vote for another nominee at their
discretion. Each director elected will hold office until the next annual meeting
or until his successor is elected or appointed.
Information Regarding Nominees For Election As Directors
The following tables sets out the name and municipality of residence of
each person proposed by management of the Corporation to be nominated for
election as a director, the position with the Corporation which each nominee
presently holds, the principal occupation of each nominee, and the date on which
each nominee was first elected or appointed director. See "Security Ownership of
Certain Beneficial Owners and Management" for the number of Common Shares that
are beneficially owned, directly or indirectly, or over which control or
direction is exercised by each nominee.
Name and Municipality Position with Principal Director
of Residence Corporation Occupation Since
------------ ----------- ---------- -----
Elias Vamvakas........ President, Chief Officer of the May 1993
Richmond Hill, Executive Officer Corporation
Ontario and Chairman of the
Board of Directors
Dr. Jeffery J. Machat. Director, Ophthalmologist May 1993
Richmond Hill, Co-National Medical
Ontario Director
John F. Riegert....... Secretary and Officer of the June 1995
North York, Ontario Director Corporation
Howard J. Gourwitz.. Director(1)(2)(3) Attorney and June 1995
Bloomfield Hills, Counsellor-at-Law,
Michigan shareholder of
Gourwitz and
Barr, P.C.
<PAGE>
-5-
Dr. William David
Sullins, Jr........... Director(1)(2)(3) Optometrist June 1995
Athens, Tennessee
James R. Connacher.... Director(1)(2) Corporate Director January 1996
Toronto, Ontario
Warren S. Rustand..... Director(2)(3) Management October 1997
Tucson, Arizona Consultant
- ----------
(1) Member of the Corporation's Compensation Committee.
(2) Member of the Corporation's Corporate Governance Committee.
(3) Member of the Corporation's Audit Committee.
Directors And Executive Officers
Elias Vamvakas (age 41) is the President, Chief Executive Officer and
Chairman of the Board of Directors of TLC. Prior to co-founding TLC in 1993, Mr.
Vamvakas was the President of E.A. Vamvakas Insurance Agencies Limited and the
President of the Creative Planning Financial Group of Companies.
Jeffery J. Machat, MD, (age 39) is the Co-National Medical Director of
TLC. Prior to co-founding TLC in 1993, Dr. Machat performed laser vision
correction at the Laser Eye Centre, the Toronto Laser Sight Centre, the Bochner
Eye Institute and the Windsor Laser Eye Institute. Dr. Machat received his Royal
College of Canada Certification in Ophthalmology in 1990. Dr. Machat was also
board certified by the American Academy of Ophthalmology in 1991 and is a member
of the American Society of Cataract and Refractive Surgeons and the
International Society of Refractive Surgery.
James R. Connacher (age 62) has been a director of TLC since January 1996.
Mr. Connacher was a Vice-Chairman of Gordon Capital Corporation, a Canadian
investment dealer from 1994 to 1998. Mr. Connacher was the Chairman and Chief
Executive Officer of Gordon Capital Corporation from 1978 to August 1994 and the
Chairman and Managing Partner from August 1994 to December 1995.
David C. Eldridge, OD, FAAO (age 44) is the Executive Vice President,
Clinical Affairs of TLC. Prior to joining TLC full-time in 1997, Dr. Eldridge
was an optometrist from 1978 to 1997 and was the first private practice
optometrist in the United States to perform laser eye surgery. He served as
President of the Oklahoma Chapter of the American Association of Optometry
(AAO), President of the Oklahoma American Optometric Association ("OAOA"),
member of the OAOA Board of Directors, Chairman of the OAOA Education Committee,
Oklahoma "Optometrist of the Year" in 1993 and is a charter member of the OAOA
Contact Lens Section. Dr. Eldridge is a Fellow of the American Association of
Optometry.
<PAGE>
-6-
Howard J. Gourwitz (age 51) has been a director of TLC since June 1995.
Mr. Gourwitz has been a shareholder of the Southfield, Michigan law firm
Gourwitz and Barr, P.C. since January 1993. Mr. Gourwitz specializes in the
practice of corporate and tax law, estate and financial planning, and commercial
planning, real estate, sports and entertainment law.
Peter M. Hetz (age 51) was appointed Vice President of Human Resources of
TLC in 1999. From 1988 to 1999, Mr. Hetz was the Vice-President, Human Resources
for Chubb Security Canada Inc. From 1987 to 1988, Mr. Hetz served as Manager,
Employee Relations for NCR Canada Inc. From 1980 to 1987, Mr. Hetz served as
Manager, Labour Relations for the Bank of Montreal. Mr. Hetz was also Personnel
Management Consultant for the Montreal Catholic School Commission from 1969 to
1980.
Kathryn M. Hughes (age 29) is the Vice President of Marketing for TLC.
Prior to joining TLC in 1999, Ms. Hughes served as the National Director of
Marketing Operations for HealthSouth Corporation, the largest provider of
outpatient surgery and rehabilitation health care services in the United States.
Gary F. Jonas (age 54) is the Executive Vice President, Development for
TLC. Prior to joining TLC in 1997, Mr. Jonas was a founder and the Chief
Executive Officer of 20/20 Laser Centers, Inc. from 1993 to February 1997. From
1988 to 1993, Mr. Jonas served as the President and Chief Operating Officer of
Earle Palmer Brown, an advertising agency in the United States. From 1975 to
1988, Mr. Jonas was the CEO of University Research Corporation, a health service
consulting company. Mr. Jonas is currently a director of LaserSight
Technologies, Inc.
Peter J. Kastelic, CA, (age 42) was appointed Chief Financial Officer and
Treasurer of TLC in July 1997. From 1994 to 1997, Mr. Kastelic served as Vice
President of Finance for the Potash Company of Canada. Prior to 1994, Mr.
Kastelic held the position of Vice President and Controller of Curragh Inc.,
which was a mining company listed on The Toronto Stock Exchange and New York
Stock Exchange.
Ronald J. Kelly, LLB, (age 37) was appointed General Counsel of TLC in
September 1996. From 1990 to 1996, Mr. Kelly practiced law in the law firm of
Siskind, Cromarty, Ivey & Dowler in London, Ontario where he practiced
corporate, commercial and technology law. Mr. Kelly is a former Adjunct
Professor of contract law at the University of Western Ontario.
William P. Leonard (age 34) was appointed the Vice President of Operations
for TLC in 1999. Previously, he served as Regional General Manager for TLC.
Prior to joining TLC in 1997, Mr. Leonard was a Site Manager of 20/20 Laser
Centers, Inc. from 1995 to February 1997. From 1990 to 1995, Mr. Leonard was a
Territory Manager for Wesley Jessen Corporation, a division of Schering-Plough
Corp.
<PAGE>
-7-
Henry Lynn (age 48) was appointed Executive Vice President, Information
Systems of TLC in March 1998. During 1994 Mr. Lynn was Vice President
Information Systems for Hawker Siddeley Canada, Inc. and from 1995 to March 1998
performed in that role for BeaconEye Inc. Prior to 1994, Mr. Lynn was Vice
President, Information Systems of Indal Ltd., a large diversified multi-plant
manufacturing organization.
John F. Riegert (age 70) is the Secretary of TLC. Prior to joining TLC in
June 1995, Mr. Riegert was the Chief Executive Officer of Crossroads Christian
Communications Inc., a national broadcasting company, from 1992 to 1995, a
private corporate consultant from 1991 to 1992, and the Vice President and
Secretary-Treasurer of the Canadian Bankers' Association from 1969 to 1991.
Warren S. Rustand (age 56) has been a director of TLC since October 1997.
Mr. Rustand is currently the Managing General Partner of Harlingwood Capital
Partners, a San Diego-based company. Mr. Rustand was the Chairman and Chief
Executive Officer of Rural/Metro Corporation, a U.S. public company providing
ambulance and fire protection services, from 1996 to August, 1998. Mr. Rustand
was Chairman and Chief Executive Officer of The Cambridge Company Ltd., a
merchant banking and management consulting company, from 1987 to 1997. From 1994
to 1997, Mr. Rustand was also the Chairman of 20/20 Laser Centers, Inc.
Rochelle E. Stenzler (age 45) was appointed the President of International
Operations for TLC in 1999. From 1997 to 1998, Ms. Stenzler served as the
President of Revlon Canada, Inc. From 1988 to 1997, Ms. Stenzler was with Pharma
Plus Drugmarts Ltd., Ontario's largest retail drug store chain, serving first as
the Senior Vice President of Operations from 1988 to 1992, and subsequently, as
the President and General Manager from 1992 to 1997.
William David Sullins, Jr., OD, (age 56) has been a director of TLC since
June 1995. Dr. Sullins has been the President and Chief of Clinical Services of
Athens Eye Care Clinic, P.C. since 1991. Dr. Sullins is a founding member and
distinguished practitioner of National Academies of Practice, a Fellow and
former member of the Admissions Committee of the American Academy of Optometry,
a Fellow and Admissions Chair of the Tennessee Academy of Optometry, Adjunct
Professor at the Southern College of Optometry, member Council on Optometric
Education, and Past President and former Chairman of the Board of Trustees of
the American Optometric Association. Dr. Sullins is a director of First Franklin
Bankshares, a financial holding company, and of First National Bank and Trust
Company. Dr. Sullins is a Fellow of the American Association of Optometry.
Madeline D. Walker (age 52) was appointed the Chief Operating Officer of
TLC in 1996. Ms. Walker has been associated with TLC since 1993. Since 1990, she
has also been the President of Mainstay Human Resources Corporation, a
management consulting company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the United States Securities Exchange Act of 1934, as
amended, requires the Corporation's directors, certain officers and persons who
own more than 10% of a registered class of the Corporation's equity securities
to file reports of ownership on Form 3 and changes in ownership on Form 4 or 5
with the Securities and Exchange Commission (the "Commission"). Such, directors,
officers and 10% shareholders are also required by the Commission's rules to
furnish the Corporation with copies of all Section 16(a) reports they file. The
Corporation assists its directors and officers and preparing their Section 16(a)
reports. In fiscal year 1999, the preparation of certain Section 16(a) reports
was delayed. As a result, a report on Form 4 for each of Mr. Gary Jonas (the
April 1999 report, reporting 2 transactions), Mr. Warren Rustand (the January
1999 report, reporting one transaction and the March 1999 report, reporting 7
transactions), and Mr. Howard Gourwitz (the October 1998 report, reporting 3
transactions, the January 1999 report, reporting 4 transactions, and the April
1999 report, reporting one transaction) were filed late.
<PAGE>
-8-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as at September 1, 1999, the security ownership
of the Corporation, directly and beneficially (including vested options), by the
directors and Named Executive Officers of the Corporation (see "Executive
Compensation"), the directors and executive officers as a group, and each person
who, to the knowledge of the directors or officers of the Corporation,
beneficially owns, directly or indirectly, or exercises control or direction
over Common Shares carrying more than 5% of the voting rights attached to all
outstanding Common Shares of the Corporation (the "Principal Shareholders").
Name Number of Percentage of Class
- ---- Common -------------------
Shares(1)
---------
Elias Vamvakas(2)................... 3,169,507 8.35%
Dr. Jeffery J. Machat(3)............ 2,915,000 7.78%
TAL Investments Counsel Limited..... 2,275,000 6.08%
Putnam Investment Management........ 1,920,000 5.13%
John F. Riegert(4).................. 9,000 *
Howard J. Gourwitz(5)............... 245,268 *
Dr. William David Sullins, Jr.(6)... 43,900 *
James R. Connacher(7)............... 61,000 *
Warren S. Rustand(8)................ 10,818 *
Gary F. Jonas....................... 150,515 *
David C. Eldridge (9) .............. 142,090 *
William P. Leonard (10)............. 4,025 *
All directors and officers as a
group(11) ....................... 6,874,109 18.0%
- -----------
* Less than 1%.
(1) Number represents Common Shares held and Common Shares underlying options
that are currently exercisable or exercisable within 60 days of September
1, 1999.
(2) Includes vested options for 533,273 shares. Shares owned by Mr. Vamvakas
are held directly as to 586,234 and indirectly as to 2,050,000 by 1111881
Ontario Limited, a corporation wholly-owned by the Vamvakas Family Trust.
<PAGE>
-9-
(3) Includes vested options for 55,207 shares. Shares owned by Dr. Machat are
held directly as to 22,293 and indirectly as to 2,837,500 by 1123562
Ontario Limited, a corporation wholly-owned by the Machat Family Trust.
(4) Includes vested options for 9,000 shares.
(5) Includes vested options for 10,000 shares. Excludes 1,174,009 Common
Shares owned by LNG Enterprises, Inc., of which Mr. Gourwitz is an
associate.
(6) Includes vested options for 10,000 shares.
(7) Includes vested options for 10,000 shares.
(8) Includes vested options for 5,000 shares.
(9) Includes vested options for 47,707 shares.
(10) Includes vested options for 3,825 shares.
(11) Includes vested options for 789,012 shares. Excludes 1,174,009 shares
owned by LNG Enterprises, Inc.
<PAGE>
-10-
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all compensation earned during the last
three completed fiscal years by the Chief Executive Officer and the
Corporation's four highest paid executive officers who were serving as executive
officers at the end of the financial year ended May 31, 1999 ("Fiscal 1999") and
whose annual salary and bonus exceeded C$100,000 in Fiscal 1999 (together, the
"Named Executive Officers"). In the table below, and elsewhere in this Circular,
references to "C$" shall mean Canadian dollars and references to "US$" shall
mean United States dollars.
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
- -------------------------------------------------------------------------------------------------
Common
Shares under
Fiscal $ ($) Salary ($) Bonus Option
Name and Principal Position Year Currency June 1- May 31 June 1 - May 31 (#)(1)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Elias Vamvakas, 1997 US 235,417 250,000(2) Nil
Chief Executive Officer 1998 US 260,417 Nil Nil
1999 US 282,391 Nil 250,000(5)
- -------------------------------------------------------------------------------------------------
Jeffery J. Machat, 1997 US 200,000 Nil 25,000
Co-National Medical Director 1998 C 773,448(3) Nil 15,000
1999 US 960,228(3) Nil 20,000
- -------------------------------------------------------------------------------------------------
Gary Jonas (4) 1997 US 67,045 Nil Nil
Executive Vice President 1998 US 224,328 Nil 15,000
Strategic Growth 1999 US 219,420 Nil Nil
- -------------------------------------------------------------------------------------------------
David C. Eldridge 1998 US $ 126,122 Nil 15,000
Executive Vice-President, 1999 US $ 172,054 Nil 20,000
Clinical Affairs
- -------------------------------------------------------------------------------------------------
William P. Leonard 1999 US $ 118,890 60,000 15,750
Vice-President, Operations
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) These options vest one year after the date granted, unless otherwise
stated.
(2) This amount has become payable to Mr. Vamvakas, but has not yet been paid.
(3) Dr. Machat became an officer of the Corporation in January 1996. The
Corporation has entered into a consulting agreement with Excimer
Management Corporation which corporation will make available to TLC the
services of Dr. Jeffery J. Machat as a consultant relating to the business
of the Corporation. Pursuant to such agreement, Dr. Machat is designated
Co-National Medical Director of TLC. The agreement provides for an annual
consulting fee in the amount of US$200,000. Dr. Machat has also entered
into a surgery agreement with the Corporation pursuant to which he will
perform excimer laser procedures at one or more of the Corporation's
clinics and will be entitled to receive a fee of US$200 per eye for
routine cases, US$300 per eye for refractive problems or US$400 per eye
for complex cases. For fiscal 1998 and later years, in order to comply
with U.S. disclosure requirements, the procedure fee has been included in
the amount of salary compensation. The procedure fees were not included in
previous disclosure reports under Canadian disclosure rules. Of the amount
set forth above, US$200,000 constitutes the consulting fee paid by the
Corporation for Dr. Machat's services as Co-National Medical Director, and
the remainder constitutes procedure fees paid by patients for medical
services performed by Dr. Machat at TLC clinics.
(4) Mr. Jonas was an officer for only a portion of Fiscal 1997.
(5) These are "bonus" options. Options to acquire 125,000 common shares vested
immediately and options to acquire 62,500 will vest on each of December
31, 1999 and December 31, 2000, provided that, prior to each of such
dates, (i) the Company achieves certain financial results or (ii) the
price of the Common Shares on The Toronto Stock Exchange reaches certain
levels. If neither of these conditions are met on the specified dates, the
unvested options are forfeited.
<PAGE>
-11-
Options Granted During Fiscal 1999
The following table sets forth the individual grants of stock options for
Fiscal 1999 to the Named Executive Officers:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Common % of Total Exercise Market Value
Shares Options or Base of Common
Under Granted to Price Shares Value Under
Options Employees in Underlying Black-Scholes
Name Granted Date of Grant Fiscal Year Options on the Expiration Date Option Pricing
(#) Date of Grant Model
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Elias Vamvakas 125,000(1) August 14, 1998 15.87% US$13.13 US$13.13 August 14, 2003 US$723,500(2)
62,500(3) August 14, 1998 7.94% US$13.13 US$13.13 December 31, 2004(4) US$361,750(5)
62,500(6) August 14, 1998 7.94% US$13.13 US$13.13 December 31, 2005(4) US$361,750(5)
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffery J. Machat 20,000(7) December 1, 1998 2.5% US$19.50 US$19.50 December 1, 2003 US$159,200(2)
- ------------------------------------------------------------------------------------------------------------------------------------
William P. Leonard 15,750(7) December 1, 1998 2.0% US$19.50 US$19.50 December 1, 2003 US$125,370(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Gary F. Jonas - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
David C. Eldridge 20,000(7) December 1, 1998 2.5% US$19.50 US$19.50 December 1, 2003 US$159,200(2)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options vested immediately.
(2) Assumes: 5.8% risk-free rate of interest; dividend yield of 0%; volatility
35%; options mature in 5 years.
(3) Options will vest on December 31, 1999, provided that, prior to such date,
(i) the Company achieves certain financial results or (ii) the price of
the Common Shares on The Toronto Stock Exchange reaches certain levels. If
neither of these conditions are met on the specified date, the unvested
options are forfeited.
(4) Options mature five years from the date of vesting.
(5) Assumes: 5.8% risk-free rate of interest; dividend yield of 0%; volatility
35%.
(6) Options will vest on December 31, 2000, provided that, prior to such date,
(i) the Company achieves certain financial results or (ii) the price of
the Common Shares on The Toronto Stock Exchange reaches certain levels. If
neither of these conditions are met on the specified date, the unvested
options are forfeited.
(7) Options vest one year after the date of grant.
<PAGE>
-12-
Aggregate Option Exercises During Fiscal 1999 and Fiscal Year-End Option Values
The following table sets forth all stock options exercised by the Named
Executive Officers of the Corporation, the total number of shares underlying
unexercised options of the Named Executive Officers and their dollar value at
the end of Fiscal 1999:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Unexercised Options at Fiscal Value of Unexercised in-the-Money
Year-End Options at Fiscal Year-End (US$)
Note (1)
- -----------------------------------------------------------------------------------------------------------------------
Common Aggregate Exercisable Unexerciseable Exercisable Unexerciseable
Shares Value
Name Acquired on Realised
Exercise (#) (US$)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Elias Vamvakas 200,000 7,231,125 733,273 250,000 28,751,693 7,625,000
- -----------------------------------------------------------------------------------------------------------------------
Dr. Jeffery J. Machat - - 55,207 20,000 2,132,087 490,000
- -----------------------------------------------------------------------------------------------------------------------
David C. Eldridge - - 47,707 20,000 1,842,362 490,000
- -----------------------------------------------------------------------------------------------------------------------
Gary F. Jonas - - - - - -
- -----------------------------------------------------------------------------------------------------------------------
William P. Leonard - - 3,825 15,750 147,760 385,875
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Value is based upon the closing price of TLC's common shares on the
NASDQ on May 31, 1999, which was US$44.00.
<PAGE>
-13-
Employment Contracts
Mr. Elias Vamvakas
The Corporation has entered into an employment contract with Mr. Elias
Vamvakas on January 1, 1996. He is the President, Chief Executive Officer and
Chairman of the Board of Directors of the Corporation. This agreement was
amended on August 14, 1998. The term of the amended agreement is five years
commencing on January 1, 1996 with automatic one year renewals unless otherwise
terminated by the parties. During the initial year of the agreement, the base
salary was US$225,000, US$250,000 in the second year of the term, US$275,000 in
the third year, US$316,250 in the fourth year, and US$363,750 in the fifth year.
Thereafter, Mr. Vamvakas' base salary will be determined by the Board of
Directors but will never be less than the previous year's base salary plus
fifteen percent. Mr. Vamvakas' compensation also includes a discretionary annual
bonus as determined by the Board of Directors, provided that Mr. Vamvakas is not
entitled to receive a bonus in the fourth or fifth years of the contract.
Pursuant to the amendment to the contract, Mr. Vamvakas was granted
options to acquire an aggregate of 250,000 Common Shares at an exercise price of
C$20.75 (US $13.13). Options to acquire 125,000 common shares vested immediately
and options to acquire 62,500 will vest on each of December 31, 1999 and
December 31, 2000, provided that, prior to each of such dates, (i) the Company
achieves certain financial results or (ii) the price of the Common Shares on The
Toronto Stock Exchange reaches certain levels. If neither of these conditions
are met on the specified dates, the unvested options are forfeited.
Mr. Vamvakas' employment may be terminated for just cause (as defined in
the agreement). If terminated other than for just cause, Mr. Vamvakas will be
entitled to receive 24 months' base salary and bonus and shall be entitled to
exercise all share options granted but not otherwise exercisable or forfeited.
The agreement also contains non-competition and confidentiality covenants
for the benefit of the Corporation.
<PAGE>
-14-
Dr. Jeffery J. Machat
The Corporation has entered into a consulting agreement with Excimer
Management Corporation which corporation will make available to TLC the services
of Dr. Jeffery J. Machat as a consultant relating to the business of the
Corporation. Pursuant to such agreement, Dr. Machat is designated Co-National
Medical Director of TLC. The term of the agreement was three years commencing on
January 1, 1996. The Corporation has commenced negotiations with Dr. Machat to
extend the agreement. The agreement provides for an annual consulting fee in the
amount of US$200,000. Dr. Machat has also entered into a surgery agreement with
the Corporation pursuant to which he will perform excimer laser procedures at
one or more of the Corporation's clinics and will be entitled to receive a fee
of US$200 per eye for routine cases, US$300 per eye for refractive problems or
US$400 per eye for complex cases. Dr. Machat is also entitled to receive options
under the Share Option Plan as a director.
Dr. Machat's agreement may be terminated for just cause (as defined in the
agreement). If terminated other than for just cause, Dr. Machat will be entitled
to receive an amount equal to two times the annual consulting fee.
Dr. Machat's consulting agreement contains non-competition and
confidentiality covenants for the benefit of the Corporation.
Gary F. Jonas
The Corporation has entered into an employment contract with Mr. Gary
Jonas who is Executive Vice President, Development of the Corporation. The term
of the agreement is five years commencing on September 1, 1997 with automatic
one year renewals as agreed upon by the parties. During the initial year of the
agreement, the base salary was US$220,000, with an annual review of salary
during each year of the term. Mr. Jonas no longer participates in the
Corporation's Stock Option Plan under the terms of his contract.
Mr. Jonas' employment may be terminated for cause. If terminated other
than for cause, Mr. Jonas will be entitled to receive 6 months' salary and shall
be entitled to exercise all vested share options granted.
The agreement also contains non-competition and confidentiality covenants
for the benefit of the Corporation.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors is composed of Dr.
Sullins, Mr. Gourwitz, and Mr. Connacher. None of the members of the
Compensation Committee is an officer, employee or former officer or employee of
the Corporation. Determination of the compensation of executive officers of each
of the subsidiaries of the Corporation is made by the entire Board of Directors
of each subsidiary. Dr. Sullins also serves as a member of the boards of
directors of one or more subsidiaries of the Corporation.
<PAGE>
-15-
REPORT ON EXECUTIVE COMPENSATION
The Corporation's corporate philosophy on compensation is that
compensation should be tied to an individual's performance and to the
performance of the Corporation as a whole. TLC believes that executive officers
who make a substantial contribution to the long-term success of the Corporation
and its subsidiaries are entitled to participate in that success.
The compensation of the Corporation's executive officers, including its
Named Executive Officers, is comprised of three components: (i) base salary;
(ii) cash bonuses; and (iii) long-term incentives in the form of stock options.
The Corporation does not have an executive pension plan.
TLC is an emerging corporation which was incorporated in 1993 and
consequently the Board of Directors has placed considerable emphasis upon the
incentive of stock options in determining executive compensation in order to
align the interests of the executive officers with the long-term interests of
the Corporation's shareholders.
The Share Option Plan is administered by the Board of Directors. The
purpose of the Share Option Plan is to advance the interests of the Corporation
by (i) providing directors, officers, employees and other eligible persons with
additional incentive; (ii) encouraging stock ownership by eligible persons;
(iii) increasing the proprietary interests of eligible persons in the success of
the Corporation; (iv) encouraging eligible persons to remain with the
Corporation or its affiliates; and (v) attracting new employees, officers or
directors to the Corporation or its affiliates. In determining whether to grant
options and how many options to grant to eligible persons under the Share Option
Plan, consideration is given to each individual's past performance and
contribution to the Corporation as well as that individual's expected ability to
contribute to the Corporation in the future.
Compensation of Chief Executive Officer
During Fiscal 1999, Mr. Vamvakas, the President, Chief Executive Officer
and Chairman of the Board of Directors of TLC, continued to provide the
leadership and strategic direction that has enabled the Corporation to continue
its expansion throughout Canada and the United States.
The base compensation paid to Mr. Vamvakas during Fiscal 1999 was set by
his employment agreement described under " - Employment Contracts." The terms of
his employment contract were amended in Fiscal 1999 based upon the subjective
evaluation of factors including his contribution to the Corporation, the
leadership and strategic direction he has provided and comparisons with
comparable positions in other companies. Stock options to acquire up to 250,000
shares were granted to Mr. Vamvakas as a bonus and an incentive during Fiscal
1999, based on the same factors. Options to acquire 125,000 shares vested
immediately with the remainder becoming exercisable over the next two years upon
the occurrence of certain events. If the stated events do not occur, the
unvested options are forfeited. See "Executive Compensation - Summary
Compensation Table" and "- Employment Contracts".
<PAGE>
-16-
The foregoing report is submitted by the Compensation Committee.
William David Sullins, Jr., OD James R. Connacher Howard J. Gourwitz
Compensation of Directors
Directors of the Corporation who are not executive officers of the
Corporation are entitled to receive an attendance fee of $350 (C$ for Canadian
resident directors and US$ for U.S. resident directors) in respect of each
meeting attended. Non-executive members of the Board who are chairpersons of
Committees of the Board will also receive an annual fee of $5,000 for their
services (C$ for Canadian residents and US$ for U.S. residents). In addition,
directors are reimbursed for out-of-pocket expenses incurred in connection with
attending meetings of the Board of Directors and are entitled to receive options
under the Share Option Plan. On December 1, 1998, non-executive members of the
Board of Directors were each issued options to acquire 5,000 Common Shares at
US$ 19.50 per share.
<PAGE>
-17-
PERFORMANCE GRAPH
The following show the cumulative total shareholder return (assuming
reinvestment of dividends) over the last two fiscal years compared to the
cumulative total return on the TSE 300 Index and the Nasdaq Health Services
Stocks Index.
Cumulative Total Return on $100 Investment Assuming Dividends are
Reinvested May 31, 1996-May 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
- --------------------------------------------------------------------------------
5/31/1996 5/31/1997 5/31/1998 5/31/1999
- --------------------------------------------------------------------------------
TLC The Laser C$100 C$172.66 C$345.324 C$938.85
Center Inc.
- --------------------------------------------------------------------------------
TSE 300 C$100 C$124.25 C$150.10 C$137.57
Composite Index
- --------------------------------------------------------------------------------
Nasdaq Health US$100 US$82.86 US$84.83 US$72.60
Services Stocks
- --------------------------------------------------------------------------------
<PAGE>
-18-
STATEMENT OF CORPORATE GOVERNANCE POLICIES
The Board of Directors of TLC believes that strong corporate governance
practices are essential to the well-being of the Corporation and its
shareholders. Since March 1996, the Common Shares have been listed on The
Toronto Stock Exchange. The By-Laws of The Toronto Stock Exchange require that
this Statement of Corporate Governance Practices relate the corporate governance
practices of the Board of Directors to the "Guidelines for Improved Corporate
Governance" contained in the Final Report of The Toronto Stock Exchange
Committee on Corporate Governance in Canada (the "TSE Report"). A description of
the Corporation's corporate governance practices follows.
Mandate of the Board of Directors
The mandate of the Board of Directors is to supervise the management of
the business and affairs of the Corporation and to act with a view to the best
interests of the Corporation.
Composition of the Board of Directors
The Board of Directors is currently comprised of seven members.
Assuming the proposed nominees for election as directors are elected at the
Meeting, the Board of Directors believes that four directors are "unrelated"
directors and the remaining three are "related" directors, within the meaning of
the TSE Report. An "unrelated" director is a director who is independent of
management and is free from any interest and any business or other relationship
which could, or could reasonably be perceived to, materially interfere with the
director's ability to act with a view to the best interests of the Corporation,
other than interests and relationships arising from shareholding. The
Corporation does not have a significant shareholder, since there is no person
who has the ability to exercise a majority of the votes attached to the
outstanding shares of the Corporation for the election of directors. There were
eight meetings of the Board of Directors in Fiscal 1999. Messrs. Rustand and
Machat attended four of the eight meetings, Dr. Sullins attended six of the
eight meetings and Mr. Connacher attended seven of the eight meetings. The other
directors attended all of the meetings. In addition to attending board and
applicable committee meetings, the unrelated directors of the Corporation meet
regularly independent of management to discuss the business and affairs of the
Corporation.
Board Committees
The Board of Directors has established three committees. The following is
a brief description of each committee and its composition.
<PAGE>
-19-
The Audit Committee consists of three directors: Messrs. Gourwitz and
Rustand and Dr. Sullins, all of whom are unrelated directors. The Audit
Committee is responsible for the engagement of the Corporation's independent
auditors and reviews with them the scope and timing of their audit services and
any other services they are asked to perform, their report on the Corporation's
accounts following the completion of the audit and the Corporation's policies
and procedures with respect to internal accounting and financial controls. There
were five meetings of the Audit Committee relating to Fiscal 1999.
The Compensation Committee consists of three directors: Messrs. Connacher
and Gourwitz, and Dr. Sullins, all of whom are unrelated directors. The
Compensation Committee is responsible for the development of compensation
policies and makes recommendations on compensation of executive officers to the
Corporate Governance Committee (see below) for approval of the Board of
Directors. There was one meeting of the Compensation Committee relating to
Fiscal 1999.
The Corporate Governance Committee consists of four directors: Messrs.
Connacher, Rustand and Gourwitz and Dr. Sullins, all of whom are unrelated
directors. The Corporate Governance Committee is responsible to the Board of
Directors with respect to developments in the area of corporate governance, the
practices of the Board, the nomination of Directors and the delegation of work
to other committees of the Board. Although there were discussions and
correspondence pertaining to the work of the Corporate Governance Committee
during Fiscal 1999, there were no meetings of the Corporate Governance Committee
relating to Fiscal 1999. The committee serves as a nominating committee and will
consider nominees for the Board of Directors recommended by shareholders.
Recommendations by shareholders should be submitted to the Company's Secretary
and should identify the recommended nominee by name and provide detailed
background information. Recommendations received by May 31, 2000 will be
considered by the committee for nomination at the 2000 annual meeting of
shareholders.
Shareholder Communications
The Board of Directors places great emphasis on its communications with
shareholders. Shareholders receive timely dissemination of information and the
Corporation has procedures in place to permit and encourage feedback from its
shareholders. TLC's senior officers are available to shareholders and, through
its investor relations department, TLC seeks to provide clear and accessible
information about the results of the Corporation's business and its future
plans. TLC has established an investor web site on the Internet through which it
makes available press releases, financial statements, annual reports, trading
information and other information relevant to investors. Mr. Vamvakas may also
be contacted directly by investors through the Internet.
<PAGE>
-20-
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Corporation maintains directors' and officers' liability insurance.
Under this insurance coverage the insurer pays on behalf of the Corporation for
losses for which the Corporation indemnifies its directors and officers, and on
behalf of individual directors and officers for losses arising during the
performance of their duties for which they are not indemnified for the
Corporation. The policy limit is US$50,000,000 per policy term subject to a
deductible of US$100,000 per occurrence with respect to corporate indemnity
provisions and US$250,000 if the claim relates to securities law claims. The
total premium in respect of the directors' and officers' liability insurance for
Fiscal 1999 was approximately US$485,000. The insurance policy does not
distinguish between directors and officers as separate groups.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
There are no material transactions since the commencement of Fiscal
1999.
Indebtedness of Directors, Executive Officers and Senior Officers
No officer, director, or employee, or former officer, director or employee
of the Corporation or any of its subsidiaries, or associate of any such officer,
director or employee is currently or has been indebted (other than routine
indebtedness) at any time during Fiscal 1999 to the Corporation or any of its
subsidiaries other than as disclosed below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Largest Amount Amount
Involvement of the Outstanding During year ended Outstanding as at
Name and Principal Position Corporation May 31, 1999 September 15, 1999
(C$) (C$)(1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Elias Vamvakas, Car Loan 51,232 -
Chief Executive Officer
- --------------------------------------------------------------------------------------------------------
Madeline Walker, Car Loan 30,590 21,584
Chief Operating Officer
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) The indebtedness is secured in each case by an automobile of the officer.
<PAGE>
-21-
APPOINTMENT OF AUDITORS
It is the intention of the management representatives designated in the
enclosed form of proxy to vote the shares in respect of which they are appointed
proxy in favour of a resolution appointing Ernst & Young, Toronto, Ontario, as
auditors of the Corporation, to hold office until the next annual meeting of
shareholders, and authorizing the directors to fix the remuneration to be paid
to the auditors, unless the shareholder who has given such proxy has directed
that the shares be withheld from voting in the appointment of auditors. Ernst &
Young have been auditors of the Corporation since 1997. If shareholders do not
approve the appointment of Ernst & Young, the Board of Directors will reconsider
their appointment. Representatives of Ernst & young are expected to attend the
Meeting, will be provided with an opportunity to make a statement, should they
desire to do so, and will be available to respond to appropriate questions from
the shareholders.
NAME CHANGE
At the Meeting, the Corporation will seek approval of a special resolution
("Special Resolution Number 1"), authorizing an amendment to the articles of the
Corporation to change the name of the Corporation to "TLC Laser Eye Centers
Inc." This name is intended to better reflect the business of the Corporation.
In order to be effective, Special Resolution Number 1 must be passed by at
least two-thirds of the votes cast at the Meeting. It is the intention of the
management representatives designated in the enclosed form of proxy to vote the
shares in respect of which they are appointed proxy in favour of the Special
Resolution Number 1, a copy of which is set out on Exhibit A to this Circular,
unless the shareholder who has given such proxy has directed that the shares be
otherwise voted.
AMENDMENT TO BY-LAW NO. 3
The Corporation will seek approval of a resolution ( "Resolution Number
2"), confirming the amendment of By-Law No. 3 (the "By-Law") of the Corporation
to reduce the quorum requirement for a valid shareholders' meeting. Section 5 of
the By-Law currently states that a quorum at any meeting of shareholders shall
be two persons present in person and each entitled to vote thereat and holding
not less that 51% of the votes entitled to be cast thereat. On August 20, 1999,
the Board of Directors approved the amendment of the By-Law to provide that a
quorum at any meeting of shareholders shall be two persons present in person and
each entitled to vote thereat and holding not less than 20% of the votes
entitled to be cast thereat. The purpose of the amendment to the By-law is to
simplify the quorum requirement to ensure that the business of the Corporation
can be carried on effectively.
<PAGE>
-22-
In order to be effective, Resolution Number 2 must be passed by a majority
of the votes cast at the Meeting. In addition, the implementation of this
amendment is subject to the receipt of appropriate regulatory approval. It is
the intention of the management representatives designated in the enclosed form
of proxy to vote the shares in respect of which they are appointed proxy in
favour of Resolution Number 2, a copy of which is set out on Exhibit B to this
Circular, unless the shareholder who has given such proxy has directed that the
shares be otherwise voted.
SHARE COMPENSATION
At the Meeting, the Corporation will seek approval of a resolution
("Resolution Number 3"), authorizing the Board of Directors of the Corporation
to issue up to 500,000 Common Shares in the aggregate over the next two years to
doctors as compensation for providing administrative or consulting services to
the Corporation or its subsidiaries. Resolution Number 3 is intended to provide
the Corporation with flexibility to issue Common Shares in order to attract and
retain the administrative and consulting services (not including seeing patients
or practicing medicine) of experienced and knowledgeable ophthalmologists and
optometrists. An aggregate of 40,000 common shares have previously been issued
to doctors, subject to shareholder approval of Resolution Number 3, in exchange
for services. Shareholder approval of Resolution Number 3 is being sought in
accordance with the rules of The Toronto Stock Exchange. The authority conferred
by Resolution Number 3 will expire at the end of the annual meeting of the
Corporation in 2001, unless extended by approval of the shareholders.
In order to be effective, Resolution Number 3 must be passed by a majority
of the votes cast at the Meeting. It is the intention of the management
representatives designated in the enclosed form of proxy to vote the shares in
respect of which they are appointed proxy in favour of Resolution Number 3, a
copy of which is set out on Exhibit C to this Circular, unless the shareholder
who has given such proxy has directed that the shares be otherwise voted.
SHAREHOLDERS RIGHTS PLAN
At the Meeting, shareholders will be asked to approve a resolution
("Resolution Number 4") ratifying, confirming and approving the shareholder
rights plan (the "Rights Plan"), which was considered and adopted by the Board
of Directors on September 9, 1999 and made effective as of September |X|, 1999,
subject to regulatory and shareholder approval. Approval of the Rights Plan by
the shareholders of the Corporation is required by the TSE.
In order to be effective, Resolution Number 4 must be passed by a majority
of the votes cast at the Meeting. The Board of Directors has determined that the
Rights Plan is in the best interests of the Corporation and recommends that
shareholders vote in favour of Resolution Number 4. It is the intention of the
management representatives designated in the enclosed form of proxy to vote the
shares in respect of which they are appointed proxy in favour of Resolution
Number 4, a copy of which is set out on Exhibit D to this Circular, unless the
shareholder who has given such proxy has directed that the shares be otherwise
voted.
<PAGE>
-23-
Effect and Advantages of a Rights Plan
Under the provincial securities legislation in Canada, a take-over bid
generally means an offer to acquire voting or equity shares of a corporation
that, together with shares already owned by the bidder and certain parties
related thereto, amount to 20% or more of the outstanding voting shares. The
existing legislative framework for take-over bids presents certain concerns for
shareholders, which has led many Canadian companies to adopt shareholder rights
plans. In particular, this legislation permits a take-over bid to expire 21 days
after it is initiated. The Board of Directors is of the view that this is an
insufficient time period for shareholders to consider a take-over bid and make a
reasoned and careful decision regarding such bid, or to consider actual or
possible competing take-over bids. Furthermore, a shareholder may feel compelled
to tender its common shares to a take-over bid which such shareholder considers
to be inadequate, out of a concern that in failing to do so, it may be left with
illiquid or minority-discounted common shares. As a result, in the absence of a
shareholders rights plan, shareholders may fail to realize the maximum value for
their common shares.
The purpose of the Rights Plan is to ensure adequate time for shareholders
of the Corporation to assess the merits of a take-over bid without undue
pressure. The Rights Plan is designed to give the Board of Directors time to
consider alternatives, which may allow shareholders to receive full and fair
value for their common shares. Moreover, the Board of Directors believes that
the Rights Plan will encourage persons seeking to acquire control of the
Corporation to do so by means of a public take-over bid available to all
shareholders, which will give shareholders the best opportunity of being assured
that they will participate on an equal basis, regardless of the size of their
holdings, in an acquisition of control of the Corporation.
The Rights Plan does not affect the duty of the Board of Directors to act
honestly and in good faith with a view to the best interests of the Corporation
and its shareholders. Indeed, the Board of Directors believes that the Rights
Plan remains an appropriate mechanism to ensure that the Board of Directors will
be able to discharge its responsibility to assist shareholders in responding to
a take-over bid.
The Rights Plan was not adopted by the Board of Directors in response to
any acquisition or take-over bid. Furthermore, in adopting the Rights Plan, the
Board of Directors does not intend to prevent a change of control of the
Corporation or to secure the continuance of current management or the directors
currently in office. The Rights Plan is not part of a plan by management to
adopt a series of anti-takeover measures. However, the Corporation already has
in place certain provisions in its articles and by-laws which may be deemed to
render more difficult, or discourage, takeovers or changes in control of the
Corporation. See "Existing Anti-Takeover Provisions". At present, management
does not intend to propose other anti-takeover measures in future proxy
solicitations.
Shareholder rights plans have been adopted by a large number of
publicly-held corporations in Canada. The terms of the Rights Plan are
substantially the same as those recently adopted by other major Canadian
companies.
<PAGE>
-24-
Disadvantages of a Rights Plan
The Rights Plan could have the effect of deterring tender offers or
take-over attempts, even though such an offer or attempt might appear to
shareholders to be beneficial, and could make it more difficult for the holder
of a large block of the common shares to assume control of the Corporation. In
addition, it has been argued that rights plans, in general, have the effect of
entrenching management by discouraging certain take-overs which are not favored
by management.
Existing Anti-Takeover Provisions
The following factor, and its potential for having an anti-takeover
effect, should be reviewed in evaluating the proposal to approve the Rights
Plan.
Under the Corporation's Articles of Incorporation, the Board of Directors
may issue an unlimited number of additional common shares. Although the Board of
Directors has no present intention of doing so, such shares could be issued in a
manner that would make an acquisition of the Corporation more difficult.
Terms of the Rights Plan
The material terms of the Rights Plan are summarized below. Reference
should be made to the actual provisions of the Shareholder Rights Plan Agreement
between the Corporation and CIBC Mellon Trust Company as Rights Agent, copies of
which are available to shareholders upon request and will be made available at
the Meeting. Capitalized terms which are not defined below have the meanings
attributed to such terms in such agreement.
Rights
One Right has been issued and is attached to each outstanding common share
of the Corporation. A Right only becomes exercisable upon the occurrence of a
Flip-In Event, which is a transaction pursuant to which a person becomes an
Acquiring Person and which otherwise does not meet the requirements of a
Permitted Bid.
When exercised, a Right entitles each shareholder who is not then
attempting to acquire control of the Corporation to purchase additional common
shares at a substantial discount to market value. This purchase would cause
substantial dilution to the person or group of persons attempting to acquire
control of the Corporation, other than by way of a Permitted Bid. The Rights
will expire on the termination of the Rights Plan, unless redeemed before such
time.
<PAGE>
-25-
Acquiring Person
An Acquiring Person is generally a person who becomes the beneficial owner
of 20% or more of the outstanding common shares of the Corporation. Under the
Rights Plan, there are various exceptions, including:
(a) a person who acquires 20% or more of the outstanding common shares
due to (i) acquisitions of common shares by the Corporation, (ii)
pro rata distributions of common shares by the Corporation, or (iii)
the issuance of common shares on an exempt private placement basis
(subject to certain limits); and
(b) underwriters who obtain common shares for the purposes of a public
distribution.
Beneficial Ownership
The thresholds for triggering the Rights Plan are based on the percentage
of shares that are Beneficially Owned by a person. This is defined in terms of
legal or equitable ownership of common shares. In addition, a person is deemed
to be the Beneficial Owner of common shares in circumstances where that person,
and its affiliates or associates and any other person acting jointly or in
concert with such person, has a right to acquire common shares within 60 days.
There are various exceptions to this rule, including:
(a) persons who tender common shares pursuant to a take-over bid;
(b) persons such as portfolio managers who hold as nominees;
(c) persons who enter into lock-up agreements on certain terms and
conditions; and
(d) persons who have been given proxies to vote other persons' common
shares in connection with the public proxy solicitation, or who have
agreements as to how they will vote their common shares.
<PAGE>
-26-
Permitted Bid
If a take-over bid is structured as a Permitted Bid, a Flip-In Event will
not occur and the Rights will not become exercisable. The requirements of a
Permitted Bid include the following:
(a) the take-over bid must be made to all shareholders by means of a
take-over bid circular;
(b) the take-over bid must not permit the bidder to take up any common
shares that have been tendered pursuant to the take-over bid prior
to the expiry of a period not less than 60 days after the take-over
bid is made, and then only if at such time more than 50% of the
common shares held by the Independent Shareholders (shareholders
other than the bidder, its affiliates and persons acting jointly or
in concert with such bidder), have been tendered pursuant to the
take-over bid and not withdrawn;
(c) the take-over bid must contain an irrevocable and unqualified
provision that, unless it is withdrawn, common shares may be
tendered at any time during the 60 day period referred to in (b)
above and that any common shares deposited pursuant to the take-over
bid may be withdrawn until they have been taken up and paid for; and
(d) if more than 50% of the common shares held by Independent
Shareholders are tendered to the take-over bid within the 60-day
period, then the bidder must make a public announcement of that fact
and the take-over bid must then remain open for an additional 10
business days from the date of such public announcement.
The Rights Plan also allows a Competing Permitted Bid to be made while a
Permitted Bid is in existence. A Competing Permitted Bid is a take-over bid that
is made after a Permitted Bid has been made but prior to its expiry, and which
satisfies all of the requirements of a Permitted Bid except that it may expire
on the same date as the Permitted Bid (provided that the Competing Permitted Bid
is open for a minimum of 21 days).
The requirements of a Permitted Bid and a Competing Permitted Bid enable
shareholders to decide whether the take-over bid or any competing permitted bid
is adequate on its own merits, without being influenced by the likelihood that a
take-over bid will succeed. Moreover, if there is sufficient support for a
take-over bid such that at least 50% of the outstanding common shares have been
tendered to it, a shareholder who has not yet tendered to that bid will have a
further 10 business days in which to decide whether to withdraw its common
shares from a competing take-over bid, if any, and whether to tender to the
take-over bid.
<PAGE>
-27-
Waiver and Redemption
The Board of Directors may waive the application of the Rights Plan to a
particular take-over bid or redeem the Rights in the following circumstances:
(a) a waiver can only be given where a take-over bid is made by way of a
take-over bid circular;
(b) a waiver given in respect of one take-over bid constitutes an
automatic waiver in respect of all other competing take-over bids;
(c) a waiver may be given in the event of an acquisition of common
shares by any person over the 20% threshold, provided that such
person agrees to dispose of the excess shares within 30 days, if
such acquisition was inadvertent and without any intention to cause
a Flip-In Event, and otherwise within 10 days; and
(d) the Rights are deemed to be redeemed upon the successful completion
of a Permitted Bid (or a Competing Permitted Bid) if a waiver has
been given in respect of any other take-over bid made by way of
circular.
The Board of Directors may, however, terminate the Rights Plan, with prior
shareholder approval, at any time prior to the occurrence of a Flip-In Event by
redeeming all of the Rights that are then outstanding at a price of $0.0001 per
Right.
Termination
The Rights Plan will expire on the fifth anniversary of its adoption,
namely on November 4, 2004. However, in addition to the shareholder approval
that is being sought at the Meeting, shareholder reconfirmation of the Rights
Plan is also required at the first annual shareholders meeting after the third
anniversary of the Rights Plan, namely at the shareholders meeting to be held
after November 4, 2002.
OTHER BUSINESS
The Corporation knows of no other matter to come before the Meeting other
than the matters referred to in the notice of meeting.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the
Corporation's annual meeting of shareholders for Fiscal 2000 must be received by
the Corporation's principal office not later than July 1, 2000 for inclusion in
the proxy statement for that meeting.
<PAGE>
-28-
AVAILABILITY OF DISCLOSURE DOCUMENTS
The Corporation will provide any person or company, upon request to its
Secretary, with a copy of:
(i) the most recent annual information form or Form 10-K of the
Corporation, which includes management's discussion and analysis of
financial conditions and results of operations, together with a copy
of any document or the pertinent pages of any document incorporated
therein by reference;
(ii) the comparative financial statements of the Corporation for the
fiscal year ended May 31, 1999, together with the report of the
auditors thereon;
(iii) the most recent annual report of the Corporation;
(iv) the interim financial statements of the Corporation for the periods
subsequent to the end of its fiscal year; and
(v) this Circular.
DIRECTORS' APPROVAL
The contents and sending of this Circular have been approved by the Board
of Directors of the Corporation.
By Order of the Board of Directors
/s/ John F. Riegert
John F. Riegert
Secretary
Mississauga, Canada
September ___, 1999
<PAGE>
-29-
EXHIBIT A
Special Resolution Number 1 Relating to the Change in the Name of the
Corporation
Be it resolved that:
1. The articles of the Corporation be amended to change the name of the
Corporation to "TLC Laser Eye Centers Inc."; and
2. any director or officer of the Corporation is hereby authorized and
empowered for and in the name of and on behalf of the Corporation to
execute, in duplicate, and to deliver to the Director under the Business
Corporations Act (Ontario), articles of amendment and to execute, or cause
to be executed, whether under the corporate seal of the Corporation or
otherwise, and to deliver or cause to be delivered all such other
documents and instruments, and to do or cause to be done all such other
acts and things as, in the opinion of such director or officer, may be
necessary or desirable in order to carry out the intent of this special
resolution.
<PAGE>
-30-
EXHIBIT B
Resolution Number 2 Relating to Amendment to By-Law No. 3
Be it resolved that:
The amendment of section 5 of By-Law No. 3 of the Corporation, approved by the
Board of Directors on August 20, 1999, as described in the accompanying
management information circular for this meeting under the heading "Amendment to
By-Law No. 3", is hereby confirmed.
<PAGE>
-31-
EXHIBIT C
Resolution Number 3 Relating to Share Compensation
Be it resolved that:
1. The Board of Directors is hereby authorized and empowered to issue from
time to time up to 500,000 common shares of the Corporation to doctors as
compensation for providing administrative or consulting services to the
Corporation or its subsidiaries;
2. unless extended by resolution of the shareholders of the Corporation, the
authority conferred by this resolution shall expire at the end of the
annual meeting of the Corporation in 2001; and
3. any director or officer of the Corporation is hereby authorized and
empowered for and in the name of and on behalf of the Corporation to
execute and deliver, whether under the corporate seal or otherwise, all
such documents and instruments and to do all such other acts and things
as, in the opinion of such director or officer, may be necessary or
desirable in order to carry out the intent of this resolution.
<PAGE>
-32-
EXHIBIT D
Resolution Number 4 Relating to the Shareholder Rights Plan
Be it resolved that:
1. The adoption of the Shareholder Rights Plan Agreement dated as of |X|,
1999 between the Corporation and CIBC Mellon Trust Company is hereby
ratified, confirmed and approved; and
2. any director or officer of the Corporation is hereby authorized and
directed in the name of and on behalf of the Corporation, to execute and
deliver or cause to be delivered all such documents and to do all such
other acts and things as such person may consider necessary or desirable
in order to carry out the intent of the foregoing resolution and the
matters authorized thereby.
TLC THE LASER CENTER INC.
PROXY
Annual and Special Meeting of Shareholders of
TLC THE LASER CENTER INC.
to be held on November 4, 1999
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
OF TLC THE LASER CENTER INC.
The undersigned shareholder of TLC The Laser Center Inc. (the
"Corporation") hereby appoints Elias Vamvakas, President and a Director of the
Corporation, or, failing him, John F. Riegert, Secretary of the Corporation, or,
failing him, Peter Kastelic, Chief Financial Officer of the Corporation, or
instead of any of the foregoing, ___________________________, as proxy of the
undersigned, to attend, vote and act for and on behalf of the undersigned at the
annual and special meeting of shareholders of the Corporation to be held on
November 4, 1999 and at all adjournments thereof, upon the following matters:
1. TO VOTE FOR |_| 1 OR WITHHOLD |_| 2
or, if no specification is made, vote FOR the election of directors for
the respective terms stated in the accompanying management information
circular; provided that the undersigned wishes to withhold vote for the
following directors:
______________________________________________________________________
2. TO VOTE FOR |_| 3 OR AGAINST |_| 4
or, if no specification is made, vote FOR a resolution authorizing an
amendment to the articles of the Corporation to change the name of the
Corporation to "TLC Laser Eye Centers Inc.;
3. TO VOTE FOR |_| 5 OR AGAINST |_| 6
or, if no specification is made, vote FOR a resolution confirming the
amendment of By-Law No. 3 of the Corporation to reduce the quorum
requirement for a valid shareholders meeting;
4. TO VOTE FOR |_| 7 OR AGAINST |_| 8
or, if no specification is made, vote FOR a resolution ratifying,
confirming and approving the adoption of a Shareholder Rights Plan
agreement effective as of September [ ], 1999 between the Corporation and
CIBC Mellon Trust Company as Rights Agent;
5. TO VOTE FOR |_| 9 OR AGAINST |_| 10
or, if no specification is made, vote FOR a resolution authorizing the
Board of Directors of the Corporation to issue during the next two years
up to 500,000 common shares to doctors as compensation for providing
administrative or consulting services to the Corporation or its
subsidiaries;
6. TO VOTE FOR |_| 11 OR WITHHOLD |_| 12
or if no specification is made, vote FOR the continued appointment of
Ernst & Young as auditors of the Corporation and authorizing the directors
to fix the remuneration of the auditors; and
7. TO VOTE at the discretion of the proxy nominee on any amendments to the
foregoing and on such other business as may properly come before the
meeting or any adjournments thereof.
EXECUTED on the ___________________ day of _____________________, 1999
- ----------------------------------- ------------------------------------
Number of Common Shares Signature of Shareholder
------------------------------------
Name of Shareholder
(Please print clearly)
NOTES:
1. A shareholder has the right to appoint a person to represent the
shareholder at the meeting other than the management representatives
designated in this proxy. Such right may be exercised by inserting in the
space provided the name of the other person the
<PAGE>
shareholder wishes to appoint. Such other person need not be a
shareholder.
2. To be valid, this proxy must be signed and deposited with the secretary of
the Corporation c/o CIBC Mellon Trust Company, Proxy Dept., 320 Bay
Street, P.O. Box 1, Toronto, Ontario M5H 4A6 not later than the close of
business on November 2, 1999, or, if the meeting is adjourned, 48 hours
(excluding Saturdays and holidays) before any adjourned meeting.
3. If an individual, please sign exactly as your shares are registered. If
the shareholder is a corporation, this proxy must be executed by a duly
authorized officer or attorney of the shareholder and, if the corporation
has a corporate seal, its corporate seal should be affixed. If the shares
are registered in the name of an executor, administrator or trustee,
please sign exactly as the shares are registered. If the shares are
registered in the name of the deceased or other shareholder, the
shareholder's name must be printed in the space provided, the proxy must
be signed by the legal representative with his name printed below his
signature and evidence of authority to sign on behalf of the shareholder
must be attached to this proxy.
4. Reference is made to the accompanying notice and management information
circular for further information regarding completion and use of this
proxy and other information pertaining to the meeting. Before completing
this proxy, non-registered holders should carefully review the section in
the accompanying management information circular entitled "General Proxy
Information - Non-Registered Shareholders" and should carefully follow the
instructions of the securities dealer or other intermediary who sent this
proxy.
5. If this proxy is not dated in the space provided, it is deemed to bear the
date on which it is mailed by management of the Corporation.
6. If a share is held by two or more persons, any one of them present or
represented by proxy at a meeting of shareholders may, in the absence of
the other or others, vote in respect thereof, but if more than one of them
are present or represented by proxy, they shall vote together in respect
of each share so held.
