Employment Agreement – Continued Employment – LCA-Vision, Inc.

AGREEMENT

This Agreement (this “Agreement”) is made and entered into on the
8^th day of September, 2009 by and between LCA -Vision Inc., a Delaware
corporation (the “Corporation”), and Rhonda Sebastian (the “Employee”).

RECITALS:

A. The Employee is currently employed by the Corporation.

B. The Employee desires to continue to be employed by the Corporation, and
the Corporation desires to continue to employ the Employee, on the terms
outlined in this Agreement.

C. This Agreement supersedes any previous agreement between the Employee and
the Corporation with respect to the matters covered herein.

NOW, THEREFORE, in consideration of the recitals and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Corporation and the Employee agree as follows:

1. Position and Term. Effective as of the date of this Agreement, the
Corporation continues to employ the Employee, and the Employee accepts continued
employment with the Corporation, as Senior Vice President of Human Resources of
the Corporation. Employee will report directly to the Chief Executive Officer
(CEO) and will be a member of the Executive Management team. The term of the
Employee’s employment is “at will” meaning that either the Employee or the
Corporation can end the Employee’s employment at any time and for any reason.
The initial term of this Agreement commences on the date of this Agreement and
terminates on December 31, 2009. The term of this Agreement will be renewed
automatically from year to year thereafter, unless either the Employee or the
Corporation notifies the other at least ninety (90) days prior to December 31,
2009 or December 31st of any subsequent year of its or her desire to terminate
this Agreement as of the December 31st immediately following the service of
notice. While she is employed by the Corporation, the Employee shall devote
substantially all of her business time, ability, and attention for the benefit
of the business of the Corporation. Nothing in this Section 1, however, will
prevent the Employee from engaging in additional activities in connection with
personal investments, charitable, civic, educational, professional, industry, or
community affairs that are not inconsistent with the Employee’s duties under
this Agreement. The Employee’s duties shall include those as are customary for
someone of her position at comparable corporations.

2. Best Efforts. The Employee agrees on a full-time basis to perform
faithfully, industriously, and to the best of her ability, experience, and
talents, all of the duties that may be required by the terms of this Agreement.

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3. Compensation and Benefits. The Corporation shall pay the Employee a
base salary of One Hundred Ninety Thousand Dollars ($190,000) per year, which
shall be paid in accordance with the Corporation’s standard salary schedule from
time to time in effect, but no less frequently than in equal monthly
installments. The base salary will be reviewed by the Compensation Committee of
the Board of Directors not less frequently than annually, and may be adjusted
upward (but not downward), in the discretion of the Compensation Committee of
the Board of Directors. In addition, the Employee shall be eligible for annual
cash and equity incentive bonuses as may be awarded to her in the discretion of
the Compensation Committee or the Board of Directors. Your bonuses for 2009 will
be determined as set forth in your offer letter of June 1, 2009. The Employee
shall be entitled to participate in such other group employee benefits,
including but not limited to the benefits listed on Exhibit A of this Agreement.
All reasonable and necessary expenses incurred by Employee in the course of the
performance of Employee’s duties to the Corporation shall be reimbursable in
accordance with the Corporation’s then current travel and expense policies. In
connection with her employment by the Corporation, the Employee shall be based
at the principal executive offices of the Corporation in the Cincinnati, Ohio
area, except for travel reasonably required for Corporation business. If elected
as a Director of the Corporation, the Employee shall serve in such capacity
without further compensation.

4. Confidentiality, Non-competition, Inventions, Etc. The Employee
recognizes that the Corporation has and will have information regarding
inventions, products, product designs, processes, technical matters, trade
secrets, copyrights, customer lists, prices, costs, discounts, business and
financial affairs, future plans, and other vital items of information which are
confidential, valuable, special, and unique assets of the Corporation In order
to protect these assets, and in consideration of Employee’s continued employment
and the agreement of the Corporation to enter into this Agreement, the Employee
agrees to execute the Confidentiality, Inventions and Noncompetition Agreement
attached to this Agreement as Exhibit B, which shall be considered as part of
this Agreement.

5. Breach. In the event of a breach by the Employee of any of the
provisions of this Agreement during or after the term hereof, the Corporation
shall be entitled to an injunction (without the requirement of bond) restraining
the Employee from violating such provisions. Nothing herein shall be construed
as prohibiting the Corporation from pursuing other remedies, including a claim
for losses and damages.

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6. Termination. (a) The Employee may terminate this Agreement for Good
Reason. Good Reason means a separation from service because of (A) the
Corporation having breached any material provision of this Agreement, (B) a
material diminution in the Employee’s authority, duties, or responsibilities;
(C) a change in the geographic location of the Employee’s primary work location
that is thirty-five (35) miles or more from the Corporation’s headquarters in
Cincinnati, Ohio; or (D) a successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Corporation fails to assume all of the
Corporation’s obligations under this Agreement. Besides satisfying (A) – (D), in
order to be considered Good Reason, the Employee must provide written notice to
the Corporation of the existence of the breach of the material provision within
90 days of the initial existence of the breach, and within 30 days after receipt
of such notice, the Corporation must fail to cure such breach. The Corporation
may terminate the employment of the Employee if (i) the Employee has breached
any material provision of this Agreement and within 30 days after notice thereof
from the Corporation, the Employee fails to cure such breach; or (ii) the
Employee at any time refuses or fails to perform, or misperforms, any of her
obligations under or in connection with this Agreement in a manner of material
importance to the Corporation and within 30 days after notice thereof from the
Corporation, the Employee fails to cure such action or inaction; or (iii) a
court determines that the Employee committed a fraud or criminal act in
connection with her employment that materially affects the Corporation. If the
Employee’s employment hereunder is terminated by the Corporation for any reason
other than pursuant to clauses (i) through (iii) above, or by the Employee for
Good Reason or due to death or disability (as defined in the Company’s long-term
disability policy), or if the Corporation gives notice of non-renewal pursuant
to Section 1 above, the Employee shall be entitled to the following severance
and benefits under this Agreement: (i) continuation of the Employee’s base
salary, $190,000, including any subsequent upward adjustments in the Employee’s
base salary, payable in 12 equal monthly installments commencing on the next
payroll ending date after the Employee’s date of termination, (ii) continuation
of health, dental and vision benefits for the 12-month period following her date
of termination with premiums charged to the Employee at active employee rates,
(iii) in the case of any such termination occurring after the sixth complete
month of the fiscal year of termination, a bonus under the Executive Cash Bonus
Plan for the year of termination in an amount based on actual performance for
the year (provided, all subjective individual performance measures will be
deemed satisfied), pro-rated for the fraction of the year during which the
Employee was employed, and payable when annual bonuses are paid to other senior
executives, (iv) all of the Employee’s Options and Time-Based Restricted Share
Awards will vest in full, (v) the Employee will be issued shares under
outstanding Performance-Based Restricted Share Awards based on the actual level
of achievement of the performance criteria for the applicable performance period
applicable to the Awards, pro-rated to reflect the number of days from the start
of the applicable performance period to the date the Employee ceases to be
employed by the Corporation divided by the total number of days in the
applicable performance period, any such shares to be issued to the Employee at
the same time as shares are issued to other senior executive officers, and (vi)
the following amounts and benefits (“Accrued Obligations”): (a) the Employee’s
accrued and unpaid base salary and accrued and unused vacation through the date
of termination, payable by the next payroll ending date after such termination,
(b) the Employee’s unreimbursed business expenses incurred through die date of
termination and payable in accordance with such policies and procedures as are
applicable to senior executives of the Corporation, (c) any unpaid annual bonus
earned for the prior fiscal year, payable when annual bonuses are paid to other
senior executives but in no event beyond the last day on which such payment
would qualify as a short-tern deferral under Treasury Regulation § 1.409A-1
(b)(4), and (d) all accrued, vested and unpaid benefits under all employee
benefit plans in which the Employee is a participant immediately prior to her
termination, payable in accordance with the tears of such plans. The Employee
will not be obligated to mitigate her severance and other benefits provided
under this Agreement, and no amounts payable to the Employee hereunder will be
reduced as a result of subsequent employment or self-employment, except that the
Employee’s health benefits continuation as provided at clause (ii) above will be
reduced by any comparable coverage from a subsequent employer. In the event of a
Change in Control (as defined under the Corporation’s 2006 Stock Incentive Plan)
all of the Employee’s Options and Time-Based Restricted Share Awards will vest
in full and all of the Employee’s Performance-Based Restricted Share Awards will
be treated as earned at target (if the performance period is not then completed)
and the shares subject thereto will be issued to the Employee within 10 days of
such Change in Control.

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(b) Notwithstanding the provisions of Subsection (a), to the extent the
amount of severance payable and other benefits provided under the immediately
preceding paragraph does not exceed the Separation Pay Exemption Amount (defined
below), such severance and other benefits shall be exempt from Section 409A of
the Internal Revenue Code (“Section 409A”) and shall be paid or provided in
accordance with the provisions of Subsection (a). The amount of the severance
payable and other benefits provided under Subsection (a) that is in excess of
the Separation Pay Exemption Amount shall be subject to the requirements of
Section 409A and shall be paid in strict accordance with the provisions of
Subsection (a), unless the Employee is a specified employee (as defined in
accordance with Treas. Reg. § 1.409A-1(j) and such rules as many be established
by the Corporation (including its delegate) from time to time) on her date of
termination in which case the excess amount shall be paid as follows: (w) no
portion of the excess amount may be paid, or commence to be paid, earlier than 6
months after the date the Employee terminates employment, (x) in the case of a
payment that would have otherwise been paid during such 6-month period, the
payment shall be made on the first day of the seventh month following the date
the Employee terminates employment, (y) in the case of installment payments that
would have otherwise been paid during such 6 month period, such installment
payments shall be accumulated and paid on the first day of the seventh month
following the date the Employee terminates employment and the remaining
installments shall be paid in strict accordance with the provisions of
Subsection (a), and (z) the determination of the amount of severance payable and
other benefits provided under this Agreement that may considered excess amounts
shall be made in the following order (those that are listed first shall be
considered not to exceed the Separation Pay Exemption Amount to the maximum
extent possible): (I) benefits, then (II) any payments in cash that are to be
paid in installments, then (III) any payments in cash that are to be paid in a
lump sum, and (IV) any noncash payments. For purposes of this Subsection (b),
the term “Separation Pay Exemption Amount” means an amount equal to two times
the lesser of (x) the sum of the Employee’s annualized compensation based upon
the annual rate of pay for services provided to the Company for the Employee’s
taxable year preceding the taxable year in which the Employee separates from
service (adjusted for any increase during that year that was expected to
continue indefinitely if the Employee had not separated from service); or (y)
the maximum amount that may be taken into account under a qualified plan
pursuant to Section 401(a)(17) of the Internal Revenue Code for the year in
which the Employee separates from service.

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(c) Notwithstanding anything in this Agreement to the contrary, if any of the
payment or payments or other benefit to the Employee (prior to any reduction
below) provided for in this Agreement, together with any other payment or
payments or other benefit which the Employee has the right to receive from the
Corporation or any corporation which is a member of an “affiliated group” as
defined in Section 1504(a) of the Internal Revenue Code of 1986, as amended
(“Code”), without regard to Section 1504(b) of the Code, of which the
Corporation is a member (the “Payments”) would constitute a “parachute payment”
(as defined in Section 280G(b)(2) of the Code), and if the Safe Harbor Amount
(defined below) is greater than the Taxed Amount (defined below), then the total
amount of such Payments shall be reduced to the Safe Harbor Amount. The “Safe
Harbor Amount” is the largest portion of the Payments that would result in no
portion of the Payments being subject to the excise tax set forth at Section
4999 of the Code (“Excise Tax”). The “Taxed Amount” is the total amount of the
Payments (prior to any reduction, above) notwithstanding that all or some
portion of the Payments may be subject to the Excise Tax. Solely for the purpose
of comparing which of the Safe Harbor Amount and the Taxed Amount is greater,
the determination of each such amount shall be made on an after-tax basis,
taking into account all applicable federal, state and local employment taxes,
income taxes, and the Excise Tax (all of which shall be computed at the highest
applicable marginal rate). If a reduction of the Payments to the Safe Harbor
Amount is necessary, then the reduction shall occur in the following order
unless the Employee elects in writing a different order (provided, however, that
such election shall be subject to approval of the Corporation if made on or
after the date on which the event that triggers the Payments occurs): (i)
reduction of cash payments; then (ii) cancellation of accelerated vesting of
stock or stock option awards; and then (iii) reduction of the Employee’s
benefits. In the event that acceleration of vesting of stock or stock option
award compensation is to be reduced. Such acceleration of vesting shall be
cancelled in the reverse order of the date of grant of the Employee’s stock
awards unless the Employee elects in writing a different order for cancellation.

7. Notices. Any notice or communication required or permitted to be
given by any provision of this Agreement shall be deemed to have been
sufficiently given or served for all purposes to a party: (a) if delivered
personally to such party; (b) if sent to such party (addressed to such party’s
facsimile number which is set forth in this Agreement) by facsimile, with
receipt confirmed by telephone; (c) if sent to such party (addressed to such
party’s address which is set forth in this Agreement) by regularly scheduled
overnight delivery carrier with delivery fees either prepaid or an arrangement,
satisfactory with such carrier, made for the payment thereof; or (d) if sent to
such party (addressed to such party’s address which is set forth in this
Agreement) by registered or certified mail, postage and charges prepaid. Any
such notice shall be deemed to be given: (i) upon personal delivery, as provided
above; (ii) upon telephonic confirmation of receipt of notice sent by facsimile,
as provided above; (iii) one (1) business day after delivery to a regularly
scheduled overnight delivery carrier, addressed and sent as provided above; or
(iv) three (3) business days after the date on which the same was deposited in a
regularly maintained receptacle for the deposit of United States mail, addressed
and sent as provided above. The addresses of each of the parties are as follows:

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To the Corporation:

LCA-Vision, Inc.

7840 Montgomery Road

Cincinnati, OH 45236

Attention: Chief Executive Officer

Facsimile No.: (513) 792-5620

To the Employee:

Rhonda Sebastian

7723 Cooper Road

Cincinnati, OH 45242

Any party may change such party’s address or facsimile number for purposes of
this Agreement by notice given in accordance herewith.

8. Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof, and there
are no other promises or conditions between the parties in any other agreement,
whether oral or written, relating to such subject matter. This Agreement
supersedes any prior written or oral agreements between the parties with respect
to the subject matter hereof.

9. Amendment. This Agreement may only be modified or amended if the
amendment is made in writing and is signed by both parties. Any amendments
hereto must be signed by the Chief Executive Officer on behalf of the
Corporation or at the direction of the Corporation’s Board of Directors to be
effective against the Corporation.

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10. Severability. If any provision of this Agreement shall be held to
be invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision of
this Agreement is invalid or unenforceable, but that by limiting such provision
it would become valid or enforceable, then such provision shall be deemed to be
written, construed, and enforced as so limited.

11. Waiver. The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver or limitation of that party’s
right subsequently to enforce and compel strict compliance with every provision
of this Agreement.

12. Applicable Law. This Agreement shall be governed by the laws of
the State of Ohio, except the choice of law provisions thereof.

13. Arbitration Agreement. Any and all claims with respect to this
Agreement shall be settled by arbitration administered by the American
Arbitration Association (AAA) in Cincinnati, Ohio under the AAA’s National Rules
for the Resolution of Employment Disputes, and judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof. In
any such arbitration proceeding, either party also may, without waiving any
remedy under this Agreement, seek from any court having jurisdiction any interim
or provisional relief that is necessary to protect the rights or property of
that party pending the arbitrator’s determination of the merits of the
controversy. Nothing in this Agreement is intended to prohibit Employee from
filing a claim or communicating with any governmental agency including the Equal
Employment Opportunity Commission or Department of Labor.

14. Indemnification. In accordance with the Corporation’s Bylaws, the
Corporation will indemnify and hold harmless, to the fullest extent permitted by
applicable law, the Employee if she is made or is threatened to be made a party
or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that she is a
director or officer of the Corporation, against all liability or loss suffered
(including attorneys’ fees) reasonably incurred by Employee.

15. Binding Effect; Assignment. This Agreement shall be binding upon
the parties and their respective heirs, executors, administrators, successors,
and assigns; provided, however, that the Employee shall not assign any part of
her rights or duties under this Agreement without the prior written consent of
the Corporation, which the Corporation may grant or withhold in its sole
discretion, and any such assignment by the Employee without the Corporation’s
prior written consent shall be void and of no force or effect. In the event of a
merger, sale, transfer, consolidation, or reorganization involving the
Corporation, this Agreement shall continue in full force and effect and shall be
binding upon, and inure to the benefit of, the Corporation’s successor.

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16. Exemption from, or Compliance with, Section 409A. The payment of
amounts and the provision of benefits under this Agreement are intended to be
exempt from, or compliant with, Section 409A of the Internal Revenue Code.
Accordingly, the payment of any amount under this Agreement subject to Section
409A shall be made in strict compliance with the provisions hereof, and no such
amounts payable hereunder may be accelerated or deferred beyond the periods
provided herein. This Agreement shall be administered and interpreted in a
manner that is consistent with the foregoing intention.

IN WITNESS WHEREOF, the parties hereto have duly and validly entered into and
executed this Agreement as of the date first written above.

LCA-Vision Inc.	EMPLOYEE
By: /s/ Steven C. Straus	/s/ Rhonda Sebastian
Printed Name: Steven C. Straus	Printed Name: Rhonda Sebastian
Title: Chief Executive Officer

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