EXECUTION COPY
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement is made and entered into this 18th day of
August, 1997 by and between LCA-Vision Inc., a Delaware corporation ('LCA'),
Summit Technology, Inc., a Massachusetts corporation ('Summit') and the LCA
shareholders listed on Schedule A hereto ('Shareholders').
WHEREAS, the LCA and Summit have entered into a certain Acquisition
Agreement dated as of even date herewith (the 'Acquisition Agreement') pursuant
to which LCA is acquiring from Summit all of its shares of common stock of
Refractive Centers International, Inc., a Delaware Corporation ('RCII'), in
consideration for shares of LCA common stock; and
WHEREAS, one of the conditions to the closing of the Acquisition Agreement
is the execution and delivery of this Shareholders' Agreement.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement and not otherwise defined shall
have the meanings ascribed to them in the Acquisition Agreement.
ARTICLE II
BOARD OF DIRECTORS
2.1 Nomination of Directors. For the term of this Agreement, the
Shareholders agree, consistent with their fiduciary duties in any and all
capacities as shareholders, officers and directors of LCA, to cause LCA, whether
itself or through its Board of Directors (the 'Board') or a committee thereof,
(a) to set the number of directors that constitute the full Board at five (5)
and (b) to nominate individuals for election to the Board at each annual meeting
of the shareholders of LCA in the manner provided in this Agreement (the
'Designated Nominees'). The following individuals shall be the initial
Designated Nominees:
Stephen N. Joffe
John C. Hassan
John H. Gutfreund
Ronald Herskowitz
William O. Coleman
2.2 Alternate Designated Nominees. If there is a vacancy in the Board
occurring between annual meetings, or if one or more of the initial Designated
Nominees shall decline to stand for election to the Board, the Shareholders and
Summit shall appoint one or more alternate Designated Nominees (each an
'Alternate Designated Nominee') in the following manner. The Shareholders shall
select an individual to serve as the Alternate Designated Nominee, which
individual shall be independent both of LCA (except through proposed service as
a member of the Board) and of the Shareholders. The selected individual shall be
subject to Summit's approval, which shall not unreasonably be withheld. Summit's
approval shall be deemed given if Summit has not responded to the Shareholders
within thirty (30) days of notice of the identity of the selected individual.
Upon selection and approval, such Alternate Designated Nominee shall for all
purposes be deemed a Designated Nominee under this Agreement.
2.3 Voting of Shares. In any and all elections of directors of the
Board, whether in person or by proxy at a meeting of LCA shareholders, or at a
meeting of the Board called for the purpose of filling a vacancy in the Board
(to the extent not inconsistent with the fiduciary duties of any director who is
also a Shareholder), the Shareholders and Summit shall vote all shares of LCA
stock owned by them to elect the Designated Nominees to the Board and shall vote
against any proposal that would violate any term or provision of this Agreement.
ARTICLE III
COVENANTS OF SHAREHOLDERS
3.1 Payment of LCA Shareholder Debt. The Shareholders agree that they
will not accept, demand or request any payment on the LCA Shareholder Debt
unless the earnings of LCA for the prior fiscal year (before taxes, amortization
of goodwill and depreciation, net of capital expenditures for such fiscal year)
exceeded One Million Dollars ($1,000,000), and agree that payment in such event
may be made only to the extent of twenty-five percent (25%) of such excess. The
Shareholders understand and agree that LCA shall cause the instruments
representing the LCA Shareholder Debt to contain a legend to the effect of the
foregoing.
3.2 Conversion of LCA Preferred Stock. The Shareholders agree that the
per share Conversion Price of the LCA Interim Series Preferred Stock shall not
be less than Three and 50/100 Dollars ($3.50) per share.
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3.3 Arms' Length Transactions. During the term of this Agreement, none
of the Shareholders shall enter into any transaction with LCA unless such
transaction is at fair market value and approved by a majority of LCA's
independent directors.
ARTICLE IV
MISCELLANEOUS
4.1 Binding Effect. This Agreement shall be binding upon the parties
hereto and their respective heirs, successors and assigns. All shares of LCA
Common Stock and LCA Preferred Stock at any time owned by a party to this
Agreement shall be subject to this Agreement. Shares of LCA Common Stock and LCA
Preferred Stock can be transferred by a party only if the transferee of such
shares agrees to be bound by this Agreement, except for transfers by Summit
pursuant to or not in violation of this Agreement or the Registration Rights
Agreement or to any Person who is not an Affiliate of Summit.
4.2 Duration of Agreement. This Agreement shall remain in effect until
the earlier of (i) the date which is five (5) years from the date of this
Agreement, and (ii) the date on which Summit owns less than five percent (5%) of
the issued and outstanding shares of LCA Common Stock. At any time that Summit
owns less than such percentage, this Agreement shall terminate and be of no
further force and effect, without the necessity of any action on the part of any
of the parties hereto.
4.3 Injunctive Relief. It is acknowledged that it would be impossible to
measure the damages that would be suffered by a party to this Agreement if the
other parties were to fail to comply with the provisions of this Agreement, and
that in the event of any such failure, monetary damages would not provide the
injured party an adequate remedy. The parties shall, therefore, be entitled to
seek specific performance and injunctive relief for any breach of this Agreement
in a court of competent jurisdiction.
4.4 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without application of
principles of conflict of laws, any suit for the enforcement of this Agreement
may be brought in the courts of that state and all parties consent to the
exclusive jurisdiction of such courts and to service of process in any such suit
being made upon any party by mail at their respective addresses set forth in
below.
4.5 Notices. All notices hereunder shall be in writing and shall be
deemed to have been duly given when actually received. Notices hereunder may be
given (i) by hand, (ii) by certified mail, postage prepaid, return receipt
requested, (iii) by a courier service which guaranties delivery within one
business day or (iv) by telecopy to a party; in each case to the parties at
their
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respective addresses set forth below, or to such other address as a party may
specify by notice:
If to Summit or RCII: If to LCA:
Summit Technology, Inc. LCA-Vision, Inc.
21 Hickory Drive 7840 Montgomery Road
Waltham, MA 02154 Cincinnati, OH 45236
Attn: Chief Executive Officer Attn: President
with a copy to: with a copy to:
Goldstein & Manello, P.C. Dinsmore & Shohl, L.L.P.
265 Franklin Street 1900 Chemed Center
Boston, MA 02110 255 East Fifth Street
Attn: Lauren Jennings, Esq. Cincinnati, OH 45202-3172
Attn: Charles F. Hertlein, Jr., Esq.
If to the Shareholders:
Stephen N. Joffe, M.D. Sandra F.W. Joffe
8750 Red Fox Lane 8750 Red Fox Lane
Cincinnati, Ohio 45243 Cincinnati, Ohio 45243
Craig P.R. Joffe
22 Bigelow Street, #2B
Cambridge, MA 02139
4.6 Waiver. Waiver of any provision of this Agreement, in whole or in
part, in any one instance shall not constitute a waiver of any other provision
in the same instance, nor any waiver of the same or another provision in another
instance, but each provision shall continue in full force and effect with
respect to any other then-existing or subsequent breaches.
4.7 Entire Agreement. This Agreement, together with the Acquisition
Agreement, the Confidentiality Agreement and the Registration Rights Agreement
constitutes the entire agreement between the parties hereto with respect to its
subject matter, superseding all prior negotiations, communications, contracts
and other agreements, courses of dealing and the like between or among the
parties.
4.8 Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and this Agreement shall be interpreted as if such provision or
provisions were not a part hereof. Moreover, if any provision of this Agreement
shall for any reason be held to be excessively broad as to time, duration,
geographical scope, activity or subject, it shall be construed by
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limiting and reducing it, so as to be enforceable to the extent compatible with
applicable laws as they shall then be in force.
4.9 Amendment. This Agreement may be amended, modified or terminated,
and any right under this Agreement may be waived in whole or in part, only by a
writing signed by all parties hereto.
4.10 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
4.11 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall constitute one and the same instrument.
4.12 Defaults. Any breach or default by a party under the Acquisition
Agreement shall be deemed a default by such party under this Agreement.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers
in the case of corporate parties, have executed this Agreement under seal, as of
the day and year first above written.
SUMMIT TECHNOLOGY, INC. LCA-VISION INC.
By:/s/Robert J. Palmisano By: /s/Stephen N. Joffe
__________________________ __________________________
Robert J. Palmisano, Chief Stephen N. Joffe, President
Executive Officer
SHAREHOLDERS:
/s/Stephen N. Joffe
_______________________
Stephen N. Joffe
/s/Sandra F.W. Joffe
_______________________
Sandra F.W. Joffe
/s/Craig P.R. Joffe
_______________________
Craig P.R. Joffe
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SCHEDULE A
Stephen N. Joffe
Sandra F.W. Joffe
Craig P.R. Joffe
Shareholders' Agreement - LCA-Vision Inc. and Summit Technology Inc.
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