STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (this "Agreement") is entered into and is
effective for all purposes as of the 10th day of February, 1997, by and between
TLC The Laser Center, Inc., a corporation organized under the laws of Ontario
("TLC") and Xxxx Xxxxxxxxxx, M.D. ("Donnenfeld").
RECITALS
WHEREAS, Donnenfeld is a shareholder of 20/20 Laser Centers, Inc., a
Maryland corporation ("20/20") as well as a holder of certain options to
purchase stock in 20/20 (the "Options"), pursuant to that certain Stock Option
Agreement between 20/20 and Donnenfeld dated as of August 1, 1996 (the "Option
Agreement").
WHEREAS, 20/20 and TLC have entered into a Share for Share Exchange
Agreement dated as of December 15, 1996 (the "TLC Exchange Agreement") pursuant
to which TLC is offering to purchase all of the outstanding shares of 20/20 from
its existing shareholders.
WHEREAS, Donnenfeld received his Options in consideration of personal
services provided to 20/20 pursuant to that certain (a) letter of agreement
dated June 23, 1995 (the "City Organizer Agreement") describing Donnenfeld's
responsibilities and compensation in connection with being an M.D. City
Organizer in the New York Metropolitan area, and (b) that certain Team Surgeon
Agreement dated June 23, 1995 among Speaker, 20/20, and 20/20 Laser Vision
Correction Associates, P.C. (the "Team Surgeon Agreement"). The City Organizer
Agreement and the Team Surgeon Agreement shall be referred to herein
collectively as the "Services Agreements".
WHEREAS, it is in the best interests of 20/20 and TLC that Donnenfeld
continue to provide his personal services under the existing Services
Agreements.
WHEREAS, Donnenfeld is willing to continue to provide services pursuant to
the terms and conditions of the existing Service Agreements so long as TLC
enters into this agreement concerning the exchange of shares at the time
Donnenfeld exercises his outstanding options to purchase shares of 20/20, and
TLC is willing to do so on the terms and conditions set forth below.
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NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, agree to the following terms:
1. Ratification of Services Agreements. The parties hereto ratify and
confirm the Services Agreements and acknowledge that they are in full force and
effect.
2. Share Exchange. In the event Donnenfeld exercises his options to
purchase 20/20 stock pursuant to the Option Agreement on or before March 1,
1999, then promptly after the exercise of such option, TLC agrees to issue TLC
stock in exchange for the 20/20 stock purchased by Donnenfeld, at an exchange
ratio of .37517 shares of TLC stock for each share of 20/20 stock and Donnenfeld
agrees to accept such exchange of TLC stock, subject to the provisions of
paragraphs 4 and 8 below. In the event any Options are not exercised on or
before March 1, 1999, then the obligations of TLC and Donnenfeld under this
paragraph 2 shall be null and void with respect to such Options.
3. Continuance of Services Agreements. Donnenfeld agrees not to give
notice of termination of his Services Agreements with 20/20 prior to the earlier
to occur of (i) the closing of the TLC stock exchange pursuant to the TLC
Exchange Agreement, or (ii) the termination of the TLC Exchange Agreement.
4. Adjustment of Option Shares and Change in Capital Structure.
a. This Agreement shall not affect in any way the right or power of
TLC or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in TLC's capital
structure or its business, or any merger or consolidation of TLC, or any
issuance of bonds, debentures, preferred or prior preference stock ahead
of or affecting the common stock or the rights thereof, or the dissolution
or liquidation of TLC, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
b. If TLC shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of the common stock
outstanding, without receiving compensation therefor in money, services or
property, then (1) the number, class, and per share price of shares of
common stock to be exchanged hereunder shall be appropriately adjusted in
such a manner as to entitle Donnenfeld to receive upon exercise of an
Option, for the same aggregate cash consideration, the same total number
and class of shares as he would have received had Donnenfeld exercised his
Option in full immediately prior to the event requiring the adjustment;
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and (2) the number and class of shares then reserved for issuance
hereunder as a result of Options outstanding shall be adjusted by
substituting for the total number and class of shares of common stock then
reserved that number and class of shares of common stock that would have
been received by the owner of an equal number of outstanding shares of
each class of common stock as the result of the event requiring the
adjustment.
c. After a merger of one or more corporations with TLC or after a
consolidation of TLC and one or more corporations, Donnenfeld shall, at no
additional cost, be entitled upon exercise of an Option to receive
pursuant to this Agreement in lieu of the number and class of shares as to
which he would be entitled to exchange pursuant to paragraph 2 hereof, the
number and class of shares of stock or other securities to which
Donnenfeld would have been entitled pursuant to the terms of the agreement
of merger or consolidation if, immediately prior to such merger or
consolidation, Donnenfeld had been the holder of record of the number and
class of shares of common stock equal to the number and class of shares as
to which he would be entitled under paragraph 2 hereof.
d. Except as previously expressly provided, neither the issuance by
TLC of shares of stock of any class, or securities convertible into shares
of stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of TLC
convertible into such shares or other securities, nor the increase or
decrease of the number of authorized shares of stock, nor the addition or
deletion of classes of stock, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number, class or price of
shares of common stock then subject to this Agreement.
e. Adjustment under the preceding provisions of this section will be
made by the Board of Directors of TLC in good faith, whose determination
as to what adjustments will be made and the extent thereof will be final,
binding, and conclusive.
5. Authorization and Reservation of Shares. During the term of this
Agreement, TLC will at all times have authorized and reserved a sufficient
number of shares of its common stock to provide for the rights to exchange as
provided for herein. TLC represents and warrants that (i) all stock issued to
Donnenfeld in exchange for 20/20 stock shall be validly issued, fully paid and
non-assessable, and (ii) such stock shall be free of restrictions on
transferability imposed by TLC other than the provisions of paragraph 8 hereof
and the terms and conditions of the Holdback Agreement (defined in paragraph 8),
provided however, that, subject to the provisions of paragraph 7 hereof and the
terms and conditions of the
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Registration Rights Agreement (defined in paragraph 7), such stock may be
subject to restrictions on transferability imposed by applicable law.
6. No Fractional Share or Scrip. No fractional shares or scrip
representing fractional shares shall be issued hereunder. Any fractional shares
shall be rounded to the nearest whole share such that fractions of .50 and
greater shall be rounded up to the next whole share and fractions of less than
.50 shall be rounded down.
7. Registration Rights Agreement. TLC acknowledges and agrees that the TLC
shares issuable to Donnenfeld pursuant to this Agreement (a) shall be included
as part of the shares that are subject to that certain Registration Rights
Agreement dated concurrently herewith between TLC and the shareholders of 20/20
(the "Registration Rights Agreement"), and (b) shall be included in any
obligation of TLC to register shares of former 20/20 shareholders on the Toronto
Stock Exchange pursuant to the TLC Exchange Agreement.
8. Holdback Agreement. The parties acknowledge and agree that the TLC
shares to which Donnenfeld may be entitled pursuant to this Agreement are
subject to the terms and conditions of that certain Holdback Agreement dated
concurrently herewith between TLC and the shareholders of 20/20 (the "Holdback
Agreement") and that any TLC shares issued to Donnenfeld pursuant to this
Agreement shall be subject to the terms and conditions of the Holdback
Agreement. In the event TLC is entitled to indemnification under the Holdback
Agreement prior to a time that Donnenfeld has exercised all of his Options, then
the exchange ratio set forth in paragraph 2 hereof shall be modified so that the
number of TLC shares that Donnenfeld receives pursuant to this Agreement upon
exercise of an Option shall be adjusted so that upon the exercise of an Option,
Donnenfeld receives the number and class of shares of stock or other securities
to which Donnenfeld would have been entitled pursuant to the terms of the
Holdback Agreement if, immediately prior to the exercise of such Options,
Donnenfeld had been the holder of record of the number and class of shares of
common stock equal to the number and class of shares as to which he would be
entitled under paragraph 2 hereof.
9. Miscellaneous. This Agreement shall be governed by and construed under
the laws of the State of Maryland. The titles of the sections and subsections of
this Agreement are for convenience only and are not to be considered in
construing this Agreement. This Agreement does not entitle
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Donnenfeld to any voting rights or other rights as a shareholder of TLC with
respect to any shares that are the subject matter hereof prior to the exercise
of the Options as provided for herein. All notices required or permitted to be
given under this Agreement shall be in writing and shall be delivered in person,
by telecopy, by express courier or by certified mail, return receipt requested,
postage prepaid.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first set forth above.
TLC:
TLC The Laser Center, Inc.
By: /s/ X.X. Xxxxx
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Xxxxxx Xxxxx, Vice President
DONNENFELD:
/s/ Xxxx Xxxxxxxxxx, M.D.
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Xxxx Xxxxxxxxxx, M.D.
Acknowledged and Agreed To:
20/20 Laser Centers, Inc.
By: /s/ Xxxxxxxxx X. Xxxxxx
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