Management Information Circular - TLC VISION CORP - 11-17-1997 by TLCV-Agreements

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									[TLC CORPORATE LOGO OMITTED] 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 October 30, 1997 at 10:00 a.m. (Toronto time) at the Design Exchange, 234 Bay Street, 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. 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 2, 1997, except where otherwise noted. 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 CIBC Mellon Trust Company, Proxy Dept., 393 University Avenue, 5th Floor, Toronto, Ontario M5G 2M7 not later than the close of business on October 28, 1997 or, if the Meeting is adjourned, 48 hours (excluding Saturdays and holidays) before any adjourned meeting. 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

-2Corporation 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 applicable, 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, NONREGISTERED 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. 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.

-3A 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. 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. VOTING SHARES AND PRINCIPAL HOLDERS THEREOF On September 2, 1997, the Corporation had outstanding 27,438,448 common shares (the "Common Shares"). Each registered holder of Common Shares of record at the close of business on September 12, 1997, 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. The following table shows, as at September 2, 1997, each person (collectively, the "Principal Shareholders") 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 10% of the voting rights attached to all outstanding Common Shares of the Corporation:
NAME AND MUNICIPALITY OF RESIDENCE -----------------------Elias Vamvakas(1)(3) . . . . . Richmond Hill, Ontario Dr. Jeffery J. Machat(2)(3) . . Richmond Hill, Ontario -----------------------------NUMBER OF COMMON SHARES ------------3,394,727

PERCENTAGE OF CLASS ------------------12.4%

4,522,293

16.5%

(1) Shares owned by Mr. Vamvakas are held directly as to 1,144,727 and indirectly as to 2,250,000 by 1111881 Ontario Limited, a corporation wholly-owned by the Vamvakas Family Trust.

-4(2) Shares owned by Dr. Machat are held directly as to 22,293 and indirectly as to 4,500,000 by 1123562 Ontario Limited, a corporation wholly-owned by the Machat Family Trust. (3) Dr. Steven Slade holds options to acquire 250,000 of the Common Shares currently owned by the Principal Shareholders and others, of which 45% belong to Dr. Machat and 30% to Mr. Vamvakas. The options may be exercised at a price of US$0.10 per share subject to compliance with applicable law. No additional Common Shares will be issued by the Corporation to satisfy the options, which have been granted by the Principal Shareholders and others to induce Dr. Slade to participate in the Corporation and to serve as Co-National Medical Director of the Corporation. ELECTION OF DIRECTORS The number of directors to be elected at the Meeting is seven. This number represents a reduction in the size of the Board of Directors from its current number of nine directors. The articles of the Corporation authorize the Board of Directors to be comprised of a number of directors between one and ten and the directors have been authorized by the shareholders to determine the number from time to time between that minimum and maximum. The Board of Directors resolved on September 25, 1997 that the number of directors to be elected at the Meeting will be seven, having regard to the composition of the Board and the "Guidelines for Improved Corporate Governance" contained in the Final Report of The Toronto Stock Exchange Committee on Corporate Governance in Canada. 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, the date on which each nominee was first elected or appointed director and the number of Common Shares that are beneficially owned, directly or indirectly, or over which control or direction is exercised by each nominee.

-5NAME AND MUNICIPALITY OF RESIDENCE --------Elias Vamvakas . . . . . . . . . . Richmond Hill, Ontario POSITION WITH CORPORATION ------------------------President, Chief Executive Officer and Chairman of the Board of Directors(1)(2) Director, Co-National Medical Director(1)(4) Director(2)(4) PRINCIPAL OCCUPATION -------------------Officer of the Corporation DIRE ----

Dr. Jeffery J. Machat . . . . . . . Richmond Hill, Ontario James R. Connacher Toronto, Ontario . . . . . . . .

Ophthalmologist

Vice-Chairman, Gordon Capital Corporation (investment bank) Officer of the Corporation Attorney and Counsellorat-Law, shareholder of Gourwitz and Barr, P.C. Optometrist

Ja

John F. Riegert . . . . . . . . . . North York, Ontario Howard J. Gourwitz . . . . . . . .

Secretary and Director(1)

Director(4)(6)(7) Bloomfield Hills, Michigan

Dr. William David Sullins, Jr. . . Athens, Tennessee

Director and Vice-Chairman of TLC's National Advisory Council(2)(6) Nominee Director Tucson, Arizona bank and management consultant)

Warren S. Rustand . . . . . . . . .

Chairman, Rural/Metro Corporation (merchant

(1) Mr. Vamvakas, Dr. Machat and Mr. Riegert are members of the Corporation's Executive Committee. (2) Mr. Vamvakas, Dr. Sullins and Mr. Connacher are members of the Corporation's Nominating Committee. (3) Mr. Vamvakas' shareholdings are described under "Voting Shares and Principal Holders Thereof". Family members of Mr. Vamvakas own 3,000 Common Shares. (4) Dr. Machat, Mr. Gourwitz and Mr. Connacher are members of the Corporation's Compensation Committee. (5) Dr. Machat's shareholdings are described under "Voting Shares and Principal Holders Thereof". (6) Mr. Gourwitz and Dr. Sullins, Jr. are members of the Corporation's Audit Committee. (7) Mr. Gourwitz is a member of the Corporation's Corporate Governance Committee. (8) LNG Enterprises, Inc., an associate of Mr. Gourwitz, owns 2,400,000 Common Shares. Mr. Rustand has held his present principal occupation since 1997. For more than five years prior to 1997, Mr. Rustand was Chairman and Chief Executive Officer of The Cambridge Company Ltd., a merchant banking and management consulting company. From 1994 to 1997, Mr. Rustand was also the Chairman of 20/20 Laser Centers, Inc., which was acquired by the Corporation in February 1997 and manages refractive clinics in the Northeast US.

-6CHANGE OF AUDITORS Horwath Orenstein are currently the auditors of the Corporation. The Corporation wishes to change auditors from the present auditors Horwath Orenstein, to Ernst & Young, Toronto, Ontario. 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. Pursuant to National Policy Statement No. 31 of the Canadian Securities Administrators, the Corporation has prepared a Notice of Change of Auditors setting forth the circumstances relating to the proposal to change auditors. Response letters commenting on this Notice of Change of Auditors have been obtained from both Horwath Orenstein, the current auditors, and Ernst & Young, the proposed auditors. Copies of the Notice of Change of Auditors, the response letters and written confirmation of the review of the Board of Directors of the Corporation are attached as Schedule A to this Circular. AMENDMENT TO THE SHARE OPTION PLAN At the Meeting, shareholders will be asked to pass a resolution (the "Share Option Resolution") approving an amendment to the Corporation's share option plan (the "Share Option Plan") to increase the number of shares which may be issued thereunder from 2,534,611 to 4,116,000. The new number will represent approximately 15% of the Corporation's currently issued and outstanding shares, in keeping with the intent of the Share Option Plan established during TLC's initial public offering, and an increase of approximately 62% in the number of Common Shares issuable under the Share Option Plan. At September 2, 1997, options to acquire 2,436,999 Common Shares remained outstanding and unexercised. The purpose of this amendment is to ensure that there remains available for issuance under the Share Option Plan a sufficient number of options to allow the Corporation to maintain its current policy of rewarding options as an alternative to cash compensation, and as bonus remuneration, for all corporate office employees and directors of the Corporation. 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 Share Option Resolution, a copy of which is set out on Schedule B to this Circular, unless the shareholder who has given such proxy has directed that the shares be otherwise voted. In order to be effective, the Share Option Resolution must be passed by a majority of the votes cast at the Meeting, excluding votes attaching to shares beneficially owned by insiders to whom options have been or may be granted under the Share Option Plan and their associates. At September 2, 1997, 10,995,007 votes, being the votes attaching to Common Shares beneficially owned by insiders and their associates, will not be counted for the purposes of determining whether the level of shareholder approval required to amend the Share Option Plan has been obtained.

-7PROPOSED SHARE PURCHASE PLAN The Board of Directors of the Corporation has adopted a share purchase plan (the "Share Purchase Plan"), subject to receiving all necessary regulatory and shareholder approvals. The Share Purchase Plan will become effective on or about October 30, 1997. At the Meeting, shareholders will be asked to approve a resolution (the "Share Purchase Resolution") approving the Share Purchase Plan and authorizing 500,000 Common Shares to be reserved for issuance under the Share Purchase Plan. This number will represent approximately 2% of the Corporation's currently issued and outstanding shares. The objective of the Share Purchase Plan is to advance the interests of the Corporation by providing additional incentives to employees of the Corporation and its subsidiaries; encouraging share ownership by such persons; increasing their proprietary interest in the success of the Corporation; encouraging them to remain with the Corporation; and attracting new employees. The Share Purchase Plan will be offered to all employees of the Corporation located in Canada and the United States who have been employed by the Corporation for three months or more ("Share Purchase Participants"). The Share Purchase Plan will be administered by CIBC Mellon Trust Company (the "Administrator"). Under the plan, Share Purchase Participants may enrol to have a percentage of their payroll (excluding bonuses and overtime) up to a maximum of 10% deducted and remitted towards the purchase of Common Shares in the name of the Share Purchase Participant (the "Employee Contribution"). The Corporation will contribute an additional amount equal to 25% of the Employee Contribution towards purchases of Common Shares in the name of the Share Purchase Participant (the "Employer Contribution"). Purchases will be made from treasury at the current market price or, at the Corporation's option and subject to certain restrictions, purchases using the Employee Contribution may be made on the open market. The "current market price" on any date will be equal to the weighted average trading prices of the Common Shares on The Toronto Stock Exchange for the five (5) trading days prior to that date. Subject to obtaining regulatory approval, any cash dividends paid on Common Shares purchased under the Share Purchase Plan will be reinvested in Common Shares of the Corporation issued from treasury at the current market price (determined on the basis of the weighted average trading prices of the Common Shares on The Toronto Stock Exchange for the twenty (20) trading days prior to the date of reinvestment) less a discount not to exceed 5%. Common Shares will be purchased using the Employee Contribution every quarter (a "Common Share Purchase Date"). Common Shares will be purchased using the Employer Contribution one year after each Common Share Purchase Date. A Share Purchase Participant who ceases to participate in the Share Purchase Plan either voluntarily or by reason of disability, death or termination of employment will be entitled to receive (i) all Common Shares purchased through the Employee Contribution or Employer Contributions and (ii) all Common Shares purchased through the reinvestment of dividends paid on Common Shares purchased pursuant to (i). The Share Purchase Participant will not be entitled to amounts accrued with respect to Employer Contributions that have not been applied towards the purchase of Common Shares. Share Purchase Participants are entitled to change their contribution levels on a quarterly basis and are permitted to withdraw Common Shares purchased under the Share Purchase Plan once every year. Administrative expenses of the Share Purchase Plan will be paid by the Corporation. Share Purchase Participants may be required to pay charges to process withdrawals and other similar requests.

-8It 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 Share Purchase Resolution, a copy of which is set out on Schedule C to this Circular, unless the shareholder who has given such proxy has directed that the shares be otherwise voted. In order to be effective, the Share Purchase Resolution must be passed by a majority of the votes cast at the Meeting, excluding votes attaching to shares beneficially owned by insiders and their associates. At September 2, 1997, 10,995,007 votes, being the votes attaching to Common Shares beneficially owned by insiders and their associates, will not be counted for the purposes of determining whether the level of shareholder approval required to approve the Share Purchase Plan has been obtained. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth all compensation earned during the last two 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, 1997 ("Fiscal 1997") and whose annual salary and bonus exceeded $100,000 in Fiscal 1997 (together, the "Named Executive Officers"):
LONG-TERM COMPENSATI AWARDS -------------------------OTHER COMMON SHARES RESTRIC NAME AND PRINCIPAL ANNUAL UNDER OPTION SHARES POSITION COMPEN(#) RESTRIC YEAR SALARY BONUS SATION SHARE UN (US$) (US$) ($) ($) --------------------------------------------------------------------------------------------------------Elias Vamvakas, Chief 1996 215,260 Nil Nil 1, 000,000 Nil Executive Officer 1997 235,417 250,000(1) Nil Nil Nil --------------------------------------------------------------------------------------------------------Dr. Jeffery J. Machat, 1996 83,333(2) Nil Nil 25,000 Nil Co-National Medical 1997 200,000 Nil Nil 25,000 Nil Director --------------------------------------------------------------------------------------------------------Ronald J. Kelly, 1996 Nil Nil Nil Nil Nil Vice-President 1997 150,000(3) Nil Nil 25,000 Nil Acquisitions and General Counsel --------------------------------------------------------------------------------------------------------Dr. Barry Barresi, 1996 Nil Nil Nil Nil Nil Chief Executive Officer 1997 128,365 Nil Nil 25,000 Nil - Partner Provider (4) Health Inc. --------------------------------------------------------------------------------------------------------Gary Jonas, 1996 Nil Nil Nil Nil Nil Senior Vice-President 1997 67,045 Nil Nil Nil Nil U.S. Operations (5) ANNUAL COMPENSATION ---------------------------------

(1) This amount is payable to Mr. Vamvakas upon the Corporation having earned two consecutive quarters of net income. (2) Dr. Machat became an officer of the Corporation in January 1996. (3) Mr. Kelly became an officer of the Corporation in September 1996. His salary is presented in Canadian dollars. (4) Dr. Barresi became the Chief Financial Officer of Partner Provider Health Inc., a subsidiary of the Corporation, in September 1996. (5) Mr. Jonas joined the Corporation in February 1997.

-9OPTIONS GRANTED DURING FISCAL 1997 The following table sets forth the individual grants of stock options for Fiscal 1997 to the Named Executive Officers:
COMMON MARKET VALUE SHARES % OF TOTAL OPTIONS COMMON SHARE UNDER OPTIONS GRANTED TO UNDERLYING OPTI GRANTED EMPLOYEES IN EXERCISE OR BASE ON THE DATE NAME (#) FINANCIAL YEAR PRICE OF GRANT --------------------------------------------------------------------------------------------------------Dr. Jeffery J. Machat 25,000 7.81% $7.25 $7.25 Ronald J. Kelly 25,000 7.81% $7.25 $7.25 Dr. Barry Barresi 25,000 7.81% $7.25 $7.25

AGGREGATE OPTION EXERCISES DURING FISCAL 1997 AND FINANCIAL 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 securities underlying unexercised options of the Named Executive Officers and their dollar value during Fiscal 1997:
V UNEXERCISED OPTIONS AT FINANCIAL YEAR-END --------------------------------------------------------------------------------------------------------COMMON SHARES ACQUIRED AGGREGATE ON VALUE EXERCISE REALIZED (#) (US$) EXERCISABLE UNEXERCISABLE EX NAME --------------------------------------------------------------------------------------------------------Elias Vamvakas Nil Nil 304,137 304,136 2 Dr. Jeffery J. Machat Nil Nil 7,604 32,603 Ronald J. Kelly Nil Nil Nil 25,000 Dr. Barry Barresi Nil Nil Nil 25,000

(1) The closing price of TLC's Common Shares on The Toronto Stock Exchange on May 31, 1996 was $12.00.

-10EMPLOYMENT CONTRACTS MR. ELIAS VAMVAKAS The Corporation has entered into an employment contract with Mr. Elias Vamvakas who is the President, Chief Executive Officer and Chairman of the Board of Directors of the Corporation. The term of the agreement is three years commencing on January 1, 1996 with automatic one year renewals as agreed upon by the parties. During the initial year of the agreement, the base salary was US$225,000, which will increase by US$25,000 during each year of the initial term. 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. Mr. Vamvakas' employment may be terminated for cause. If terminated other than for 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. The agreement also contains non-competition and confidentiality covenants for the benefit of the Corporation. 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 is three years commencing on January 1, 1996. 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 $150 per procedure performed by him payable in the same currency as paid by the patient. Dr. Machat is also entitled to receive options under the Share Option Plan as a director. Dr. Machat's agreement may be terminated for cause. If terminated other than for 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.

-11RONALD J. KELLY The Corporation has entered into a consulting agreement with Kelmar Corporation, which corporation will make available to TLC the services of Ronald J. Kelly as a consultant relating to the business of the Corporation. Mr. Kelly has also been appointed the Vice-President Acquisitions and General Counsel of the Corporation. The agreement, which expires on December 31, 1999, provides for an annual consulting fee payable by the Corporation to Kelmar Corporation of $200,000. If the consulting agreement is terminated, other than for cause, Mr. Kelly shall be entitled to a payment of $100,000. The agreement also contains non-competition and confidentiality covenants for the benefit of the Corporation. COMPOSITION OF THE COMPENSATION COMMITTEE Until February 1997, the entire Board of Directors of the Corporation was responsible for determining compensation of executive officers of the Corporation. In February 1997, the Board established a Compensation Committee, composed of Dr. Machat, Mr. Gourwitz and Mr. Connacher. All of the nominees for election as directors described under "Election of Directors" served as directors during Fiscal 1997, except Dr. Barry J. Barresi, who was appointed in September 1996, and Warren S. Rustand, who is a nominee for election as director at this Meeting. In addition, Ronald J. Kelly and Dr. David Eldridge, served as directors during Fiscal 1997. Messrs. Vamvakas, Riegert, Kelly, Machat, Eldridge and Barresi are members of the Board of Directors and officers of the Corporation or a subsidiary. Except for Dr. Machat, 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. Messrs. Vamvakas, Riegert and Kelly and Drs. Machat, Eldridge and Sullins, Jr. are the only members of the Board of Directors of the Corporation who also serve as members of the boards of directors of one or more subsidiaries of the Corporation. (See also "Interest of Insiders in Material Transactions".) 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

-12executive 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, the Board of Directors considers 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 1997, 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 compensation paid to Mr. Vamvakas during Fiscal 1997, and the compensation reflected in his employment contract, are based upon comparisons with comparable positions in other companies within the same industry, as well as with the compensation levels of chief executive officers in start-up companies in the industrial technology sector. See "Executive Compensation - Summary Compensation Table" and "- Employment Contracts". In addition, to reward Mr. Vamvakas for his contributions to the Corporation's growth in Fiscal 1997, the Board of Directors, on the recommendation of the Compensation Committee, has awarded Mr. Vamvakas a bonus for Fiscal 1997 in the amount of US$250,000. The bonus is payable upon the Corporation having earned two consecutive quarters of net income. The foregoing report is submitted by the Board of Directors and the Compensation Committee.
Elias Vamvakas John F. Riegert Dr. William David Sullins, Jr. Dr. Jeffery J. Machat Howard J. Gourwitz Ronald J. Kelly James R. Connacher Dr. David C.Eldridge Dr. Barry J. Barresi

-13COMPENSATION OF DIRECTORS Directors of the Corporation who are not executive officers of the Corporation are entitled to receive an attendance fee of $350 in respect of each meeting attended. In addition, directors are reimbursed for out-ofpocket 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, 1996, non-executive members of the Board of Directors were each issued options to acquire 5,000 Common Shares. (See also "Interests of Insiders in Material Transactions".) PERFORMANCE GRAPH The following show the cumulative total shareholder return (assuming reinvestment of dividends) over Fiscal 1997 in comparison with the cumulative total return on the TSE 300 Index. CUMULATIVE TOTAL RETURN ON $100 INVESTMENT ASSUMING DIVIDENDS ARE REIVINVESTED MAY 31, 1996 - MAY 31, 1997 ERROR! NOT A VALID LINK. STATEMENT OF CORPORATE GOVERNANCE POLICIES The Board of Directors of TLC believes that strong corporate governance practices are essential to the wellbeing 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 nine members. The size of the Board of Directors was increased from eight to nine members in September 1996 and the number of directors to be elected at the Meeting has been set at seven. The Board of Directors believes that three directors are "unrelated" directors and the remaining six are "related" directors, within the meaning of the TSE Report. If the proposed nominees for election as director are elected at the Meeting, the Board of Directors believes that four directors will be "unrelated" directors and the remaining three will be "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

-14interest 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. BOARD COMMITTEES The Board of Directors has established five committees. The following is a brief description of each committee and its composition. The EXECUTIVE COMMITTEE consists of three directors: Messrs. Vamvakas, Machat and Riegert, all of whom are related directors. The Executive Committee may exercise all powers of the Board of Directors in respect of the management and direction of the business and affairs of the Corporation between meetings of the Board of Directors, subject to certain restrictions under applicable laws. The AUDIT COMMITTEE consists of three directors: Messrs. Gourwitz, Sullins, Jr. and Eldridge. The Audit Committee is composed of a majority of 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 was one meeting of the Audit Committee relating to Fiscal 1997. The NOMINATING COMMITTEE consists of three directors: Messrs. Vamvakas, Sullins, Jr. and Connacher, a majority of whom are unrelated directors. The Nominating Committee is responsible for the selection of new directors and their recommendation to the Corporate Governance Committee (see below) as nominees to the Board of Directors. The COMPENSATION COMMITTEE consists of three directors: Messrs. Connacher, Machat and Gourwitz, a majority 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. The CORPORATE GOVERNANCE COMMITTEE consists of three directors: Messrs. Gourwitz, Kelly and Eldridge, a majority of whom are related directors. If the proposed nominees for election as directors are elected at the Meeting, two directors will be appointed to replace Messrs. Kelly and Eldridge such that the committee remains composed of a majority of unrelated directors. The Corporate Governance Committee is responsible for delegating work to other committees of the Board. It will be responsible to the Board of Directors with respect to developments in the area of corporate governance and the practices of the Board. 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

-15permit 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. 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 1997 to the Corporation or any of its subsidiaries other than as disclosed below.
LARGEST AMOUNT OUTSTANDING DURING YEAR ENDED OUTST NAME AND PRINCIPAL POSITION MAY 31, 1997 SEPTE ($) --------------------------------------------------------------------------------------------------------Elias Vamvakas, Car Loan $60,000 $ Chief Executive Officer --------------------------------------------------------------------------------------------------------Madelaine Walker, Chief Operating Officer Car Loan $37,875 $ --------------------------------------------------------------------------------------------------------INVOLVEMENT OF THE CORPORATION

(1) The indebtedness is secured in each case by an automobile of the officer. 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$10,000,000 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. In addition to the deductible relating to securities laws claims, the insurance policy contains a coinsurance clause whereby the Corporation is liable for 40% of losses relating to such claims. The total premium in respect of the directors' and officers' liability insurance for Fiscal 1997 was approximately US$152,000. The insurance policy does not distinguish between directors and officers as separate groups. INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS The only material transactions since the commencement of Fiscal 1997 in which any director, senior officer, principal shareholder (as described under "Principal Shareholders") or any associate or affiliate of the foregoing has or had an interest are as follows: 1. Effective January 1, 1996, Dr. Machat commenced receiving remuneration in accordance with the consulting agreement and surgery agreement referred to under "Executive Compensation - Employment Contracts".

-162. Mr. Gourwitz, a director of the Corporation, receives fees for legal work done on behalf of TLC.

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. 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 John F. Riegert John F. Riegert Secretary Mississauga, Canada September 26, 1997

SCHEDULE A PART I NOTICE OF CHANGE OF AUDITORS Horwath Orenstein are currently the auditors of TLC The Laser Center Inc. (the "Corporation"). The Corporation has determined not to propose the reappointment of Horwath Orenstein. Approval of the shareholders of the Corporation will be sought at the next annual and special meeting of the shareholders (the "Meeting") to be held on October 30, 1997. Subject to the approval of the shareholders of the Corporation being obtained at the Meeting, the auditors of the Corporation will be changed to Ernst & Young. In the opinion of the Corporation, as of the date hereof there have NOT occurred between Horwath Orenstein and the Corporation any reportable events within the meaning of National Policy Statement No. 31 of the Canadian Securities Administrators, whether in the form of disagreement, unresolved issues or consultations, in connection with the audit of the two most recently completed fiscal years of the Corporation for any periods subsequent to completion of the audits performed by Horwath Orenstein in connection with the fiscal year of the Corporation ended May 31, 1997. In addition, there are no reservations in the auditor's reports for such period. The Board of Directors and the audit committee of the Corporation have considered and approved the proposal that the auditors be changed from Horwath Orenstein to Ernst & Young. The proposal was approved on September 25, 1997. DATED at Mississauga, Ontario, September 25, 1997. TLC THE LASER CENTER INC. By: PETER KASTELIC Peter Kastelic Chief Financial Officer and Treasurer

SCHEDULE A PART II [LETTERHEAD OF HORWATH ORENSTEIN] September 25, 1997 Ontario Securities Commission The Manitoba Securities Commission British Columbia Securities Commission Alberta Securities Commission Saskatchewan Securities Commission Commission des valeurs mobilieres du Quebec Office of the Administrator, Securities Act, New Brunswick Nova Scotia Securities Commission Registrar of Securities, Prince Edward Island Government of Newfoundland and Labrador, Securities Division Securities and Exchange Commission To whom it may concern: RE: TLC THE LASER CENTER INC. - NOTICE OF CHANGE OF AUDITOR In accordance with the requirements of National Policy Statement No. 31, we have read the Notice of Change of Auditors of the above company dated September 25, 1997 and are in agreement with the information contained in the Notice. Yours truly, HORWATH ORENSTEIN Chartered Accountants

SCHEDULE A PART III [LETTERHEAD OF ERNST & YOUNG] September 25, 1997 Ontario Securities Commission The Manitoba Securities Commission British Columbia Securities Commission Alberta Securities Commission Saskatchewan Securities Commission Commission des valeurs mobilieres du Quebec Office of the Administrator, Securities Act, New Brunswick Nova Scotia Securities Commission Registrar of Securities, Prince Edward Island Government of Newfoundland and Labrador, Securities Division Securities and Exchange Commission Dear Sirs: RE: TLC THE LASER CENTER INC. We have read the Notice of Change of Auditors of TLC The Laser Center Inc. dated September 25, 1997 and are in agreement with the statements contained in such Notice based on our knowledge of the information at this time. Yours sincerely, Ernst & Young

SCHEDULE A PART IV CONFIRMATION OF REVIEW OF NOTICE OF CHANGE OF AUDITORS TO: THE SHAREHOLDERS OF TLC THE LASER CENTER INC. The undersigned confirms that the Notice of Change of Auditors dated September 25, 1997 and the letters of Horwath Orenstein and Ernst & Young addressed to the relevant securities regulators expressing their agreement with the information contained in the Notice of Change of Auditors have been reviewed by the Board of Directors and the Audit Committee of TLC The Laser Center Inc.
DATED: September 25, 1997

By:

PETER KASTELIC ------------------------------------Peter Kastelic Chief Financial Officer and Treasurer

SCHEDULE B

SHARE OPTION RESOLUTION BE IT RESOLVED THAT: 1. Section 1.5 of the Share Option Plan of the Corporation be and it is hereby amended to increase the number of Common Shares which may be issued under the Share Option Plan to 4,116,000; and 2. Any director or officer of the Corporation is hereby authorized and directed for and in the name of and on behalf of the Corporation to do all acts and things and execute, whether under the corporate seal of the Corporation or otherwise and deliver or cause to be delivered all documents and instruments as in the opinion of such director or officer may be necessary or desirable to carry out the intent of this resolution.

SCHEDULE C SHARE PURCHASE RESOLUTION BE IT RESOLVED THAT: 1. The Share Purchase Plan of the Corporation approved by the Board of Directors on September 25, 1997, as described in the accompanying management information circular for this meeting under the heading "Proposed Share Purchase Plan", is hereby ratified, authorized and approved; and 2. Any director or officer of the Corporation is hereby authorized and directed for and in the name of and on behalf of the Corporation to do all acts and things and execute, whether under the corporate seal of the Corporation or otherwise and deliver or cause to be delivered all documents and instruments as in the opinion of such director or officer may be necessary or desirable to carry out the intent of this resolution.

TLC THE LASER CENTER INC. PROXY ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS OF TLC THE LASER CENTER INC. TO BE HELD ON OCTOBER 30, 1997 THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT 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 and a Director of the Corporation, or, failing him, Ronald J. Kelly, General Counsel and a Director 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 MEETING OF SHAREHOLDERS OF THE CORPORATION TO BE HELD ON OCTOBER 30, 1997 AND AT ALL ADJOURNMENTS THEREOF, upon the following matters: 1. TO VOTE / / WITHHOLD VOTE / / or, if no specification is made, VOTE, in the election of directors; 2. TO VOTE / / WITHHOLD VOTE / / or if no specification is made, VOTE in the appointment of Ernst & Young as auditors of the Corporation and in authorizing the directors to fix the remuneration of the auditors; 3. TO VOTE FOR / / VOTE AGAINST / / or if no specification is made, VOTE FOR the resolution approving the amendment to the Share Option Plan to increase the number of shares that may be issued thereunder; 4. TO VOTE FOR / / VOTE AGAINST / / or if no specification is made, VOTE FOR the resolution approving the Share Purchase Plan; and 5. 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 _____________________, 1997
------------------------------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 shareholder wishes to appoint. Such other person need not be a shareholder. 2. To be valid, this proxy must be signed and deposited with CIBC Mellon Trust Company, Proxy Dept., 393 University Avenue, 5th Floor, Toronto, Ontario M5G 2M7 not later than the close of business on October 28, 1997, 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.

NEWS RELEASE CONTACT: FOR IMMEDIATE RELEASE STEPHEN KILMER MANAGER, INVESTOR RELATIONS (905) 602-2020 EXT. 235 1-800-TLC-1003 INVESTOR.RELATIONS@LZR.COM TLC POSTS RECORD NET REVENUES FOR 1998 FIRST QUARTER TORONTO, OCTOBER 14, 1997: TLC The Laser Center Inc., the largest provider of laser vision correction in North America, today announced its results for the three months ended August 31, 1997. Results were characterized by an increase in net revenue, driven primarily by strong growth in the number of refractive laser procedures performed. First quarter gross revenue was $20.6 million, an increase of 253% over the 1997 comparative quarter. First quarter net revenue was $13.8 million, an increase of 281% over the first quarter of 1997, and the highest quarterly net revenue ever reported by the Company. The increasing revenue reflects continuing strong growth in the number of procedures at existing sites and TLC's rapidly expanding activities in the U.S. market. TLC performed over 6,100 paid refractive laser procedures in the first quarter, compared to 1,600 from the same quarter a year ago. TLC's net loss for the quarter was $3.7 million, or $0.14 per share, versus $0.8 million, or $0.05 per share for the corresponding period a year ago. The net loss includes $2.7 million in amortization and $1.6 million in development and start-up costs. The net loss was much lower than expected considering TLC's rapid expansion in the U.S. market, where most of TLC's U.S. centers have been open for less than 1 year. Traditionally, it takes 18 months for TLC laser centers to show a profit.

"We believe that our growth strategy is really starting to prove itself," said Elias Vamvakas, CEO of TLC. "TLC's balance sheet and cash position is very strong." "This, combined with stronger than expected operating results, will allow us to continue to grow our leadership position in the North American laser vision correction market." ABOUT TLC THE LASER CENTER INC. TLC is the largest provider of excimer laser vision correction in North America. TLC's core business strategy is providing excimer laser eye surgery in partnership with its network of more than 6,000 affiliated doctors. TLC has an integrated approach in providing eye care which includes secondary care facilities, managed care, buying groups and information technologies. TLC's common shares trade on the Toronto Stock Exchange under the symbol 'LZR' and on the NASDAQ National Market under the symbol 'LZRCF'. Visit our web site at http://www.lzr.com FORWARD LOOKING STATEMENTS This press release may contain forward-looking information within the meaning of Section 27A of the U.S. Securities Act of 1993 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. TLC's operating results can be impacted by a number of factors, any of which could cause actual results to vary materially from the current results or TLC's anticipated future results. TLC's operating results can vary substantially from period to period due to the timing of acquisitions and expansion opportunities. This and other factors make the estimation of future operating results uncertain. Risk factors are listed from time to time in TLC's reports filed with the Toronto Stock Exchange and the U.S. Securities and Exchange Commission. TLC assumes no obligation to update information contained in this press release.

TLC THE LASER CENTER INC. CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT PER SHARE AMOUNTS)
Three months ended August 31 1997 1996 --------------------------------------------------------------------------------Net revenues $ 13,804 $ 4,912 Share of loss of affiliated companies (87) (28) -------------------------13,717 4,884 -------------------------EXPENSES Operating 12,608 4,032 Financial 481 136 Amortization 2,717 637 -------------------------15,806 4,805 -------------------------Income (Loss) from operations (2,089) 79 Development and start-up expenses 1,601 794 -------------------------Loss before income taxes (3,690) (715) -------------------------Income taxes Current 26 49 -------------------------26 49 -------------------------Net loss for the period $ (3,716) $ (764) --------------------------------------------------LOSS PER SHARE Weighted average number of common shares outstanding REVENUE ANALYSIS $ (0.14) $ (0.05)

26,914,000

16,712,283

Three months ended August 31 ($ thousands) 1997 1996 --------------------------------------------------------------------------------Gross revenues of all managed clinics: $ 20,560 $ 8,131 --------------------------------------------------Represented by: Refractive clinics revenue $ 14,100 $ 3,551 Secondary care clinics physician group revenue 6,460 4,580 -------------------------20,560 8,131 -------------------------Less: Provision for contractual allowances and adjustments 3,802 2,060 Amounts retained by physician groups 3,632 1,159 -------------------------7,434 3,219 -------------------------Net revenues of all managed clinics 13,126 4,912 Other 678 -------------------------Net revenues $ 13,804 $ 4,912 ---------------------------------------------------

CONSOLIDATED STATEMENT OF DEFICIT
Three months ended August 31 1997 1996

($

THOUSANDS)

--------------------------------------------------------------------------------Balance, beginning of period $ (17,690) $ (3,741) Net loss for the period (3,716) (764) -------------------------Balance, end of period $ (21,406) $ (4,505) ---------------------------------------------------

TLC THE LASER CENTER INC. CONSOLIDATED BALANCE SHEET (IN THOUSANDS OF CANADIAN DOLLARS)
31-Aug 1997 1996 --------------------------------------------------------------------------------ASSETS Current Cash and short-term deposits $ 11,855 $ 1,916 Accounts receivable 5,849 2,069 Income taxes recoverable 150 Prepaids and sundry 2,845 573 -------------------------20,699 4,558 Capital assets 36,588 18,705 Assets under capital lease 9,787 1,699 Investment in affiliated companies 634 367 Projects under development 144 1,094 Deferred income taxes 26 141 Goodwill 35,850 Other 575 106 -------------------------$ 104,303 $ 26,670 --------------------------------------------------LIABILITIES Current Accounts payable and accrued liabilities Income taxes payable Current portion of long term debt Current portion of obligations under capital lease Current portion of term bank loan Deferred income taxes

$

Long term debt Obligations under capital lease Term bank loan Deferred rent and compensation

Non-controlling interest

8,984 $ 2,219 20 1,893 1,436 2,549 322 40 40 32 133 -------------------------13,498 4,170 6,083 5,698 8,791 923 13 53 2,399 94 -------------------------30,784 10,938 -------------------------465 --------------------------

SHAREHOLDERS' EQUITY Capital stock Deficit

94,460 20,237 (21,406) (4,505) -------------------------73,054 15,732 -------------------------$ 104,303 $ 26,670 ---------------------------------------------------

TLC THE LASER CENTER INC. CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION (IN THOUSANDS OF CANADIAN DOLLARS)
Three months ended August 31 1997 1996 ---------------------------------------------------------------------------------OPERATING ACTIVITIES Net loss for the period $ (3,716) $ (764) Amortization 2,717 637 Share of loss from affiliates 87 28 --------------------------------------------------(912) (99) Changes in non-cash operating items Deferred income taxes (net) 169 Projects under development 24 (499) Non-controlling interest 2 Income taxes payable (104) (87) Prepaid and sundry assets (529) (44) Accounts payable and accrued liabilities (741) (304) Accounts receivable (1,793) (354) Deferred rent 6 -------------------------Cash provided from (used for) operating activities (3,884) (1,381) -------------------------FINANCING ACTIVITIES Capital stock issued Term bank loan Obligations under capital lease Long-term debt Cash provided from (used for) financing activities

1,908 576 (10) (10) (320) 6 (461) 2,705 -------------------------1,117 3,277 --------------------------

INVESTING ACTIVITIES Other Investment in affiliated companies Assets under capital lease Goodwill Capital assets Cash provided from (used for) investing activities

13 (18) (46) (136) (53) (681) (2,042) (4,227) (3,288) -------------------------(6,355) (4,123) -------------------------(9,122) (2,227) 20,977 4,143 -------------------------$ 11,855 $ 1,916 ---------------------------------------------------

Decrease in cash Cash and short-term deposits, beginning of period Cash and short-term deposits, end of period

TLC THE LASER CENTER INC. ANNUAL INFORMATION FORM FOR THE YEAR ENDED MAY 31, 1997 SEPTEMBER 30, 1997

TABLE OF CONTENTS
The Company....................................................................2 General Development Of The Business............................................3 Industry Background............................................................5 Business Of The Company........................................................8 Government Regulation.........................................................18 Selected Consolidated Financial Information...................................22 Dividends And Dividend Policy.................................................23 Management's Discussion And Analysis Of Financial Condition And Results Of Operations.......................................................23 Stock Exchange Listings.......................................................24 Directors And Officers........................................................24 Additional Information........................................................25 Glossary......................................................................27

THE COMPANY TLC The Laser Center Inc. (the "Company" or "TLC") was incorporated by articles of incorporation under the BUSINESS CORPORATIONS ACT (Ontario) on May 28, 1993. By articles of amendment dated October 1, 1993, the name of the Company changed to its present form, and by articles of amendment dated March 22, 1995, certain changes were effected in the issued and authorized capital of the Company with the effect that the authorized capital of the Company became an unlimited number of Common Shares. The head and principal office of the Company is located at 5600 Explorer Drive, Suite 301, Mississauga, Ontario; Telephone: (905) 602-2020; Facsimile: (905) 602-2025. TLC's Internet address is www.lzr.com. All references in this Annual Information Form ("AIF") to "$" and "dollars" are to Canadian dollars, unless otherwise noted. The "Company" or "TLC" means the Company and its subsidiaries, unless the context otherwise requires. Certain terms used in this AIF are defined elsewhere in the AIF. (See "Glossary".) The following organizational chart illustrates the principal entities owned by the Company as at May 31, 1997, their jurisdiction of incorporation and the percentage of voting securities held by each company's parent company (100% unless specified to the contrary). -2-

[GRAPHIC] depicting TLC organizational chart (1) TLC Piedmont Laser Center Inc. and TLC Chicago Laser Center Inc. each operate a refractive clinic and a secondary care clinic. TLC Midwest Eye Laser Center Inc. operates two secondary care clinics, one of which is also a refractive clinic. (2) Opened September 1997. (3) Acquired July 23, 1997. (4) Dissolved effective May 31, 1997. The assets of the dissolved subsidiaries were transferred to 20/20 Laser Centers, Inc. ("20/20") (5) As of September 30, 1997, TLC acquired 96.25% of 20/20 Laser Services (South Florida) Limited Partnership, LLP ( 62% is owned by 20/20 Laser Centers, Inc. and 34.25% is owned by TLC The Laser Center (Delaware) Inc.). -3-

GENERAL DEVELOPMENT OF THE BUSINESS BACKGROUND The Company is a provider of integrated eye care in North America, specializing in excimer laser surgery to correct common refractive vision disorders such as nearsightedness, farsightedness and astigmatism. The Company develops and manages regional networks consisting of refractive laser clinics and secondary care clinics in conjunction with a network of local doctors. TLC began operation in 1994 when it opened the TLC Windsor clinic. Since commencement of operations, TLC has opened or acquired 32 refractive clinics (including three with secondary care operations) and two secondary care clinics. Two clinics were opened in 1995, three clinics were opened or acquired in 1996 (two in the U.S.), and 24 clinics were opened in 1997, including eight U.S. clinics managed by 20/20 Laser Centers, Inc. ("20/20") and one clinic in Canada. On February 10, 1997, the Company acquired 99.9% of the shares of 20/20 to become the largest provider of laser vision correction in North America. The Company has developed a network, which as of September 30, 1997 totals 32 refractive clinics (three of which are also secondary care clinics), two secondary care clinics and 12 network centers in 26 states and provinces across North America. In Canada, the Company manages five refractive clinics in Ontario, British Columbia, and New Brunswick. In the U.S., the Company manages 27 refractive clinics in Oklahoma, Indiana, South Carolina, Washington, Colorado, California, Florida, Wisconsin, Illinois, Ohio, Tennessee, Maryland, New York, New Jersey, Pennsylvania, Montana, North Carolina, Massachusetts and Virginia. The Company manages five secondary care clinics in Washington, South Carolina and Illinois (three of which are also refractive clinics). Revenues earned by the Company in the U.S. amounted to approximately 60%, while revenues earned in Canada amounted to approximately 40%. The preponderance of the Company's business in future is expected to be in the U.S. as the Company has opened 27 refractive clinics (including three with secondary care operations) and two secondary care clinics in the United States and may in future open more centers there. TLC had approximately 350 employees at May 31, 1997. REFRACTIVE CLINICS The Company is pursuing a strategy of expansion of its core refractive laser surgery business. The major focus of the Company's expansion strategy continues to be the U.S., where the Company is seeking to position itself to take advantage of the growing market for excimer laser procedures. The table below illustrates the growth in the number of procedures performed at the Company's refractive clinics since the Company began operations in the second quarter of 1994: GROWTH IN NUMBER OF PROCEDURES PERFORMED [bar graph showing growth in number of refractive procedures performed] (1) Includes 1,326 and 1,478 procedures performed at 20/20 clinics during the quarters ended February 28, 1997 and May 31, 1997, respectively. 20/20 was acquired by TLC on February 10, 1997. -4-

The Company has 11 clinics under development. The Company opens refractive clinics in cities where it has identified strong support from local doctors for the TLC co-management strategy, and requires at least 50 local doctors to indicate their intention to affiliate with the Company. The Company estimates that the cost of opening each refractive clinic in the U.S. will be $1.5 million. It is intended that such cost will be funded through equipment financing which the Company currently has available to it and funds available for general corporate purposes. Generally, it is expected that a TLC refractive clinic will become profitable after it has completed approximately eighteen months of operation. SECONDARY CARE CLINICS As part of its strategy to expand its core refractive laser surgery business, the Company intends to acquire, and manage on behalf of doctors, secondary care clinics in U.S. cities where it has established, or intends to establish, a refractive clinic. The Company believes that the acquisition of secondary care clinics in U.S. cities where it manages refractive clinics and has established a network of affiliated doctors will place TLC in a strong competitive position to obtain managed care contracts. The operation of both refractive and secondary care clinics in a single geographical center may result in operating efficiencies which each clinic might not be able to achieve individually, including purchasing economies of scale and more efficient use of equipment and personnel. If achieved, such operating efficiencies should enable the clinics to provide a range of eye care services at a lower cost than competing service providers. Acquisitions of existing clinics will also create an extended patient base, allowing each clinic to increase awareness of its services among clients of the other. The Company's strategy is to acquire secondary care clinics for a purchase price based upon a multiple of earnings satisfied through a combination of cash and stock of the Company. The Company has entered into two letters of intent to acquire secondary care clinics. The first letter of intent, with Eye Care Physicians of Michigan, provides for the formation of a joint venture to establish refractive clinics and secondary care clinics in Michigan. The second letter of intent, with Britton Vision Associates, P.C., provides for the formation of a joint venture to establish a secondary care clinic in Oklahoma. MANAGED CARE The Company believes that because of the economies of scale that will be developed through the network of refractive and secondary care clinics, and the geographic area that will be covered by the TLC network of affiliated doctors, the Company will be in a strong competitive position to obtain managed care contracts with Health Management Organizations ("HMOs"), insurance companies, employer groups and other private third party payors. The goal of TLC's managed care subsidiary, Partner Provider Health Inc. ("PPH"), is to implement a business model whereby eye care providers become true partners in building successful managed care businesses. PPH develops local partnerships in individual states through the creation of local practice associations called VisionMeds. PPH has formed five such partnerships, with an additional eleven expected to be formed within the next nine months. VisionMeds are expected to expand the market share of affiliated eye care providers through -5-

successful contracting for the complete range of managed eye care products. TLC secondary care clinics as well as TLC affiliated optometrists will be the immediate beneficiaries of market share growth in managed care contracting by PPH. NETWORK CENTERS The Company's network centers, located near TLC refractive clinics, provide management services similar to those provided by refractive clinics, including clinical training, patient education, marketing and network development. Network centers support market development, without the need for large capital expenditures. The network center is compensated by the affiliated clinic for the management services it provides. Since June 1, 1996, the Company has opened 12 network centers with three additional centers under development. INDUSTRY BACKGROUND EXCIMER LASER PROCEDURES The human eye, which is approximately 25 millimeters in diameter, functions much like a camera. It incorporates a lens system that focuses light (the cornea and the lens), a variable aperture system which regulates the amount of light passing through the eye (the iris), and a film which records the image (the retina). The excimer laser is designed to enable a doctor to treat two major categories of vision disorders - refractive and pathological disorders. Refractive disorders, such as nearsightedness, farsightedness and astigmatism, result from an inability of the optic system to focus images on the retina properly. The amount of refraction required to properly focus images depends on the curvature of the cornea and the size of the eye. If the curvature is not correct, the cornea cannot properly focus the light passing through it onto the retina, and the viewer will perceive a blurred image. Refractive disorders have historically been treated primarily by eyeglasses or contact lenses. Increasingly, they are being treated by surgical techniques, the most common of which in the U.S. is Refractive Keratectomy ("RK"). In the case of RK, an ophthalmologist uses a scalpel to make a series of incisions around the cornea in a radial pattern, resulting in a flattening of the corneal surface. Unlike RK, excimer laser procedures are designed to reshape or sculpt the outer layers of the cornea to correct vision disorders by changing its curvature. For instance, in Photorefractive Keratectomy ("PRK"), the excimer laser emits excimer laser pulses to remove submicron (a micron equals 0.001 of a millimeter) layers of tissue from the surface of the cornea to reshape the front surface of the cornea. PRK differs from RK in several respects. PRK depends less on the surgical skill of the doctor and more on the accuracy of the excimer laser. After one year, the appearance of an eye treated with PRK is typically clear with no visible evidence of the PRK procedure. Because RK involves incisions into the corneal tissue, it may weaken the structure of the cornea which can have adverse consequences following traumatic injury. RK also produces incisional scarring, and may cause fluctuation of vision and progressive farsightedness. The Company believes that these considerations explain the decrease in popularity of RK in markets in which PRK is available. Laser-In-Situ Keratomileusis ("LASIK") is a procedure that came into commercial use in Canada in 1994. LASIK combines a manual procedure that has been performed for over ten years with the accuracy of a laser. In LASIK, a surgical instrument called a microkeratome is used to -6-

create a thin flap on the surface of the cornea. Excimer laser energy is then used to make a correction in the inner layers of the cornea, and the flap is then replaced. The Company believes LASIK allows more precise correction than PRK for higher levels of nearsightedness, farsightedness and astigmatism, with greater predictability of results and decreased probability of regression. In the case of PRK and LASIK, once the doctor makes an assessment of the exact correction required, the software of the excimer laser system calculates the optimal number of pulses needed to achieve the intended corneal correction using a specially developed algorithm. The patient reclines in a chair, his or her eye focuses on a fixation target, and the doctor positions the patient's cornea for the excimer laser procedure. The doctor uses a foot pedal to deliver the excimer laser beam, which emits a rapid succession of excimer laser pulses. In the case of most excimer lasers, each excimer laser pulse removes approximately 0.25 microns of corneal tissue, with each succeeding pulse removing a slightly larger ring of tissue, up to 7.0 mm in diameter. The typical procedure takes 10 to 15 minutes, from set-up to completion, with the length of time of the actual excimer laser treatment running 15 - 90 seconds. PRK and LASIK are done on an out-patient basis without general anesthesia, and the progress of the eye is monitored in a series of follow-up visits. Following PRK, a patient typically experiences blurred vision and discomfort until the outer surface of the cornea heals, which usually occurs within 72 to 96 hours after the procedure has been performed. A patient usually experiences a substantial improvement in clarity of vision within a few days following PRK, normally seeing well enough to drive a car within one to two weeks. However, it generally takes one month, but may take up to six months, for the full benefit of the procedure to be realized. In the case of LASIK, the surface layer of the cornea remains intact. Consequently, LASIK has the advantage of more rapid visual recovery than PRK, with most typical patients seeing well enough to drive a car the next day and healing completely within one to three months. According to the two-year follow-up data accumulated by Summit Technology Inc. ("Summit") during clinical trials performed in connection with FDA approval of its excimer laser, all of the individuals undergoing PRK experienced an improvement in visual acuity without corrective eyewear. Prior to PRK, 95% of the eyes treated were 20/200 or worse. Of the eyes treated, approximately 91% improved to 20/40 or better, the legal requirement to obtain a driver's license in most States without corrective eyewear, while the remaining 9% experienced improved vision without corrective eyewear, but still required corrective eyewear to achieve 20/40 or better. REFRACTIVE CLINIC MARKET While estimates of market size should not be taken as projections of revenues or of the Company's ability to penetrate that market, the U.S. Department of Health and Human Services estimates that approximately 90 million people in the U.S. alone are nearsighted. Of those individuals, most traditionally resort to non-surgical treatment. In 1993, industry sources estimated that 60 million nearsighted persons used glasses or contact lenses to correct their vision disorder, with approximately 90% of nearsighted persons having low-level nearsightedness, which can be treated by excimer laser procedures within the limitations imposed by the FDA on its approval for use of an excimer laser in the U.S. It is also estimated that an additional 65 million farsighted persons wear glasses or contact lenses to correct their vision disorder. At present, the FDA has not -7-

approved the use of excimer lasers in the U.S. for treatment of farsightedness but the Company is performing surgery to correct farsightedness at its TLC Toronto clinic. (See "Government Regulation - Excimer Laser Regulation - United States".) In 1994, industry sources estimated that U.S. consumers spent approximately US$13 billion on eyeglasses and contact lenses. The Company believes that with excimer laser procedures many of these people could reduce or eliminate their reliance on corrective eyewear. In 1993, when PRK was not yet available in the U.S., approximately 250,000 RK procedures were performed in the U.S. While the Company believes that many nearsighted and farsighted people are potential candidates for excimer laser procedures, these procedures must compete with corrective eyewear, RK and other surgical and nonsurgical treatments for nearsightedness and farsightedness. (See "Business of The Company - Competition Refractive Clinics - Consumer Market for Vision Correction".) The decision to have an excimer laser procedure performed largely represents a lifestyle choice dictated by an individual's desire to reduce or eliminate their reliance on corrective eyewear, rather than a health decision. Nevertheless, the Company believes that the market potential for excimer laser procedures is commercially significant, and that many nearsighted and farsighted people will perceive that excimer laser procedures have advantages over alternative treatments. SECONDARY CARE CLINIC MARKET Secondary care clinic refers to a clinic which is equipped to enable physicians to provide advanced levels of eye care, including eye surgery, for the treatment of disorders such as glaucoma, cataracts and retinal disorders. Generally, a secondary care clinic does not dispense eyewear or contact lenses, perform refractions, or provide eye examinations or general diagnostic services. Although it is difficult to estimate the size of the secondary care clinic market, in 1994, industry sources estimated that ophthalmologists in the U.S. performed in excess of 2.4 million major surgical procedures. Sources of revenues for secondary care clinics are direct payments by patients as well as reimbursement or payment by third party payors such as Medicaid and Medicare. There have been recent reductions in the amounts reimbursed by Medicaid and Medicare for eye care procedures. Future material reductions in the amounts reimbursed by Medicaid and Medicare could affect the profitability of secondary care clinics, including those managed by the Company. The secondary care clinic market is in a period of consolidation as a result of the recent focus on costcontainment by HMOs, insurance companies and employer groups. To remain competitive in the changing medical service environment, doctors are increasingly affiliating with larger organizations which offer skilled and innovative management, negotiate contracts with payors on behalf of their enrollees and provide sophisticated information systems, greater capital resources and more efficient cost structures. Small to mid-sized doctor groups and individual practices are at a relative disadvantage in the changing eye care industry, as these smaller organizations typically lack the capital to expand, develop information systems, purchase new technologies and generate economies of scale. Additionally, small to mid-sized doctor groups and individual practices often do not have formal ties with other providers nor do they have the ability to offer a variety of medical services, thus reducing their competitive position relative to larger organizations. -8-

MANAGED CARE MARKET In the U.S., doctors have traditionally provided medical services to individual patients on a fee-for-service basis, either through commercial insurance or through Medicare or Medicaid. The fee-for-service model provides few incentives for the efficient utilization of resources and has contributed to increases in health care costs. Concerns over the accelerating cost of health care have resulted in the increasing prominence of managed care and a decline in fee-for-service medicine. Under a typical managed care arrangement, a payor, such as an employer or HMO, determines covered services and budgets funding for each area of clinical service. Managed care organizations then bid for the opportunity to become the supplier of the covered services for a fixed fee or rate. In 1995, according to the U.S. Department of Labor, over 65% of employed Americans received health insurance through a managed care organization, such as an HMO. An HMO typically organizes the delivery of eye care by contracting with organized groups of private practice optometrists and ophthalmologists. Eye care procedures are typically a standard benefit provided by managed care organizations. According to the American Association of Health Plans, in 1996, over 91% of HMOs provided specific coverage for routine eye examinations. However, the cost of excimer laser procedures has not been and is not expected to be covered by the majority of HMOs or most other third party payors under managed care contracts. BUSINESS OF THE COMPANY GENERAL The Company is a provider of integrated eye care in North America, specializing in excimer laser surgery to correct common refractive vision disorders such as nearsightedness, farsightedness and astigmatism. The Company develops and manages regional networks consisting of refractive laser clinics and secondary care clinics in conjunction with a network of local doctors. CO-MANAGEMENT STRATEGY The Company believes that a true co-management model in which primary care doctors work jointly with secondary care doctors results in optimal patient care. TLC refractive clinics offer excimer laser procedures through co-operation between the Company, the clinic and affiliated doctors. In most cases, excimer laser procedures are performed by doctors under the terms of an agreement with the TLC refractive clinic and the Company. (See "- Refractive Clinics" and "- 20/20 Acquisition".) The affiliated doctors assess candidates for excimer laser procedures and provide pre- and post-operative care, including an initial eye examination and a minimum of six follow-up visits. There are currently over 6,000 doctors affiliated with TLC in this manner. In July, 1997, TLC acquired The Vision Source, Inc., a corporation that provides marketing, management and buyer power to independently owned and operated optometric franchises in the United States. The Vision Source, Inc. maintains the goal of providing competitive purchasing power and marketing opportunities to optometrists while allowing them to remain independent practitioners. This retention of independence also makes The Vision Source, Inc. an appealing concept for private practitioners when they begin to seek affiliations in the managed care environment. The Vision Source, Inc. is administered by practicing optometrists who have a clear view of the needs of its members. -9-

The Company provides courses in co-management and practice management to affiliated doctors and their staffs. Each TLC refractive clinic has a network of affiliated doctors whose patients use the clinic, and it is intended that doctors affiliated with each refractive clinic in the U.S. will have 50% representation on the board of directors of the subsidiary that owns the clinic. The Company intends to implement a co-management strategy for its secondary care clinics. The Company believes that through its network of referring doctors and its co-management strategy it will have a competitive advantage in both the secondary care and managed care market in which affiliated service providers, able to provide a range of eye care services at a lower cost than unaffiliated providers, appear to be the most successful. MARKETING RESOURCES TLC provides marketing and practice management resources to assist affiliated doctors with marketing their services to the general public. TLC's marketing department designs advertising programs and templates that can be used by clinics and affiliated doctors who are part of the TLC network. INFORMATION TECHNOLOGY SYSTEMS The TLC network of clinics and affiliated doctors are being linked by information technology systems through (i) an on-line communication network; (ii) practice management software; and (iii) the Internet. On-line Communication System: The Company is implementing an on-line communication system through Vision Corporation, which is owned 50.1% by the Company, 39.8% by the ARM Group Inc., a software enterprise unaffiliated with TLC, and 10.1% by Kelmar Corporation, a corporation controlled by Mr. Ronald J. Kelly, a director and officer of the Company. It is intended that upon payment of a modest on-line charge, affiliated doctors will be linked by computer with the Company, suppliers and each other. The Company believes that the communication system will become a key component of the TLC co-management strategy by facilitating and reducing the cost of disseminating information within TLC. The Company intends to allow its suppliers access to the communication system in consideration for the payment of advertising fees and anticipates that such suppliers will offer volume discounts to the affiliated doctors linked to the communication system. The Company's clinics will also benefit from any volume discounts that the affiliated doctors obtain from on-line suppliers. Practice Management Software: The emergence of managed care has increased the need for information collection, analysis and management throughout the entire health care industry so that providers can better quantify the revenues and expenses associated with managed care contracting. Information management systems are moving beyond traditional systems that focus primarily on billing, insurance and simple financial management, and are moving towards computerized cost management, medical charting, quality control issues and clinical outcomes analysis, with a particular emphasis on evaluating the risks and profitability of managed care contracts. The Company is implementing a software system designed to facilitate the financial reporting process and the transfer of information relating to practice management, cost analysis and patient outcomes. The Company believes that the practice management software will enhance the quality and efficiency of care provided by TLC because it will enable TLC to assess the results of procedures through the use of medical charting and clinical outcomes analysis, and thereby identify the need -10-

for adjustments to training or other practice management initiatives of TLC. The Company also believes that its ability to attract managed care contracts in respect of its secondary care clinics will be enhanced because this type of practice management software will allow TLC to track the statistical information required by managed care contract providers. Internet: Doctors, prospective patients and other on-line users can access TLC's Web sites on the Internet (www.lasercenter.com/tlc and www.lzr.com). In addition to a directory of TLC care providers, the Web sites offer co-management information for affiliated doctors as well as information for prospective patients. The Web sites also have a doctor "sysop" - a doctor experienced in excimer laser use who answers questions and sources information about refractive procedures. The Company recently entered into an agreement with America Online to enable doctors affiliated with TLC to have access to TLC's Web sites. NATIONAL ADVISORY COUNCIL The Company's National Advisory Council (the "Advisory Council") is comprised of doctors that represent the geographic centers in which TLC currently manages or intends to manage a clinic. By providing regional representation, the Advisory Council serves as a channel of communication to doctors in the cities in which TLC manages or intends to manage a clinic. The Advisory Council advises the Company on a broad range of clinical and strategic issues, and its feedback is incorporated in the Company's strategic development. TRAINING All doctors who perform excimer laser procedures at TLC refractive clinics are given the opportunity to attend the Company's comprehensive training program conducted under the supervision of Dr. Jeffery Machat or Dr. Steven Slade. Dr. Machat and Dr. Slade are the Co-National Medical Directors of TLC, and both are prominent ophthalmologists and experts in the field of excimer laser procedures. Both have been working with excimer lasers since 1990, and have lectured and trained doctors in North America, South America, Europe, South Africa, Australia and Asia. Dr. Machat was the first surgeon proficient with the excimer lasers of all three of the following manufacturers: Summit, VISX and Technolas GmbH ("Technolas") (acquired by Chiron Vision Corporation ("Chiron")). In addition, Dr. Machat and Dr. Slade are qualified by Chiron to certify doctors to perform LASIK procedures. EDUCATION The Company believes that ophthalmologists, optometrists and other eye care professionals who endorse excimer laser procedures are a valuable resource in increasing general awareness and acceptance of the procedures among potential candidates and in promoting the Company as a service provider. The Company seeks to be perceived by eye care professionals as the leading provider of excimer laser eye surgery. One way in which it hopes to achieve this objective is by participating in the education and training of ophthalmologists and optometrists in Canada and the U.S. In 1997, the Company devoted approximately $54,000 ($100,000 in 1996 and US$200,000 in 1995) to educational initiatives. Most of this expenditure is attributable to educational programs for eye care professionals conducted through the TLC Continuing Education Foundation (the "Foundation"). The Company established the Foundation in November 1994 to provide educational programs to doctors in all aspects of clinical study, primarily in conjunction with certain U.S. -11-

universities. The Foundation, a non-profit organization, has developed co-management courses in conjunction with the optometry schools at Northeastern State University in Oklahoma, the University of Alabama at Birmingham and the Pacific University in Oregon. The Foundation was established with funding of US$150,000 from the Company. The Company expects that the Foundation will be able to operate without any significant additional funding from the Company in future. The TLC Windsor and TLC Tulsa clinics are state-of-the-art teaching facilities. Each clinic occupies over 5,000 sq. ft., and is equipped with advanced clinical equipment and audio-visual technology. The TLC Windsor clinic was used by Chiron, a major manufacturer of excimer lasers, as one of its teaching facilities for ophthalmologists learning to use the excimer laser. Dr. Machat also teaches courses on PRK and LASIK for ophthalmologists at the TLC Windsor clinic. The TLC Tulsa clinic is used by the Company to provide training in the use of medication for eye care and diagnostic, therapeutic and excimer laser procedures. On April 7, 1997, the Company entered into a letter of intent with the School of Optometry at the University of Waterloo to establish a joint venture at the clinic located at the School of Optometry whereby TLC will provide training to students. It is expected that the joint venture will enhance general awareness of refractive procedures. REFRACTIVE CLINICS In Canada, the Company manages five refractive clinics in Ontario, New Brunswick, and British Columbia. In the U.S., the Company manages 27 refractive clinics (including three with secondary care operations), including 20/20 clinics, in Oklahoma, Indiana, South Carolina, Washington, Colorado, California, Florida, Wisconsin, Illinois, Ohio, Tennessee, Maryland, New York, New Jersey, Pennsylvania, Montana, North Carolina, Massachusetts, and Virginia. Schedule A of this AIF contains a brief description of each TLC clinic. (See "20/20 Acquisition" for a description of 20/20 clinics.) PRK and LASIK have been performed at TLC refractive clinics in Canada since 1993 and 1994 respectively. LASIK now accounts for a majority of procedures performed at TLC refractive clinics, and Dr. Machat, the CoNational Medical Director, has performed more LASIK procedures than any other doctor in North America. The Company believes that LASIK procedures will continue to constitute the major portion of the procedures performed at TLC clinics in Canada. The charge per eye for the excimer laser procedures (including all necessary enhancements) is approximately $2,000 to $2,250 for PRK and $2,400 to $2,750 for LASIK (U.S. residents pay fees in US$). The cost of excimer laser procedures is not covered by provincial health care plans in Canada or reimbursable under Medicare or Medicaid in the U.S. and is not expected to be covered by the majority of HMOs or most other third party payors under managed care contracts. -12-

Most doctors performing excimer laser procedures at TLC refractive clinics do so under one of three types of standard agreements (which have been modified for use in the U.S. as required by State law): professional services/full service management agreements ("Level I Agreements"), professional service/partial service management agreements (Level II Agreements), or facility use agreements ("Level III Agreements"). Under Level I Agreements, doctors ("Level I doctors") contract to carry out excimer laser procedures at the clinic and to provide other management services for co-managed patients and TLC agrees to provide certain management and administrative services. The doctor typically retains a fee of approximately $300 per procedure (approximately US$300 for U.S. residents) and TLC earns a fee of approximately US$1,300 to US$1,600 for its facility and management services. The terms of the Level I Agreements typically prohibit Level I doctors from disclosing confidential information relating to the clinic, soliciting patients or employees of the clinic, or participating in any other refractive clinic within a specified area. Level I doctors are responsible for maintaining appropriate malpractice insurance, and agree to indemnify the Company and its affiliates for any losses incurred as a result of the doctor's negligence or malpractice. Level II Agreements are similar to Level I Agreements except that TLC agrees to provide a more limited range of management services to the doctor, and the doctor typically performs pre - and post-operative care on his/her own patients, rather than co-managing patients. The doctor typically retains a fee of approximately US$500 for PRK surgery and US$750 for LASIK surgery and an additional approximately US$400 for pre - and postoperative care. TLC typically earns a fee of approximately US$1,100 to US$1,300 for its facility and management services. Under Level III Agreements, the Company grants facility use rights to doctors ("Level III doctors") to perform procedures on the doctor's own patients. TLC does not provide management services under these agreements. The Level III doctors pay the refractive clinic fees in the range of $750 to $1,000 for each of the first eight excimer laser procedures and in the range of $600 to $800 for each additional excimer laser procedure performed by them in any one month (US$750 to US$1,000 and US$600 to US$800, respectively, for U.S. residents). Level III doctors are responsible for their patients' pre- and post-operative care, and agree to indemnity, insurance and confidentiality provisions similar to those in the Level I Agreements. Doctors must meet the credentialing requirements of the FDA and the TLC refractive clinic in which they perform procedures and, before performing procedures, complete training provided by the Company unless the Company is otherwise satisfied that the doctor has been properly trained. Where permissible under applicable laws, the subsidiaries incorporated to operate some refractive clinics may issue minority equity interests to affiliated doctors. The shares of the relevant subsidiary through which additional clinics are opened will generally be held pursuant to a shareholders' agreement that may include, among other things, a buy-sell provision and other buy-out rights in favor of doctors. In addition, the Company anticipates that at most refractive clinics opened in the U.S., the affiliated doctors will designate 50% of the directors of the subsidiary and the affiliated doctors who are shareholders of the subsidiary will designate that portion of the directors that corresponds to their percentage ownership in the subsidiary. -13-

20/20 ACQUISITION On February 10, 1997, the Company acquired 99.9% of the shares of 20/20 for a purchase price of $31,642,211, satisfied by the issuance of 4,364,443 Common Shares of the Company at a price of $7.25 per share. An additional 385,000 Common Shares may be issued at a price of $7.25 per share as 20/20 stock options are exercised. A majority of the Common Shares issued in connection with the acquisition are being held in escrow by the Company for at least a one year period from February 10, 1997, with Common Shares owned by insiders of 20/20 being held in escrow for up to a two year period from February 10, 1997, in each case to indemnify the Company in the event of a breach of the representations and warranties made by 20/20. 20/20 manages eight refractive clinics located in Maryland, New York, Florida, New Jersey, Pennsylvania and Virginia. Doctors in the 20/20 network provide excimer laser services under a Surgeon Agreement or an Optometrist Agreement. Under Surgeon Agreements, doctors perform excimer laser procedures on patients from the doctor's own practice (in which case, the doctor may perform pre- and post-operative care), on patients referred by 20/20 optometrists (in which case, the patient is co-managed with the optometrist performing pre-and postoperative care), and on patients referred to the doctor through 20/20's marketing efforts. A 20/20 doctor is paid US$500 per eye for each excimer laser procedure and US$500 for pre- and post-operative care for patients that are not co-managed with an optometrist. Under Optometrist Agreements, a 20/20 optometrist performs preand post-operative care for patients treated by 20/20 doctors and is paid a fee of US$500. 20/20's agreements with doctors typically prohibit doctors from disclosing confidential information relating to the clinic or from soliciting patients or employees from the clinic, or participating in other refractive clinics in competition with the 20/20 clinic (except that a 20/20 doctor is not prohibited from performing procedures at a hospital where the doctor has privileges). All doctors are responsible for maintaining appropriate malpractice insurance, and agree to indemnify the 20/20 clinic and its affiliates for any losses incurred as a result of the doctor's negligence or malpractice. SECONDARY CARE CLINICS The Company manages secondary care clinics at which doctors offer treatment for a range of vision disorders, including cataracts, glaucoma and retinal disorders. In connection with each of its secondary care clinics, TLC has entered into long term practice management agreements. Pursuant to these agreements, TLC manages the doctors' practices at these clinics (including providing administrative services and support staff) and receives a management fee. The Company manages five secondary care clinics in the U.S. (including three that are also refractive clinics): one in Washington, one in South Carolina and three in Illinois. TLC Northwest Eye: On March 25, 1996, the Company acquired all of the shares of TLC Northwest Eye, a corporation operating the Northwest Eye Center, located in Seattle, Washington, the operations of which were managed by the Company pursuant to a management agreement commencing January 1, 1996. TLC Northwest Eye includes an ambulatory surgical center operated at the principal practice location, at which ophthalmologic surgeries are performed, and three -14-

satellite practice locations. TLC Northwest Eye draws patients from Washington and British Columbia. In connection with the acquisition, a professional service corporation owned by doctors (who were the shareholders of TLC Northwest Eye and currently perform surgical procedures at the clinic) entered into a practice management agreement with TLC Northwest Eye for a period of 40 years. TLC Piedmont: The Company's clinic in Greenville, South Carolina, which opened in June 1996, includes secondary care operations which are directed by Dr. Jonathan Woolfson. TLC Chicago: In October, 1996, TLC Chicago acquired capital assets from Horn Eye Centers Ltd. of Chicago, Illinois for a purchase price of US$92,400. In connection with this acquisition, Horn Eye Centers, Inc. entered into a practice management agreement with TLC Chicago whereby TLC Chicago manages the practice at the clinic for a period of twenty years in return for management fees at predetermined rates which vary according to the revenues of the practice. TLC Midwest Eye: On January 1, 1997, TLC Midwest Eye acquired all the assets of Midwest Eye Institute, Inc., which operates two clinics located in Palos Heights and Westchester, Illinois (suburban Chicago). The acquisition was completed for a purchase price of US$1,506,000. TLC Midwest Eye draws on a local network of over 300 co-managing doctors. In connection with this acquisition, Midwest Eye Institute II, Inc., a professional services corporation, entered into a practice management agreement with TLC Midwest Eye for a period of 20 years. MANAGED CARE PPH, owned 90% by TLC The Laser Center (Delaware) Inc. ("TLC U.S.") and 10% by Dr. Barry Barresi, a director of the Company, began operations in the second quarter of 1996. PPH's management team is comprised of the following executives who have held leadership positions in health care service facilities, academic health centers and managed care companies:
Barry J. Barresi, OD, PhD Kathy L. Wood, MBA Arthur Roberts, MBA James Owen, OD, MBA Richard A. Radin President and Chief Executive Officer Chief Operating Officer Chief Financial Officer Director, VisionMed Division Director, Management Services

PPH, in conjunction with local doctors, develops and manages Independent Practice Associations and Specialty Services Organizations as regional companies that serve health plans, other managed care organizations and health care purchasers. These local managed care companies are administered from the PPH corporate office, which provides information technology, sales and marketing assistance and professional relations. PPH will receive a fee from payors for performing the following management services: national sales and marketing; claims adjudication; provider network administration support; capitation payment design and related product development; utilization management; quality improvement systems; compliance reporting; and member satisfaction survey research. -15-

PPH entered into a letter of intent with Northwest Health Partners, a physician hospital organization in Seattle, Washington, which provides that PPH will provide management services to Northwest Health Partners commencing in January 1998. PPH is expected to incur net losses for 1997 as a result of development expenses, including staff wages and benefits, professional fees, and other administrative expenses, incurred in securing managed care agreements and other revenue-generating management services relationships. PPH has executed a letter of intent with Primary Eyecare Group, Inc. ("PEG"), an independent practice association, to form a new company called VisionMed MidAtlantic. VisionMed MidAtlantic will arrange for the provision of eye and vision care services and administer eye and vision care contracts in Virginia, Maryland and Washington, D.C. The letter of intent provides that PPH will assume the administration of PEG's routine vision contract with Aetna Health Plans of the Mid-Atlantic and Aetna Health Management effective October 1, 1997. COMPETITION REFRACTIVE CLINICS The Company competes in two principal markets: (i) the consumer market for vision correction and (ii) the market for excimer laser service providers. Consumer Market for Vision Correction: Within the consumer market, excimer laser procedures performed by the Company's clinics compete with other surgical and non-surgical treatments for refractive disorders, including eyeglasses, contact lenses, other types of refractive surgery including RK, and technologies currently under development such as corneal implants and intraocular implants and surgery with different types of lasers. In the foreseeable future, the Company believes that eyeglass and contact lens use will continue to be the most popular alternative to PRK and LASIK. Advantages of corrective eyewear include the comparatively low immediate cost (although the Company believes that eyeglass and contact lens wearers may spend well in excess of the cost of PRK or LASIK over their lifetimes) and the avoidance of surgery. It is likely that eyeglass and contact lens manufacturers, many of whom have greater financial resources than the Company, will continue to develop, enhance and market their products to make them as attractive as possible to people with refractive vision disorders. Other manual surgical and non-surgical techniques to treat vision disorders are currently in use and under development and may prove to be more attractive to consumers than PRK or LASIK. Market for Excimer Laser Service Providers: Within the market for excimer laser service providers, the Company faces competition from other service providers. Other service providers include companies with operations similar to the Company, optometrists (whether individually, in groups or as retail chains), ophthalmologists, hospitals and managed-care entities which, in order to offer refractive surgery to existing patients, may purchase excimer lasers directly from a manufacturer. Suppliers of conventional corrective refractive mediums (eyeglasses and contact lenses), such as optometric chains, may also compete with the Company by purchasing excimer lasers and offering refractive surgery to their customers. These service providers may have greater capital resources than the Company and may be able to offer refractive surgery at lower rates. -16-

The Company's principal competitors include Laser Vision Centers, Inc., Sight Resource Corporation, BeaconEye Inc., LaserSight Centers, Sterling Vision, Laser Centers of America Inc., LCA Vision Inc. and Physicians Resource Group Inc. SECONDARY CARE CLINICS The secondary care clinic market is in a period of consolidation. The Company believes that companies with established operating histories and greater resources than the Company may be pursuing the acquisition of secondary care clinics. The Company's principal competitors include Physician Resource Group, Inc., PrimeVision and Omega Health Services Inc. Some hospitals, clinics, health care companies, HMOs and insurance companies engage in activities similar to the activities of the Company. There can be no assurance that the Company will be able to compete effectively with such competitors, that additional competitors will not enter the market, or that such competition will not make it more difficult to acquire the assets of, and provide management services to, secondary care clinics on terms beneficial to the Company. TLC secondary care clinics will compete with local eye care service providers as well as managed care organizations. The Company believes that changes in government and private reimbursement policies and other factors have resulted in increased competition for consumers of medical services. The Company believes that the cost, accessibility and quality of services provided are the principal factors that affect competition. There can be no assurance that the TLC secondary care clinics will be able to compete effectively in the markets that they serve, which inability to compete could adversely affect the Company's business, financial condition and results of operations. Further, the TLC secondary care clinics will compete with other providers for managed care contracts. The Company believes that trends toward managed care have resulted in increased competition for such contracts. There can be no assurance that the Company and the TLC secondary care clinics will be able to successfully acquire sufficient managed care contracts to compete effectively in the markets they will serve, which inability to compete could adversely affect the Company's business, financial condition and results of operations. MANAGED CARE In the market for managed eye and vision contracting the Company competes with Vision Service Plan, a national eye care plan, and three regional market managed care plans, Davis Optical, Block Managed Vision Care and Eye Health Network of Omega Health Systems, Inc. In addition, physician practice management companies, such as EyePA Inc. (a subsidiary of Physicians Resource Group, Inc.), NovaMed, Inc., Prime Vision, Inc., MEC (a subsidiary of LaserSight Inc.) and Vision21 Inc. have been formed to seek managed care contracts on behalf of their acquired ophthalmic practices and may compete with PPH. There can be no assurance that the Company will be able to compete effectively with such competitors, that additional competitors will not enter into the market, or that such competition will not make it more difficult for the Company to obtain managed care contracts. -17-

MARKETING The Company's marketing efforts are concentrated on joint marketing programs with affiliated doctors with the goal of encouraging the use of TLC clinics. The Company believes that the most effective way to market to doctors is to be perceived as the leading provider of quality eye care. To this end the Company actively participates in the education of doctors on excimer laser procedures and strives to remain current with new procedures and techniques. (See " - Co-Management Strategy".) The Company also promotes its services to doctors in Canada and the U.S. through conferences, advertising in optometric and ophthalmological journals and quarterly newsletters. The Company provides a limited amount of marketing directly to members of the public, who are informed of the Company's services through radio and print advertisements, past patient referrals, videos, brochures and seminars. PROPERTY LEASES, EQUIPMENT AND CAPITAL FINANCING PROPERTY LEASES The Company operates its business in leased premises. The leases are negotiated on market terms and typically have a term of five to ten years. EQUIPMENT AND CAPITAL FINANCING VISX excimer lasers cost approximately US$525,000 per machine. The Company expects to upgrade the excimer lasers at each of the existing Canadian refractive clinics within five years. The Company acquires excimer lasers and other equipment used at its clinics under capital lease arrangements. The lasers require periodic servicing, generally after 300 procedures, and the annual cost of servicing is dependent on the number of procedures performed. For example, the Company pays on average $75 per procedure for servicing of the laser in the TLC Windsor clinic. The VISX lasers used in the U.S. clinics are currently covered under one or two-year warranties which include servicing but the Company expects to incur equivalent servicing costs to those in Windsor in connection with the VISX lasers once the warranties expire. When excimer laser procedures are performed in the U.S., the Company is required to pay a user fee to Pillar Point Partners ("Pillar Point") which is currently in the amount of US$260 for each excimer laser procedure performed. Pillar Point is a partnership formed by VISX and Summit to license U.S. patents covering methods and apparatus for performing excimer laser procedures in return for per procedure royalties and royalties on equipment sales. To the Company's knowledge, Pillar Point is being investigated by the U.S. Federal Trade Commission for potential anti-trust violations and has been challenged in two civil actions as an illegal arrangement. There can be no assurance that payments made to Pillar Point in the U.S. will preclude a patent dispute with either VISX or Summit with respect to technology not covered by the relevant patents or that the Company's activities will not infringe patents held by other parties. -18-

GOVERNMENT REGULATION EXCIMER LASER REGULATION CANADA The use of excimer lasers in Canada to perform refractive surgery is not subject to regulatory approval, and excimer lasers have been used to treat nearsightedness since June, 1990. However, the HPB regulates the sale of devices, including excimer lasers used to perform procedures at the Company's refractive clinics. Pursuant to the regulations prescribed under the Food and Drugs Act, the HPB may permit manufacturers or importers to sell a certain number of devices to perform procedures provided the devices are used in compliance with specified requirements for investigational testing. Permission to sell the device may be suspended or canceled where the HPB determines that its use endangers the health of patients or users or where the regulations have not been complied with. Devices may also be sold for use on a non-investigational basis where evidence available in Canada to the manufacturer or importer substantiates the benefits and performance characteristics claimed for the device. The HPB has conditionally approved the sale of the VISX excimer laser to perform procedures for mild to moderate nearsightedness and low level astigmatism on a non-investigational basis. The Company believes that the sale of the excimer lasers to its refractive clinics, and their use at the clinics, complies with HPB requirements. UNITED STATES Medical devices, such as the excimer lasers used in the Company's clinics, are subject to the most stringent form of regulation and oversight by the FDA and cannot be marketed for commercial sale in the U.S. until the FDA grants premarket approval ("PMA") for the device. To obtain a PMA for a medical device, excimer laser manufacturers must file a PMA application that includes clinical data and the results of pre-clinical and other testing sufficient to show that there is a reasonable assurance of safety and effectiveness of their excimer lasers. Human clinical trials must be conducted pursuant to Investigational Device Exemptions issued by the FDA in order to generate data necessary to support a PMA. In the U.S., Summit and VISX are currently the only excimer laser manufacturers to have obtained a PMA for their respective excimer lasers to treat nearsightedness using PRK. The Summit PMA, which was granted in October 1995, limits the use of the excimer laser within a six millimeter ablation zone to correct mild to moderate nearsightedness between -1.5 and -7.0 diopters with astigmatism no greater than 1.5 diopters. As a result of the limits placed on the approval, the Summit excimer laser is not authorized for use in the U.S. to treat more severe cases of nearsightedness and astigmatism. In March, 1996, VISX obtained FDA approval for PRK use of its excimer laser subject to similar use limitations as those applicable to the Summit excimer laser. While the performance of LASIK is currently the subject of a study by the FDA and while excimer lasers are not yet approved for LASIK by the FDA, doctors in the U.S., including those affiliated with TLC refractive clinics, are performing LASIK on an "off-label" basis, as permitted by applicable law. Any excimer laser manufacturer which obtains PMA approval for use of its excimer lasers will continue to be subject to regulation by the FDA. The FDA actively enforces regulations prohibiting marketing of products for non-indicated uses and conducts periodic inspections to -19-

determine compliance with good manufacturing practice regulations. Failure to comply with applicable regulatory requirements can result in, among other things, fines, suspensions or delays of approvals, seizures or recalls of products, operating restrictions or criminal prosecutions. In addition to the requirements described above, the regulatory requirements that the Company must satisfy to conduct its business will vary from state to state, and, accordingly, the manner of operation by the Company and the degree of control over the delivery of refractive surgery by the Company may differ among the states. The Company intends to comply with all regulatory requirements that will be applicable. The marketing and promotion of PRK in the U.S. is subject to regulation by the FDA and the Federal Trade Commission ("FTC"). The FDA and FTC have released a joint communique on the requirements for marketing PRK in compliance with the laws administered by both agencies. The FTC staff also issued more detailed staff guidance on the marketing and promotion of PRK and has been monitoring marketing activities in this area through a non-public inquiry to identify areas that may require further FTC attention. On April 25, 1997, VISX announced that its laser treatment for astigmatism received approval from the FDA. There can be no assurance if or when the FDA will grant its approval with respect to the use of excimer lasers to treat severe myopia or hyperopia, which could adversely affect the Company's ability to achieve its business projections. REGULATION OF OPTOMETRISTS AND OPHTHALMOLOGISTS CANADA Conflict of interest regulations in certain Canadian provinces prohibit ophthalmologists or corporations owned or controlled by them from receiving benefits from suppliers of medical goods or services to whom the ophthalmologist refers his or her patients. In certain circumstances, these regulations deem it a conflict of interest for an ophthalmologist to order a diagnostic or therapeutic service to be performed by a facility in which the ophthalmologist has any proprietary interest. This does not include a proprietary interest in a publicly traded company. Optometrists are also subject to conflict of interest regulations in Canada. TLC expects that ophthalmologists and optometrists affiliated with TLC will comply with the applicable regulations. The laws of certain Canadian provinces prohibit health care professionals from splitting fees with non-health care professionals and prohibit non-licensed entities (such as the Company) from practicing medicine or optometry and, in certain circumstances, from employing physicians or optometrists directly. The Company believes that its operations comply with such laws, and expects that doctors affiliated with TLC clinics will comply with such laws, although it cannot ensure such compliance by doctors. Optometrists and ophthalmologists are subject to varying degrees and types of provincial regulation governing professional misconduct, including restrictions relating to advertising, and in the case of optometrists, a prohibition against exceeding the lawful scope of practice. In Canada, excimer laser surgery is not within the permitted scope of practice of optometrists. Accordingly, TLC does not allow optometrists to perform the procedure at TLC clinics in Canada. -20-

UNITED STATES The health care industry in the U.S. is highly regulated. The Company's business is subject to both federal and state laws. Federal Law: A federal law (known as the "anti-kickback law") prohibits the offer, solicitation, payment or receipt of any remuneration which is intended to induce, or is in return for, the referral of patients for, or the ordering of, items or services reimbursable by Medicare or any other federally financed health care program. This law also prohibits remuneration intended to induce the purchasing of, or arranging for, or recommending the purchase or order of any item, good, facility or service for which payment may be made under federal health care programs. This law has been applied to otherwise legitimate investment interests if one purpose of the offer to invest is to induce referrals from the investor. Safe harbor regulations provide absolute protection from prosecution for certain categories of relationships. In addition, a recent law broadens the government's anti-fraud and abuse enforcement responsibilities to include all health care delivery systems regardless of payor. Subject to certain exceptions, federal law also prohibits a physician from ordering or prescribing certain designated health services or items if the service or item is reimbursable by Medicare or Medicaid and is provided by an entity with which the physician has a financial relationship (including investment interests and compensation arrangements). This law, known as the "Stark law," does not restrict a physician from ordering an item or service not reimbursable by Medicare or Medicaid or an item or service that does not fall within the categories designated in the law. PRK and LASIK are not reimbursable by Medicare, Medicaid or other federal programs. As a result, neither the anti-kickback law nor the Stark law applies to the Company's refractive clinics. The Company's secondary care clinics provide services that are reimbursable under Medicare and Medicaid. However, the Company believes that it has structured its relationships to comply with the anti-kickback law and the Stark law. Changes in the interpretation and enforcement of the existing regulatory requirements or the adoption of new requirements could have a material adverse effect on the Company's business, financial condition and results of operation. State Law: Laws in some states prohibit the offer or receipt of anything of value in return for referring patients or in return for the ordering or prescribing of health care items or services. Often, these laws are modeled on the federal antikickback law, which applies only to Federal programs; however, the law may apply to all payors in some states. Many states have self-referral laws which generally restrict a doctor from referring a patient to or ordering certain tests from a facility or entity in which the doctor has a financial interest. These laws also apply to all payors, but the scope of the laws and the detailed exceptions vary significantly from state to state. The Company believes that its operations comply with the laws in the states in which they operate, including anti-kickback and self-referral legislation. -21-

Some states have a corporate practice of medicine doctrine which prevents a business corporation from providing medical services. In some states, this restriction prohibits business corporations from employing physicians to provide professional services. In other states, a business corporation is prohibited not only from employing physicians, but also from exercising responsibility that may influence how medical services are delivered. Optometrists and ophthalmologists are also subject to varying degrees and types of professional regulation governing unprofessional conduct with respect to certain matters including professional fee-splitting, and in the case of optometrists, their ability to perform excimer laser procedures, to advertise and to contract with ophthalmologists to provide pre- and/or post-operative care. The Company believes that its operations comply, and expects that doctors affiliated with TLC clinics will comply, with such regulations, although it cannot assure such compliance by doctors. FACILITY LICENSURE AND CERTIFICATE OF NEED The Company may be required to obtain licenses from the State Departments of Health, or a division thereof in the various states in which it opens TLC clinics. The Company has no reason to believe that in those states that require such facility licensure, it will be not able to obtain such a license without unreasonable expense or delay. Some states require the permission of the State Department of Health or a division thereof, such as a Health Planning Commission, in the form of a Certificate of Need ("CON") prior to the construction or modification of an ambulatory care facility, such as a laser center, or the purchase of certain medical equipment in excess of an amount set by the state. While there can be no assurance that the Company will be able to acquire a CON in all states where a CON is required, the Company has no reason to believe that in those states that require a CON, it will not be able to do so. The Company is not aware of any Canadian health regulations which impose licensing requirements on the operation of refractive clinics. MANAGED CARE Managed care contracting, provider network operations and related management services are regulated in the U.S. by both federal and state authorities. PPH has obtained or will obtain all required federal and state permits, licenses and bonds it believes are necessary to operate its VisionMed subsidiaries and to function as a managed care company in the markets in which it is developing business. In states where an insurance license is required by a provider relationship or payor contract, PPH or the local VisionMed subsidiary or partnership will have such business underwritten by an appropriate licensed insurer. Managed care is also impacted by the federal antikickback and anti-self-referral legislation and by federal anti-trust laws. PPH intends to structure its local partnerships with providers to comply with these laws in all of the markets in which it intends to conduct business. -22-

SELECTED CONSOLIDATED FINANCIAL INFORMATION For the years ended May 31 (in thousands of Canadian dollars, except per share amounts) (audited)
1997 ---STATEMENT OF INCOME DATA: Net Revenues Expenses Share of loss of affiliated companies Income (loss) from operations Development and start up expenses Income (loss) before income taxes Income taxes Net Income (loss) (13,949) ------------Net Income (loss) per share (0.68) ------------Weighted average number of Common Shares outstanding 20,617,104 (0.23) ----------12,796,579 (0.08) ----------10,134,078 (0.00) ----------10,000,000 (2,884) ----------(836) ----------(21) ----------$29,303 36,633 212 ------(7,542) 6,253 ------(13,795) 154 ------1996 ---$9,363 9,722 241 -----(600) 2,308 -----(2,908) (24) -----1995 ---$4,592 3,877 -----715 1,506 -----(791) 45 -----1994 ---$1,083 859 -----224 205 -----19 40 ------

1997 ---BALANCE SHEET DATA: Cash and short-term deposits Working capital Total assets Total debt, net of current position Shareholders' equity Capital stock Retained earnings (deficit) $20,977 13,382 107,501 15,933 74,862 92,552 ------(17,690) -------------

1996 ----

1995 ----

1994 ----

$4,143 2,412 24,506 4,523 15,920 19,661 -----(3,741) -----------

$579 (292) 2,953 1,298 603 1,460 ----(857) ---------

$135 (223) 1,320 816 (21) (-) ----(21) ---------

-23-

For the three month periods ended (in thousands of Canadian dollars, except per share amounts) (unaudited)
---------------------------------------------------------------------------1997 19 ---------------------------------------------------------------------------Aug. 31 Nov. 30 Feb. 28 May 31 Aug. 31 Nov. 30 ---------------------------------------------------------------------------$4,912 $5,428 $6,474 $12,489 $1,795 $1,679 4,805 6,385 8,306 17,136 1,765 1,204

Net Revenues Expenses Share of loss of affiliated companies Income (loss) from operations Development and start up expenses Income (loss) before income taxes Income taxes Net Income (loss) Net Income (loss) per share Weighted average number of common shares outstanding

28

122

4

58

-

-

79

(1,079)

(1,836)

(4,705)

30

475

794

1,535

1,582

2,342

159

1,066

(715) 49 (764)

(2,614) 34 (2,648)

(3,418) 27 (3,445)

(7,047) 44 (7,091)

(129) 11 (140)

(591) (11) (580)

(0.05)

(0.15)

(0.16)

(0.28)

(0.01)

(0.05)

16,712,283

17,732,323

21,519,647

25,149,469

10,989,104

11,228,958

DIVIDENDS AND DIVIDEND POLICY The Company has never paid cash or other dividends. It is the policy of the Board of Directors to retain earnings to finance the growth of the Company's business. Payment of any dividends will depend on the financial condition, results of operations and capital requirements of the Company as well as other factors deemed relevant by the Board of Directors. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Reference is made to management's discussion and analysis of financial condition and results of operations on pages 17 to 22 of the Company's Annual Report for the year ended May 31, 1997 which is incorporated herein by reference. -24-

STOCK EXCHANGE LISTINGS The common shares of the Company are listed for trading on The Toronto Stock Exchange under the symbol "LZR" and the NASDAQ National Market under the symbol "LZRCF" . DIRECTORS AND OFFICERS Directors of the Company hold office until the next annual meeting of shareholders or until a successor is elected or appointed.
NAME AND MUNICIPALITY OF -----------------------RESIDENCE --------DIRECTORS --------Elias Vamvakas . . . . . . . . Richmond Hill, Ontario Dr. Jeffery J. Machat . . . . . Richmond Hill, Ontario James R. Connacher Toronto, Ontario . . . . . . POSITION WITH COMPANY --------------------PRINCIPAL OCCUPATION --------------------

Director (since May 1993)(1)(2)

President, Chief Executive Officer and Chairman of the Board of Direc Ophthalmologist and Co-National Me of the Company Vice-Chairman, Gordon Capital Corp (investment bank) Secretary of the Company

Director (since May 1993)(1)

Director (since January 1996) (2)(3) Director (since June 1995)(1)

John F. Riegert . . . . . . . . North York, Ontario Howard J. Gourwitz . . . . . . Bloomfield Hills, Michigan Dr. William David Sullins, Jr. Athens, Tennessee Warren S. Rustand . . . . . . . Tucson, Arizona Ronald J. Kelly, London, Ontario . . . . . . .

Director (since June 1995) (3)(4)(5) Director (since June 1995)(2)(4)

Attorney and Counselor-at-Law, sha Gourwitz and Barr, P.C. Optometrist and Vice-Chairman of T Advisory Council Chairman, Rural/Metro Corporation bank and management consultant) General Counsel and Vice-President of the Company Executive Vice-President, Clinical of the Company and Chairman of TLC's National Advisory Council President and Chief Executive Offi

Nominee Director

Director (since June 1995)(5)

Dr. David C. Eldridge, Okmulgee, Oklahoma

. . . .

Director (since June 1995)(4)(5)

Dr. Barry J. Barresi OFFICERS Madelaine Diane Walker, Mississauga, Ontario Peter Kastelic, Toronto, Ontario . . .

Director (since September 1996)

Chief Operating Officer

Officer of the Company

. . . . . . .

Chief Financial Officer and Treasurer Senior Vice-President International Senior Vice-President - Operations

Officer of the Company

Frances K. Brotherhood, Fort Worth, Texas

. . .

Officer of the Company

Gary F. Jonas, . . . . . . . . Bethesda, Maryland

Officer of the Company

-25-

Anthony F. Rzepka, Toronto, Ontario

. . . . . .

Director of Finance and Assistant Treasurer

Officer of the Company

(1) Mr. Vamvakas, Dr. Machat and Mr. Riegert are members of the Corporation's Executive Committee. (2) Mr. Vamvakas, Dr. Sullins and Mr. Connacher are members of the Corporation's Nominating Committee. (3) Dr. Machat, Mr. Gourwitz and Mr. Connacher are members of the Corporation's Compensation Committee. (4) Mr. Gourwitz , Dr. Sullins, Jr. and Dr. Eldridge are members of the Corporation's Audit Committee. (5) Mr. Gourwitz, Mr. Kelly and Dr. Eldridge are members of the Corporation's Corporate Governance Committee. Mr. Rustand has held his present principal occupation since 1997. For more than five years prior to 1997, Mr. Rustand was Chairman and Chief Executive Officer of The Cambridge Company Ltd., a merchant banking and management consulting company. From 1994 to 1997, Mr. Rustand was also the Chairman of 20/20, which was acquired by the Company on February 10, 1997. The articles of the Company authorize the Board of Directors to be comprised of a number of directors between one and ten and the directors have been authorized by the shareholders to determine the number from time to time between that minimum and maximum. The Board of Directors resolved on September 25, 1997 that the number of directors to be elected at the annual and special meeting of shareholders on October 30, 1997 will be seven, having regard to the composition of the Board and the "Guidelines for Improved Corporate Governance" contained in the Final Report of The Toronto Stock Exchange Committee on Corporate Governance in Canada. Mr. Kelly, Dr. Eldridge and Dr. Barresi, all officers of the Company, have not been nominated for re-election as directors. ADDITIONAL INFORMATION Additional information relating to the Company, including information concerning remuneration of directors and executive officers, indebtedness of directors and officers, the principal holders of the Company's shares, options to purchase shares and the interests of insiders in material transactions, where applicable, is contained the Company's Management Information Circular dated September 26, 1997 for the annual and special meeting of shareholders to be held on October 30, 1997, which is incorporated herein by reference. Additional financial information with respect to the Company is provided in the Consolidated Financial Statements for the year ended May 31, 1997 contained in the Company's Annual Report for the year ended May 31, 1997 ("1997 Annual Report"). The 1997 Annual Report also contains management's discussion and analysis of the Company's financial condition and results of operations for the year ended May 31, 1997. The information contained in the Company's Consolidated Financial Statements for the year ended May 31, 1997 and in the management's discussion and analysis is hereby incorporated by reference. Additional information relating to the Company will be provided to any person upon request to the Secretary of the Company as follows: (a) when securities of the Company are in the course of a distribution pursuant to a short form prospectus, or when a preliminary short form prospectus has been filed in respect of a distribution of the Company's securities, (i) one copy of this AIF, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in the AIF, -26-

(ii) one copy of the Company's Consolidated Financial Statements for the year ended May 31, 1997, together with the accompanying report of the auditor and one copy of any interim financial statements of the Company subsequent to the financial statements for the year ended May 31, 1997, (iii) one copy of the Company's Management Information Circular dated September 26, 1997, and (iv) one copy of any other documents that are incorporated by reference into the preliminary short form prospectus or the short form prospectus and are not required to be provided under (i) or (iii) above; or (b) at any other time, one copy of any document referred to in (a)(i), (ii) and (iii) above, providing that the Company may require the payment of reasonable charge if the request is made by a person who is not a security holder of the Company. -27-

GLOSSARY AS USED IN THIS AIF, THE FOLLOWING TERMS HAVE THE FOLLOWING MEANINGS: 1997, 1996, 1995 AND 1994 mean the Company's fiscal years ended May 31, 1997, 1996, 1995 and 1994, respectively, unless otherwise indicated. ASTIGMATISM is an irregularity in the curvature of the cornea causing a blurring of vision because of the inability of the eye to focus an image to a single point. COMPANY has the same meaning as TLC, unless the context otherwise requires. CORNEA is the outermost surface of the eye and serves as a "window" through which light can pass. DIOPTER is a unit of measurement of the refractive (i.e. focusing) power of the eye. DOCTOR refers to an optometrist or an ophthalmologist. EXCIMER LASER is a particular type of computer-controlled laser whose active medium is a high pressure mixture of noble gases and halogens. The output of this laser typically has high peak powers (between 100 and 250 millejoules per cm) and short pulses (10-100 nanoseconds) with a wavelength in the ultraviolet region of the spectrum (193 nm - 308 nm). FDA is the Food and Drug Administration of the United States Department of Health and Human Services. FTC is the Federal Trade Commission of the United States Department of Commerce. HMO means a health maintenance organization, being an organization of health care personnel and facilities that provides a comprehensive range of health services to an enrolled population for a fixed sum of money paid in advance for a specified period of time. These health services include a wide variety of medical treatments and consults, inpatient and outpatient hospitalization, home health service, ambulance service, and sometimes dental and pharmacy services. The HMO may be organized as a group model, an individual practice association, a network model or a staff model. HPB means the Health Protection Branch of Health Canada. LASIK is Laser-Assisted Intrastromal Keratomileusis, a procedure using a manual procedure and an excimer laser, generally for the correction of higher levels of nearsightedness and farsightedness. MANAGED CARE refers to arrangements typically involving a third party, such as an HMO, insurance company or employer group, which is frequently the payor, assuming responsibility for ensuring that health care is provided through a designated group of providers in a high quality, cost-effective manner. -28-

MEDICAID AND MEDICARE are U.S. government subsidized health programs for eligible beneficiaries. NETWORK CENTER refers to a facility which provides management services including clinical training, patient education, marketing and network development but does not perform excimer laser procedures. The laser procedure itself is performed in a clinic affiliated with TLC which compensates the network center for its management services. PRK is Photorefractive Keratectomy, a technique involving the use of ultraviolet light such as that emitted by excimer lasers to treat refractive disorders which affect vision. This technique can be considered to be "optical reshaping" of the cornea in which submicron layers of tissue are removed with each laser pulse. RK is Radial Keratotomy, a refractive surgical procedure utilizing diamond knives in which "relaxation" incisions are cut through approximately 90% of the thickness of the periphery of the cornea resulting in a reshaping of the eye due to the stresses caused by intra-ocular pressure. REFRACTION refers to the passage of light through a medium, such as the cornea, which bends its rays. REFRACTIVE CLINIC refers to a clinic performing refractive procedures which may include excimer laser and manual surgical procedures. SECONDARY CARE CLINIC refers to a clinic which is equipped to enable physicians to provide advanced levels of care, including eye surgery, for the treatment of disorders such as glaucoma, cataracts and retinal disorders. Generally, a secondary care clinic does not dispense eyewear or contact lenses, perform refractions, or provide eye examinations or general diagnostic services. TLC means the TLC The Laser Center Inc., its subsidiaries and its 50% owned affiliated companies, unless the context otherwise requires. TLC U.S. means TLC The Laser Center (Delaware) Inc., a wholly-owned subsidiary of the Company. 20/20 means 20/20 Laser Centers, Inc. and its subsidiaries, which were acquired by the Company on February 10, 1997, unless the context otherwise requires. -29-

COVER TLC The Laser Center Inc. First quarter report Three Months Ended August 31, 1997 [picture] depicting eyes INSIDE MESSAGE TO SHAREHOLDERS The fiscal quarter ending August 31, 1997 results were characterized by an increase in net revenue, driven primarily by strong growth in the number of refractive laser procedures performed. First quarter gross revenue was $20.6 million, an increase of 253% over the 1997 comparative quarter. First quarter net revenue was $13.8 million, an increase of 281% over the first quarter of 1997, and the highest quarterly net revenue ever reported by the Company. The increasing revenue reflects continuing strong growth in the number of procedures at existing sites and TLC's rapidly expanding activities in the U.S. market. Over 6,100 paid refractive laser procedures were performed at TLC centers in the first quarter, compared to 1,600 from the same quarter a year ago. TLC's net loss for the quarter was $3.7 million, or $0.14 per share, versus $0.8 million, or $0.05 per share for the corresponding period a year ago. The net loss includes $2.7 million in amortization and $1.6 million in development and start-up costs. The net loss was much lower than expected considering TLC's rapid expansion in the U.S. market, where most of TLC's U.S. centers have been open for less than 1 year. Traditionally, it takes 18 months for TLC laser centers to show a profit. TLC's balance sheet and cash position is very strong. This, combined with stronger than expected operating results, will allow us to continue to grow our leadership position in the North American laser vision correction market. TLC INTRODUCES LIFETIME VISION COMMITMENT FOR ITS PATIENTS High-quality patient care is our first priority, and patient satisfaction is our only assurance of continued success. TLC's highly trained surgeons have been performing laser vision correction in Canada for the past eight years, and in the U.S. for more than a year. To date, our results have been excellent. In fact, we are so confident in the long-term visual stability of laser vision correction patients, TLC is willing to give patients a lifetime commitment. While we can't guarantee our patients a lifetime of perfect vision as a result of refractive surgery, we can reassure each patient of a lifetime of care to help maintain the best possible vision. Both past and future patients treated at a TLC center will be eligible to participate in TLC's LIFETIME COMMITMENT program*. TLC LISTS ITS SHARES ON THE NASDAQ NATIONAL MARKET TLC's shares have begun trading on the NASDAQ National Market under the symbol LZRCF. Of course, TLC also remains listed on the Toronto Stock Exchange under the trading symbol LZR. TLC has always seen itself as a North American company, with strong ties to the U.S. Most of our doctors, employees and clinics are in the U.S. The Company has a strong U.S. shareholder base and its Nasdaq listing will give everyone the opportunity to participate in TLC's exciting future. TLC ANNOUNCES NEW CHIEF FINANCIAL OFFICER Peter Kastelic has been appointed as TLC's new Chief Financial Officer. Mr. Kastelic, who received his C.A. designation in 1983, brings a broad base of experience to TLC having served in key financial roles over the last 10 years. His experience includes, Potash Company of Canada Limited, Curragh Inc. and Falconbridge Limited. [bar graph] depicting refractive clinic procedures by quarter CONSOLIDATED BALANCE SHEET (IN THOUSANDS OF CANADIAN DOLLARS) THREE MONTHS ENDED AUGUST 31 1997 1996

Assets Current Cash and short-term deposits Accounts receivable Income taxes recoverable Prepaids and sundry Capital assets Assets under capital lease Investment in affiliated companies Projects under development Deferred income taxes Goodwill Other

$

$ Liabilities Current Accounts payable and accrued liabilities Income taxes payable Current portion of long-term debt Current portion of obligations under capital lease Current portion of term bank loan Deferred income taxes Long-term debt Obligations under capital lease Term bank loan Deferred rent and compensation Non-controlling interest Shareholders' equity Capital stock Deficit $ CONSOLIDATED STATEMENT OF DEFICIT (IN THOUSANDS OF CANADIAN DOLLARS) THREE MONTHS ENDED AUGUST 31 Balance, beginning of period Net loss for the period Balance, end of period

11,855 5,849 150 2,845 20,699 36,588 9,787 634 144 26 35,850 575 104,303

$

$

1,916 2,069 -573 4,558 18,705 1,699 367 1,094 141 -106 26,670

$

8,984 -1,893 2,549 40 32 13,498 6,083 8,791 13 2,399 30,784 465 94,460 (21,406) 73,054 104,303

$

2,219 20 1,436 322 40 133 4,170 5,698 923 53 94 10,938 -20,237 (4,505) 15,732 26,670

$

$ $

1997 (17,690) (3,716) (21,406)

$ $

1996 (3,741) (764) (4,505)

CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION (IN THOUSANDS OF CANADIAN DOLLARS) THREE MONTHS ENDED AUGUST 31 1997 Operating activities Net loss for the period $ (3,716) Amortization 2,717 Share of loss from affiliates 87 (912) Changes in non-cash operating items Deferred income taxes (net) 169 Projects under development 24 Non-controlling interest 2 Income taxes payable (104)

1996 $ (764) 637 28 (99) -(499) -(87)

Prepaid and sundry assets Accounts payable and accrued liabilities Accounts receivable Deferred rent Cash provided from (used for) operating activities Financing activities Capital stock issued Term bank loan Obligations under capital lease Long-term debt Cash provided from (used for) financing activities Investing activities Other Investment in affiliated companies Assets under capital lease Goodwill Capital assets Cash provided from (used for) investing activities Decrease in cash Cash and short-term deposits, beginning of period Cash and short-term deposits, end of period

(529) (741) (1,793) -(3,884) 1,908 (10) (320) (461) 1,117 13 (46) (53) (2,042) (4,227) (6,355) (9,122) 20,977 $ 11,855 $

(44) (304) (354) 6 (1,381) 576 (10) 6 2,705 3,277 (18) (136) (681) -(3,288) (4,123) (2,227) 4,143 1,916

CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED AUGUST 31 1997 Net revenues $ 13,804 Share of loss of affiliated companies (87) 13,717 Expenses Operating 12,608 Financial 481 Amortization 2,717 15,806 Income (Loss) from operations (2,089) Development and start-up expenses 1,601 Loss before income taxes (3,690) Income taxes Current 26 26 Net loss for the period $ (3,716) LOSS PER SHARE $ (0.14) Weighted average number of common shares outstanding 26,914,000 Revenue Analysis Gross revenues of all managed clinics $ 20,560 Represented by: Refractive clinics revenue $ 14,100 Secondary care clinics physician group revenue 6,460 20,560 Less: Provision for contractual allowances

$

1996 4,912 (28) 4,884 4,032 136 637 4,805 79 794 (715) 49 49 (764) (0.05)

$ $

16,712,283

$ $

8,131 3,551 4,580 8,131

and adjustments Amounts retained by physician groups Net revenues of all managed clinics Other Net revenues

$

3,802 3,632 7,434 13,126 678 13,804

$

2,060 1,159 3,219 4,912 -4,912

CORPORATE OFFICE TLC The Laser Center Inc. 5600 Explorer Drive, Suite 301, Mississauga, Ontario L4W 4Y2 Tel: (905) 602-2020 Fax: (905) 602-2025 INVESTOR RELATIONS CONTACT Stephen Kilmer Tel: 1-800-TLC-1033 or Tel: (905) 602-2020 Fax: (905) 602-2025 Website: http://www.lzr.com E-mail: investor.relations @ lzr.com TRANSFER AGENT The CIBC Mellon Trust Company Tel: 1-800-387-0825 Stock Exchange Listing Shares of the Corporation are listed on the Toronto Stock Exchange and NASDAQ National Market TRADING SYMBOLS TSE - LZR NASDAQ - LZRCF FORWARD LOOKING INFORMATION This quarterly report may contain forward-looking information within the meaning of Section 27A of the U.S. Securities Act of 1993 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. TLC's operating results can be impacted by a number of factors, any of which could cause actual results to vary materially from the current results or TLC's anticipated future results. TLC's operating results can vary substantially from period to period due to the timing of acquisitions and expansion opportunities. This and other factors make the estimation of future operating results uncertain. Risk factors are listed from time to time in TLC's reports filed with the Toronto Stock Exchange and the U.S. Securities and Exchange Commission. TLC assumes no obligation to update information contained in this quarterly report. LASER CENTERS IN CANADA BRITISH COLUMBIA VANCOUVER TLC Northwest-Vancouver (604) 903-4000

Dr. Michael Melenchuk NEW BRUNSWICK MONCTON TLC Moncton (506) 863-1999 Dr. Josee Visockis Dr. Serge Richard ONTARIO LONDON TLC London (519) 438-2020 Marion Baird TORONTO TLC Toronto (416) 733-2020 Horace Chiu WINDSOR TLC Windsor (519) 250-2020 Joseph Ferrari LASER CENTERS IN THE UNITED STATES CALIFORNIA BREA TLC Inland Empire (909) 931-0044 Jerry Adams COLORADO DENVER TLC Rocky Mountain (303) 329-9141 Dr. Jimmy Jackson FLORIDA BOCA RATON TLC Boca Raton (561) 998-2020 Dr. Salvador DeCanio Jr. MIAMI TLC Miami (305) 949-2999 Dr. Jonathon Jacobs ILLINOIS CHICAGO TLC Chicago (312) 640-3400 Janine Charland WESTCHESTER TLC MEI/Westchester

(708) 562-4681 Janine Charland INDIANA INDIANAPOLIS TLC Indiana (317) 845-2020 Dr. Brian Duvall MARYLAND ROCKVILLE TLC Rockville (301) 881-2020 Kelly Citrin MASSACHUSETTS BOSTON TLC Massachusetts (617) 544-0223 Dr. Kristen Brown MONTANA BILLINGS TLC Big Sky (406) 651-0202 Dr. Harvey Bonner NEW JERSEY MOUNT LAUREL TLC Mount Laurel (609) 778-8550 Dr. F. Lawrence Vernamonti FAIR LAWN TLC Fair Lawn (201) 796-4466 Tina Robinson NEW YORK NEW YORK TLC Manhattan (212) 588-0200 Bindu Thomas GARDEN CITY TLC Garden City (516) 742-2020 Laura DiLorenzo White Plains TLC White Plains (914) 997-2222 Dayna Heit NORTH CAROLINA CHARLOTTE TLC Charlotte (704) 344-0800

Dr. William Rafferty RALEIGH TLC Raleigh/Durham (919) 781-9400 Gloria Johnson WINSTON-SALEM TLC Winston-Salem (910) 765-5600 Dr. Bill Rafferty OHIO ADA TLC Lima (419) 634-8155 Dr. Duane Wires OKLAHOMA OKLAHOMA CITY TLC Oklahoma City (405) 842-6060 Dr. Waymon Harrison TULSA TLC Tulsa (918) 491-6009 Dr. Jeff Miller PENNSYLVANIA PLYMOUTH MEETING TLC Plymouth Meeting (610) 940-3937 Dr. David Gubman SOUTH CAROLINA GREENVILLE TLC Piedmont (864) 297-6299 Dr. Cynthia Wike TENNESSEE JOHNSON CITY TLC Tri-Cities (423) 282-0002 Dr. Richard Phillips VIRGINIA FAIRFAX TLC Fairfax (703) 560-2020 Janet Ward WASHINGTON LYNNWOOD TLC Northwest Seattle (425) 771-1200 Dr. Beth Kneib

WISCONSIN MADISON TLC Wisconsin (608) 249-6000 Dr. Charlotte Burns SECONDARY EYE CARE FACILITIES IN THE UNITED STATES ILLINOIS CHICAGO* TLC Chicago (312) 640-3400 Janine Charland PALOS HEIGHTS TLC MEI/Palos Heights (708) 361-7788 Janine Charland WESTCHESTER* TLC MEI/Westchester (708) 562-4681 Janine Charland SOUTH CAROLINA GREENVILLE* TLC Piedmont (864) 297-6299 Dr. Cynthia Wike WASHINGTON SEATTLE TLC Northwest Eye Inc. (206) 528-6000 Rodger McCollum TLC NETWORKS IN CANADA ONTARIO KITCHENER (University of Waterloo) TLC NETWORKS IN THE UNITED STATES CONNECTICUT HARTFORD Dr. Jerry Hardison, (860) 236-5831 INDIANA SEYMOUR Dr. Mike Frische, (812) 523-8756 KENTUCKY BENTON Dr. Joe Ellis,

(502) 527-7421 BOWLING GREEN Dr. John Breiwa, (502) 842-0383 COVINGTON Dr. Richard Schuck, (606) 781-2000 NEVADA LAS VEGAS Dr. Tom Kroll, (702) 737-0321 NEW MEXICO ALBUQUERQUE Dr. Craig Clatanoff, (505) 896-4554 TENNESSEE CHATTANOOGA Dr. Daryl Mann, (423) 855-1666 KNOXVILLE MEMPHIS Dr. John Sharpe, (901) 722-3263 NASHVILLE Phil Christopherson, (615) 361-0339 UNDER DEVELOPMENT CALIFORNIA BEVERLY HILLS SAN DIEGO OHIO CLEVELAND COLUMBUS TOLEDO GEORGIA ATLANTA INDIANA FORT WAYNE IOWA SIOUX CITY MICHIGAN DETROIT NEW YORK

BROOKLYN SOUTH CAROLINA COLUMBIA/CHARLESTON * Denotes a clinic that is also listed as a laser center


								
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