8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934

Date of Report (Date of earliest event reported): February 21, 2006

LCA-VISION INC.

(Exact name of registrant as specified in its charter)

Delaware	0-27610	11-2882328
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

7840 Montgomery Road, Cincinnati, Ohio	45236
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (513) 792-9292

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

As previously disclosed, Mr. Stephen N. Joffe will step down as Chief Executive Officer on March 1, 2006. Mr. Joffe has agreed to continue to serve as Chairman of the Board after March 1, 2006 and to assist in the orderly transition of executive management responsibilities. On February 21, 2006, the Compensation Committee of the Company’s Board of Directors approved the structure and amount of compensation to be paid Mr. Joffe for services rendered after March 1, 2006. Until December 31, 2006, Mr. Joffe will receive his current salary of $600,000, payable according to normal Company procedures, as long as he is serving as Chairman of the Board. Mr. Joffe will also receive an immediate one-time cash payment of $1,000,000, less tax and other customary deductions, for his services and responsibilities as Chairman of the Board through the end of calendar year 2006. If Mr. Joffe ceases, for any reason within his control, to carry out his services and responsibilities as Chairman of the Board prior to December 31, 2006, he will reimburse the Company for a proportionate amount of this cash payment less taxes and other deductions paid (based upon the time between such event and December 31, 2006 compared to the ten months between March 1, 2006 and December 31, 2006). Mr. Joffe will not be eligible for any cash bonus, options, restricted stock or other payments except as described above.

Also on February 21, 2006, the Board of Directors approved the following base salaries for 2006, effective retroactively to January 1, 2006:

	2006 Base Salary
Craig P.R. Joffe	$	300,000
Chief Operating Officer, General Counsel, and Interim Chief Executive Officer
Kevin M. Hassey	$	270,000
President
Alan H. Buckey	$	270,000
Executive Vice President/Finance and Chief Financial Officer

On the same day, the Board of Directors amended the Company’s Executive Cash Bonus Plan (the “Amended Plan”) establishing criteria for the payment of annual bonuses to the three above named executive officers and such other additional employees as may be selected by the Compensation Committee of the Board from time to time. The Amended Plan will apply to bonuses paid in respect of calendar year 2006. The Amended Plan is attached to this Report as Exhibit 10.1 and is incorporated herein by reference in response to the requirements of this Item 1.01.

Form agreements as may be entered into with the named executive officers and outside directors pursuant to the Company’s 2001 Long-Term Stock Incentive Plan are attached to this Report as Exhibits 10.2, 10.3, and 10.4 and are incorporated herein by reference in response to the requirements of this Item 1.01.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

10.1	Executive Cash Bonus Plan (as amended February 21, 2006)
10.2	Form of Restricted Stock Award Agreement with all employees, including named executive officers
10.3	Form of Stock Option Agreement with outside directors
10.4	Form of Stock Option Agreement with all employees, including named executive officers

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

LCA-VISION INC.
 

/s/ Alan H. Buckey  

Alan H. Buckey 

Executive Vice President/Finance and
Chief Financial Officer 

Date: February 24, 2006

EX-10.1

Exhibit 10.1

LCA-Vision Inc.
Executive Cash Bonus Plan
(as amended February 21, 2006)

Section 1. Purposes of the Plan

     The purposes of this Executive Cash Bonus Plan (Plan) of LCA-Vision Inc. (Company) are:

• to stimulate executives’ efforts to achieve the Company’s short and long-term goals,

• to link a portion of executive compensation to Company performance, and

• to provide a competitive compensation package.

Section 2. Performance Period

     Bonuses shall be determined based upon the Company’s performance during each calendar year (Plan Year).

Section 3. Participants; Eligibility

     (a) The following employees shall be participants in the Plan: the Company’s Chief Executive Officer (including on an interim basis if or as applicable), its President, its Chief Financial Officer and its Chief Operating Officer & General Counsel. The Compensation Committee of the Company’s Board of Directors (Committee) may select additional participants from time to time.

     (b) In order to be eligible for a bonus, a participant must be employed by the Company or one of its subsidiaries throughout any Plan Year and as provided in Section 5. However, the Committee may approve participation in the Plan and a prorated bonus for an employee who is hired or moves into an eligible position during a Plan Year.

Section 4. Bonus Calculation

     (a) Bonus amounts shall be calculated as a percent of base salary at the end of the Plan Year based upon the extent to which threshold, target and maximum performance goals set annually by the Committee are achieved. Initially, the performance measure shall be pre-tax income. The Committee may select one or more additional or different objective performance measures in the future. Bonuses for achieving the threshold, target and maximum performance goals shall be 20%, 40% and 60% of base salary, respectively, for participants, with linear interpolation between those percentages unless another method of interpolation is set by the Committee at the time it establishes the performance goals.

     (b) In calculating bonuses for a Plan Year, the Committee may interpret any performance measure in a way that eliminates the effects of any unusual financial items or corporate events that have materially affected the performance goals originally established for that Plan Year (e.g., stock splits and other changes in capitalization, stock offerings or repurchases, unusual gains or losses or accounting changes).

Section 5. Bonus Payment

     Bonuses under this Plan will be calculated and paid in cash as soon as practicable after completion of the year-end audit of the Company’s financial statements by its independent auditors; provided that in no event will bonuses be paid later than short-term deferral deadline. Notwithstanding a participant’s eligibility for a bonus pursuant to Section 3(b), the participant will forfeit any bonus for a Plan Year if he or she is not employed by the Company or one of its subsidiaries on the date that bonuses for that Plan Year are calculated.

     For purposes of this Plan, the “short-term deferral deadline” means the later of the 15th day of the third month following the executive’s first taxable year in which the bonus is no longer subject to a substantial risk of forfeiture or the 15th day of the third month following the end of the Company’s first taxable year in which the bonus is no longer subject to a substantial risk of forfeiture. Notwithstanding the foregoing, if it is not administratively impracticable for the Company to make the bonus payment by the end of the applicable 2¹/2 month period or the making of the bonus payment by the end of the applicable 2¹/2 month period will jeopardized the solvency of the Company, and, as of the beginning of the Plan Year to which the bonus is attributable, such impracticability or insolvency was unforeseeable, the bonus payment shall be made as soon as reasonably practicable after the 2¹/2 month period. Such bonus payment shall be considered as being made prior to the short-term deferral deadline. For purposes of this paragraph, an action or failure to act of the executive or a person under the executive’s control, such as a failure to provide necessary information or documentation, is not an unforeseeable event.

Section 6. Committee

     (a) This Plan shall be administered by the Committee, which will have the authority and discretion to interpret the Plan, to establish, amend and rescind rules relating to the Plan, and to make all other determinations that may be necessary or advisable for the Plan’s administration. In administering the Plan, the Committee shall strictly enforce the forfeiture conditions with respect to all executives, including executives that own a significant amount of the total combined voting power or value of all classes of equity of the Company. For federal income tax purposes, the Plan and the bonuses payable hereunder are intended to be exempt from Section 409A of the Internal Revenue Code of 1986 (Code) as a result of the fact that a bonus payment that becomes payable as a result of the lapse of the substantial risk of forfeiture conditions applicable to a bonus is to occur no later than the period allowed under the short-term deferral rule set forth in Prop. Treas. Reg. § 1.409A-1(b)(4). This Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

     (b) Any interpretation of the Plan by the Committee and any decision by it relating to the Plan shall be final and binding on all persons.

Section 7. Amendment

     The Board of Directors of the Company may amend or terminate this Plan at any time, except that no amendment or termination may materially adversely affect the rights of any participant with respect to Plan Years ended prior to the date on which the amendment or termination is adopted by the Board.

Section 8. Plan Not Exclusive

     This Plan shall not be construed as limiting the ability or discretion of the Committee to award additional bonuses, separate and apart from this Plan, to individual participants based upon subjective or other criteria.

EX-10.2

Exhibit 10.2

LCA-VISION, INC.
2001 LONG-TERM STOCK INCENTIVE PLAN
RESTRICTED STOCK AWARD AND AGREEMENT

You have been awarded a restricted stock award under the LCA-Vision Inc. 2001 Long-Term Stock Incentive Plan (the “Plan”).

GRANT: LCA-Vision Inc., a Delaware corporation (the “Company”), hereby awards to you (the “Grantee” named below) restricted shares of the Company’s Common Stock, par value $.001 per share (“Shares”), subject to the forfeiture provisions and other terms of this Agreement. The Shares will be issued at no cost to you on the Vesting Date[s] set forth below, provided that you are employed by the Company or any of its subsidiaries on the [applicable] Vesting Date. Please read this Agreement carefully and return one copy as requested below. Unless otherwise provided in this Agreement, capitalized terms have the meanings specified in the Plan.

Grantee:                     No. of Shares:                     Grant Date:                     Vesting Dates:

VESTING: [All of the Shares will vest (become deliverable) on [date]] or [The Shares will vest (become deliverable) between the Grant Date and [last vesting date] with [% or number of shares] vesting on [dates]] or, if earlier, upon a Change of Control of the Company (the “Vesting Date”); subject, however, to the forfeiture provisions set forth below. If your employment terminates because of your death or incapacity, all the Shares issuable under this award will vest on your termination of employment. On [the][each] Vesting Date (or promptly thereafter), the Company will deliver to you a certificate representing the Shares which have vested on such date.

[NO] RIGHTS AS STOCKHOLDER PRIOR TO VESTING: Prior to [the][any] Vesting Date, you will have [no] rights as a stockholder of the Company with respect to the Shares to be issued on or after [the][that] Vesting Date.

[DIVIDEND EQUIVALENT: You will receive [cash] [shares of the Company’s Common Stock] in an amount equal to the dividends which would have been payable in respect of the Shares if they had been issued at the time of the Grant.]

FORFEITURE OF SHARES: In the event you cease to be employed by the Company, or by any of its subsidiaries for any reason (other than as a result of death) prior to [the] [any] Vesting Date, then all unvested Shares subject to this award will be forfeited as of the date of your termination of employment and any rights with respect to such forfeited Shares will immediately cease.

CONFIDENTIALITY: In consideration of your receipt of this award, you agree as follows:

(a) During your employment with the Company or by any of its subsidiaries, and after the termination of your employment, for any reason, voluntary or involuntary, you will hold in a fiduciary capacity for the benefit of the Company all information, knowledge or data relating to the Company or any of its subsidiaries and their respective businesses which the Company or any of its subsidiaries consider to be proprietary, trade secret or confidential that you obtain or have previously obtained during your employment by the Company or any of its subsidiaries and that is not public knowledge (other than as a result of your violation of this provision) (“Confidential Information”). You will not directly or indirectly use any Confidential Information for any purpose not associated with the activities of the Company or any of its subsidiaries, or communicate, divulge or disseminate Confidential Information to any person or entity not authorized by the Company or any of its subsidiaries to receive it at any time during or after your employment with the Company, except with the prior written consent of the Company or as otherwise required by law or legal process. At any time requested by the Company and immediately upon the termination of your employment, you shall return all copies of all documents and other materials in any form that constitute, contain, refer or relate to any Confidential Information.

(b) You understand and agree that the restrictions set forth above are reasonable and necessary to protect the legal interests of the Company. You further agree that the Company will be entitled to seek injunctive relief in the event of any actual or threatened breach of such restrictions, and you hereby consent to the exercise of personal jurisdiction and venue in a federal or state court of competent jurisdiction located in Hamilton County, Ohio. You understand and agree that this Agreement shall be construed and enforced in accordance with the laws of the state of Delaware applicable to contracts executed and performed therein. If any provision of this Agreement is determined to be unenforceable by any court, then such provision will be modified or omitted only to the extent necessary to make the remaining provisions of this Agreement enforceable.

TAXES: You must pay all applicable U.S. federal, state, local and foreign taxes resulting from the grant of this award and the issuance of the Shares upon any vesting of this award. The Company has the right to withhold all applicable taxes due upon the vesting of this award (by payroll deduction or otherwise) from the proceeds of this award or from future earnings (including salary, bonus or any other payments.) In advance of [the][each] Vesting Date you may elect to pay the withholding amounts due by surrendering to the Company a number of the Shares otherwise deliverable on that Vesting Date that have a fair market value on that Vesting Date equal to the amount of the payroll withholding taxes due.

CONDITIONS: This award is governed by and subject to the terms and conditions of the Plan, which contains important provisions of this award and forms a part of this Agreement. A copy of the Plan is being provided to you, along with a summary of the Plan. If there is any conflict between any provision of this Agreement and the Plan, this Agreement will control, unless the provision is not permitted by the Plan, in which case the provision of the Plan will apply. Your rights and obligations under this Agreement are also governed by and are subject to applicable U.S. laws and foreign laws.

AGREEMENT: To acknowledge your agreement to the terms and conditions of this award, please sign and return one copy of this Agreement to                                                            .

LCA-VISION INC.	Complete Grantee Information below:
By:
Name:	Home Address (including country):
Title:
Date Agreed To:
	U.S. Social Security Number (if applicable)

EX-10.3

Exhibit 10.3

LCA-VISION INC.
2001 LONG-TERM STOCK INCENTIVE PLAN
DIRECTORS’ NON-QUALIFIED STOCK OPTION AWARD AND AGREEMENT

GRANT: LCA-Vision Inc., a Delaware corporation (“Company”), hereby awards you (the “Optionee” named below) a Non-Qualified Stock Option (“Option”) under the 2001 Stock Incentive Plan (the “Plan”) to purchase the number of shares of the Company’s Common Stock, par value $.001 per share (“Shares”), at the Option Price, set forth below, subject to the following terms and conditions:

Optionee                     No. of Shares:                     Option Date:                     Grant Date:

Unless otherwise provided in this Agreement, capitalized terms have the meanings specified in the Plan.

VESTING: This Option vests between the Grant Date and second anniversary of the Grant Date, with 50% of the total number of Shares vesting (becoming exercisable) on            [month and day of award] in each of 20___ and 20___ [the first and second anniversaries of the Grant Date] or, if earlier, upon a Change of Control of the Company; provided that this Option has been outstanding for at least six months and you have served continuously as a director of the Company through the applicable vesting date. If your service as a director terminates because of your death or incapacity, all Shares covered by this Option will vest on the termination of your service.

TERM: This Option expires 5 years from the Grant Date set forth above. If your service as a director terminates prior to the expiration date, this Option will be subject to earlier expiration as specified in the Plan.

EXERCISE: In order to exercise this Option, you must deliver to the Company a written notice indicating the number of Shares being exercised, accompanied by full payment of the Option Price. You must exercise this Option for at least 100 shares, unless the total number of vested Shares covered by this Option is less than 100, in which case you must exercise this Option for all then-vested Options. You may pay the Option Price in cash or in shares of Common Stock owned by you for at least six months prior to the exercise. You will have no rights as a stockholder with respect to the Shares before exercise of this Option and delivery to you of a certificate evidencing those Shares.

TAXES: You must pay all applicable U.S. federal, state and local taxes resulting from the issuance of Shares upon exercise of this Option. The Company has the right to withhold all applicable taxes due upon the exercise of this Option (by deduction from director’s fees or otherwise) from the proceeds of such exercise or from future director’s fees or any other payments.

CONDITIONS: This Option is governed by and subject to the terms and conditions of the Plan, which contains important provisions of this award and forms a part of this Agreement. A copy of the Plan is being provided to you, along with a summary of the Plan. If there is any conflict between any provision of this Agreement and the Plan, this Agreement will control, unless the provision is not permitted by the Plan, in which case the provisions of the Plan will apply. Your rights and obligations under this Agreement are also governed by and are subject to applicable U.S. laws.

ACKNOWLEDGEMENT: To acknowledge receipt of this award, please sign and return one copy of this Agreement to                                                             .

LCA-VISION INC.	Complete Grantee Information below:
By:
Name:	Home Address (including country):
Title:
Date Agreed To:
	U.S. Social Security Number (if applicable)

EX-10.4

Exhibit 10.4

LCA-VISION INC.
2001 LONG-TERM STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AWARD AND AGREEMENT

GRANT: LCA-Vision Inc., a Delaware corporation (“Company”), hereby awards you (the “Optionee” named below) a Non-Qualified Stock Option (“Option”) under the 2001 Long-Term Stock Incentive Plan (the “Plan”) to purchase the number of shares of the Company’s Common Stock, par value $.001 per share (“Shares”), at the Option Price, set forth below, subject to the following terms and conditions:

Optionee                     No. of Shares:                     Option Date:                     Grant Date:

Unless otherwise provided in this Agreement, capitalized terms have the meanings specified in the Plan.

VESTING: This Option vests between the Grant Date and            , 20      , [fourth anniversary of the Grant Date] with 25% of the total number of Shares vesting (becoming exercisable) on            [month and day of award] in each of 20       , 20       , 20      , and 20       [first, second, third and fourth anniversaries of the Grant Date] or, if earlier, upon a Change of Control of the Company; provided that that this Option has been outstanding for at least six months and you have remained continuously employed by the Company or any of its Subsidiaries through the applicable vesting date. If your employment terminates because of your death or incapacity, all the Shares covered by this Option will vest on your termination of employment.

TERM: This Option expires 10 years from the Grant Date set forth above. If your employment terminates prior to the expiration date, this Option will terminate as specified in the Plan.

EXERCISE: In order to exercise this Option, you must deliver to the Company a written notice indicating the number of Shares being exercised, accompanied by full payment of the Option Price. You must exercise this Option for at least 100 shares, unless the total number of vested Shares covered by this Option is less than 100, in which case you must exercise this Option for all then-vested Shares. You may pay the Option Price in cash or in shares of Common Stock owned by you for at least six months prior to the exercise. You will have no rights as a stockholder with respect to the Shares before exercise of this Option and delivery to you of a certificate evidencing those Shares.

TAXES: You must pay all applicable U.S. federal, state, local and any foreign taxes resulting from the grant or vesting of this Option or issuance of Shares upon exercise of this Option. The Company has the right to withhold all applicable taxes due upon the exercise of this Option (by payroll deduction or otherwise) from the proceeds of such exercise or from future earnings (including salary, bonus or any other payments).

CONDITIONS: This Option is governed by and subject to the terms and conditions of the Plan, which contains important provisions of this award and forms a part of this Agreement. A copy of the Plan is being provided to you, along with a summary of the Plan. If there is any conflict between any provision of this Agreement and the Plan, this Agreement will control, unless the provision is not permitted by the Plan, in which case the provision of the Plan will apply. Your rights and obligations under this Agreement are also governed by and are subject to applicable U.S. and foreign laws.

ACKNOWLEDGEMENT: To acknowledge receipt of this award, please sign and return one copy of this Agreement to                                                             .

LCA-VISION INC.	Complete Grantee Information below:
By:
Name:	Home Address (including country):
Title:
Date Agreed To:
	U.S. Social Security Number (if applicable)